Sustainability and local community acceptance as determinants of industry structure and growth

The aquaculture sector is dependent on local acceptance to exist and grow. Both real and perceived effects influence the industry's growth opportunities. This project provides new knowledge on the effects of aquaculture in terms of estimated economic impacts. Furthermore, it estimates negative external effects associated with diseases and parasites, and positive external effects associated with agglomeration economies. The project has documented and quantified significant external economies of scale related to geographic agglomeration of aquaculture and related activities. Furthermore, we find significant geographic parasite and disease dynamics between farms which influence productivity and economic performance of salmon aquaculture. The project also analyses through case studies the question of why do conflicts between the aquaculture industry and coastal communities arise, and how can such conflicts be reduced. Salmon aquaculture faces a challenging balancing act between local expectations of positive economic returns and absence of negative environmental externalities. Local ownership in salmon farming has positive effects on the local perceptions of the industry. This is achieved through a combination of communication, investments and career opportunities of locally embedded companies. Variations in expectations and requirement of local communities along the coast gives rise to a suboptimal use of the coastal zone. The most productive farming locations may not necessarily become available for salmon production, leading to lower production and productivity than would otherwise have been possible. The findings from the project will provide knowledge to policy makers and stakeholders that will help in developing policies towards the aquaculture sector, and finding sustainable balances between Norway's growth ambitions for salmon farming, the industry's private economic objectives and the requirements of local communities and other sectors. Our results imply that regulation based on municipality and county borders are not optimal in order to achieve maximum sustainable value added. A more coordinated regulation across municipality and county borders will facilitate levels of positive and negative externalities which are sustainable and acceptable. We also point to the need for finding an appropriate balance in policies and regulations between traditional open cage aquaculture in the coastal zone, and new often more closed production technologies onshore and offshore. We are engaged in ongoing processes that could lead to a new regulatory regime for salmon aquaculture in the future.

This project is organized in three work packages to shed light on the main objective from different angles. In the first work package, the objective is to obtain information about factors that prevent and promote harmonic coexistence of aquaculture with other interests and values in coastal communities. This work package addresses the question of why do conflicts between the aquaculture industry and coastal communities arise, and how can such conflicts be reduced? As this is an issue that has received l ittle attention, our basic methodological approach is comparative qualitative case studies, where cases are selected to reflect municipalities/communities with different attitudes to salmon aquaculture. The second work package use a quantitative approach to shed light on the importance of different types of external economies of scale and to what extent these are influenced by location (municipality) and industry structure. We will investigate one negative externality, disease as represented by salmon li ce, and one positive externality, the existence of industry clusters. Of particular interest is whether areas with large multi-plant firms that presumably can coordinate efforts against lice have a lower prevalence of lice, and whether industry clusters i s a substitute to large firms. The third work package will use the results from the two previous work packages to investigate the foundations for sustainable increase in the Norwegian salmon production. Furthermore, we will statistically analyse interrel ationships between employment and economic impacts from aquaculture and socio-economic characteristics of the local communities where they reside. The WP will analyze whether there are specific socio-economic structures that are associated with reduced l ocal resistance to salmon farming, to what extent these are compatible with structures that are more efficient in containing the impact of negative externalities, and whether these are related to firm structure.