THE INEFFICIENCY OF SALMON AQUACULTURE IN CHILE: Social, Economic, & Environmental Aspects Fundacion Terram Corporacion Terra Australis Editors: Marcel Claude and Jorge Oporto Researchers: Marcel Claude, Jorge Oporto, Ciro Ibañez, Lila Brieva, Consuelo Espinosa and Marcela Arqueros August 2000 EXECUTIVE SUMMARY At present, there are no valid reasons to ground the claim of sustainability in the salmon aquaculture industry of the country. This is the main conclusion of the research conducted by Fundación Terram and other researchers on the national aquaculture activity. The main characteristic of this research is the inclusion of the analysis of social, economic and environmental equity levels. According to the researchers, the present situation of the salmon industry “is unacceptable as it entails that all Chilean citizens will have to bear the environmental costs and accept that the Environmental Gap is widening every day, as well as the fact that the increase in productivity is not reflected on the salaries of workers”. From the economic standpoint, even though there has been a remarkable increase in the production of salmon in Chile, the workers´ salaries have not risen accordingly. Therefore, the greater volume of profits has expanded the profitability of the companies. As concerns the Environmental Gap -the difference between the traditional GDP and the Green GDP-, the research shows that it tends to increase in time and that, as compared to the GDP, it has doubled between 1990 and 1996. From the environmental perspective, the research points out that by reason of the salmonind-fish aquaculture industry, four of the five lakes of Chiloé used for its development are seriously polluted. Likewise, it alerts us about the increasing volume of egg imports eggs, which increases the risk of new diseases that may be introduced and spread. The research documents the danger to the local fish fauna resulting from the millions of salmon escaped from their cages, further warning that protection systems of the cages give rise to high mortality levels of birds and sea mammals, an area in which illegal behaviors to eliminate sea lions are still common practice. This research presents, in the section of conclusions, that environmental costs resulting from emissions of nutrients into the environment, are not borne by the aquaculture industry but in the future same will be paid by the companies themselves, by alternative economic activities and by the community as a whole. It further concludes that the fast growth of this industry is based on the lack of internalization of environmental costs. If this situation continued it would lead, in the medium term, to the stagnation and subsequent reduction of this activity, as well as to the deterioration, in most cases irreversible, of the environment. In the opinion of the authors and contributors to this research, the situation is not irreversible, always provided that the companies engaged in the salmon industry adopt a series of recommendations which may be categorized as environmental and economic recommendations. Among the environmental ones, companies are urged to use closed farming systems, with impermeable barriers between the cages and the bodies of water containing them; enter into the integrated development of production system to recycle waste matter generated; reduce the imports of eggs to cause the risk of introduction of 2 diseases to diminish; prefer preventive methods rather than treatments in the fight against diseases; systematically monitor farming centers; develop activities which foster the exchange of new preventive techniques; develop environmental monitoring action; establish the environmental bond; prohibit the use of nets or other elements resulting in the death of birds and sea mammals and enforce the prohibition to use firearms and any other items that originate the intentional or accidental mortality of wildlife. The economic recommendations include the execution of agreements so that increases in productivity may be reflected in an increase in actual salaries, so as to induce a better distribution of the income generated by this activity; and the creation of a special tax that may help capture and charge the businesses for the gratuitous use of the natural heritage and, additionally, that may permit the negative external costs they generate to be attributed to this activity and induce a level of sustainable activity. Santiago, July 2000 3 CONTENTS INTRODUCTION ________________________________________________________ 6 Chapter 1 _______________________________________________________________ 8 SALMONID AQUACULTURE – TWENTY YEARS OF HISTORY Chapter 2 ______________________________________________________________ 12 IMPACTS ON THE ENVIRONMENT 2.1. Impacts caused by feeding salmon in captivity _______________________________ 14 2.2. Impacts caused by escapes of farmed salmon ________________________________ 15 2.3. Use of biocides and antibiotics _____________________________________________ 16 2.4. Use of immune stimulants ________________________________________________ 19 2.5. Import of eggs __________________________________________________________ 20 2.6. Outbreak of diseases _____________________________________________________ 21 2.7. Discharge of solid and liquid waste _________________________________________ 22 2.8. Mortality of sea birds and mammals________________________________________ 23 2.9. Change of the landscape ___________________________________________________ 24 2.10. Use and availability of the coastal line ______________________________________ 25 2.11. Standards of environmental quality ________________________________________ 27 Chapter 3 ______________________________________________________________ 30 SOCIAL AND ECONOMIC IMPACTS 3.1. Economic impacts ________________________________________________________ 31 3.1.1. Chile and the Global Production of