Industrial Policy in the Norwegian Salmon Aquaculture Industry: Linking Industrial Policy to Sustainable Development

Marte Natvik Erlandsen & Marius Mortensen

Student thesis: Master thesis

Abstract

The purpose of this thesis is to find out how the industrial policy has contributed to a sustainable development of the Norwegian salmon aquaculture industry. The three aspects of sustainable development are examined to assess the effect of the policies implemented. The social aspect is examined by valuing a salmon and trout license which is the political instrument that allow production and control the production capacity. A license is estimated to be worth 93.706.366 NOK. The government has generally sold and awarded licenses at far under their market value throughout history and this represent lost resource rent that could be distributed to society. Thus, the distribution of wealth is not optimal in a social perspective. The environmental aspect is examined against the Porter Hypotheses which concern the relationship between environmental regulations, innovation and competitiveness. Environmental regulations have managed to direct resources at reducing waste and investing in green technology. In addition, the R&D policy has been characterized by high public financing which have resulted in many innovations, especially early on. The economic aspect is examined through an industry analysis that shows the development in revenues, prices, profitability, historic growth and contributions to GDP. The economic development has been characterized by high volatility due to variations in the price. However, the profitability is on average quite high and the industry have grown faster than many other industries in Norway. In addition, the policy concerning how production increases have been awarded is analyzed in relation to consistency and predictability. The main conclusion is that the way production increases have been awarded has been unpredictable which in turn increases the overall risk in the industry. Sustainable development has overall been achieved through a combination of strict environmental regulation and high public financing of R&D. However, future production increases should be based on a policy rule with clear and objective environmental indicators as a basis to ensure that future growth is environmentally sustainable and do not harm the long-term profitability in the industry.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages135