Deliverable D4.2: Report on minimising economic losses, opportunities and challenges for aquaculture in Europe

Globally aquaculture provides an important high-qualityprotein source and supplies over 50% of fish consumed. Though small in volume compared to Asian production, European aquaculture focusses largely on the production of high value finfish and shellfish, providing an economically (and socially) important commodity. Climate change has the potential to pose significant challenges and opportunities to European aquaculture, however, to date little research has been conducted to evaluate the economic consequences of these. For the growth of aquaculture, sectorsmust be profitable. Both local and global conditions determine the potential profits of a farmand both are likely to be influenced by climate change. Local conditions such as temperature determine growth rates of the cultured species, but also influence negative factors such as the occurrence of disease, whilst global markets influence feed ,fuel and energy prices, which are major costs in many forms of aquaculture production. This CERES deliverable examined the present-day costs and profits associated with key aquaculture species produced across Europe and attempted to determine how and why costs and profits may change under the four CERES socio-political scenarios. Six species (rainbow trout, carp, Atlantic salmon, European sea bass, sea bream and blue mussel) farmed across a total of ten European countries (Germany, Denmark, Ireland, Norway, United Kingdom, Netherlands, Spain, Poland and Turkey) were investigated to understand the production opportunities and risks associated with each of the four CERES scenarios. For four of these countries’ (Germany, Turkey, Poland and Denmark) multiple species and/or farm types were investigated allowing within country comparisons to be made.The profits, costs opportunities and challenges to each of these sectors were assessed at both the farm and regional level to understand how climate change may affect the profitability of the different farm types in different countries, and,identify the potential winners and losers under the four CERES socio-political scenarios. Across the species investigated, there was substantial variability between the profitability of the different farm types investigated. As a general rule, analysis of present-day profitability showed that in the absence of public payments and subsides, larger more vertically integrated farm types were more profitable than smaller independent enterprises. When looking at the projections for future profitability, this pattern also held true, and the analysis suggests that such businesses are moreresilient to the effects of climate change and some may actually benefit from some or al lof the future scenarios. For all farm types, the trade focussed WM and NE scenarios appeared to provide the greatest potential opportunities to increase profits, with more environmentally friendly GS scenario the lowest. Throughout the analyses conducted within this task, several common key factors emerged for many of the sectors.These included how feed ingredients, fuel and energy are influenced by global market forces, whereas others such as disease or growth rates are influenced by local conditions. In this analysis, we found that, the main impacts of climate change on aquaculture profitability acted through the effects on global markets, rather than direct local effects associated with temperature changes. The main challenges associated with global markets related to changes in fish meal and fish oil process which greatly influenced the profitability of all intensive fin fish aquaculture. To overcome this major challenge to future aquaculture profitability and growth it will be essential that global developments in feeds are made potentially through the replacement of fishmeal and fish oils with alternative ingredients such as insect meal, single cell protein, marine algal oil or gene modified plant oils.