Aquaculture, Fisheries and the EnvironmentEnvironment

Frank Asche

NAAFE, 2011The Economics of Conflict and Co-existence in an

Increasingly Crowded Ocean"Increasingly Crowded Ocean

We like to think of fishing as traditional and romantictraditional and romantic,

..but there have always been conflictsconflicts…

even before the big guys showed up..even before the big guys showed up…

…and before one had to pay attention to these guysto these guys…

and these guys…and these guys…

and these..and these…

The world’s oceans cover 2/3 of the planetplanet…

.. and is an under utilized resourceunder-utilized resource

• But pressure is increasingp g1. Because an increasing and wealthier global

population requires more resources

2. Because more people and companies realize the opportunities in the ocean and innovate to exploit themthem• The power block, Offshore drilling, Aquaculture,

Tourism• Globalization

3. The competition creates use conflicts, and these are exacerbated by groups of people who think we are exacerbated by groups of people who think we should not utilize the oceans harder

More people More people care!care!

Is the growth in aquaculture production good?production good?

Different perspectives on ocean useDifferent perspectives on ocean use

• Conflict arises because there is no Conflict arises because there is no general agreement about how the ocean’s resources should be used and to whose benefit

• More specifically, these conflicts are manifested through competing user

l d ( )interests, including no (new) use – i.e. conservationism

Hilborn: Pauly:

Kjell Bjordal’s examples of different perspectives:

Hilborn: Pauly:

• The state of the world’s fish stocks is better than it has been for decades

The world’s fish stocks are overfishedWe started out by fishing out the large

• We do not know any fish species driven to extinction by human activity

y g gvaluable species an will end up fishing jellyfish

80% of the Barent’s Sea stocks have

• The situation in the Barent’s Sea is better than for generations: International

80% of the Barent s Sea stocks have collapsed or a severely overfished

In 2010 we drove 1000-2000 ocean generations: International success story in fisheries management

species to extinction

Trawling kills eco-systems and everything within them

->There is a tremendous potential for increased aquaculture production

eve y g w e

Aquaculture production should be significantly reduced

Different perspectives on ocean useDifferent perspectives on ocean use

• There will always be a mechanism that There will always be a mechanism that balances the different interests– Different outcomes are possible depending on

h i d i i i d mechanism design, incentives and governance structure

• The tragedy of the commonsSh l d• Shrimp aquaculture and mangroves

• Economists can analyze the outcomes • Economists can analyze the outcomes of different structures– National measures– International organizations

Small pelagicsSmall pelagics

• Are primarily reduced to p yfishmeal and oil, but are increasingly used for human consumptionp

• The majority of fishmeal and oil is now used in and oil is now used in aquafeeds

• Should their use be governed by management system, economics, or system, economics, or some ethical principles giving a different outcome?

Global production bysource for fishmealsource for fishmeal

Total Norwegian landings and share used for reduction to fishmeal/oilused for reduction to fishmeal/oil

Norwegian landings and prices by use for spring spawning herringfor spring spawning herring

12004

800

10003

3,5Landings

Price, meal

Pririce, Human

600

800

1 5

2

2,5

000 tonn

es

NO

K/

kg

200

400

0,5

1

1,5 1,0N

00

,

19891991199319951997199920012003200520072009

The fishmeal trap hypothesis (Wijkstrøm Naylor et al)(Wijkstrøm, Naylor et al)

• Growth in aquaculture production increase q pdemand for forage fish to produce feed 1. This makes aquaculture inherently unsustainable

and environmentally degradingand environmentally degrading• Requires that forage fisheries are poorly managed,

that forage fish has no substitutes, and that cost is not important for aquaculture productionp q p

2. This will eventually also put a limit on aquaculture production• Requires that aquaculture feed must contain marine q q

ingredients

Global aquaculture and fishmeal productionfishmeal production

Growth in global aquaculture production does not lead to increased use of marine ingredientsnot lead to increased use of marine ingredients

Inclusion levels of fish meal and oil in salmon feed

Inclusion levels of marine ingredients in

salmon feed

35,0

Inclusion levels of marine ingredients in Salmonid diets

25,0

30,0

n

15,0

20,0

Dietary In

clusion

Fishmeal % 

Fish OIl% 

5,0

10,0

% D

0,0

2000 2001 2002 2003 2004 2005 2006 2007 2008

The fishmeal trap is a good story, but does

not hold up against the not hold up against the datadata

Innovation is driving the food market and enables us to feed more humans:

Th l l i t dThe long run real price trends

60

50

Corn

30

40

er b

ushe

l

Wheat

Soybeans

20

USD p

e

-

10

1914

1918

1922

1926

1930

1934

1938

1942

1946

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

Real U S broiler pricesReal U.S. broiler prices

3 5

2 5

3

3,5

2

2,5

SD/lb

1

1,5U

0

0,5

947

950

953

956

959

962

965

968

971

974

977

980

983

986

989

992

995

998

001

004

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2

25

AquacultureAquaculture

• Aquaculture is the result of i R&D d systematic R&D and

innovation in water based food production systems

• Expansion of aquaculture production is profitable because of lower production pcost due to technical innovation– Productivity growth

• This is a necessary development if the world’s oceans and waterways are oceans and waterways are to be significant sources of food

Norwegian export price and production cost for salmon 1985-2010 (2010=1)

120 2500Price

80

100

120

g 1500

2000

2500

10

PriceCostProduction

40

60

80

NO

K/k

g

1000

1500

000 tonn

0

20

0

500

1985198719891991199319951997199920012003200520072009

Norwegian export price and production cost for salmon 1985-2010 (2010=1)

