Implementation of climate mitigation policies in the aquaculture sector in Trøndelag (Norway)

This study focuses on balancing economic development and environmental sustainability in the context of the aquaculture industry in the Norwegian county of Trøndelag.
Striking a balance between these two aspects is of essence: fish farming represents an important source of income for company owners and for the host municipalities; indeed, salmon farming constitutes an average of 60-70% of the export income of the region. However, aquaculture does not come free of risks: it poses a threat to traditional fishing communities and to tourism, as the wild fish stock, particularly wild salmon, is exposed to risks of contamination from the fish farms.

To tackle these challenges, the Traffic Light policy has been instituted, a system employing color-coded zones (green, yellow, red) to regulate the industry based on environmental conditions and their impact, and prescribe specific behaviours such as the expansion, reduction, or maintenance of fish farming activities.
The issue raises the interest of a number of primary stakeholders, such as local aquaculture businesses, traditional fishing communities, the tourism sector, and local governmental bodies, but a far more sizable group of secondary stakeholders is affected; as previously mentioned, salmon farming constitutes an average of 60-70% of the export income of the region, hence the multiplier effects of the sector are high. Fish farms also drive one of the largest capital accumulations in the region, and a substantial industry of suppliers (particularly in the maritime sector) relies on contracts from fish-farming companies.
Balancing the scales between environmental preservation and economic prosperity requires careful consideration of potential risks. Key among these are the displacement of traditional fishing communities and the potential escalation of production costs. Moreover, the transition to greener policies requires a nuanced understanding of the social implications, potential conflicts between industry and society, and the cascading effects that might stifle growth in certain sectors.

To comprehensively evaluate the economic and environmental implications of policy changes in aquaculture, quantitative modeling tools like REMES-Norway and LC-IMPACT are deployed. These models allow us to analyze diverse scenarios, considering the impacts of climate policies on various socio-economic and environmental indicators.
So far, the economic analysis is still ongoing; we have managed to gather preliminary results from a pilot test in the agricultural sector first. Initial results assume varied levels of productivity restoration in the sector and, as a consequence, indicate potential economic development and job creation in several industries due to ripple effects. These begin with a decrease in production costs in the agriculture sector linked to improved productivity; as such, a general increase in demand follows, which in turn leads to an increase in the demand for capital and labor whose wage rate and required return increase, ultimately leading to higher economic growth, but with a consequent price of materials.

Some sectors that are mainly linked to demand for investments, with a large share of the costs allocated in materials and with important internal spiral effects (much of the input used in the sector is produced by other firms in the same field), such as the building sector, see its demand decreasing. These production areas diminish in value, while the rest of the economy benefits from the increase in productivity of the agricultural sector.
While the economic analysis is still in progress, preliminary results from a pilot test in the agricultural sector suggest promising outcomes; the restoration of productivity in agriculture has a domino effect, reducing production costs, increasing demand, and ultimately boosting the economy. However, it is important to note that the direct effects and the subsequent domino effects resulting from the application of the TLS in the aquaculture sector are anticipated to be less significant than those identified in the pilot case involving the agricultural sector, due to its smaller scale. Nevertheless, our monitoring and adaptation of policies based on evolving environmental and economic conditions will continue, and we are eager to provide updates as our study unfolds.