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112 focus on the different areas has shifted over the years, where social sustainability was most important in the beginning through creation of jobs and activity in the districts. The
Aquaculture Act of 2005 emphasized a stronger focus on environmental sustainability.
Economic sustainability has always been important, as an industry cannot be sustained without being profitable. However, the focus on economic sustainability has increased from 1981 to today, most notably through less stringent ownership restrictions.
8.2.1 Social sustainability
Social sustainability concerns a range of different topics from human rights to social equity.
In general, social sustainability can be to meet the needs of current citizens and provide the next generation with the ability to maintain a health community. One of the important elements is then to work for equal opportunities among the citizens. One way of achieving this is to distribute the wealth from natural resources so the society can benefit from these.
Thus, the value created should be distributed in a fair way between owners, workers and the society. If the government, municipalities and counties facilitate for and allow aquaculture production in coastal areas, then some of the value created should benefit society.
The distribution of the value created is done through taxes that concern all business, special fees, employment and the revenue from sale of licenses and production increases. The valuation of the license was part of assessing what the value of a license theoretically can be given future expectations for the industry. The price of the license is the resource rent that society collects, and it was estimated to be 93.703.366 NOK. Thus, the resource rent is the economic value of allowing the salmon aquaculture industry to use the coastal areas to produce salmon and trout. The licenses have been granted to a low fixed price in all grant rounds since 2002 except for some licenses in 2014 that were granted in a closed bidding auction. The prices that have been observed in the secondary market have been substantially higher than the fixed prices. Thus, society has missed out on potentially high rents that could have been used to benefit the industry, society in general and specifically the districts.
Part of the social sustainability is naturally upheld by the industry because its production facilities are located in coastal areas in the districts. Therefore, a large fraction of the
industries employees is located in the districts as figure 15 in section 3.9 showed. The license
113 rounds in 2002 and 2009 both contained requirements that were intended to support
employment and value creation in the coastal areas. However, a high amount of these licenses were traded in the second-hand market afterwards which in part decreased the intended effect of the licenses.
8.2.2 Environmental sustainability
Environmental sustainability is essentially the concept that decides whether or not the
government will allow further growth in the future. Environmental sustainability has become increasingly important in salmon aquaculture and in all other businesses in general. The focus has only increased since 2005 and the two main problems for the industry are sea lice and escape of salmon.
Norway has one of the strictest environmental policies of the large salmon producing
countries and is also the country that is leading in administration and management of salmon aquaculture. Chile is often a country that is often compared to Norway as Chile is the world’s second largest salmon producer. The Chilean government has had more liberal environmental regulations than Norway since the beginning and Chile have had large problems with disease outbreaks and other biological problems that have significantly decreased production and the competitiveness of the domestic industry in Chile. Compared to Chile, the Norwegian
industry has avoided large-scale production decrease and has increased its production in the same period. It is reasonable to believe that some of the reason is the relatively stricter regulatory regime in Norway. However, it is not possible to conclude that the environmental regulations have provided increased competitiveness in Norway.
The industry and the government all agree that innovations through technology and better operational solutions is the only way in which the industry can increase production capacity and at the same time keep the environmental impact at an acceptable level. The level of public financing in R&D has been over 50 % since 2001. A part of the reason is that there are market failures in R&D where spillovers prevent a single firm from capturing the whole return from its investment in R&D. Public investments in R&D have therefore been essential for the innovations that have provided the basis for the high historic growth in the industry. Another reason for high public investment in R&D was that most firms lacked the resources to invest
114 in R&D themselves due to their small sizes. The R&D policy in salmon aquaculture was quite successful up until the beginning of the century. However, if success is measured in
innovations that solve the industry’s problems, then the R&D policy have not been successful from the mid-2000s until today.
The environmental regulations analyzed in relation to the Porter hypothesis revealed that the regulations to some extent were effective in decreasing the environmental impact through less waste of resources. The government succeeded in decreasing the amount of escaped salmon after the implementation of the NYTEK regulation, in close collaboration with the industry.
The effect of the green licenses in terms of green production and new technology cannot yet be determined due to the long production process in salmon aquaculture. However, the licenses do provide an incentive to producers to commercialize new technological and operational solutions to keep the amount of sea lice and escaped salmon at a new minimum.
8.2.3 Economic sustainability
The economics of an industry is first and foremost the reason why the industry exists and why the government have an interest in providing the best possible framework and let it use the natural resources compared to other possible uses. The industry analysis showed that salmon aquaculture has experienced growth that has greatly outmatched that of the general industry.
The profitability in the industry is very volatile where the profit has a high correlation with the sales price of salmon. Firms in salmon aquaculture are price takers in an international market which means that the government must carefully assess the impact different policies have on economic sustainability versus the purpose of the policy.
The most important concept to provide stable economic conditions for the industry is to have a predictable framework, both in terms of political goals and the instruments used to fulfill them. Predictable policymaking decreases the general risk of investments and shifts resources to more productive activities like investments in R&D. The political goals in the industry have to a large extent been predictable in that they always have had a focus on sustainable development since the first permanent breeding law. However, the specific policies set in place have not been predictable which have resulted in uncertainty and consequently higher general risk in the industry. Uncertainty arises from how and when policies and regulations
115 are implemented to specific formulations in regulations that are either vague or poorly
defined.
The economic sustainability of the industry must also be linked to the innovations and technological changes that have ensured that the economics in the industry are strong. These innovations are in part a result of public financing and policies to strengthen the R&D
investments in the industry. The public investments in R&D have therefore been essential for the innovations that have provided the basis for the economic sustainability in the industry.
Policies concerning R&D are also one of the most important to make future growth
environmentally sustainable and to secure social sustainability through continued growth that secures jobs along the coast.