My name is Michelle Molnar. I'm with the David Suzuki Foundation. I have a Bachelor of Economics from the University of Western Ontario and a Master of Public Policy from Simon Fraser University.
While it is generally held that close containment technology offers several environmental benefits, debate remains over whether this technology is economically viable. As of yet, there has been no economic analysis completed on closed-containment aquaculture that considers all of its impacts from a societal viewpoint.
However, there have been two recent attempts at a financial analysis. These studies consider a subset of the costs and benefits that apply to the owner-operator or the investor. Both studies find that land-based aquaculture can produce a positive net income, and we recommend that the next step should be to expand upon the analysis to consider all stakeholders who have standing, including government, first nations, the environment, local communities, and the public at large.
One of the two existing studies or financial analyses I referred to was completed by Dr. Andrew Wright with Save Our Salmon. He found that the capital costs were approximately $12 million. The annual operating costs are less than $6 million. The net income range is anywhere from $5 million to $13 million, depending upon your harvest strategies. The higher end of the range is associated with a potential of using waste as a feedstock for a secondary product, which David referred to earlier.
The second study has recently been completed by the Department of Fisheries and Oceans. They found that capital costs were approximately $22 million, that annual operating costs were about $7 million, that there was a positive net income of approximately $600,000 and that the net present value, using year three as a benchmark, is approximately negative $2 million.
However, we found that the capital costs were high. Estimates of the cost of land and the amount of land and equipment were excessive. There were some concerns regarding assumptions around feed cost labour estimates, the contingency rate, and the depreciation rates used, and there was no consideration of environmental impacts.
CARR and Marine Harvest have jointly agreed to conduct an economic analysis. This analysis will be completed in four phases. The first phase is to develop performance criteria. The second stage is to complete a financial analysis similar to what's been done by DFO and Andrew Wright. The third stage will identify external impacts and will attempt to monetize them where possible. The final stage will look at developing an economic model that considers economies of scale; production efficiencies; a range of environmental, socio-economic, and performance matrices; and the cost savings related to locating this technology near more developed centres.