A flexible policy instrument to encourage externality abatement technologies in salmon aquaculture

Aquaculture has been identified as a food sector with potential to provide protein and essential micronutrients to a growing global population, with salmon aquaculture often viewed as a leader in innovation and adoption of new technologies. Despite a broad range of negative externalities in salmon aquaculture, sea lice infestations remain the most harmful of environmental issues within the industry. In response to these challenges and driven by the need for a higher degree of control over the production conditions, salmon producers in Norway have been investing in new technologies that are often perceived as the last resort for sea lice abatement. The challenge is to design a regulatory regime that encourages innovation toward a sustainable mix of production technologies in the future. In this paper, we propose to use feed-in tariffs (FITs), a dynamic Pigouvian subsidy, as a regulatory instrument that can promote investments in abatement technologies by the salmon farming industry. We ground our discussion of FITs for aquaculture in experiences from the renewable energy sector in Spain and Germany.