Feasibility of land-based aquaculture in New Zealand of a final output map showing degree of site...

REPORT NO. 2094

FEASIBILITY OF LAND-BASED AQUACULTURE IN NEW ZEALAND

CAWTHRON INSTITUTE | REPORT NO. 2094 APRIL 2012

FEASIBILITY OF LAND-BASED AQUACULTURE IN NEW ZEALAND

HELEN MUSSELY, ERIC GOODWIN

CAWTHRON INSTITUTE 98 Halifax Street East, Nelson 7010 | Private Bag 2, Nelson 7042 | New Zealand Ph. +64 3 548 2319 | Fax. +64 3 546 9464 www.cawthron.org.nz

REVIEWED BY: Jim Sinner

APPROVED FOR RELEASE BY: Mike Mandeno

ISSUE DATE: 13 April 2012

RECOMMENDED CITATION: Mussely H, Goodwin E 2012. Feasibility of land-based aquaculture in New Zealand. Cawthron Report No. 2094. 20p.

© COPYRIGHT: Apart from any fair dealing for the purpose of study, research, criticism, or review, as permitted under the Copyright Act, this publication must not be reproduced in whole or in part without the written permission of the Copyright Holder, who, unless other authorship is cited in the text or acknowledgements, is the commissioner of the report.


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EXECUTIVE SUMMARY

With increasing global demand for seafood and the limited capacity for wild capture fisheries to meet this demand, it is likely that aquaculture will continue its current growth phase (FAO 2010). In New Zealand, land-based aquaculture offers an opportunity to grow and diversify the aquaculture industry to meet its goal of $1 billion in sales by 2025 (NZAS 2006). Cawthron Institute (Cawthron) has internally-funded a project to develop expertise in land-based aquaculture. This report presents a portion of the knowledge gained during this broad-scope project and discusses site selection, species selection, economic modelling and environmental impact assessment. Site selection is a critical step in establishing a land-based aquaculture venture. Cawthron has developed a tool that automates the process of searching for an appropriate site for land-based aquaculture. The Land Based Aquaculture Site Selection tool (LBASS) uses geographical information systems (GIS) to find sites that have certain user-defined attributes, such as distance from seawater or slope. LBASS can produce a short-list of potential sites that will then require follow-up assessment. Some investors will have a species in mind when investigating the prospect of land-based aquaculture. Other investors have a site that they want to use and will need to choose a species to suit. In either case the potential for growing a species must be carefully assessed in terms of biological, technological and market feasibility. Key requirements of a species will not only dictate whether that species can be cultured but will also directly affect economic feasibility and level of research and development spending required. Economic modelling is an essential step in assessing the financial feasibility of a proposed land-based aquaculture venture. Bioeconomic models incorporate both biological and financial inputs to generate a measure of financial viability. This is often presented in the form of Net Present Value (NPV) or Internal Rate of Return (IRR). Sensitivity analysis can also indicate which inputs have the greatest effect on the financial outcome. Economic modelling allows the integration of all available biological and financial information and thus supports a more objective decision about whether a proposed venture is likely to succeed. Environmental concerns feature highly in any popular or scientific media concerning aquaculture. Any form of aquaculture must justify its use of resources and, in New Zealand, environmental regulations are strict. The environmental impacts of land-based aquaculture will vary widely depending on the type of facility and the species being cultured. While potential impacts will need to be assessed on a case by case basis, this report presents two methods of environmental impact assessment: life cycle assessment and use of indicators.


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TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................................III

1. INTRODUCTION ........................................................................................................... 1

2. THE OPPORTUNITY ..................................................................................................... 2

3. SITE SELECTION .......................................................................................................... 4

4. SPECIES SELECTION .................................................................................................. 7

5. ECONOMIC MODELLING ............................................................................................. 9

6. ENVIRONMENTAL IMPACT ASSESSMENT ................................................................14 6.1. Use of Indicators ........................................................................................................................................... 14 6.2. Life Cycle Assessment (LCA) ....................................................................................................................... 17 6.2.1. Environmental impact of carnivorous finfish production .......................................................................... 17 6.2.2. Life cycle assessment of salmonid culture systems ................................................................................ 18 6.3. Environmental impacts of land-based aquaculture ....................................................................................... 18

7. REFERENCES .............................................................................................................20 LIST OF FIGURES