Salmonid-fish ____________________________________ 31 3.1.2. Exports: Prices and Commercialized Volumes _______________________________________ 32 3.1.3. Demand of Food Products _______________________________________________________ 34 3.1.4. Exported Products _____________________________________________________________ 35 3.1.5. Target Markets of Exports _______________________________________________________ 36 3.2. Impacts on other economic sectors: tourism and small-scale fishing_______________ 37 3.2.1. Tourism _____________________________________________________________________ 37 3.2.2. Small-scale fishing ____________________________________________________________ 37 3.3. Social impacts ___________________________________________________________ 39 3.3.1. Distribution of the Income 1990-1995 _____________________________________________ 39 3.3.2. Salaries and Productivity _______________________________________________________ 41 3.4. Sociocultural changes of the local communities ________________________________ 42 Chapter 4 ______________________________________________________________ 44 NEW CONCEPTS: THE "GREEN" GDP AND THE ENVIRONMENTAL GAP 4.1. Accounting of Natural and Environmental Resources. Conceptual Aspects ________ 44 4.1.1. Brief Description of the System of National Accounts (SNA) __________________________ 44 4.1.2. Unfavorable opinions of the SNA ________________________________________________ 45 4 4.2. Assessment of the "Green" GDP and the Mitigation Costs in the Salmonid-fish Aquaculture Industry in the Region of The Ten Lakes ______________________________ 46 4.2.1. Emissions and Mitigation Costs __________________________________________________ 46 4.2.2. Green GDP and Environmental Gap _______________________________________________ 48 Chapter 5 ______________________________________________________________ 50 TWELVE RECOMMENDATIONS FOR NEW POLICIES 5.1. Conclusions ______________________________________________________________ 50 5.2. Recomemndations ________________________________________________________ 53 ANNEX 1: TABLES _____________________________________________________ 55 ANNEX 2: METHODOLOGICAL ASPECTS _________________________________ 60 Economic Impacts ____________________________________________________________ 60 Social Impacts _______________________________________________________________ 60 Assessment of the "Green" GDP in the Salmonid-fish AI ___________________________ 62 REFERENCE __________________________________________________________ 65 5 INTRODUCTION This document presents a comprehensive analysis of the Chilean salmonid-fish farming aquaculture industry. Its singularity is that includes, for the first time in this type of analysis, the concept of equity as the result of specific studies of economic, social and environmental impacts of the activity. The impacts are identified and evaluated according to quantitative existing information. The approach adopted in this document is not homogenous. This characteristic should not be surprising because there is no formal analytical pattern calling for all issues in this document to be dealt with from an exclusive approach. However, the methodology adopted falls within the concepts developed under the Theory of Sustainable Development; in spite of the fact that such term may be given several interpretations, it gives us the possibility, due to its flexibility, to address the concepts disclosed in this document. Sustainable Development is an approach that attempts to combine the aspects of economic growth, equity and the sustainable use of the resources, with the understanding that the economic growth cannot be infinite because the natural resources on which it is based have a limited life (Daly & Coob, 1993). The research includes conventional economic aspects like exports, currency, product and salaries as well as social aspects like pollution, outbreak of exotic diseases, mortality of the local fauna, et cetera. With the inclusion of the analysis of equity we hope to introduce a new perspective to these debates because there was no similar analysis until the present. The document is divided into five chapters. The first chapter presents the general background of the national aquaculture industry. The second chapter analyzes the aquaculture industry from the environmental perspective. The impacts are considered according to a typology of environmental standards internationally accepted. This chapter reveals the results of measures of environmental quality in lakes located in the provinces of Llanquihue and Chiloé, in addition to the description of some indicators of imports of eggs and use of antibiotics. The impacts of escaped salmon on the local fauna, the outbreak of new exotic diseases, mortality of sea birds and mammals, discharge of solid and liquid waste and the specific impacts on the coast, among others, are also analyzed. The third chapter analyzes the industry in terms of the economic and social impacts that has generated. Within the economic impacts, the importance of the Chilean aquaculture salmonid-fish industry is considered within the framework of the global industry and the volumes of exports, prices, type of products and markets are reviewed. Then, the impacts of this industry on other economic sectors like tourism and small-scale fishing are evaluated. As concerns the social impacts, the evolution of the functional distribution of the income is analyzed, and the evolution of the salaries and production is compared. 