Econ 381

December 10th, 2020

ECON 381 – Fall 2020

Submitted to: Dr. R. Martin

The Environmental Impacts of Atlantic Salmon Aquaculture in British Columbia and How Economic

Policy Can Be Used to Address These Impacts

Academic Integrity

Students must abide by [UVic academic regulations]

(https://www.uvic.ca/calendar/undergrad/index.php#/policy/Sk_0xsM_V?bc=true&bcCurrent=08%20-

%20Policy%20on%20Academic%20Integrity&bcGroup=Undergraduate%20Academic%20Regulations&bc

ItemType=policies) and observe standards of scholarly integrity (i.e. no plagiarism or cheating).

Therefore, this assignment must be taken individually and not with a friend, classmate, or group. You

are also prohibited from sharing any information about the assignment with others. I affirm that I will

not give or receive any aid on this assignment and that all work will be my own.

Introduction

In British Columbia, the gold rush of 1858 marked the beginning of an industrialization that

permanently altered the province. This year induced a shift from a fur-trade economy to an industrial,

resource-extraction based economy (Edmonds, 2010). Not only did this shift negatively affect the

indigenous peoples residing on the land since time immemorial, but it induced a period of widespread

environmental destruction that continues in the province to this day (Ignace & Ignace, 2017). In the

media, issues such as deforestation resulting from the logging industry and greenhouse gas emissions

from oil, gas and mineral extraction projects receive a lot of attention. However, an environmental issue

that is consistently ignored by both provincial authorities and the general public is the pollution and

environmental damage associated with aquaculture. More specifically, Atlantic salmon farming in British

Columbia produces various forms of pollution, including diseases, escaped fish and organic wastes that

are currently under inadequate regulation. In the following essay, I will explore the environmental

damage related to Atlantic salmon farms in British Columbia, explain how current regulations and

policies are ineffectively addressing this issue, and offer an opinion on how to improve regulation

through economic policy.

Environmental Problems with Atlantic Salmon Farms

Diseases

In British Columbia, development of the aquaculture industry in past decades has resulted in the

construction of many Atlantic salmon farms along the coast. Unfortunately, these fish farms have been

criticized for polluting coastal waters with diseases, such as piscine reovirus (PRV) and sea lice, which

can harm native species. Morton & Routledge (2016) claim that 30 million Atlantic salmon eggs have

been imported to British Columbia from various countries since 1985 in support of the aquaculture

industry. Diseases and pathogens are often carried into the province with these eggs, which is the

primary reason for disease emergence in wild fish species (Morton & Routledge, 2016). In addition to

introducing exotic pathogens, fish farms are also known to foster diseases and have even been referred

to as “pathogen culturing facilities” (Bakke & Harris, 1998, as cited in Morton & Routledge, 2016).

Moreover, these diseases are easily transmitted to wild salmon in British Columbia since the fish farms

are typically located on the province’s native salmon runs (Roscovich & Morton, 2013). Disease

transmission is particularly prevalent in open net sea pens due to the continuity of water between the

farms and the natural ecosystem (Morton & Routledge, 2016). Consequently, it has been observed that,

when infected, wild salmon cease scavenging practices and are preferentially preyed upon due to

weakness, and thus do not proliferate (Morton & Routledge, 2016). For example, Morton & Routledge

claim that sockeye infected with sea lice, a pathogen that transmits infectious salmon anemia (ISA),

were found to be 20% less successful at consuming food. This results in large numbers of deceased wild

salmon, as is evidenced by the collapse of the Fraser Sockeye (Morton & Routledge, 2016). In contrast,

natural methods to control epizootics fail in fish farm environments because there is a constant supply

of food and an absence of predators (Morton & Routledge, 2016). The survival of diseased farmed

salmon results in unhealthy fish being sold for purchase in grocery stores, which threatens human health

(Roscovich & Morton, 2013). Overall, the introduction of exotic diseases to British Columbia’s waters

has impacted both the wild salmon populations and human health.

