March 2025, In the Spotlight -
Over the last few years, the world has witnessed an alarming increase in the frequency and intensity of wildfires, a phenomenon closely linked to climate change. While the immediate devastation of wildfires is often measured in terms of land area burned and property destroyed, the ripple effects extend far beyond terrestrial boundaries, reaching into the heart of our oceans. These disasters are having a negative effect on the blue economy, leading to algal blooms, dead zones, and disrupted marine ecosystems.
Wildfires might seem like a landlocked problem, but their impact also stretches to the seas. When forests burn, ash and debris are carried by wind and water into rivers, eventually reaching the ocean. This influx of nutrients can lead to algal blooms, which deplete oxygen levels in the water and create dead zones where marine life struggles to survive. Additionally, the soot and particulate matter from wildfires can settle on the ocean’s surface, affecting the amount of sunlight that penetrates the water and disrupting the photosynthesis process of marine plants and phytoplankton. The vibrant coral reefs, teeming with life, suffocating under a blanket of ash.
"Wildfires might seem like a landlocked problem, but their impact stretches to the seas."
Duncan Scott, Analyst
For illustrative purposes only.
The disruption of these foundational elements of the marine food web can have cascading effects on the entire ecosystem. Fish populations may decline due to the loss of food sources, and coral reefs, already stressed by rising ocean temperatures and acidification, may suffer further damage from increased sedimentation and reduced water quality. Therefore, with wildfires becoming more intense due to climate change, our oceans are under threat.
The blue economy, which encompasses industries such as fisheries, tourism, and marine biodiversity conservation, is particularly vulnerable to the dual threats posed by wildfires and climate change. Healthy oceans are essential for the sustainability of these industries, and any disruption to marine ecosystems can have significant economic and social consequences.
"...any disruption to marine ecosystems can have significant economic and social consequences."
Willem Visser, Sector Portfolio Manager
Fisheries, for example, rely on stable fish populations and healthy marine habitats. The decline in fish stocks due to disrupted food webs and degraded habitats can lead to reduced catches, impacting the livelihoods of millions of people who depend on fishing for their income. Moreover, the loss of biodiversity can affect the resilience of marine ecosystems, making them more susceptible to other stressors such as overfishing and pollution.
The global economic cost of wildfires is estimated to be between USD 394 billion and USD 893 billion annually.1 In the U.S., wildfire suppression costs have skyrocketed, reaching a record high of close to USD 4.4 billion in 2021.2 These figures highlight the immense financial burden that wildfires impose on economies worldwide.
Tourism, another pillar of the blue economy, is also at risk. Coastal areas that draw tourists for their natural beauty and recreational opportunities can be severely impacted by wildfire aftermath. Smoke and ash reduce air quality and visibility, deterring visitors. Degraded marine environments diminish the appeal of activities like snorkelling and diving, further impacting local economies.
Marine biodiversity conservation efforts are similarly challenged by the interplay of wildfires and climate change. Conservation initiatives often focus on protecting specific species or habitats, but the widespread impacts of wildfires can undermine these efforts by altering entire ecosystems. The statistics on marine life loss are staggering. Over one‑third of marine mammals and nearly one‑third of sharks, shark relatives, and reef‑forming corals are threatened with extinction. Since 1870, we have lost approximately 50% of the world’s coral reefs. Mangroves, which are crucial for coastal protection and biodiversity, have seen a 40% decline since 1970.3
Moreover, human activities have significantly altered two‑thirds3 of the ocean, with only 13% of marine ecosystems remaining intact.4 This rapid decline in marine biodiversity is unprecedented and poses a threat to the health of our oceans and the blue economy.
To combat the dual threats of wildfires and climate change, we need integrated solutions that address both land and sea. Sustainable land management practices, such as controlled burns and reforestation, can reduce the risk of severe wildfires. These practices protect terrestrial ecosystems and prevent downstream effects on marine environments.
"...we need integrated solutions that address both land and sea."
Willem Visser, Sector Portfolio Manager
On the marine side, enhancing the resilience of ocean ecosystems is crucial. Protecting and restoring habitats like mangroves, seagrasses, and coral reefs can buffer against the impacts of wildfires and climate change. Reducing other stressors, such as overfishing and pollution, helps build resilience and supports ecosystem recovery.
The blue economy, valued at around USD 2 trillion globally, is vital for millions of livelihoods, particularly those in coastal and island communities.5 Protecting this sector involves a coordinated effort that integrates both terrestrial and marine conservation strategies. This is because activities on land, such as agriculture, urban development, and industrial processes, can have significant impacts on marine environments through pollution, habitat destruction, and climate change. Therefore, effective conservation strategies must address both land‑based and marine‑based activities to ensure the sustainability of ocean resources.
The intricate relationship between climate change, wildfires, and the blue economy underscores the multifaceted challenges that demand comprehensive solutions. Climate change exacerbates the frequency and intensity of wildfires, which in turn can lead to increased sediment and nutrient runoff into marine environments, adversely affecting water quality and marine life. This highlights the necessity of recognizing the interconnectedness of terrestrial and marine ecosystems.
By implementing integrated solutions such as enhancing wildfire management practices, reducing greenhouse gas emissions, and promoting sustainable land and ocean use, we can mitigate these impacts. Such efforts will contribute to a more sustainable and resilient blue economy, ensuring the continued prosperity of communities that depend on ocean resources while safeguarding the health of our planet’s ecosystems for future generations.
Unless indicated otherwise, statistics/data provided are the most recent available.
Willem Visser
Sector Portfolio Manager, Impact and Emerging Markets
Willem Visser is a sector portfolio manager, emerging markets and impact fixed income, in the Fixed Income Division. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.
Duncan Scott, CFA®
Analyst, Responsible Investing
Duncan Scott is an investment analyst on the Responsible Investing team. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.
1 Source: Joint Economic Committee Democrats, “Climate-exacerbated wildfires cost the U.S. between USD 394 to USD 893 billion each year in economic costs and damages,” October 2023.
2 Source: National Interagency Fire Center, based on cost data as of 2023.
3 oursharedseas.com/threats/threats-habitat-and-biodiversity, 2021.
4 The Location and Protection Status of Earth’s Diminishing Marine Wilderness Kendall R. Jones, Carissa J. Klein, Benjamin S. Halpern. August 20, 2018.
5 Source: UN Environment Programme, unep.org/topics/ocean-seas-and-coasts/ecosystem-based-approaches/sustainable-blue-economy.
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