6 The fourth chapter is a summary of the traditional approach of the National Accounts and works on the concepts of Green Gross Domestic Product (GDP) and the Environmental Gap. As concerns the System of National Accounts the same is reviewed as a condensed system of the economic activities within a territory, showing its structure as well as the unfavorable opinions of the specialists. Then, we estimate the green GDP for the national aquaculture sector, which is the same indicator as for the traditional economic activity but adjusted to environmental variables. Finally, this chapter presents the evolution of costs of abatement created by this industry and the Environmental Gap that the same generates. The fifth chapter presents, first, the conclusions arising from this work and afterwards the recommendations to conduct the present salmonid-fish industry towards sustainable criteria in the course of time. Acknowledgments The authors wish to express their acknowledgments to all the people who contributed towards the preparation of this document, specially to the people who are closed to the salmon industry but preferred to remain anonymous, and to the local people from Tenaún, Chonchi, Isla Lemuy, Quemchi and Calbuco, mainly. A special acknowledgment to Dr. Ricardo Enríquez from the Institute of Ictiopathology of the Universidad Austral de Chile, Dr. Marcelo Acevedo from Biosalmo Ltd. Dr. Victor Alvarado from Salmovet Ltd. Dra. Doris Soto from the School of Fishery of the Universidad Austral de Chile, Marcela Gallegos and Ricardo Torrijos, both professionals of the National Service of Fisheries and to the Weeden Foundation from the United States. 7 Chapter 1 SALMONID-FISH AQUACULTURE INDUSTRY – TWENTY YEARS OF HISTORY Although the introduction of salmonid-fish in Chile dates back to the beginning of the XX century, it was only from the 80s and specially after 1990 that the national Aquaculture Industry (AI) had such a tremendous growth that at present is among the first worldwide markets as regards volumes of production but also as regards non-sustainable impacts. Development of the aquaculture was justified on the need to reduce the pressure over fisheries resources highly overexploited due to the increase of the demand for human consumption. However, the new development of this economic activity not only was far from reducing the capture of native species but, to the very contrary, they increased to produce food for the aquaculture industry itself (Naylor et al., 2000). This situation created additional serious problems of contamination and deepened equity problems between the actors involved in this activity. The origin of this activity goes back to the beginning of last century. The first introduction of salmonid-fish in Chile occurred in 1905 with eggs from Europe in the locality of Río Blanco located at more than 200 kilometers to the north of Santiago. During that year the first successful eclosion of rainbow trout took place (Oncorhynchus mykiss) and gave origin to the introduction of trout in different watercourses in the central and south region of Chile. In 1914, the second farming center was set up in the locality of Lautaro (650 kilometers to the south of Santiago). The main objective of this center was to introduce different salmon species between 30° and 42°S. In 1946, the same center developed the first eggs of the Atlantic salmon (Salmo Salar) and coffee trout (Salmo trutta). The specimens from this farming center were the basis of the introduction of salmonid-fish species into rivers and lakes located in the south of Chile and the Patagonia. The third national farming center was set up in 1952 in the locality of Polcura, Province of Ñuble, for the purpose of producing eggs and fries of the rainbow and coffee trout to repopulate the central region of Chile. In 1973, a farming center opened in Pullinque near the Lake Panquipulli (Tenth Region of the Lakes). This center became the largest and most modern center of the country. Its main objective was to expand the population of trout in the south of Chile. At the same time, several attempts to introduce other salmonid-fish species (chinook salmon, red salmon and Pacific salmon [Oncorhynchus bisutch]) took place with eggs provided by a cooperation program with the US Peace Corps. These efforts were unsuccessful. The first efforts to introduce the keta salmon as a wild species took place in 1969 through an intergovernmental agreement between Chile and Japan. The main objective was to establish a center in the southern region of Chile. Although the outcomes were not those expected, this project counted with the technical assistance of Japanese experts and they 8 help to train an important group of Chilean people in different areas of farming, pathologies and food that contributed to open the path to develop the national salmonidfish aquaculture industry. During the seventies the private business started to farm salmonid-fish using the closed farming system, which implies an impermeable barrier between the salmon and the surrounding ocean or lake waters in which the salmon develops. At the beginning of the 70s, several tests of intensive farming of the rainbow trout were initiated in the area of the Arrayán, near Santiago. Later, in 1975, a commercial fish farming center was established in Río Pescado, in the mouth of the Lake Llanquihue (Tenth Region) that produced the first exports of Chilean salmonid-fish. In 1979, the Japanese Company Nichiro Chile and the Chilean company Mares Australes started confined farming in cages of the Pacific salmon in the localities of Chinquihue and Huito, respectively (Tenth Region). The decade of the 1980s mark the beginning of the real industrial development of the salmon in Chile, through the growth of farming centers in the Tenth Region. Between 1981 and 1984, governmental agencies conducted studies to determine the economic viability and technical feasibility to farm salmon species in captivity. This gave origin to a process of technical adjustments to techniques used in the United State and Scandinavian countries. At the beginning, the main farmed species was the trout, but it was gradually replaced, first, by the Pacific salmon and later by the Atlantic salmon (Annex 1, Table A). The accelerated development of the salmon industry can