Figure 1. Specifying scoring bands and weighting factor for distance from coast. ............................ 5 Figure 2. Combined suitability scores (left) minus excluded areas (centre), yields sites ranked

by suitability (right). ............................................................................................................. 6 Figure 3. Example of a final output map showing degree of site suitability for freshwater

aquaculture over the top of the South Island. ..................................................................... 6 Figure 4. An @Risk triangular probability distribution for grow-out time .......................................... 10 Figure 5. Cumulative frequency distribution for 20 year NPV generated from 10,000 iterations of

the geoduck bioeconomic model. ..................................................................................... 12 Figure 6. Tornado graph showing the sensitivity analysis results for the 20 year NPV for

geoduck farming................................................................................................................ 12 Figure 7. The ten key environmental performance indicators as developed by the Seafood

Ecology Research Group at the University of Victoria, Canada. Reproduced with permission of John Volpe from the GAPI website http://web.uvic.ca/~serg/initiatives/flapi.html ..................................................................... 15

Figure 8. GAPI Environmental Performance Indicators. Reproduced with the permission of John Volpe (Volpe et al. 2010). ................................................................................................. 16

LIST OF TABLES

Table 1. SWOT analysis for the potential of land-based aquaculture in New Zealand .................... 3 Table 2. Information required for a potential aquaculture species in terms of technological,

biological and market feasibility. ......................................................................................... 7 Table 3. Freshwater and marine species that are candidates for land-based aquaculture in New

Zealand. .............................................................................................................................. 8 Table 4. Input distributions given for key variables in the geoduck bioeconomic model ................ 11


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1. INTRODUCTION

Demand for seafood is growing globally and aquaculture production is increasingly being used to meet this demand. Almost half the world’s seafood consumption now comes from aquaculture rather than wild capture and this trend looks set to continue (FAO 2010). Aquaculture comes in a myriad of forms, from subsistence farming to large-scale intensive systems utilising the newest technology. Accordingly, aquaculture ventures range across a variety of scales including, amongst many others, size, complexity, degree of financial gain and level of environmental impact. Land-based aquaculture (LBA) is the term used for any type of aquaculture that takes place on land, be it for freshwater or marine species. A land-based facility takes water from a source (for example the ocean or a river) through a filtration process and into a containment area (usually tanks or ponds). The water can either be passed through once (flow-through) or it can be recycled through a series of treatment steps and used again (recirculation). Although land-based aquaculture in New Zealand is fairly limited at this time, globally, it is a significant producer of finfish, shellfish and seaweed species. New Zealand is currently producing salmon, paua, koura (freshwater crayfish), silver and white amur and freshwater prawns on land at a small scale. At research-scale, redfin perch, sea cucumbers, geoduck, native freshwater finfish species, kingfish, hapuku, butterfish and species of seaweed are also being cultured.

This report presents a summary of work carried out by Cawthron Institute to look at the feasibility of land-based aquaculture in New Zealand, funded by Cawthron’s ‘Internal Investment Fund’. The scope of the project was broad and the information presented here represents only a portion of the knowledge gained. This report looks first at the general opportunity presented by land-based aquaculture in New Zealand. It then presents some information on Cawthron’s development of LBASS (land-based aquaculture site selection tool), a geographical information system (GIS) tool for site selection (Section 3). Section 4 briefly considers some of the issues surrounding the selection of species for LBA. Section 5 describes the use of bioeconomic modelling as a tool for carrying out desktop assessments of the financial viability of proposed aquaculture ventures. Finally Section 6 presents two approaches for assessing environmental impacts of land-based aquaculture.

