The Economic Case for Revitalizing the Baltic Sea

BCG - The Economic-Case-Baltic-Sea-web_190x175_tcm80-155657

by Fredrik Lind and Nina Källström March 10, 2014

The Baltic Sea is in critical condition, with several environmental challenges threatening its future. First, wastewater and agricultural runoff from fertilized fields is leading to eutrophication, a process that decreases the oxygen critical to marine life and causes severe algal blooms. Second, hazardous substances such as flame retardants, dioxins, and pharmaceuticals are resulting in contamination of the waters and driving up toxin levels in the fish that are hauled in. Third, overfishing has depleted important commercial fish stocks such as cod, herring, and sprat despite some recent progress in addressing the issue. The strong projected growth of the region will only place more demands on the sea’s limited resources unless actions are taken to address these problems and restore the waters to health.

At the same time, however, the Baltic Sea region—which includes the countries of Finland, Sweden, Denmark, Germany, Poland, Lithuania, Latvia, Estonia, and Russia—is particularly well positioned to take on a global leadership role in responding to these types of environmental challenges. Politically stable and not plagued by poverty, war, or other major conflicts, this dynamic region is also financially strong and boasts well-educated people, a relatively low population density, a solid commercial base, and a reputation for innovation. Given these characteristics, it has the potential to become a hub for innovation in the so-called blue and green technology solutions that have a positive impact on the environment, including both the sea and the land.

Capitalizing on the Opportunity

The Boston Consulting Group recently joined forces with WWF to evaluate how best to conserve and restore the health of the Baltic Sea. In the resulting report Turning Adversity into Opportunity: A Business Plan for the Baltic Sea (, BCG analyzed the likely impact that two different scenarios for the future would have on the region’s three key industries: tourism, agriculture, and commercial fishing. The two scenarios assessed were “Clear Waters,” a cleaner and functioning Baltic Sea, and “Shipwrecked” a further accelerated degradation. Drawing on our analysis, we determined that by 2030, under the Clear Water scenario, the region could add 550,000 more jobs and €32 billion in economic value than it would achieve in the Shipwrecked scenario—by decreasing the region’s ecological footprint and promoting collaboration among the Baltic countries’ governments and industry sectors.

An additional opportunity exists in that the blue and green solutions needed to help the region address its environmental threats are the subject of rising global demand, making the commercial benefits of developing these solutions potentially enormous. Wastewater treatment, for instance, is an area of major potential growth both in the region—and beyond. In the Baltic region, the demand for improved wastewater treatment is strong since countries there still release on average 22 percent of their wastewater, untreated, into the sea. Similarly, China plans to invest €43 billion over the next five years to improve its urban wastewater infrastructure.