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Figure 1. Aquaculture farm on B.C. Coast.
Developing and maintaining appropriate property rights within the Canadian aquaculture industry is important to ensure long lasting social, environmental and economic sustainability. Canada’s economy originated under a staples economy. A staples economy is characterized by the exportation of raw, un-processed material. For many years the fish industry has made up a large portion of Canada’s global exports in the staples economy. Inadequate property rights, public policy and conservation have ultimately led to the deterioration of the fish industry, decreasing Canada’s contribution to the global supply. A decreasing supply along with a growing human population has created a seemingly everlasting global shortage of fish. Privately owned west coast aquaculture began in the 1970s in an attempt to decrease prices by increasing the global supply. Atlantic, Coho and Chinook salmon are the main finned species produced by Canadian aquaculture. Aquaculture may be one of the simplest and most economical approaches to increase fish supply to meet a growing global demand. Aquaculture is currently the top global export from British Columbia, and Canada is the top exporter of aquaculture-produced finned fish to the United States. Not without objection, regarding the impacts to environmental sustainability, aquaculture is a rapidly growing industry. There are currently 120 active and non-active privately owned aquaculture sites in British Columbia. The Government of Canada regulates aquaculture under the federal Fisheries Act and the province of British Columbia designates tenure to private business owners. Reduced enforcement in previous years, a lack of information regarding the health and population of wild fish stocks and inter-breeding, an example of a negative externality, are the contributing issues originating from inadequate property rights within the Canadian aquaculture industry. This wiki page will more specifically focus on finfish aquaculture in British Columbia.
Laws and Regulations
Government laws and regulations provide strict guidelines to operating fish farmers (aquaculturalists) in the British Columbia aquaculture industry. Fish farmers are individuals who hold leases or tenure agreements from the provincial crown. Tenures can range in length from 1 to 30 years and they provide terms regarding operating standards. A lease or tenure gives restrictions on where, when and how much a fish farm can produce. Holders of these leases and tenures must fall within the following criteria, they must: be a Canadian citizen, be 19 years of age or older, have a registered corporation in British Columbia, partnership, cooperative or be part of a First Nation band. A holder of a lease or tenure cannot restrict public access to the aquaculture area. The fish farm cannot restrict the water ways of the general public. The type of ownership that is expressed above, leases and tenures, are not exclusive private ownership where the individual owns the asset entirely.
Policy outcomes and issues
Individuals or fish farmers are merely renting or leasing the land and assets from the crown for a specified period of time. The length of tenure between the crown and fish farm may also influence how the asset is managed and looked after. A short tenure would likely lead to less responsibility put on the owner of the lease where as a tenure that is up to 30 years in length may increase the chances of sustainable management as the payback period is spread out over the long term. For example, an aquaculturalist who is given a 3 year tenure or lease agreement to produce fish may operate in a way that sacrifices the future potential of the asset in hopes of maximizing the current return and benefit. There is little incentive to maintain the productivity and sustainability of the resource and its environment, when the property rights and environmental obligations are removed after 3 years. This type of operation may lead to environmental harm causing degradation to waterways and the surrounding environment.
The type of ownership regime of the British Columbia aquaculture industry covers most areas of property rights, including: enforcement, exclusivity, duration and benefits. The longer the lease or tenure agreement the more the lease will operate like private ownership. Permanent private ownership of an aquaculture asset may increase the incentive to operate and manage the asset in ways that will increase the long term sustainability in order to receive sustained benefits. Private ownership with continuous property rights provide the opportunity to plan and manage for the future, as they are responsible for the short and long term costs and benefits. On the other hand, an aquaculture tenure or lease agreement of 3 years will lead to owners sacrificing environmental sustainability in order to receive benefits up front as they have no accountability to the asset in year 4. The tenure and lease agreements of British Columbia aquaculture ignore two categories of property rights, transferability and divisibility. Fish farmer cannot transfer their lease agreement to a third party as the agreement is between them and the Crown. Any termination or transferring of the lease would be in violation and would need to be approved by the Crown. This lack of transferability diminishes the opportunity for fish farmers to benefit from price appreciation of lease and tenure agreements. The British Columbia aquaculture industry is privately owned and lease and tenure agreements may provide some of the property rights characteristics that will lead to efficient management and sustainability of the aquaculture industry.