APRIL 2012 REPORT NO. 2094 | CAWTHRON INSTITUTE

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2. THE OPPORTUNITY

The New Zealand aquaculture sector aims to exceed sales of $1 billion by 2025 (NZAS 2006). The Aquaculture New Zealand Research Strategy (Aquaculture New Zealand 2009) identified diversification and efficiency to be the major drivers of growth in the industry. Diversification encompasses the farming of new species as well as the utilisation of new farming technologies and spaces. Efficiency can apply to any part of the value chain and can include optimisation of production through new technologies and automation. Diversification and improved efficiency are both achievable through growing New Zealand’s land-based aquaculture sector. Historically New Zealand has been a difficult place to attain new coastal space for marine farming. While recent legislative changes may improve access to new space, an opportunity also exists in New Zealand to take advantage of land-based aquaculture technologies. This could aid our ability to diversify into new species and provide a new platform for sustainable growth of aquaculture. Difficulties in obtaining new water space is one reason for considering LBA but others include: the greater control that LBA offers in regard to growing conditions, feeding, and biosecurity; the opportunity to utilise geothermal and waste heat sources to enable faster crop growth or to produce a species that will not grow in ambient water conditions; and the environmental sustainability that can be achieved with LBA, mainly due to the feasibility of waste collection and land-based waste treatment. LBA also provides the flexibility to locate production close to key infrastructure, processing and market or to a source of labour. As a country strongly reliant on agriculture, New Zealand may also benefit from diversification of its land-based industries. In some cases agricultural land may be suited to a land-based aquaculture facility and this could be incorporated into existing infrastructure. The waste heat that is often associated with farming systems could be utilised and provide cost savings for the aquaculture production component. Table 1 identifies some internal factors (strengths and weaknesses) and external factors (opportunities and threats) that comprise a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis for LBA in New Zealand. The weaknesses of land-based aquaculture in New Zealand include the high cost of power and land, a limited list of potential species, and the lack of local fish-feed manufacturing. Any potential land-based aquaculture venture must be assessed on its individual merits. There will be increasing global demand for aquaculture product and land-based production in New Zealand could meet some of that demand. However, individual circumstances of any new venture will determine its viability – financial, technical and environmental.


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Table 1. SWOT analysis for the potential of land-based aquaculture in New Zealand

STRENGTHS WEAKNESSES

- Better control of discharges possible than with other forms of aquaculture

- Ability to control growing conditions

- Good Food Conversion Ratios (FCRs) as consumption is monitored and feeding varied accordingly

- High quality science and research support

- Able to position facilities close to market and/or point of export

- High production per hectare

- No spatial competition with ocean users

- Educated workforce

- History of successful farming/ animal husbandry

- High cost of labour

- High cost of power compared to other countries

- Distance to major markets

- No fish feed plant in NZ and limited local feed ingredients available

- High cost of land, especially coastal

- Few suitable species available in NZ (especially native)

- Strict intake and discharge regulations

- No commercial hatcheries

- Lack of infrastructure

- Small domestic market

- Land-based aquaculture equipment not produced in NZ

OPPORTUNITIES THREATS - To make better use of renewable

energy resources such as geothermal energy

- To gain from the negative public perception of seacage farming

- To benefit from increasing global fish consumption / decreasing wild fish stocks

- To establish aquaponics as a known production system in New Zealand

- To gain from the increasing market for eco-label products

- To make better use of freshwater availability

- To utilise the good quality seawater that is available

- Low cost competition from other countries

- Overproduction depresses price

- Biosecurity problems and constraints

- Public backlash against perceived ‘battery fish’

- Intake and effluent regulations become too difficult to meet

- Substitute product becomes available

- Fishmeal-based feeds become too costly and substitute feeds are not suitable

- Short tenure to land or water so threat to future rights to operate

- ‘Food miles’ issue makes NZ seafood unpopular

- Freshwater may be limited to the ‘leftovers’ after other users


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3. SITE SELECTION

There are many factors to be considered in locating a land-based facility. The importance of individual attributes will be project-specific depending on: • Scale of operation: from small backyard aquaponics to large recirculation facilities • Water source: freshwater or saltwater • Environmental requirements of the target species, e.g. temperature, salinity, etc. • Required volume of water per day As well as being slow and laborious, manual search for a suitable site is prone to bias because a person must, by necessity, only focus on a small subset of potential sites and might weight evaluation criteria differently from site to site. In contrast, formalising and automating the search makes it objective, exhaustive, repeatable and precise. To achieve this, Cawthron has developed LBASS (Land Based Aquaculture Site Selection), a geographical information system (GIS) tool to find New Zealand’s best sites for land-based aquaculture. Rather than evaluating a limited shortlist of identified sites, users of LBASS can search across an entire region, for previously unidentified sites that meet criteria derived from the specific needs of an LBA proposal. Some factors are ‘yes/no’ constraints, for example, existing land use may exclude a site from consideration for land-based aquaculture development, in that development will generally not be permitted in areas such as wetlands, national parks, natural heritage areas and culturally sensitive areas. Other factors affect feasibility more on a sliding scale. Most of these will influence the set-up capital costs, the on-going operating costs, or the logistical feasibility of operating at a site. For a site reliant on access to seawater, these factors include: • Distance from seawater (pumping costs) • Elevation above sea level (pumping costs) • Slope of the site (site preparation costs) • Distance to a town (availability of facilities, staff and services) • Distance to nearest road and nearest power supply (site development costs) • Distance to market (transport costs and logistics of supply) • Distance to other sites of the business (transport costs and logistics) LBASS allows the user to configure these and many other attributes to customise the search for the specific development in mind. For each attribute, the user defines several bands of attribute value and assigns each a relative suitability score. For instance, land within 500m of the coast may be assigned a score of 3; land between