Escapement

As previously mentioned, much of the aquaculture industry in British Columbia is composed of

Atlantic salmon farms. This species of salmon is not native to the province, and research suggests that it

may constitute an invasive species when introduced to the natural environment (Volpe et al., 2001). This

is because when farmed salmon escape from enclosures, they are immediately in competition with wild

salmon for food, habitat and other resources (Volpe et al., 2001). Ford & Myers (2008) suggest that

“farmed salmon escape in all areas where salmon aquaculture is practiced”, implying that no farm is

excluded from posing this environmental hazard. One of the threats of escapement that Ford & Myers

discuss is competition for mates with wild salmon, which can result in hybridization. Since native salmon

in British Columbia are already at risk due to other anthropogenic causes, interbreeding between wild

and farmed salmon could reduce survival for wild salmon (Ford & Myers, 2008). Naylor et al. (2005)

explain that not only does damage result from the interbreeding of farmed males and wild females, but

further harm is caused in the devastation of wild salmon nests by farmed females that spawn later in the

season. Additionally, escaped Atlantic salmon are capable of travelling long distances from their host

farm, resulting in devastation of ecosystems in a variety of locations (Volpe et al., 2001). Moreover, once

an escaped farmed salmon is found, it is nearly impossible to determine where that salmon came from

due to a lack of farm specific markers, making it difficult to regulate this problem (Volpe et al., 2001).

Although British Columbia requires farmers to report escaped salmon in a timely manner, this is an

ineffective policy due to weak incentives, as will be discussed later in this essay (Naylor et al., 2005). All

in all, better regulations are needed to ensure that escaped Atlantic salmon do not devastate

ecosystems by competing for resources and hybridizing with native species.

Organic Waste

In addition to cultivating infectious diseases and damaging native ecosystems due to escaped

fish, Atlantic salmon farms are the source of several other types of pollution. Firstly, Atlantic salmon

farms can produce high concentrations of fecal matter due to the large number of fish in an enclosed

area, which can create local toxicity of the water (Backman et al., 2009). This can result in the

suppression of natural vegetation on the underlying seafloor by reducing the amount of dissolved

oxygen through complex chemical processes (Brooks & Mahnken, 2003). Another complication of high

levels of fecal matter is the resulting nutrient enrichment of the seafloor (Backman et al., 2009). Feces

and uneaten feed in the fish farms can settle on the floor and induce eutrophication due to the high

nitrogen levels present in both of these organic wastes (Brooks & Mahnken, 2003). Consequently, this

can stimulate algae blooms, which can negatively impact many aquatic species by altering primary

production, however research on the effects of fish farm related algae blooms is inconclusive (Brooks &

Mahnken, 2003). Additionally, the accumulation and subsequent decomposition of organic wastes on

the seafloor can produce carbon dioxide, methane and hydrogen sulfide gas, further polluting the water

and disrupting biogeochemical cycles (Backman et al., 2009). All of these forms of pollution relating to

organic waste from fish farms combine to cause a reduction in species richness as pollution-tolerant

species dominate over sensitive species (Backman et al., 2009). The implications of this pollution are

further magnified for species at risk, including all five types of wild Pacific salmon in British Columbia. In

order to reduce the harm associated with organic wastes from fish farms, more effective regulations and

technologies are required.

Economic Solutions to These Externalities

In order to employ economic solutions on the aquaculture industry, it is crucial that the

pollutants and environmental risks resulting from fish farms – diseases, escaped salmon, and organic

waste – are treated accordingly. When recognized as externalities to the market, these pollutants can be

dealt with through policy, thereby incentivizing producers (fish farmers) to create less pollution either by

producing less or by innovating new technologies (Field & Field, 2020). Unfortunately, few attempts to

use economic policy to regulate this market have been effective in addressing its environmental risks. In

the following paragraphs, I will provide a description of three relevant solutions to the environmental

damage stemming from Atlantic salmon farms; performance standards, innovation incentives, and

pollution taxes. I will then discuss why the third option, pollution taxes, is necessary for environmental

improvement in this industry in British Columbia.

