Economic Analysis of Netcage Versus Sea-Bag Production Systems for Salmon Aquaculture in British Columbia

Conventional open netcage systems for salmon aquaculture are under scrutiny and criticism partially because they are believed to generate adverse environmental impacts on other resource users and the surrounding environment. One alternative to preventing or miniming these impacts is to use enclosed systems. Experience indicates that these enclosed systems are technically feasible and environmentally promising, but they are economically demanding because of high capital and operating costs. Therefore, an economic analysis of open netcage and sea-bag systems for salmon aquaculture was conducted to examine the profitability of salmon aquaculture operations between these two systems. The study shows that netcage systems are more financially profitable than sea-bag systems when environmental costs are either not or only partially considered. Sea-bag systems can be financially profitable only when they produce fish that achieve a price premium. Sensitivity analyses reveal that market price has the most important impact on the profitability of both systems; changes in discount rates, fish density, feed costs, and environmental costs also have major impacts on the profitability of netcage systems. Changes in the length of the growth cycle, survival rate, and feed conversion ratio have minor impacts on the profitability of sea-bag systems.