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500m and 1000m may score 2, land between 1000m and 2000m may score 1, while land beyond 2000m from the coast may score 0 (as shown in Figure 1).

Figure 1. Specifying scoring bands and weighting factor for distance from coast.

Attributes can be dropped out of the evaluation entirely, or made relatively more or less important in the evaluation. For example, distance to seawater might be worth twice as much as distance to the nearest road. These relative weights can be based on economic reasoning as they reflect real costs to an operation. For any search, the area of investigation comprises either of the two main islands of New Zealand, each of which is divided into grid cells of 1 hectare (squares of 100m on each side). Each attribute (site characteristic) is represented as one ‘layer’ of a stack that builds up a complete picture. Each cell has a score in each layer. Individual scores are added, and exclusions (i.e. yes/no criteria) are then applied to rule out some cells regardless of their score on other criteria. The result is a map of the final scores for each 1 hectare square which shows degree of suitability for land-based aquaculture (Figure 2). An example of a final output map is shown in Figure 3. This output is based on ‘dummy-run’ suitability scores and would change under another user’s selection and weighting of attributes.


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Figure 2. Combined suitability scores (left) minus excluded areas (centre), yields sites ranked by

suitability (right).

Figure 3. Example of a final output map showing degree of site suitability for freshwater

aquaculture over the top of the South Island. The sites identified by LBASS as being suitable for land-based aquaculture would require follow-up assessment by the developer. LBASS does not remove the need for detailed on-site assessment. It does however offer a fast and cost-effective method for identifying potential land-based aquaculture sites over a large area of land.

- =


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4. SPECIES SELECTION

One of the most important decisions in the set-up of any new aquaculture venture is the choice of species. Sometimes investors have chosen a species already, in which case the site must then be selected to meet the requirements of that species. Or alternatively, investors may already have land that they want to use for aquaculture and it is then a matter of choosing a species based on the attributes of that site. Out of the huge number of species, both marine and freshwater, that exist on our planet the number suitable for aquaculture is only a tiny fraction. Species must meet many requirements to be amenable to aquaculture production. The potential for growing a species needs to be assessed in terms of technological feasibility, biological feasibility and market feasibility. Although not an exhaustive list, some of the information required to understand whether a species might be feasible for aquaculture is given below in Table 2.

Table 2. Information required for a potential aquaculture species in terms of technological, biological and market feasibility.

Technological feasibility

Availability of juveniles Understanding of the grow-out system required Knowledge status of feed requirements Availability of off-the-shelf feed Type of land-based aquaculture most appropriate Major limitation to commercial production at this time

Biological feasibility

Culture requirements

(and knowledge thereof)

Temperature * Salinity Dissolved oxygen Turbidity Ammonia etc levels Maximum stocking density *

Feed Conversion Ratio * Behaviour in captivity Swimming mode Disease susceptibility Time taken to reach market size *

Market feasibility

Meat yield * Market size required * Tolerance for live transport Market price * Market demand and competition Level of marketing required Major potential markets

* = These factors generally feed directly into a bioeconomic model, see Section 5.


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Some of these factors simply dictate whether or not a species can be farmed under containment conditions, for example the temperature requirement of the animal. Sometimes conditions can be manipulated to meet the culture requirements of a given species, however this usually comes at a financial cost. Other factors in Table 2 will determine the level of research and development required to start up an aquaculture venture for that species. For example, if there is no off-the-shelf feed available for the species then many more years of research might be required before commercial production is possible. This in turn becomes a financial issue as investors usually require return on investment within a certain timeframe. Some of the factors shown in Table 2 have a direct economic consequence and are therefore inputs considered in a bioeconomic model (see Section 5). Small changes to measures such as Feed Conversion Ratio (FCR), growth rate and market price will have a large impact on the forecasted economic outcome for an aquaculture venture. In terms of possible species for land-based aquaculture in New Zealand, an assessment of a potential species is beyond the scope of this document. However, Table 3 lists some species which might be suitable for land-based aquaculture under both freshwater and marine conditions.

