The economic potential for closed cage fish farming and the total economic value of the wild salmon stock. A literature review

Abstract

The aquaculture industry has been in rapid development in the last decades. Norwegian Atlantic salmon farming has proven to be an efficient and fast growing industry. Being able to develop and utilize open net-pens on the Norwegian coastline has been a key factor for the industry. However, the open net-pen technology are facing problems with external environmental effects. These environmental problems has caused the government to impose strict regulations on the industry, which limits growth. In an attempt to achieve sustainable growth new, green development permits have been introduced. Some of these development permits are intend to give incentives to the development of closed cage production technology. The analysis will determine how much more closed-cage production can cost in private economic costs to have the same profitability as the open net-pen production, measured in NOK per kg salmon produced per year. In addition, the thesis estimates the total value of the wild salmon stock, which is one of the greatest values current regulation intends to preserve. Findings suggest that the private economic potential for closed cage salmon farming is 8.33 to 9.11 NOK per produced kilo, caused by a reduced need for sea lice treatments and a potential price premium due to an environmental friendly production. However, the real profitability of closed-cage technology can only be revealed after big scale testing is completed. The total value of the wild salmon stock was estimated to be 2.86 billion. The total value incorporates use-value and non-use value such as the value of recreational fisheries and existence value of the wild salmon. The results implicates that there is a large economic disparity between the wild salmon stock and the value generated by the salmon farming industry