The 11th International Conference on Water Resource and Environment (WRE 2025)

Abstract: The blue economy, comprising fisheries, tourism, and seafood processing industries, is expected to drive economic development through natural resources and decarbonization through blue carbon. However, the complex interrelationships and conflicting interests between marine ecosystems and socio-economic activities hinder the realization of sustainable blue development. In this context, ESG finance for fisheries and tourism is expected to contribute to the dual goals of environmental conservation and economic development, but its mechanisms are not self-evident. This study uses an R&D-based growth model in the monetary economy to analyze the effects of financial policies targeting R&D, fisheries, and tourism on expenditure, growth, environment, money, and tourism. Rent-seeking behavior toward individual transferable quotas (ITQs) is considered. The lending rates for the fisheries and tourism sectors are lower than those for the R&D sector through risk premiums. In the non-blue economy, lowering interest rates for R&D firms leads to pollution reduction and economic growth, but this effect is undermined in the blue economy. Lowering interest rates for fishing firms through risk premiums creates a trade-off between economic growth and environmental quality. When interest rates for tourism firms are raised to an adequate level through risk premiums, this leads to economic growth, environmental improvement, and expansion of tourism and money supply, but also causes a decline in lending. Here, raising interest rates for R&D firms and increasing ITQs can limit the extent of interest rate hikes for tourism firms. This result implies the finance-led tourism growth hypothesis. This study suggests that a policy mix centered on financial policies targeting tourism is important when aiming for sustainable blue development.