Methodology

Aquaculture Investor Index

The Aquaculture Investor Index informs investment decisions for growth of aquaculture in Europe, by developing a multimetric Aquaculture Investor Index that is easily understood, and allows a rapid assessment of the relative competitive advantages of different nations. Three specific objectives were considered:

To identify major categories for an Investor Index, and their respective indicators, and to develop methodologies for (a) obtaining suitable data; (b) aggregating the component categories into a meaningful final score, i.e. an index that translates the investor appeal of different European nations for aquaculture growth;
To identify knowledge gaps and help define priorities for use of resources by policy‐makers, to promote improved management of the aquaculture sector;
To promote widespread access to the index through the delivery of a smartphone application oriented towards industry and investors, and to increase public awareness

Market

Price

The sales price of seafood is one of the major determinants of income and a constraining factor in the economics of aquaculture. Aquaculture products are in direct competition with seafood from fisheries, in addition to terrestrial protein. Prices are determined by market forces; however distorting policies exert a significant influence in price discovery and dictate the feasibility in competing in different markets. The seafood industry is highly competitive and aquaculture stakeholders pay close attention to current and historical prices to evaluate the economic opportunity

Consumption

The fish consumption per capita provides an indication of the market size for the aquaculture products. The current consumption trends do not reflect future potential, but nonetheless provide an indication of the relative acceptance of aquaculture products

Economy

The economic environment is important for the private sector to transact with a degree of certainty. Macro‐economic indicators influence decisions at the firm level. The availability of capital dictates how efficiently resources can be allocated to achieve the highest expected rates of return. Aquaculture, like other sectors, benefits from macroeconomic stability, including a well‐developed financial sector and access to international capital, well‐regulated financial markets, securities exchanges, and venture capital in a transparent and trustworthy environment

Infrastructure

Infrastructure is a critical influencer of competitiveness in aquaculture. A competitive road, rail, port, and air infrastructure allows for stakeholders to move outputs (sales) and inputs (raw materials) in an efficient manner and cost effective way. The freight cost influences the ability to be competitive in export markets. The aquaculture sector relies on logistical efficiency, processing, and other linkages of the aquaculture value chain.

Production

Hatchery & nursery

Aquaculture relies on growing animals in a closed biological cycle, save for specific exceptions in shellfish where wild seed or wild fish are collected. The availability of hatcheries producing high quality juveniles (fingerlings or spat) that are tolerant of different conditions such as varying sea temperatures, disease challenges, and other factors, are vital to the aquaculture industry. The hatchery technology and fingerling availability in specific markets, provides a competitive edge to countries with ease of access to such facilities. The main European finfish aquaculture species, such as salmon, trout, sea bream, sea bass, have good functioning hatcheries, whereas emerging species often experience bottlenecks with respect to juvenile availability

Coastline

The coastline contours make a difference to the ability to produce in a balanced environment. Discriminating between coastline measurement discrepancies, through absolute and relative coastlines, provides a useful starting point to understand the protection potential a coastline from adverse conditions

Digital

Digital connectivity influences the quality and speed of sharing operational and logistical information. The ability, speed, and cost to communicate within the aquaculture sector is crucial. The digital capacity yields information about how efficiently a country can service the operational, sales, distribution, customer service components of the supply chain

Insurance

The biomass is the most valued asset on aquaculture balance sheets. The penetration, awareness, and availability of aquaculture insurance in each country can influence the investors risk perception, when transferring risk to third parties, and influence the financial and credit components of the business

Regulatory

Institutional

The institutional framework of a country is shaped by private and public stakeholders. In aquaculture, the institutional framework refers to the interaction between stakeholders in terms of process and simplicity. The interaction between firms and government determines the quality of the institutional framework in a country and influences competitiveness and growth. The institutional framework has a direct impact on investment decisions and can additionally stimulate sustainable development. In aquaculture, the institutional framework governs the sector development, and provides institutional support in managing key areas and executing monitoring activities beyond the scope of private stakeholders

