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Thursday, May 23, 2019

Aquaculture (Part 2)

Session Chair: Ola Flåten, UiT The Arctic University of Norway;

13:20 – 13:38  |  3549547

The economics of escaped salmon

Ruth Beatriz Mezzalira Pincinato1; Frank Asche2; Kristin Roll3;
1University of Stavanger, Stavanger, Norway; 2University of Florida, Gainesville, USA; 3University of South-Eastern Norway, Vestfold, Norway;

Salmon escapees are together with sea lice the most important environmental issue challenging the sustainability of Norwegian salmon farming. Escapees and other forms of mortality is costly to a farmer, and the farmer would prefer to avoid them. However, the cost of prevention tends to increase as the problem is reduced, and the farmer may find that it is too costly to reduce the problems to zero or negligible levels, thereby creating a negative externality. The most common reasons for escapes are related to the pens being teared during vessel toughing or bad weather, big mammals hitting the pen, small fish escaping through the net, lack of pen maintenance, and handling or transporting the fish. In recent years better management and technical regulations have contributed to decrease the number of escaped salmons despite the increase in total production. Applying the theory of bad outputs to model the economics of escapees, this paper investigates the economic effects of escapees in the Norwegian salmon production. A multi-product cost function with escaped salmon as the bad output and farmed salmon as the good output provides the opportunity to examine how escapes affect the costs directly, through shadow values, and indirectly, through multioutput characteristic of the escapes in terms of jointness and separability. Results indicate escapes neither affect the production cost directly or indirectly. Farmers do not have cost related incentives to reduce escaping. This suggests that regulations are the main tools for further improvement if society wants to reduce the externality below the levels that the farmers would do voluntarily.

13:38 – 13:56  |  3549590

Use and non-use of private oyster leases in the lower Chesapeake Bay

Jennifer Beckensteiner1; Andrew Scheld1; David Kaplan2;
1Virginia Institute of Marine Science, Virginia, USA; 2UMR MARBEC (U. Montpellier, CNRS, Ifremer, IRD), Sète, France;

Recently, oyster aquaculture has begun to rebound in Virginia (to ~2.5 million lbs. in 2016 compared to a maximum of 0.4 million lbs./year from 1995 to 2005), associated with an increase in subaqueous leased areas. Over 120,000 acres of grounds are leased currently and applications for another 25,000 acres are pending. However, production levels are far behind what they used to be. Though in theory, private leases must be used for oyster production, in practice, they can be held for other reasons, such as speculation or intentional exclusion of others. These factors have led to large variation over time and space in the use of leases in the lower Chesapeake Bay, and privately leased grounds are now thought to be underutilized for oyster production. This research quantifies temporal and spatial trends in the use and productivity of oyster ground leases in the lower Chesapeake Bay. A Stochastic Production Frontier model estimates the extent to which leased areas are not at full production levels as a function of socio-economic variables. Outputs are used to investigate how socio-economic factors affect oyster production, controlling for environmental conditions. Size and number of leases are compared between the main tributaries in the Chesapeake Bay, as well as production and productivity. Preliminary results suggest that only a small fraction of leased areas (18%) have reported oyster harvest in 2016 and about 30% over the last decade. In 2016, productivity was greatest in the Potomac river where leases are smaller, more abundant and actively used. Socio-economic factors are expected to explain the main differences in the use of leases between the rivers. Outputs from the model will indicate if ground leases may be driven by waterfront landowners who wish to impede development of aquaculture in their backyard. The predictive SPF model will be valuable to oyster managers and growers trying to understand and visualize Bay oyster production. The results will be beneficial for 1) oyster industry participants to determine potential increases in productivity for different areas, and 2) policymakers as they are currently trying to develop new requirements which seek to increase oyster cultivation on leased grounds.

13:56 – 14:14  |  3569986

A review of global oyster aquaculture consumption and production

Robert Botta1; Frank Asche1; Edward Camp1;
1University of Florida, Gainesville/Florida, United States;

Oysters represent one of the most important aquaculture markets, yet global trends in the oyster culture industry have not been well assessed. In this paper, we will investigate long-run trends in oyster production and consumption, focusing on the impact of aquaculture and trade on the global market. Global oyster aquaculture production temporal trends mirror aquaculture production for most other species, with significant production increases beginning in the 1970s. Asia, specifically China, accounts for approximately 86% of global oyster culture production. France, Japan, South Korea, and USA account for most of the remaining production in both weight (metric tons) and value (USD). When compared to the massive increase in Chinese production since the 1970s, production in other countries has remained relatively stable. However, the importance of aquaculture growth remains high for many countries, such as the USA, where there has been a significant decline in wild oyster reefs and associated wild landings.