Property rights are essential and are used to protect, maintain and enhance the sustainability of wild fish stocks. Aquaculture operations are privately owned businesses, leased from the provincial government and regulated by the federal government. According to the Federal Fisheries Act, if independent or government operators are constructing dams or other water related constructions, the Federal Fisheries Act must be followed. This applies to all aquaculture operations. In following the Fisheries Act, it is required that the individual operators meet specific criteria. For example, construction cannot impede wild fish from accessing habitat. Construction plans, which must include fish pathways, must be presented to the minister of Fisheries and Oceans. Fish pathways include such devices as fish ladders. If individuals or operators fail to meet proper standards, Fisheries and Oceans Canada has the authority to ask individuals or operations to alter the flow of water to meet the needs of fish. Construction can begin once written permission is provided to the contractor by the minister of Fisheries and Oceans. The ministry has an obligation to Canada to thoroughly investigate the design of all construction projects undertaken in areas of sensitive fish habitat, including aquaculture operations. Failure to abide by the Federal Fisheries Act can result in many forms of justice. Fines or restorative justice are examples of prosecution. The protection of wild fish stocks is important in order to ensure environmental, economical and social sustainability. Enforced property rights are essential in making this happen. A lack of resources and oversight are difficulties incurred by the provincial and federal government in providing adequate enforcement of property rights as they pertain to aquaculture operations.
Various viruses and diseases are common throughout the aquaculture industry's large-scale production system. These diseases are most often contagious and can be transferred through the water, from one fish to another. This makes high density enclosures an ideal place for viruses and diseases to thrive. Diseases often spread beyond the confines of aquaculture operations, infecting wild fish stocks. Medications can be administered in an attempt to prevent and cure many diseases that are common to aquaculture operations. Sea lice is a very commonparasite found in aquaculture operations and is treatable with in-feed medication. Diseases, viruses, bacteria and other parasites are listed in the Health of Animals Act. All reports of disease are to be reported to the Canadian Food Inspection Agency, who then extensively investigates the issue and how to contain it. Further, records of disease must be submitted to the Department of Fisheries and Oceans.
Medication and drugs are species specific and alternatives cannot always be used. Drugs that are used as antibacterials for finfish include: oxytetracycline, florfenicol, trimethoprim in combination with sulfadiazine, or ormetoprim in combination with sulfadimethoxine.
According to research, there are two in-feed anti-bacterial drugs used to treat and eliminate sea lice. These medications are ivermectin and emamectin benzoate. It is suggested that emamectin benzonate, also called Slice, is a better option, as the use of ivermectin was outdated after 2000. According to a scientific study on the effects of anti sea lice medication: http://www.pac.dfo-mpo.gc.ca/aquaculture/reporting-rapports/health-sante-eng.html. The effect of emamectin benzonate on Atlantic and Pacific salmon produced different results. The production of Atlantic salmon dramatically increased, while the production of Pacific salmon decreased. According to the research, the reason behind the two extremes was resistance to sea lice infection. Atlantic salmon were more resistant to sea lice infection, which increased production.
Figure 1: The Use of In-Feed Anti-Lice Therapeutants on Salmon Fish Production in B.C.
Asymmetrical information is affecting public knowledge regarding the health and population of wild fish stocks. Aquaculture in Canada continues to grow, generating approximately $2 Billion in economic activity and over $1 Billion in GDP per year. Annually, B.C. makes up the majority of Canada's aquacultural production. In 2010 B.C. contributed 58% of the aquaculture industry's production in Canada (DFO, 2012). Private aquaculture operators might neglect to provide all the necessary and accurate information regarding the health of the environment and the condition of wild and penned fish stocks, which might affect business investment and positive economic growth. Inadequate information regarding organic waste, the introduction and transferring of finned fish and shellfish, escapees and disease can affect economic growth. If society and investors are not aware of the negative affects of aquaculture, economic growth will continue to increase. However, promoting accurate information in these areas would promote better long-term economic, social and environmental sustainability.
