The traffic light system. Is it a solution to a nonpoint pollution problem?

The salmon lice-induced mortality of wild salmon stocks that result from aquaculture production can be considered a nonpoint pollution problem. In Norway, this externality is managed using a traffic light system (TLS), and the purpose of this system is to regulate the estimated aggregated salmon lice-induced mortality of wild salmon stocks in a number of production areas. This paper evaluates the TLS and in doing so, we depart from the literature on the regulation of nonpoint pollution problems. We argue that limited perceived influence of individual actions on the mortality of wild salmon stocks, difficulties in obtaining a reliable measure for the aggregated salmon lice-induced mortality and collective punishment of individual actions constitute the major problems of the TLS. As alternatives to the TLS, we discuss a subsidy to reduce the amount of salmon lice and a tax on salmon lice at farm site level.