Climate Change aND THE Sustainability of NORWEGIAN Salmon Aquaculture

We investigate the economic and environmental sustainability of Norwegian salmon aquaculture in light of new challenges to the industry due to climate change. This extended abstract is part of a larger research project on climate change and sustainability of Norwegian Salmon aquaculture. Presented below is some background and outline of some preliminary findings.

Currently, the Norwegian industry remains profitable, although margins vary. Figure 1 shows a breakdown of unit (per kg.) production cost and revenues from 2008 to 2014. Notable is the high share of feed cost in production costs (which has been increasing) and increasing other operational costs, referring to maintenance of equipment and costs associated with fish health and the environment (disease, escape of fish, lice).

Climate change is projected to affect conditions for salmon aquaculture in the North-Atlantic primarily through four channels: 1) Overall Increase in sea-water temperatures, 2) Increased rate of eutrophication, harmful algal blooms, spreading of bacterial diseases, 3) more extreme climatic events, and 4) availability and prices of fishmeal and fish oil for feed.

The long north-south coastline will moderate the effects of higher seawater temperatures in Norway. Production conditions will improve in northern regions, and worsen in southern regions. Marketing costs will increase, unless export markets change to favor regions closer to northern Norway (for instance Russia). Harvest patterns will likely shift to earlier (in the year) harvest peaks and stock generation transitions, since the major growth period will occur earlier. Subsequently, prices will peak earlier in spring, and the fish is likely to spend a shorter time in the ocean before harvest, with potentially positive environmental effects. Increased rate of harmful algal blooms, increased spreading of bacterial diseases and more extreme climatic events will lead to higher costs related to fish health, the environment and facilities. As such, we will likely see the share of other operational costs to production costs continue to increase. If climate change affects the pelagic fisheries negatively, feed costs will continue to increase. However, higher marine feed component prices will push towards further substitution away from marine components in the feed. Regulations should incentivize continued reduction in reliance on marine feed components to ensure economic sustainability. Finally, the success of the aquaculture industry owes a lot to the high degree of control over production, which incentivize R&D throughout the supply-chain. If climate change affects conditions such that the control over marine production conditions is threatened, this would provide an additional push towards more land-based aquaculture to secure environmental and economic sustainability.