More aquaculture? Yes, but…

If you thought Norwegian coastal municipalities do not want fish farming in their waters, then you had better think again. On commission from amongst others the Ministry of Fisheries and Coastal Affairs, Nofima has found out that this does not completely correspond with reality.

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However, it is fair to say that the attitude of the local authorities has undergone a change in recent years. To a higher degree than previously, the benevolence to the aquaculture industry is conditional, but the reluctance is aimed not at the aquaculture industry; it is the lack of wider economic benefits for the local area that is the problem.

The results of a survey carried out by Nofima scientists show that the local authorities will gladly make preparations for increased aquaculture of salmonids. As a result of some municipalities experiencing that the development of the aquaculture industry has not led to as many jobs and wider economic benefits for the local area as anticipated, and that the wider economic benefits are centralized in a smaller number of local communities, the municipalities have become more reserved in their support.

“They wish for a greater share of the industry’s value creation to go to the host municipalities. Or, to put it another way, they want compensation for preparing for aquaculture in their coastal zone,” says Nofima Scientist John R. Isaksen.

Nofima’s analysis shows that the local authorities are not opposed to growth in the aquaculture industry. On the contrary, the relationship between the local authorities and the aquaculture industry appears to be good and professionally attended to by both parties, and that the interests of the aquaculture industry are emphasized in the municipal planning processes.

New plans require new area

The aquaculture industry represents a very area-efficient form of food production, and the total physical area occupied constitutes only around 0.5 percent of the total marine area inside the sea boundary. However, many of today’s aquaculture localities are now unsuited to the way firms operate today. Many conditions point in the direction that the aquaculture industry of the future requires more or different area than is presently the case. New knowledge and requirements relating to environmental sustainability and efficient operation, together with the aim of increased production, point in the same direction.

Income from municipal property tax modest

Today, the local authorities have the possibility of charging a municipal property tax to marine fish farms, an option that had been implemented by 114 of 157 “aquaculture municipalities” by 2010. Nofima’s studies and calculations indicate that incomes from this tax are modest.

Parallel with the fact that the industry has grown in terms of both in volume and value, efficiency gains and ownership consolidation have led to concentration of the activity and profitability. Many municipalities are left with the feeling that they have not benefitted from the large increase in value creation that has occurred from this sector.

“Several municipalities are therefore speaking up for the fact that use of area in the coastal zone must be compensated in a way that favours and motivates the municipalities to prepare for aquaculture,” says Nofima Scientist Otto Andreassen.

A fee or tax remunerating the municipalities, particularly where local value creation is low or does not occur, can contribute to them acting more in accordance with the national ambition of better utilization of the area resource.

The local authorities’ primary income source is tax from the municipality’s residents, mainly income tax. However, tax on business profits goes to the State. The corporate tax paid to the State partially finds its way back to the municipalities through general grants and other transfers. But without a label that shows the aquaculture industry as the sender and contributor, the aquaculture industry may be given a lower priority in the battle for area in the coastal zone.

What is the local authorities’ opinion?

The scientists have interviewed mayors and municipal planners about their relationship with aquaculture in their municipalities. There are major differences between the local authorities’ attitude to increased preparation for aquaculture, but it is far from a clearly negative picture.

While some say no to more aquaculture, the majority have a desire to prepare for more aquaculture activity. The friction that comes to the surface in the media is moderated strongly by the mayors’ vision for the industry: Some are critical that the State sector (Norwegian Food Safety Authority, County Governor etc.) sets limits for increased aquaculture activity and wish for better mapping of the coastal zone and new area plans in order to prepare better. Others want the industry “on land” and are critical of the industry’s environmental impact. However, the majority emphasize dialogue and cooperation in order to prepare better, but in return they want more wider economic benefits for the local area, employment and – not least – an area tax.

When it comes to increased preparation for aquaculture, the local authorities are not unwilling. However, they want more in return for their efforts. The local authorities do not perceive that the social gains they are left with today are in proportion to the efforts they have made to gain the aquaculture activity.

Workforce drawn from outside

The professionalization and industrialization of the aquaculture industry has resulted in a greater demand from the industry for specialized suppliers from outside the local community. A changing labour requirement and labour market mean that those employed are not necessarily drawn from the local area.

Industry must take an active role

Collectively, the industry is on the verge of a third generation localization structure, which will involve renegotiation of the area resources. This will in turn require significant changes in the municipal coastal zone plans. There is a clear trend that previous pure “coastal zone plans” with emphasis on preparation for aquaculture are to a higher degree being included in a more overall municipal planning process. With increasingly more actors and interests asserting themselves in the planning process, the aquaculture industry’s relative voice in these processes may be weakened.

“It’s also worth noting that the majority of municipalities we have contacted report that the fish farmers are generally passive in the planning processes. Consequently, the setting aside of areas for aquaculture is reliant on the municipal planners and politicians advocating the aquaculture industry’s case,” says one of the scientists in the project, Roy Robertsen.

…and the municipalities must see the benefit

As the Ministry of Fisheries and Coastal Affairs argues itself, it is a legitimate goal for the authorities to attain a reasonable distribution of the “benefits” from fish farming. The municipalities believe that also includes them, and that a form of area tax would possibly attend to this objective better.

The advantage of an area tax is that it would constitute a specific tax – or possibly general for all types of activities that occupy area in the coastal zone. In such a light, it could function as a fee that compensates for the negative impacts of aquaculture, such as light and noise, environmental impact and displacement of other activities (fishing, traffic, outdoor recreation etc.).

“If Norway is going to become the world’s leading seafood nation, in our view it requires cooperation from the municipalities. Economists often prescribe monetary value as the best motivational factor. That’s also the case here,” says Isaksen.

“In light of this, a solution may be to levy a tax for access to the area and that the income from this goes to the municipalities. The area used for aquaculture represents a durable tax object as long as Norway’s advantage lies in the access to productive waters. However, this demands that we take care of and retain this advantage.”

An extensive Nofima report (no. 18/2012) describes in greater depth all the conditions round this issue. The report (in Norwegian language only) was written on commission for the Ministry of Fisheries and Coastal Affairs, but is also a result of a previous and coordinated effort with the project iCoast – a three-year project for the Research Council of Norway and the Norwegian Seafood Research Fund concerning the integrated coastal area management by the Norwegian College of Fishery Science / University of Tromsø.

The book from the iCoast project, in which several Nofima scientists are contributors, has just been released.

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