IMPORTANCE OF NITROGEN FOR AQUACULTURE GROWTH IN DENMARK DANISH NITROGEN POLICIES IMPLICATIONS FOR THE AQUACULTURE SECTOR.

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1 IMPORTANCE OF NITROGEN FOR AQUACULTURE GROWTH IN DENMARK DANISH NITROGEN POLICIES IMPLICATIONS FOR THE AQUACULTURE SECTOR Rasmus Nielsen Department of Food and Resource Economics Slide 1

2 Outline Danish aquaculture sector and nitrogen emission Means to achieve growth Regulation and policy Growth in the aquaculture sector without increasing emissions? Slide 2

3 Fresh water fish farms Slide 3

4 Sea cage farms Slide 4

5 Danish water environment protection plans Danish plans for reduction of nitrogen (N) and phosphorus (P) 1987 Vandmiljøplan I - N reduction 50 % and P 80 % 1998 Vandmiljøplan II as in Vandmiljøplan III - N reduction 15 % and P reduction 50 % 2009 Green Growth Reduction of tons N EU The Nitrogen Directive 2000 Water Framework Directive (WFD) Danish aquaculture Individual farm feed quotas (baseline ) tons N for sea cage farming ( tons) New regulation for land based farms on output of N and P Slide 5

6 Background Nitrogen is considered The most important environmental pollutant Affecting the estuarine and coastal environment Eutrophication leading to algae blooms, oxygen depletion, hypoxia Reduction is still needed to reach Danish goals and the goals of WFD Slide 6

7 Nitrogen emission from Danish aquaculture Sea cage farming emissions relative constant around 300 to 350 tons Land based farm emission has been declining from 2200 to 650 tons No overall emission quota for the aquaculture sector! Source: Punktkilder 2012, Naturstyrelsen (Miljøstyrelsen). Slide 7

8 Feed and production in Danish freshwater aquaculture Feed strategy aim at optimizing growth until 1991 New strategy aiming at minimizing feed use/cost production (ton) Feed (ton) Source: Punktkilder 2012, Naturstyrelsen (Miljøstyrelsen). Slide 8

9 Feed and production in Danish aquaculture Improvement of feed quality More efficient use of feed change feeding regime New model farms More effective water cleaning measures Result Reduction of 71 % (N), 78 % (P) and 74 % organic material HOWEVER, the production also decreased 24 % from Slide 9

10 The way forward Is growth possible without more nitrogen? Feeding Breeding Technology Economies of scale Spatial planning and offshore production Integrated Multi Trophic Aquaculture Regulation and bureaucracy Slide 10

11 Feeding Input of feed is closely related to the production output and emissions The more intensive production, the higher relative share of feed cost Substitution between capital and feed, labour and feed seems to be exhausted in Norwegian salmon farming (Atle Guttormsen 2002) Relative share of feed cost is above 50% in Norwegian salmon farming Relative share of feed cost is between % in Danish aquaculture There might be scope for improvement in Danish sea cage farming However, portion size trout farming is different from salmon Slide 11

12 Breeding The Norwegian salmon industry has managed to reduce production time with years over the last 4 decades There are breeding programs for rainbow trout (Norway, France) The programs in EU are not well coordinated In Denmark? Slide 12

13 Ton Department of Food and Resource Economics Technology - Danish aquaculture production Development of production in different farming systems Total Traditional farm Model 1 Model 3 Sea cage Slide 13

14 Danish aquaculture 1899 EAS San Sebastian 17. October 2014 Dias 14

15 Danish aquaculture 1999 EAS San Sebastian 17. October 2014 Dias 15

16 Recirculation farms EAS San Sebastian 17. October 2014 Dias 16

17 Closed recirculation systems EAS San Sebastian 17. October 2014 Dias 17

18 Economies of scale spatial planning Economies of scale matters! New Danish farms are between tons, old around 100 tons Norwegian sea cage farms are on average producing 6,400 ton This also requires new production sites where the carrying capacity is higher in terms of emission of nitrogen, phosphorus and organic materials Spatial planning is needed to point towards suited areas for production Work have been initiated to establish suited sites for sea cage farming However, there are several issues concerning the Water Framework Directive, and conflicts with other users Slide 18

19 Integrated Multi Trophic Aquaculture Demand of removing nitrogen and phosphorus (1:1) Production of mussels and seaweed Problems of integrating 3 types of productions Market for mussels and seaweed? Distance between emission and the compensation sites Slide 19

20 Regulatory change In 2011, a new regulation was implemented based on emission quotas However, the emission quotas are NOT tradable Detailed regulatory measures are still enforced Requirement of BAT is not feasible for small scale farmers Bureaucracy is staggering 14 of 234 farms have been approved under the new regulation Introduction of new technology - when prospect of growth is lacking? Slide 20

21 Regulation and Policy Today nitrogen emission is regulated individually for each sector Most regulation is based on command and control (input control) Studies of the aquaculture sector has shown that huge gains can be achieved introducing incentive based regulatory measures like ITQ s This requires that emission can be measured and monitored Transaction cost, enforcement and control should be low Emission from Agriculture cover 75%, only 2% from Aquaculture Slide 21

22 itrogen Retentions 2008 New map Slide 22

23 Results Sectorial production response, pct. Sectorial changes in the four scenarios ITQ ITQ and productivity ITQ and productivity, reduced quota Reduced quota only in Agriculture Crop Livestock Aquaculture Food industry Fish processing Industry Slide 23

24 Results The Macro Economy and Nitrogen loss, pct. GDP and GNE GDP GNE Nitrogen loss N-loss 0, , , , ,02 ITQ ITQ and productivity ITQ reduced quota and productivity Agricultural reduction -20 Slide 24

25 Conclusion Growth can be achieved without increasing emission Considerable gains of introducing an ITQ system in aquaculture/agriculture HOWEVER, this will not be realised with the uncertainty that exist today Especially concerning bureaucracy and regulation No fixed emission quota for aquaculture Coordination between relevant authorities Availability of NEW licenses Slide 25

26 More information on Slide 26

27 Product development Rainbow trout Main products are fresh or smoked

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