Business friendly

The ease of transacting business in countries provide an increased incentive or disincentive for firms to invest in aquaculture. A business‐friendly environment impacts the small and medium size company base in areas that affect business regulation, legal extent of property protection, among other considerations

Licensing

The licensing process in aquaculture is a significant constraint to aquaculture development in Europe. The licensing process is often governed by several institutions which increases the uncertainty and transaction cost for aquaculture operators to comply with the necessary requirements. The availability of licenses is severely constrained, such as in Scotland and Norway, albeit efficient, whereas other European countries have different license attribution mechanisms. A transparent and simple licensing process improves the incentive for aquaculture to develop

Fiscal

The fiscal burden incurred by economic actors has an influence on investment in the aquaculture sector. The fiscal framework considers an array of taxes, including but not limited to corporate tax, income tax, value added taxes, and additional taxes levied and payable to transact business within legal frameworks. Jurisdictions with tax regimes that provide flexibility intuitively appear more appealing to investors

Environment

Depth

The water depth profile is a key consideration for correct siting of aquaculture farm. The sustainable development of near‐shore and offshore aquaculture (both marine and freshwater) has an optimal range. A site that is too shallow may impact the benthic community and surrounding ecosystem beyond acceptable levels, whereas a site that is too deep requires additional capital investment and know‐how to service the mooring arrangements

Water temperature

Water temperature has a significant effect on animal growth. Growing animals within favourable temperature ranges lends a significant biological growth advantage, that is translated into cost savings. Temperature profiles for the different species in commercial aquaculture have a material impact in the viability of the industry

Current speed

The current speed has a material impact on the quality of the product as well as the water quality profile. The ideal current speed ranges promote a healthy animal, distribution and disperse waste effects, reducing concentrations, however excessive current can materially impact animal growth and structural considerations

Dissolved oxygen

The dissolved oxygen profile is key to maintain a healthy stock of animals, and a key consideration when developing the aquaculture industry. The identification of the dissolved oxygen surface profiles is crucial in selecting broad regions where aquaculture can develop

Legal

The efficiency of legal systems impacts competitiveness because economic agents make provisions based on the enforceability of the law. A functioning, impartial, and transparent legal system provides greater certainty when engaging in economic activity. The lack of a functioning or impartial legal system detracts from a country’s competitive advantage. Investor wish to have appropriate legal recourse in areas such as labour markets, enforceability of contractual obligations and relationships, litigation, and trade disputes

Sector

Aquaculture is often in direct competition with rival sectors such as tourism, shipping, among others. The presence of long‐standing conflicts detracts from the competitiveness of aquaculture, as it increases the uncertainty of the aquaculture development. The acceptance of aquaculture by society is a challenging prospect, and suffers the “new kid on the block” syndrome due to the fact commercial aquaculture in Europe is recent. Older established industries such as cattle do not have the same acceptance issues since the existence of commercial farms has spanned a far longer period. The acceptance of aquaculture is also a cultural aspect, and therefore the degree of aquaculture acceptance affects the sectoral strength

Education

Skilled labour across the supply chain can increase the competitiveness of the aquaculture industry. Knowledge relating to husbandry, biology, veterinary, maintenance, processing is vital to a thriving aquaculture industry. Pools of skilled labour can be found in consolidated aquaculture industries, influencing the availability qualified labour. The mobility of labour, and cultural aspects play important roles in influencing the sophistication of the labour force. Education is crucial for economies to develop the value chain. The globalised nature of the world requires the investment in a well‐educated workforce to allow for the development of human capital that can adapt to changing circumstances and execute complex task in aquaculture. The education of the work force considers enrolment rates and another metrics

Corruption

The corruption level in a country is a good indicator for measuring the institutional efficacy and whether the incentives enforced promote or detract from corruption. Aquaculture in countries with corruption can materially impact of the aquaculture investment partly due to the inefficiencies in accounting for the true economic value of the supply chain, in the form of informal taxes

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