The large volumes of organic waste produced by aquaculture can have considerable impacts on the ecosystem surrounding operations. Untreated waste and uneaten feed contribute to considerable pollution. High levels of nitrogen in ecosystems is extremely toxic to many species of fish and shrimp. The number of aquaculture operations operating in a specified area determines the level of pollution and toxicity produced. Technology designed to mitigate poor water quality would benefit private aquaculture operators, the public and the ecosystem. Increased water quality would decrease pathogens, increase fish health and promote sustainability. Aquaculture operators might be hesitant to provide accurate information about the amounts of organic waste produced, in an effort to promote their business and economic growth.
The transfer of fish species between aquaculture operations can increase the spread of pathogens, decreasing the overall health of the penned fish, while also impacting wild finned fish and shellfish. Viral disease, bacteria and organisms such as sea lice, are examples of pathogens that are increasingly common in aquaculture operations. The concentration of fish within aquaculture operations tends to facilitate the spread of diseases. Furthermore, the transfer of potentially diseased fish to other aquaculture operations might lead to additional infections. Unless oversight is provided, aquaculture operators might report inaccurate numbers of diseased fish in an attempt to protect the integrity of their business. Fisheries and Oceans Canada does require reviews of the risks involved with transfers. A license is required before operators can introduce or transfer fish.
Improper management and poorly maintained equipment can lead to an increased number of escaped fish from aquaculture operations. Vandalism can also be a factor in equipment failure. There are currently no regulations that require aquaculture operators to report escapes. The risk involved with escaped fish include the spread of pathogens to wild fish stocks and the potential for farmed fish to out-compete wild fish for habitat and food. Aquaculture operators are not held responsible for escaped fish and do not need to provide annual data about the amount of fish that escape. This is an example of asymmetrical information. By not providing data, operators are not held responsible for damage done to the environment. Aquaculture operators might not release this data in an attempt to protect the aquaculture industry from “bad press” or information that might decrease investment and economic growth.
These three topics provide reasons why aquaculture operators might not provide all the necessary or accurate information. The main reasons the producers might neglect to produce all this information are to increase investment and provide positive economic growth. The aquaculture industry in British Columbia is very large and necessary to provide fish to an ever-growing population. Although reducing asymmetrical information between parties could negatively impact the aquaculture industry, providing accurate information would contribute to long-term environmental, social and economic sustainability. Reducing asymmetrical information could result from improved property rights, decreasing the chance of market failure. Improved property rights might result from outside government oversight.
Inadequate property rights possessed by aquaculture operators are having an impact not only on themselves, but also on communities and individuals who rely on them. An example would be west coast Aboriginal communities. Diseased and escaped fish, as well as waste, have a direct result on wild fish stocks. Sea Lice are also a very common parasite in aquaculture operations. Unfortunately disease and habitat degradation are not restricted to regions and as a result, populations of wild fish will begin to decline over time. A decline in wild fish populations directly affects coastal communities, as well as the global supply of wild fish. Historically, wild fish has been a staple amongst Aboriginal communities. Further, a growing global population continues to place demand on the fish industry. Coastal communities who are in close proximity to aquaculture operations will often protest the establishment of aquaculture operations. Vandalism is common against aquaculture operations and can further increase the chances of escape. Escaped fish place pressure on the habitat of wild fish, resulting in decreased stocks.
Aquaculture operations produce many negative externalities but because of the growing demand for fish, these negative externalities are often overlooked. Externalities are common in markets but policy can be developed to mitigate the effects. Better-enforced property rights, sustainability standards and education could be used to reduce negative externalities. Negatives often overshadow positives and this could be the circumstance with aquaculture.
