Comparative economic performance and carbon footprint of two farming models for producing atlantic salmon (salmo salar): Land-based closed containment system in freshwater and open pen in seawater

Authors: LIU, YAJIE - Sintef Fisheries And Aquaculture Ltd; ROSTEN, TROND - Sintef Fisheries And Aquaculture Ltd; HENRIKSEN, KRISTIAN - Sintef Fisheries And Aquaculture Ltd; HOGNES, ERIK SKONTORP - Sintef Fisheries And Aquaculture Ltd; SUMMERFELT, STEVEN - Freshwater Institute; VINCI, BRIAN - Freshwater Institute

Submitted to: Journal of Aquaculture Engineering
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 1/8/2016
Publication Date: 2/6/2016
Citation: Liu, Y., Rosten, T.W., Henriksen, K., Hognes, E., Summerfelt, S., Vinci, B. 2016. Comparative economic performance and carbon footprint of two farming models for producing atlantic salmon (salmo salar): Land-based closed containment system in freshwater and open pen in seawater. Journal of Aquaculture Engineering. 71:1-12. doi: 10.1016/j.aquaeng.2016.01.001.

Interpretive Summary: The Conservation Fund Freshwater Institute and SINTEF Fisheries and Aquaculture -- a Norwegian technology and industry research organization focusing on the utilization of renewable marine resources -- joined forces to compare the economic viability and carbon footprint of open net pen and RAS methods of Atlantic salmon production. The resulting paper looks at the return on investment, production cost, market price and greenhouse gas impacts of open net pen and RAS technologies. A few highlights from the paper include: • The cost of producing salmon in land-based closed containment RAS is roughly the same as that of traditional open net pen salmon farming systems. • The return on investment for traditional open net pen salmon farming is twice that of land-based closed containment RAS when RAS salmon is sold at a premium price. • The carbon footprint of salmon produced in land-based RAS delivered fresh to market in the U.S. is less than half that of open net pen salmon delivered from Norway to the U.S. by air freight. As both the demand for seafood and the threat of over fishing increase, aquaculture --or fish farming --has already become the source of more than half of the world's seafood production. The U.S. alone consumes an estimated 770 million pounds of farmed Atlantic salmon per year. Though open net pen farming is one of the most widely used production methods for farming salmon globally, limited access to suitable coastal water areas make it a difficult method to use in the United States. Freshwater, land-based RAS offer a viable alternative that allows for the flexibility to construct local aquaculture production systems anywhere, reduces the expense and carbon footprint of transportation, and increases the supply of traceable, nutritious seafood farmed in the U.S.

Technical Abstract: Ocean net pen production of Atlantic salmon is approaching 2 million metric tons (MT) annually and has proven to be cost- and energy- efficient. Recently, with technology improvements, freshwater aquaculture of Atlantic salmon from eggs to harvestable size of 4 -5 kg in land-based closed containment (LBCC) water recirculating aquaculture systems (RAS) has been demonstrated as a viable production technology. Land-based, closed containment water recirculating aquaculture systems technology offers the ability to fully control the rearing environment and provides flexibility in locating a production facility close to the market and on sites where cost of land and power sources are competitive. This flexibility offers distinct advantages over Atlantic salmon produced in open net pen systems, which is dependent on access to suitable coastal waters and a relatively long transport distance to supply the US market. Consequently, in this paper we present an analysis of the investment needed, the production cost, the profitability and the carbon footprint of producing 3,300 MT of head-on gutted (HOG) Atlantic salmon from eggs to US market (wholesale) using two different production systems - LBCC-RAS technology and open net pen (ONP) technology using enterprise budget analysis and carbon footprint with the LCA method. In our analysis we compare the traditional open net pen production system in Norway and a model freshwater LBCC-RAS facility in the US. The model ONP is small compared to the most ONP systems in Norway, but the LBCC-RAS is large compared to any existing LBCC-RAS for Atlantic salmon. The results need to be interpreted with this in mind. Results of the financial analysis indicate that the total production costs for two systems are relatively similar, with LBCC-RAS only 10% higher than the ONP system on a head-on gutted basis (5.60 US$/kg vs. 5.08 US$/kg, respectively). Without interest and depreciation, the two production systems have an equal operating cost of 4.37 US$/kg. Capital costs of the two systems are not similar for the same 3,300 MT of head-on gutted salmon. The capital cost of the LBCC-RAS model system is approximately $54,000,000 and the capital cost of the ONP system is approximately $30,000,000, a difference of 80%. However, the LBCC-RAS model system selling salmon at a 30% price premium is comparatively as profitable as the OPN model system (profit margin of 18% versus 24%, respectively), even though its 15-year net present value is negative and its return on investment is lower than OPN system (9% vs. 18%, respectively). The results of the carbon footprint analysis confirmed that production of feed is the dominating climate aspect for both production methods, but also showed that energy source and transport methods are important. It was shown that fresh salmon produced in LBCC-RAS systems close to a US market that use an average US electricity mix have a much lower carbon footprint than fresh salmon produced in Norway in ONP systems shipped to the same market by airfreight, 7.41 versus 15.22 kg CO2eq/kg salmon HOG, respectively. When comparing the carbon footprint of production-only, the LBCC-RAS-produced salmon has a carbon footprint that is double that of the ONP-produced salmon, 7.01 versus 3.39 kg CO2eq/kg salmon live-weight, respectively.