Table 3. Freshwater and marine species that are candidates for land-based aquaculture in New Zealand.

Freshwater Marine

- Shortfin eel (Anguilla australis) - Rainbow trout (Oncorhynchus mykiss) - Chinook salmon (Oncorhynchus

tshawytscha) - Koura (Paranephrops

planifrons/zelandicus) - Redfin perch (Perca fluviatilis) - White amur (Ctenopharyngodon idella) - Silver amur (Hypophthalmichthys molitrix) - Grey mullet (Mugil cephalus) - Aquarium species (e.g., Kokopu) - Tropical freshwater prawns

(Macrobrachium rosenbergii)

- Kingfish (Seriola lalandi) - Hapuku (Polyprion oxygeneios) - Butterfish (Odax pullus) - Southern bluefin tuna (Thunnus maccoyii) - Turbot (Colistium nudipinnus) - Sea cucumbers (Stichopus mollis) - Softshell crabs - Paua (Haliotis iris) - Geoducks (Panopea zelandica) - Aquarium species - Macroalgae species, e.g. Undaria - Vascular plants, e.g. Samphire - Seahorses (Hippocampus abdominalis)

There are many other species that could be produced in New Zealand if there was cost-effective higher temperature water available. The introduction of tropical species (governed in New Zealand under the Hazardous Substances and New Organisms Act) might be possible with adequate proof that they are not able to breed under ambient New Zealand conditions. Geothermal heating may well provide one such cost-effective means of heating water and allow the production of species that would


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otherwise not be economically feasible. An industrial waste heat source may also achieve the same outcome. Also worth considering is the co-culture of two or more different species in the same system. Referred to as integrated multi-trophic aquaculture, these systems are considered to have both environmental and economic advantages (Nobre et al. 2010). Generally the waste stream from the main culture species (a finfish or shellfish) provides nutrients for the growth of a plant species. In land-based aquaculture this is commonly called ‘aquaponics’ and can comprise of a number of different combinations, for example tilapia and tomatoes/ lettuces/ peppers etc. Land-based aquaculture is well suited to a multi-trophic system as a high level of control is possible over the systems and processes that link the species.

5. ECONOMIC MODELLING

Cawthron has developed bioeconomic simulation models to assess the financial feasibility of potential aquaculture ventures, including land-based operations. Bioeconomic simulation modelling can be a valuable tool in determining whether a proposed commercial set-up shows financial promise. Using spreadsheet-based models, the biological and financial inputs into an operation can be described and a financial output generated. Often this output is in the form of Net Present Value (NPV) or Internal Rate of Return (IRR) over a 10- to 20-year timeframe.

Net Present Value = the present value of the sum of all expected annual net cash flows (revenue minus costs) over the timeframe of the analysis. Net cash flows are discounted by a specified discount rate to reflect the time value of money. The discount rate can be regarded as the rate of return which could be earned if the money was invested elsewhere. A positive NPV value shows that the present value of the revenue is greater than costs, i.e. that the venture would return more than the discount rate used in the analysis. The higher the NPV the more favourable the scenario is in financial terms. Internal Rate of Return = The percentage return on investment in a project or venture assuming a zero discount rate. In NPV analysis, the rate of return that makes the net present value (NPV) equal to zero is the IRR.

In addition, sensitivity analysis can be used to show the range of possible financial outcomes and the probability of a positive return, as well as which of the inputs has the greatest effect on the financial outcome. This recognises and incorporates the uncertainty in input variables such as growth rate, product prices, input prices, etc. Instead of using a single estimate, a range of values (minimum, maximum and most likely value) can be used for any input value that is uncertain or likely to vary over time.


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To illustrate this type of economic modelling, Cawthron has modelled a hypothetical aquaculture system, the production of the bivalve shellfish geoduck (pronounced “gooey” duck) in land-based ponds. Such a project might seem far-fetched but this economic modelling approach makes it easy to screen ideas for further evaluation. In this hypothetical example, 21 hectares of farm space are proposed to be developed over seven years. Various costs have been incorporated including capital costs for land, the intake system and a hatchery, as well as annual operating costs. Using the software programme @Risk (Palisade Corporation, Ithaca, New York) some inputs were entered as ranges rather than fixed estimates. For example, the grow-out stage for this species might vary between 5.5 and 6.5 years, so has been entered as a triangular distribution where the minimum is 5.5 years, the most likely is 6 years and the maximum is 6.5 years (Figure 4).