Often in the case of controversial issues, society tends to dwell on the negatives. This is unfair to operations such as aquaculture. Although negatives exist, positives also occur. Aquaculture increases the supply of fish, which decreases prices. This is beneficial because fish is a healthy food, abundant in many vitamins and proteins. Aquaculture also provides unique economic opportunities such as certified organic salmon and caviar. Employment is a positive externality associated with aquaculture. A decline in the forest industry along the British Columbia coast has resulted in the loss of employment for many area residents. Aquaculture operations often partner with coastal communities in an attempt to provide employment and a resulting higher quality of life. Economically, aquaculture provides income and economic growth to a province and country impacted by a declining global economy.
Aquaculture possesses as many positives as negatives depending on the perspective that society adopts. The promotion of positive externalities can result from better-established property rights, greater government oversight and funding. This can provide growth within the aquaculture community leading to investment and greater economic growth. Aquaculture is a unique industry, that provided with funding for technological advancements, can provide environmental, social and economical sustainable opportunities at a time of climactic uncertainty.
As the British Columbia aquaculture industry continues to grow, there has been an expansion into the operation of man-made and land based aquaculture containers and pools. Operating in pools away from the outside environment helps fish farmers eliminate environmental stresses on their production. In turn, fish farmers may increase production while reducing the amount of inputs and potential harm that is placed on the British Columbia waterways. Operation using man made pools and containers can also gain efficiencies by reducing the amount of diseases which results in less mortality than in natural water systems. The operation of man made facilities does face upfront cost in building and other infrastructure that is required for operation. Investment in buildings and infrastructure takes years of benefits and profit to recover the initial investment made. Another area of interest to property rights when related to building costs is the length of tenure and lease agreements, a longer tenure or lease will have more time for fish farmers to receive payment for their investment in buildings and man-made pools. Investment in expensive man-made facilities may be limited due to the type of ownership that is currently experienced within the British Columbia aquaculture industry.
With help from the federal government and Tides Canada, Kuterra a land-based fish farm has been established by the Namgis Fist Nation in B.C. Kuterra is the first commercial-scale land-based closed containment fish farm in Canada. The Namgis First Nation has been especially concerned with the impacts of aquaculture upon wild fish. This land-based closed containment facility is an interesting development in terms of aquaculture property rights. It not only increases the length of the tenure, but it also removes many of the market failures by effectively removing most aspects of production from the marine environment.
Images: Kuterra Land-based aquaculture facility, and Namgis Chief Bill Cranmer presenting first official KUTERRA Salmon.
Aboriginals and B.C Aquaculture
Discussing property rights surrounding natural resources in Canada usually involves the consideration of Aboriginal rights and title. Given the special relationship between Aboriginals and Canadian governments (all levels) there are various legal obligations that need to be met when distinguishing property rights, such as the fiduciary responsibility to uphold their rights, as well as the duty to consult. The B.C. fisheries and other coastal resources such as aquaculture are by no means exempt from these obligations. In fact, the B.C. coastal areas specifically are in a relatively unique situation in comparison to the rest of Canada, as there have been no formal treaties signed between Aboriginals and the federal government. This lack of treaties has largely intensified the conflict surrounding natural resource property rights (Anderson and Bone, 2009). The B.C. fisheries are hugely important to the aboriginal peoples of the region. It can be argued that the pre-contact aboriginal fisheries on the B.C. coast were the most important resource in the region. Not only were these fisheries able to support some of the densest non-agrarian, pre-industrial populations anywhere, but they also formed a cultural foundation (Anderson and Bone, 2009). During the 19th and 20th centuries, the B.C. coast was turned into a large scale-commercialized fishery, which largely ignored Aboriginal rights and title. From this open access, unregulated "free for all", most of the natural wild fish stocks were over exploited. This decline in fish stocks has greatly impacted the aboriginal traditional fisheries, as fish stocks have not fully recovered (Anderson and Bone, 2009).