Performance Standards and Regulations

In economics, performance standards are used as a simple approach to modify behaviour by

making an action illegal (Field & Field, 2020). Often, this manifests as setting maximum emission levels

for pollutants that cannot be exceeded, as is the case for Atlantic salmon farms. In order to be fully

effective, performance standards need to have sufficient consequences to ensure producer compliance,

which need to be adequately enforced by the government (Field & Field, 2020). Currently, there are

several regulations on fish farming practices in British Columbia. The Department of Fisheries and

Oceans (DFO) has three main standards that Atlantic salmon farmers in the province must uphold:

conducting regular sea lice counts, conducting regular benthic (seafloor) monitoring, and reporting

escaped fish in a timely manner (Department of Fisheries and Oceans Canada (DFO), 2019). The sea lice

counts are intended to ensure that the amount of this parasite in fish farms does not exceed a certain

level. However, this is not the only disease cultivated in Atlantic salmon farms that pollutes coastal

waters and threatens native salmon. Other diseases are spread from these fish farms, such as piscine

reovirus (PRV) and salmon leukemia virus (SLV), that can be transmitted to wild salmon and need to be

addressed through regulation (Morton & Routledge, 2016). Next, benthic seafloor monitoring is used to

address the cumulative effect of Atlantic salmon farms on the natural environment (DFO, 2019). This

type of monitoring looks for indication of excessive fecal matter and uneaten feed on the seafloor and

ensures that it does not exceed a certain level of pollution (DFO, 2019). Lastly, reporting of escaped fish

addresses the issues associated with farmed Atlantic salmon upon entering the native ecosystem. If

escaped fish are not reported in a timely manner, a fine will be issued by the authorities (Naylor et al.,

2005). However, Naylor et al. (2005) suggest that these fines are not significant enough to induce

changes in practice. In other words, producers will continue to ineffectively report escapement because

the cost of changing behaviour is greater than the cost of the fine. Another critique of this policy is that

it is overseen by the DFO to ensure compliance of the producers (DFO, 2019). This elicits a conflict of

interest because the DFO is both the perpetrator and the regulator in this scenario; their mandate

implies that they are responsible for both promoting the aquaculture industry and conserving the wild

salmon (Nikiforuk, 2018). Overall, the performance standards in place to regulate the environmental

impacts of Atlantic salmon farming are ineffective at changing producer behaviour since they are not

adequately enforced.

Incentive to Innovate

Another approach to reducing the environmental impacts associated with Atlantic salmon farms

is providing incentive for fish farmers to innovate new technology (Field & Field, 2020). Better

technologies that are more efficient at lowering pollution levels could allow producers to maintain high

revenues while improving environmental quality (Field & Field, 2020). Currently, the main government

program to incentivize innovation is the Scientific Research and Experimental Development Tax

Incentive Program, which supplies tax credits to those who innovate new technologies for their industry

(Government of Canada, 2020). However, there are stringent restrictions on who is eligible for these tax

credits, and they are not specific to the aquaculture industry. Accordingly, a common critique of current

policy is that aquaculture falls in between the jurisdictions of other departments; there is no

government department or group that supports innovation for aquaculture specifically (Gardner Pinfold

Consultants Inc. (GPCI), 2019). For example, Agriculture Agri-food Canada justifies their lack of funding

for aquaculture because this industry does not fit with their mandate (GPCI, 2019). Moreover, fish farms

in Atlantic Canada have access to innovation support, such as the Atlantic Innovation Fund, that the

same industry in British Columbia cannot reach (GCPI, 2019). In order to be completely effective, the

aquaculture industry in British Columbia needs policies directed at incentivizing innovation for this

industry and geographic region explicitly (GPCI, 2019). Since performance standards known to create

weak incentives for innovation and are the only policy currently adopted in British Columbia for this

industry, there is an even greater need for innovation support aimed specifically at Atlantic salmon

farms in British Columbia (Field & Field, 2020).

Pollution Taxes

One technique that can be used to manage the Atlantic salmon industry in British Columbia is a

pollution tax. Pollution taxes require that firms pay in order to emit a pollutant into the environment,

thereby incentivizing producers to pollute less (Field & Field, 2020). Theoretically, this tax would be

levied on producers, forcing them to reduce emissions until their marginal abatement costs equal the

price of the tax (Field & Field, 2020). Subsequently, the revenues generated from this tax could be used

to provide a tax credit to the fish farmers that have adopted more environmentally conscious fishing

methods or are innovating new technologies. For example, Liu (2008) explains that enclosed fish farms

can reduce the spread of diseases and pollutants to the surrounding environment and are thus