Figure 4. An @Risk triangular probability distribution for grow-out time This distribution and five other triangular distributions1 (for three biological and two financial inputs) are shown in Table 4.

1 Any of a number of probability distributions can be selected in @Risk, not just triangular distributions. The triangular distribution is, however, easy to understand and roughly approximates the (arguably more appropriate) normal distribution.

67.90 76.105.0% 90.0% 5.0%

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

64 66 68 70 72 74 76 78 80

Grow-out time (months)

Freq

uenc

y


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Table 4. Input distributions given for key variables in the geoduck bioeconomic model

Input variable Unit Min Most likely Max

Time in grow-out stage months 66 72 78

Initial stocking density # of geoducks/ m2 25 30 35

Survival rate % 30 33 36

Harvest weight grams 650 700 750

Pond development cost $/m3 5 6 10

Greenweight price $/kg 17 20 25 Our model showed that over a period of 20 years, the hypothetical farming entity would generate an NPV of $5,803,398 (using a discount rate of 10%) and an IRR of 17%. While these summary statistics are useful, the real power of the model comes from the sensitivity analysis generated by running the model thousands of times (each run of the model is referred to as an iteration) with @Risk. This allows us to see which variables have the biggest effect on financial performance. For each iteration, @Risk samples from the probability distribution for each input variable. For example, for grow-out time (Figure 4) many more of the iterations would use a value of around 72 months than a value nearer the extremes of the distribution. The 10,000 iterations then produce a probability distribution for the financial outcome, showing the likelihood of a positive outcome. The cumulative frequency distribution for the 20 year NPV for our geoduck bioeconomic model is shown in Figure 5. There is only a 0.3% probability of the venture producing a NPV of less than $0. There is a 50% chance that the NPV achieved will be of $5.81 million or more. For our geoduck example, the sensitivity analysis results for the 20 year NPV are shown in Figure 6, which is called a Tornado Graph. It shows the change in the output (in this case the 20 year NPV) for a +1 standard deviation change in each input. Basically, the longer a horizontal bar is for a certain input, then the greater the influence that input has on the financial outcome. For this example, the tornado graph (Figure 6) shows that, using the distributions given in Table 4, the most important driver of financial viability for the geoduck farm operation will be the greenweight price received. This is followed by the initial stocking density, and then grow-out time (the negative direction shows that the longer the grow-out, the worse the financial outcome). Survival rate and harvest weight are lower in importance again, and the pond excavation cost has a relatively minor impact.


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Figure 5. Cumulative frequency distribution for 20 year NPV generated from 10,000 iterations of the geoduck bioeconomic model.

Figure 6. Tornado graph showing the sensitivity analysis results for the 20 year NPV for geoduck farming.


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This is a hypothetical situation and a model is only as good as the information that goes into it. In this analysis, overseas geoduck farming knowledge was used and in the New Zealand context this will generate some uncertainty, but a model will indicate this and show where improved data would be most useful. Importantly, the model allows the orderly and un-biased integration of all available information; an essential exercise when considering a new aquaculture venture, whether it is with a new species, new grow-out technology, or both. This approach thus supports a more informed decision about whether a pilot project is worth pursuing, and where research and development resources would be best spent for the biggest gains. The model can be continually updated as research and development progresses and new information comes to hand. Bio-economic simulation modelling can provide stakeholders with a powerful and critical tool for assessing the feasibility of potential aquaculture operations.


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6. ENVIRONMENTAL IMPACT ASSESSMENT

Analysis of environmental impacts is becoming increasingly important across all industries and aquaculture is certainly no exception. The question of environmental sustainability of any new aquaculture venture is absolutely critical. All methods of aquaculture need to justify their use of resources and their level of impacts. Environmental impacts vary hugely across different sectors of the aquaculture industry and even across a single sector. A comprehensive discussion of environmental impacts is beyond the scope of this document and so this is aimed as an introduction to the issues. Cawthron has extensive expertise in assessing environmental effects for aquaculture and many other industries and further advice is available if required. There is a considerable amount of literature published regarding the environmental impacts of aquaculture, from the farm perspective right through to a global perspective. Several methods of assessing environmental impacts have been proposed and the difficulty can often be in deciphering the information available. Two such methods are outlined below; the use of indicators and Life Cycle Assessment (LCA).