Innovations in aquaculture and the ability to raise oysters with more marketable attributes have led to a larger focus on the half-shell market. American imports consist largely of fresh farmed Canadian oysters almost exclusively consumed on the half shell. French consumption consists almost entirely of domestic, cultured oysters on the half shell. With an increase in demand for oysters on the half shell, aquaculture allows for the opportunity to provide a premium product that can fill this niche.

14:14 – 14:32  |  3588011

Consumer perceptions of finfish aquaculture: Evidence from focus groups

Chris Anderson1;
1University of Washington, Seattle, WA, USA;

A Summer 2016 fish spill of 300,000 Atlantic salmon from a net pen in Puget Sound led to the loss of social license for finfish aquaculture, and subsequent legislation banning raising of non-native species in Washington State waters.This locally amplifies an environment of (often agenda-driven or outdated) negative information about farmed finfish, which influences consumers to choose non-fish farmed proteins, which typically have worse environmental and health impacts.In this context, we conduct a series of focus groups with Seattle-area seafood shoppers to identify how consumers make their meat, vegetable and seafood protein buying decisions, with a focus on perceptions of farmed finfish. In particular, we assess how perceptions of the environmental and health effects of farmed finfish are compared with capture fish, and farmed non-fish proteins. Our objective is to identify hypotheses to be tested through a subsequent marketing campaign, refined scientifically through a campaign of social action research.The campaign will present positive aspects of local farmed finfish operations to asses which messages are most effective at altering consumer perceptions, restoring a social license for domestic finfish farming, and expanding domestic farmed finfish markets.

14:32 – 14:50  |  3581377

Aquaculture over-optimism

Rashid Sumaila1; Andrea Pierruci1; Muhammed Oyinlola1;
1University of British Columbia, Vancouver, British Columbia, Canada;

The burst of aquaculture growth since the early 1980s has resulted in what we describe here as aquaculture over-optimism, i.e., the implicit belief that aquaculture alone can grow fast enough to meet the worlds need and demand for fish protein in the future. We explore and analyse various types of fish farming data to test if this over-optimism is backed by evidence from the data. In particular, we analyse time series data for both the total production and the rate of growth of (i) the top farmed fish species in the world; (ii) the top fed and non-fed farmed fish species, respectively; (iii) farmed fish in China and the rest of the world; and (iv) farmed fish in the six continents of the world. Preliminary results of our analysis suggest that aquaculture over-optimism is misplaced. Hence, even though aquaculture has room to grow, we need to beware of the risks to our fish protein supply of being over-optimistic. The conclusion we draw from our analysis is that we need to work real hard to sustainably manage our wild fish stocks as effectively as possible while we carefully deploy aquaculture to fill the gap between supply from capture fisheries and the demand for fish protein.

14:50 – 15:08  |  3582424

Resource rent in aquaculture

Ola Flaaten1; Thanh Thuy Pham Thi2;
1UiT the Arctic University of Norway, Tromso, Norway; 2UiT Arctic University of Norway, Tromso, Norway;

Resource rent in aquaculture (RRA) is any payment to a farm and site owner, on land or sea, in excess of the costs needed to bring that farm into production. For analytic and policy purposes it may be useful to distinguish among different types of RRA. Three types will be discussed: rent associated with the classical economists Ricardo (1821) and Faustmann (1849), as well as oligopoly rent from access regulation (licensing) and hampered output. The latter can arise in the case of downward sloping demand for a particular type of seafood from an aquaculture country. The similarities and differences among these types of rent are discussed and the distinctions between business economics indicators and RRA are clarified. The theory is applied to the case of Atlantic salmon in Norway and white leg shrimp in Vietnam. Based on cost and revenue data for 2016 from 84 firms from the Directorate of Fisheries in Norway; and for 2014 from 318 farms and for 2016 for 120 farms from two surveys in Vietnam, both business economics and RRA indicators are calculated, after revealing the cost structure of the farms. In theory, the RRA rate may be higher or lower than the profit rate, depending on the capital structure of the firms. The analysis demonstrates very high profit and rent rates in the Norwegian salmon industry, and lower but positive ones in Vietnam.

15:08 – 15:30


Group discussion will follow oral presentations.


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