preferable to open net cage farms. In this example, the producers choosing to use enclosed systems, or

innovating a new technology altogether, could receive a tax credit, which would encourage other

producers to do the same. A critique of this solution is the resulting pushback of the public due to tax

revenues subsidizing the same industry that is creating the problem (Liu, 2008). In other words, Atlantic

salmon prices rise as a result of the pollution tax, harming consumers, while the revenues are used to

support producers, the same individuals that created the pollution in the first place. Alternatively, tax

revenues could be used to support the people who struggle the most as a result of the tax, such as low-

income individuals who are marginalized and possibly excluded from the market. Another option would

be to use the tax revenues to clean up the pollution or revitalize the wild Pacific salmon populations that

are struggling as a result of the pollution. Overall, each of these options for redistributing tax revenues is

beneficial to the economy and creates added welfare where there wasn’t any before.

Moving Forward with Policy Reform

Benefits to Pollution Taxes

Regardless of how the revenues are utilized by the government, a pollution tax is a superior

option to other policy choices because pollution rates decrease while extra money is generated to be

used elsewhere in the economy. This is the double dividend of an emissions tax; social welfare increases

due to reduced emissions and tax relief can be provided somewhere else simultaneously (Field & Field,

2020). As a result, emissions taxes are a better option than performance standards or innovation

support because these policies do not generate extra welfare. In addition, pollution taxes require the

same level of involvement of the government as performance standards do, since the same monitoring

of pollution is required. Again, taxes are preferable to performance standards in this situation due to the

tax revenues created (Field & Field, 2020). Moreover, taxes provoke stronger incentives than

performance standards (Field & Field, 2020). This is because pollution taxes increase linearly with

emissions, so more emissions result in greater cost to the producer (Field & Field, 2020). In contrast,

performance standards tend to have the same cost regardless of how much the acceptable pollution

level is exceeded by, and if the consequence is not severe enough, as is the case with escaped salmon in

British Columbia, then the standards will continue to be ignored (GPCI, 2019; Field & Field, 2020). As

well, emissions taxes allow the producer to select the level of emissions that is most cost effective for

them based on their marginal abatement cost curve (Field & Field, 2020). Performance standards

subject all producers to the same maximum level of emissions, which is more damaging to some

producers than others. Clearly, pollution taxes have more advantageous qualities than the other policies

discussed.

Suggested Reforms

Considering all of these benefits to pollution taxes, I propose that British Columbia reevaluate

its current policies for regulating the environmental damage from Atlantic salmon farms. In order to

address the point source pollutants, including diseases and organic wastes, a pollution tax should be

levied on producers. The revenues from this tax should be used to create an innovation support

program specifically aimed at the Atlantic salmon aquaculture industry in British Columbia. This way,

salmon farmers will be encouraged to innovate new technologies and adopt more environmentally

conscious farming practices. As well, performance standards should continue to be used to address the

issue of escaped Atlantic salmon, since this is not a traditional pollutant. Requirements for farm-specific

tags should be implemented so that escaped salmon can be directly attributed a single salmon farm.

Lastly, the fines for escaped salmon, lack of reporting and lack of farm-specific tags should be increased

to ensure compliance. The DFO should continue to monitor for compliance, but with the help of

Conservation Officers to avoid the conflict of interest that arises from the DFO regulating an industry

that it is also meant to support. With these reforms, environmental quality should improve, and the

numbers wild Pacific salmon should increase.

Concluding Thoughts

Overall, Atlantic salmon aquaculture in British Columbia degrades environmental quality by

spreading infectious diseases to native species, emitting organic waste pollutants into the water, and

introducing escaped salmon into the ecosystem. These environmental damages threaten one of the

provinces most important species, Pacific salmon, which is already at risk due to other anthropogenic

causes. This species is integral to many marine and freshwater ecosystems and is a symbolic species to

indigenous communities across the province. Inadequate regulation of this industry has continued for

too long in British Columbia, providing weak incentives for producers to comply with current policies.

Reforming this industry through the use of pollution taxes, innovation support and bigger fines for non-

compliance is necessary to address this problem. With these reforms in place, the integrity of Pacific

salmon, environmental quality and human health in the province are assured to improve dramatically.

References

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