An Economic Analysis of FRDC Investment in Impacts of Aquaculture Technology – Environmental Aquaculture (excludes Southern Bluefin Tuna and Atlantic Salmon) (Cluster 17)

Background

The demand for seafood in Australia, and worldwide, is expected to grow significantly over coming decades. One source predicts that the gap between seafood supply and demand in Australia in 2050 might be between 510,000 and 925,000 tonnes. Aquaculture will be important in Australia, and the world, meeting this supply shortfall. Research and development will be essential in ensuring that sustainable and efficient aquaculture systems are developed, and that site access is maintained for aquaculture developments.

A number of specific research subprograms for individual aquaculture industries have been developed and are managed by FRDC (for example Atlantic Salmon and Southern Bluefin Tuna). However, FRDC has also funded a number of research projects addressing aquaculture that do not clearly fit into any of these subprograms.

This cluster includes projects addressing a number of aquaculture technologies, mostly relating to environmental impact of aquaculture industries. Of the five projects included in this cluster:

• Two addressed the pearl industry
• One addressed the prawn industry
• One addressed the yellowtail kingfish industry
• One addressed the interactions of marine mammals with aquaculture

 

 

Lessons Learnt for Future Investment

Lessons learnt from this analysis include:

• There are significant gains that can be made in addressing environmental and social issues in primary industries, when the achievement of those benefits can also contribute to private economic benefits to levy payers.
• The environmental benefits due to this type of research can be limited, in that the without research scenario assumes that there would be some limits to production, or some other regulation imposed on the industry. These actions would also result in reduced environmental impacts from the target industry, just as the actions taken in the ‘with research’ scenario do. Of course, both the with and without research scenarios do result in improved environmental benefits over the ‘do nothing’ scenario, but that is not measured in such cost-benefit analyses.
• The pearl coating project is an example of where a project can succeed in terms of its scientific outputs, but where there is no practical application for those outputs in the short-term. Despite their being no foreseeable benefits from this project at the present time, it should not be considered a failure, as it did meet the majority of its objectives and produced some ‘basic’ science of great ‘potential’ value.

Conclusions

Investment was made in a total of five projects within the cluster with the FRDC contribution approximating 33% of the total costs involved.

A mixture of private and public benefits was identified, with the majority of benefits from the investments private in nature. Benefits from two of the five investments were significant and therefore quantified. The benefits were associated with maintenance of access for two aquaculture industries to allow them to expand.

Overall, the investment criteria estimated for the investment of $5.4 million (present value of costs) in the five projects in the cluster were positive with a net present value estimated at $12.7 million and a benefit-cost ratio of 3.4 to 1, all expressed in 2008/09 $ terms and estimated using a discount rate of 5% (benefits estimate over 30 years from the final year of investment).

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