6.1. Use of Indicators

The most comprehensive and recent work on environmental indicators in aquaculture has been carried out by the Seafood Ecology Research Group at the University of Victoria. They have published a document entitled ‘Global Aquaculture Performance Index’ (Volpe et al. 2010) which applies the methodology of the Environmental Performance Index (EPI), developed by Yale and Columbia universities, to evaluate marine finfish aquaculture on a global scale. As with other indicator-based methodologies, the Global Aquaculture Performance Index (GAPI) places emphasis on quantitative measures of environmental impact. GAPI uses 10 indicators to assess the environmental performance of marine finfish aquaculture across species and across countries. This global approach provides interesting insights into the industry but is not all that useful at the farm scale. The restriction of GAPI to marine finfish aquaculture also means that many land-based aquaculture operations would not be included. Currently in the pipeline is a second generation GAPI tool, FLAPI or the ‘Farm-Level Aquaculture Performance Index’. According to the website, FLAPI is not a standard or certification body but instead aims at providing a means to compare the environmental performance of a range of different types of aquaculture farms.


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The 10 indicators used to assess environmental performance are common to both GAPI and FLAPI and are shown below in Figure 7. There are three categories of indicators, ‘Biological’, ‘Inputs’ and ‘Discharges’. According to the GAPI document these have been selected based on a review of various standards, guides and certification programmes. One of the difficulties with the use of indicators is the sheer number of them that could possibly be employed. The challenge is to use as few as possible (to avoid unnecessary complexity and duplication) while still managing to measure the most important impacts.

Figure 7. The ten key environmental performance indicators as developed by the Seafood Ecology

Research Group at the University of Victoria, Canada. Reproduced with permission of John Volpe from the GAPI website http://web.uvic.ca/~serg/initiatives/flapi.html

The formulas used to measure performance for each indicator under GAPI are shown below in Figure 8. The GAPI report outlines the difficulties in constructing several of these formulas given the lack of accepted methodology. In the most challenging cases expert workshops were used to develop a suitable method for measuring an indicator.

http://web.uvic.ca/~serg/initiatives/flapi.html


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Figure 8. GAPI Environmental Performance Indicators. Reproduced with the permission of John

Volpe (Volpe et al. 2010). A report on a methodology for FLAPI is due during 2012 and this may provide a good starting point for considering the environmental impacts of any proposed new land-based aquaculture facility in New Zealand.


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6.2. Life Cycle Assessment (LCA)

Life cycle assessment, also known as cradle-to-grave analysis, aims to evaluate environmental impacts at all stages of the life cycle of a product. For example, for an aquaculture product the analysis would even include the impacts of the feed production (and/or capture) and manufacture, transport of product to markets and disposal of waste. Traditional environmental impact assessment of aquaculture has generally concentrated on local-scale impacts such as discharge of nutrients or solids. However, all aquaculture facilities will also have environmental impacts that operate at a more global scale such as greenhouse gas emissions and energy use. LCA encompasses impacts at both of these scales. LCA works by quantifying inputs (for example water, energy and raw materials) and environmental releases (for example, air emissions and waste discharges) per ‘functional unit’ of a product (for example one tonne of harvested fish). It allows comparisons to be made between different production systems that would otherwise be difficult.

Two examples of case studies where the life cycle assessment methodology has been used to compare aquaculture systems are presented below.

6.2.1. Environmental impact of carnivorous finfish production

In a study by Aubin et al. (2009), LCA was used to compare the production impacts for rainbow trout in freshwater raceways (France), sea-bass in sea cages (Greece) and turbot in a land-based recirculating system (France). Six categories of impacts were assessed: - Eutrophication - Climate change - Acidification - Net primary production use - Energy use - Water dependence The results show that the three production systems differ widely across the six impact categories. For example, the turbot recirculation system uses much more energy than the other two systems due to heating and pumping requirements. Feed efficiency (measured by feed conversion ration) and the nutritional makeup of the food will both affect the eutrophication and net primary production use impacts. Again, these are quite different between the production systems.