Aquaculture in B.C. generally came into being as wild fish stocks and natural fisheries declined. And yet again the large-scale commercialized aquaculture industry developed in most cases without adequately considering Aboriginal rights and title. As discussed above, aquaculture has been found to negatively impact wild fish stocks, through disease exposure, genetic contamination, and pollution. Therefore aquaculture has placed additional pressure on an already vulnerable wild fish stock population, further stressing traditional aboriginal fisheries. From this, Aboriginal groups have increasingly become interested in the aquaculture industry, partly because of the realization that natural fish stock might never recover. Aboriginals communities have now become fairly involved in the aquaculture industry and run and operate certain fish farms. However, Aboriginal communities still maintain the importance of wild fish stocks, and are leading the developments in the field of sustainable aquaculture. The Kuterra land-based fish farm (mentioned above) is a good example of the development in sustainable and aboriginal aquaculture. They have also united their position in the industry by developing the Aboriginal Aquaculture Association to support their meaningful participation. Fisheries and Oceans Canada has also provided a Aboriginal Aquaculture in Canada Initiative to help facilitate this participation.
To summarize, the various coastal Aboriginals in B.C. have always been closely linked to fisheries, and have only recently been regaining their influence and rights over this important and valuable resource. This is mostly happening through modern treaties and comprehensive land-claims agreements. It is likely that Aboriginals will continue to be increasingly important and influential in the management of coastal resources in B.C., such as aquaculture. Thus, there will have to be, and should be, greater involvement and consideration of aboriginal rights and title, when developing appropriate property rights for B.C. aquaculture.
The issue of unsettle modern treaties across the B.C. coastal region may be one of the primary reasons that clearly defined, longer term aquaculture property rights have not been considered. Due to the current negotiations between Aboriginals and the B.C. and federal governments, the uncertainty towards the final outcomes is not conducive to solidifying property rights at present. Similarly in the case of the Northern Gateway pipeline across main land B.C. to the coast, the lack of treaties and agreements has essentially stopped the process. These are two large scale property rights examples of why it is so important for Canada to successfully negotiate comprehensive land-claims agreements with aboriginals.
As we are living in the age of "sustainable development" and are surrounded by the sustainability "buzzword." Everything seems to need a sustainability label. Therefore, Fisheries and Oceans Canada created "Canada's sustainable aquaculture program." The program consists of a variety of government investments for regulatory reform (streamlining), regulation, monitoring, and enforcement. It also provides further funding for aquaculture research and development. These are all important things for contributing to aquaculture development in Canada. However, the use of the word sustainable could be debated. The reason the program's use of the word sustainable can be identified as a "buzz word" is because the program nearly altogether skips the most important sustainability concept surrounding the industry; "property rights." As we have discussed throughout this wiki page, re-examining the short-term lease and tenure system of the B.C. aquaculture industry is the most important issue to address when pursuing sustainability. In order for a program such as this to become a truly sustainability initiative, it would have to prioritize the central concept of property rights, and not simply elaborate on specific property right attributes. As mentioned above in the Aboriginal section, the current comprehensive land-claims negotiations would be a major factor in the governments' abilities to include property rights in the program.
Property rights are an important factor that will contribute to environmental, social and economic sustainability at present and for future generations. Aquaculture operations are expected to increase in number to meet global demand. This will result in the increase of ocean based and land based aquaculture operations. The research indicates that land-based aquaculture operations are a more environmental, social and economically sustainable method of harvest. "Closed System Aquaculture (CSA) is already providing better ways to farm fish. This involves barrier technologies that ensure no contact between wild and farmed fish, thus eliminating the most negative impacts of fish farming externalities and significantly reducing others. Around the world, CSA is producing fish and profits without degrading the rich abundance of oceans, lakes, and streams." (Thriving Economies) Ocean based and land based aquaculture operations will continue to be privately operated, leased by the provincial government and regulated by the federal government. Although privately operated aquaculture is currently the best method in the pursuit of sustainability, continued research should be pursued in an attempt to increase positive externalities and decrease negative externalities and information of asymmetry. Improving relationships with coastal communities, including aboriginal communities, would benefit private aquaculture operators. Community involvement has the potential to strengthen private property rights, creating long-lasting solutions. Long lasting sustainability will be required of aquaculture operations as they continue to expand in order to meet the increasing world demand for fish.
Text Book Resource: Anderson, R., and Bone, R. 2009. Natural Resources and Aboriginal Peoples in Canada, readings, cases, and commentary, second edition. Captus Press: Concord, Ontario