120 2500Price

80

100

120

g 1500

2000

2500

10

PriceCostProduction

40

60

80

NO

K/k

g

1000

1500

000 tonn

0

20

0

500

1985198719891991199319951997199920012003200520072009

Norwegian export price and production cost for salmon 1985-2010 (2010=1)

120 2500Price

80

100

120

g 1500

2000

2500

10

PriceCostProduction

40

60

80

NO

K/k

g

1000

1500

000 tonn

0

20

0

500

1985198719891991199319951997199920012003200520072009

Shrimp production and real US import price (2005 1)(2005=1)

18 3000

12141618

2000

2500

3000

s

PriceQuantity

8

1012

US

D/

kg

1500

2000

00

0 t

on

s

246U

500

1000 10

0

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

0

1 1 1 1 1 1 1 1 1 1 2 2 2

There will be environmental challenges, but these can be solved:Use of antibiotics in the Norwegian salmon farming industryindustry

45000

50000 700

35000

40000

45000

500

600

s

20000

25000

30000

Kilo

300

400

1000

tonn

es

5000

10000

15000

100

200AntibioticsSalmon production

0

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

0

Seafood is ecosystem friendlySeafood is ecosystem friendly

Species Carbon footprint (k CO2 /k dibl

Reference (kg CO2e/kg edible part at slaughter)

Beef, Sweden Pork, Sweden

30 5.9

Cederberg et al (2009) Cederberg et al (2009)

Chicken, Sweden Salmon, Norway Cod, Norway Haddock, Norway

2.7 2.9 2.9 3.3

Cederberg et al (2009) Winther et al (2009) Winther et al (2009) Winther etal (2009)

• But even improved resource use is not il d d iti

Haddock, NorwayMackerel, Norway Herring, Norway

3.30.5 0.5

Winther et al (2009)Winther et al (2009) Winther et al (2009)

necessarily regarded as positive:

• Canadian Atlantic salmon farms increase emissions “.. largely due to greater use of poultry products” (Pelletier et al 2009) and in the UK a marked improvement in al., 2009) and in the UK a marked improvement in environmental performance could be achieved through replacing “mixed whitefish trimmings meal/oils”

Although some question our whole food production systemfood production system

T i l Museum of zoology – mutants’ roomToxic salmonBird flu

Stinky pig Mad cow

Trade and aquaculture change the market:New species in the whitefish marketp

ca 2005ca 2000ca 1995ca 1990ca 1900 - 1985

Until 1985Cod,

haddock, ith t

1990:Alaska Pollock

2005:Pangasius

2000:New warmwater species as

1995:HakeHoki

saithe, etc.Catfish

species as tilapia and Nile Perch

US imports of frozen whitefish, 1990-20082008(tonnes product weight)

350

400450

s

PangasiusRedfishSoleCod

200

250300

0 t

onne Cod

TilapiaPollockOrange roughyHaddock

50

100150

100 Whiting

HakeCatfishFlounders

050

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Other

19 19 19 19 19 20 20 20 20 20

Competition from new species influence asset l d i i i ll ivalues and participation as well as prices

Bristol Bay sockeye (drift gillnet) from Valderrama and Andersony y ( g )

The values of attributes and i f i i i l i (R h i )information are increasingly important (Roheim)

The product is not only the physical seafood product…

b t l t f i l t d t…but also a set of services related to:

• Volume• Timing and frequency• Flexibility

C t ffi i i di t ib ti• Cost efficiency in distribution• Food safety• Harvesting technologyHarvesting technology• Ecolabel• etc.

b t l t f i l t d t…but also a set of services related to:

• Volume• Timing and frequency• Flexibility

C t ffi i i di t ib ti• Cost efficiency in distribution• Food safety• Harvesting technologyHarvesting technology• Ecolabel• etc.

• And each attribute creates a new potential line of • And each attribute creates a new potential line of conflict at the market place, in the supply chain and in the production or harvesting process

Governance (Smith et al 2010)Governance (Smith et al, 2010)• Not only the government, but also the industry

itself is responsible for good governanceitself is responsible for good governance

• The influence of other stakeholders on governance has increased over time– Competing economic interests, environmental concerns,

food safety concerns

• In a successful industry, governance cannot be too light not too heavy handedtoo light, not too heavy handed

• Governance should recognize structural changes in the industry

A d t t i ti d t i bl – And not prevent innovations and sustainable technological developments

It can take time to find a good governance system:fNorwegian landings of mackerel

1000

700

800

900

es

400

500

600

700

00

to

nn

e

100

200

300

400

1,0

0

0

100

1940

1944

1948

1952

1956

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2

It can take time to find a good governance system: Shrimp production, Thailand

600

400

500

nes

300

400

00

0 t

on

n

100

200

1,0

0

Source: FAO

One may never get there because governance is lax:Shrimp production, Taiwan

100

708090

nes

405060

00

0 t

on

n

1020301

,0

0

Or because governance prevents innovation and new technologies:

Salmon production, USA

25

20

nes

10

15

00

0 t

on

n

5

1,0

0

ConclusionsConclusions

• Conflicts in relation to the use of oceans are lik l t ti d i b th likely to continue and increase, because there are so many visions with respect to sustainable use– The importance of the oceans is likely to increase

as pressure on marginal lands continue to increase– No governance is likely to lead to the worst

outcome, e.g. open access

• A fundamental question is whether innovation and human ingenuity are to be allowed to play and human ingenuity are to be allowed to play their part

• Better and sustainable outcomes require analyses and trade-offs

ConclusionsConclusions

• Analyzing trade-offs is what economists do best

• There is a huge role for geconomic research in analyzing the effects of different governance systems - including no governance - and how these are linked to different supply chains and market systemschains and market systems– Markets always play a role,

but which?And other disciplines provide – And other disciplines provide valuable insights

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