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One of the conclusions of Aubin et al. (2009) was that impacts need to be considered within the relevant environmental, social and economic context. For example, a production system that uses a high amount of energy will be more acceptable in a country that produces a higher proportion of energy from renewable sources than one that relies heavily on fossil fuels for energy production.

6.2.2. Life cycle assessment of salmonid culture systems

In this study (Ayer & Tyedmers 2009), LCA was used to compare conventional seacage production of salmon with three other production methods in Canada: a marine floating bag system, a land-based saltwater flow-through system and a land-based freshwater recirculating system. Impact categories were: - Abiotic depletion (depletion of non-renewable resources) - Global warming potential - Human toxicity potential - Marine toxicity potential - Acidification potential - Eutrophication potential - Cumulative energy demand As with the study by Aubin et al. (2009), there were clear differences in the impacts of each of the systems. The land-based recirculation system was found to be the worst performer of the four. The high energy use of this system meant it ranked poorly for abiotic depletion, global warming potential and acidification. The system did, however, perform well on a more localised scale with a better eutrophication potential score as wastewater is collected and treated using this system. The results from this study showed that moving seacage salmon production to land-based recirculating systems would decrease the dependence on local ecosystem services, but in doing so would increase the material and energy inputs required. The authors concluded that the current discussion around improving the environmental performance of salmon production needs to take into account impact factors such as global warming and abiotic resource use.

6.3. Environmental impacts of land-based aquaculture

The two LCA case studies presented above highlight the fact that environmental impacts of aquaculture are extremely specific from one site to the next. Even when only considering land-based aquaculture, the impacts will vary widely. There are some very broad generalisations that can be made when comparing intensive (high stocking


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density and high recirculation rate) and extensive (low density and low recirculation rate) systems. An intensive system, such as finfish in a recirculation system, will make efficient use of land, water and feed and will also be able to control discharges effectively. It will have a high energy demand however in a New Zealand context this energy use has less of an environmental impact than in many other countries due to the majority of our electricity coming from hydro-electric sources. An extensive system, such as a flow-through pond setup, will use less energy but will require a greater area of land and quantity of water per production unit and will also generally be less efficient in feed use. With any system there is always the potential to improve aspects of production to mitigate environmental impacts. Some examples include:

- A system with high heating requirements may look environmentally unsound but if the facility can be located to make use of geothermal energy or waste industrial heat then this completely changes the assessment.

- Feed conversion ratios (and therefore efficiency of resource use) can be improved through tailoring the diet to the species, using appropriate feeds for different age classes, selective breeding and feeding regimes.

- Effluent discharge can be improved through the use of biofiltration, flocculation/sludge collection, digestibility of feed and increased feed efficiency.

Environmental impacts must be assessed on a case by case basis. Assessment of local-scale impacts will generally be encompassed in a resource consent application. Impacts on a more global scale are now often part of the requirements of different certification bodies or retailers; for example, quantifying the carbon footprint of a product. Cawthron staff can provide advice as to the appropriate issues and methodology to consider in terms of environmental impact assessment.


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7. REFERENCES

Aquaculture New Zealand 2009. Research Strategy. Nelson. 16 p.

Aubin J, Papatryphon E, van der Werf HMG, Chatzifotis S 2009. Assessment of the environmental impact of carnivorous finfish production systems using life cycle assessment. Journal of Cleaner Production 17 (3): 354-361.

Ayer NW, Tyedmers PH 2009. Assessing alternative aquaculture technologies: life cycle assessment of salmonid culture systems in Canada. Journal of Cleaner Production 17 (3): 362-373.

FAO 2010. The State of World Fisheries and Aquaculture. Rome. 197 p.

Nobre AM, Robertson-Andersson D, Neori A, Sankar K 2010. Ecological-economic assessment of aquaculture options: Comparison between abalone monoculture and integrated multi-trophic aquaculture of abalone and seaweeds. Aquaculture 306 (1-4): 116-126.

NZAS 2006. The New Zealand Aquaculture Strategy. Commissioned by the New Zealand Aquaculture Council with the assistance of the NZ Seafood Industry Council and the Ministry of Economic Development. July 2006.

Volpe JP, Beck M, Ethier V, Gee J, Wilson A 2010. Global Aquaculture Performance Index. Victoria. 132 p.

Feasibility of land-based aquaculture in New Zealand of a final output map showing degree of site...

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