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.
CAWTHRON INSTITUTE | REPORT NO. 2094
APRIL 2012
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 landbased aquaculture. This report presents a portion of the knowledge gained during this broadscope 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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CAWTHRON INSTITUTE | REPORT NO. 2094
APRIL 2012
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.
Figure 2.
Figure 3.
Figure 4.
Figure 5.
Figure 6.
Figure 7.
Figure 8.
Specifying scoring bands and weighting factor for distance from coast. ............................ 5
Combined suitability scores (left) minus excluded areas (centre), yields sites ranked
by suitability (right). ............................................................................................................. 6
Example of a final output map showing degree of site suitability for freshwater
aquaculture over the top of the South Island. ..................................................................... 6
An @Risk triangular probability distribution for grow-out time .......................................... 10
Cumulative frequency distribution for 20 year NPV generated from 10,000 iterations of
the geoduck bioeconomic model. ..................................................................................... 12
Tornado graph showing the sensitivity analysis results for the 20 year NPV for
geoduck farming................................................................................................................ 12
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
GAPI Environmental Performance Indicators. Reproduced with the permission of John
Volpe (Volpe et al. 2010). ................................................................................................. 16
LIST OF TABLES
Table 1.
Table 2.
Table 3.
Table 4.
SWOT analysis for the potential of land-based aquaculture in New Zealand .................... 3
Information required for a potential aquaculture species in terms of technological,
biological and market feasibility. ......................................................................................... 7
Freshwater and marine species that are candidates for land-based aquaculture in New
Zealand. .............................................................................................................................. 8
Input distributions given for key variables in the geoduck bioeconomic model ................ 11
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CAWTHRON INSTITUTE | REPORT NO. 2094
1.
APRIL 2012
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.
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2.
REPORT NO. 2094 | CAWTHRON INSTITUTE
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 landbased 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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CAWTHRON INSTITUTE | REPORT NO. 2094
Table 1.
APRIL 2012
SWOT analysis for the potential of land-based aquaculture in New Zealand
STRENGTHS
-
Better control of discharges possible
than with other forms of aquaculture
-
Ability to control growing conditions
-
WEAKNESSES
-
High cost of labour
-
High cost of power compared to other
countries
Good Food Conversion Ratios (FCRs)
as consumption is monitored and
feeding varied accordingly
-
Distance to major markets
-
-
No fish feed plant in NZ and limited local
feed ingredients available
High quality science and research
support
-
High cost of land, especially coastal
-
Able to position facilities close to market
and/or point of export
-
Few suitable species available in NZ
(especially native)
-
High production per hectare
-
Strict intake and discharge regulations
-
No spatial competition with ocean
users
-
No commercial hatcheries
-
Lack of infrastructure
-
Educated workforce
-
Small domestic market
-
History of successful farming/ animal
husbandry
-
Land-based aquaculture equipment not
produced in NZ
OPPORTUNITIES
THREATS
-
To make better use of renewable
energy resources such as geothermal
energy
-
Low cost competition from other
countries
-
-
Overproduction depresses price
To gain from the negative public
perception of seacage farming
-
Biosecurity problems and constraints
-
To benefit from increasing global fish
consumption / decreasing wild fish
stocks
-
Public backlash against perceived
‘battery fish’
-
Intake and effluent regulations become
too difficult to meet
-
Substitute product becomes available
-
To establish aquaponics as a known
production system in New Zealand
-
To gain from the increasing market for
eco-label products
-
Fishmeal-based feeds become too costly
and substitute feeds are not suitable
-
To make better use of freshwater
availability
-
Short tenure to land or water so threat to
future rights to operate
-
To utilise the good quality seawater that
is available
-
‘Food miles’ issue makes NZ seafood
unpopular
-
Freshwater may be limited to the
‘leftovers’ after other users
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APRIL 2012
3.
REPORT NO. 2094 | CAWTHRON INSTITUTE
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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CAWTHRON INSTITUTE | REPORT NO. 2094
APRIL 2012
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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APRIL 2012
REPORT NO. 2094 | CAWTHRON INSTITUTE
-
=
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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CAWTHRON INSTITUTE | REPORT NO. 2094
4.
APRIL 2012
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
Biological feasibility
Market 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
Temperature *
Salinity
Culture
Dissolved oxygen
requirements
(and knowledge
Turbidity
thereof)
Ammonia etc levels
Maximum stocking density *
Feed Conversion Ratio *
Behaviour in captivity
Swimming mode
Disease susceptibility
Time taken to reach market size *
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-theshelf 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
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)
-
Marine
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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CAWTHRON INSTITUTE | REPORT NO. 2094
APRIL 2012
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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REPORT NO. 2094 | CAWTHRON INSTITUTE
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).
5.0%
0.18
90.0%
67.90
76.10
5.0%
0.16
0.14
Frequency
0.12
0.10
0.08
0.06
0.04
0.02
0.00
64
66
68
70
72
74
76
78
80
Grow-out time (months)
Figure 4.
An @Risk triangular probability distribution for grow-out time
This distribution and five other triangular distributions 1 (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.
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CAWTHRON INSTITUTE | REPORT NO. 2094
Table 4.
APRIL 2012
Input distributions given for key variables in the geoduck bioeconomic model
Input variable
Unit
Time in grow-out stage
months
Initial stocking density
# of geoducks/ m
Survival rate
%
Harvest weight
grams
3
Pond development cost
$/m
Greenweight price
$/kg
2
Min
Most
likely
Max
66
72
78
25
30
35
30
33
36
650
700
750
5
6
10
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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REPORT NO. 2094 | CAWTHRON INSTITUTE
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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APRIL 2012
6.
REPORT NO. 2094 | CAWTHRON INSTITUTE
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.
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Figure 8.
REPORT NO. 2094 | CAWTHRON INSTITUTE
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 landbased 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 landbased 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 landbased 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:
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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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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.
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