be observed in the production figures which at the beginning of the eighties reached 80 tons, 500 tons in 1984, 5,500 tons in 1988 and 247,970 tons in 19971. At present, three salmonid-fish species are farmed in Chile. According to the production significance they are: Atlantic salmon, Pacific salmon and rainbow trout. In 1997, about 247,970 tons were farmed as follows: 39% Atlantic salmon, 30% Pacific salmon and 31% rainbow trout (National Service of Fishery – SERNAPESCA, Servicio Nacional de Pesca, 1998). During the period 1995-1998, the production of salmonid-fish (Atlantic salmon, Pacific salmon and trout) in the Tenth Region represents between 40 and 100 percent of the national production. As you can observe in Graph 1, the regional production of the Atlantic salmon represented almost 100% of the national production during the same period. In the case of the Pacific salmon, the regional share decreased; however, it is still important because it represents 70% of the national production. Moreover, since 1988 the production of the rainbow trout in the Tenth Region has an amazing growth and its share in the national production increased from 43 to 90% (Annex 1, Table A). 1 These data include the Pacific, Atlantic, king, turbot, rainbow trout and coffee salmon species 9 Graph 1. Share of salmonid-fish production of the Tenth Region within the national production, 1985-1998. (%) 100% 90% % 80% 70% 60% 50% 40% 30% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Años Salmón del Pacífico Salmón del Atlántico Trucha Arcoiris Sources: Annex 1, Table A. Elaboration: Fundación Terram At present, there are about 90 companies engaged in the production of salmon and they count with more than 400 farming centers of sea water and about 185 fish farming centers of fresh water. All these farming centers cover approximately 4,700 hectares (Compendio de la Acuicultura de Chile, 1998). Besides, SERNAPESCA registers 823 aquaculture centers at the national level, 81% located in the Tenth Region and 40% of them are fish farming centers (that include salmonid-fish production). At the national level, aquaculture centers grew at an average of 17 per year between 1993-1998 and 14 of them are located in the Tenth Region (Annex 1, Table B). Farming centers employed approximately 23,000 people; 15,000 under direct employment and 8,000 indirect employment. An informal sector should be added which is not included in the official figures, they represent about 200 small-scale fishing farming centers of fresh water and seawater farming centers of salmonid-fish operating clandestinely or with temporary authorizations. Since 1992 two important technical changes have occurred in farming centers. First, the construction of wooden cages in the farming center was replaced by the purchase of plastic ones. Then, manual feeding of fish in captivity was automatized. Both situations may be the cause of 40% less hiring of workers in farming centers. From the economic perspective, the importance of the fish sector can be observed in the GDP of the Tenth Region, and in the latter, the importance of the GDP in farming centers. Thus, the fish sector increases its share in the regional GDP by 6.6% during the first five-year period of the 80s and reached 11.5% during the same period of the following decade. The GDP of the Subsector farming centers in the Tenth Region represents more than 90% of the GDP of this Subsector at the national level (Interamerican Center for the Development of Sustainable Ecosystems - Centro Interamericano para el Desarrollo de Ecosistemas Sustentables, ICSED, 1998). There was also a significant growth in the financial services, electricity, gas and water, and 10 transport and communications sectors. However, the agroforestry, personal services, real estate and public administration sector diminished their relative importance. The structural changes in the regional economy that took place during the last decade are the result of the development model of the country. The increase in importance of the fishery sector linked to the growth of export and the decrease of the public administration and agrarian sectors constitute a national and international trend. Besides, the growth in importance of the financial services, electricity, gas and water, and the transport and communications sectors is consistent with a growing regional economy linked to external markets and demographic trends in relation to the growth of the population in general and the urban population in particular. The gross domestic product (GDP) of the Region in 1986 constant prices doubled in one decade, growing at an annual average rate of 9.6%. The regional exports increased 2.5 times during the period 1991-1997 and the national exports increased only 1.9 times during the same period. The importance of regional exports within total national exports increased from 3.8% in 1991 to 5.2% in 1997 (Annex 1, Table C). This larger dynamism has influence on the regional work force, which increases from 363 thousand people in 1994 to 385 thousand in 1997 and employed from 349 thousand to 373 thousand during the same period. This entails a growth rhythm of the work force between 1994 and 1997 of 6.5% and 7.1% respectively. However, at the national level the same rates register growth of only 2.3% and 5% respectively for the same period (Annex 1, Table D). 11 Chapter 2 IMPACTS ON THE ENVIRONMENT The AI is causing serious physical, biological, and economic impacts as well as landscape changes in the south of the country. Environmental standards are constantly violated, specially in the lakes of the Province of Chiloé which are in a state of advanced deterioration according to investigations presented in this document. To the elevated concentrations of chemical elements it must be added the high use of antibiotics in salmon as diets to combat diseases without the proper knowledge of their real impact. A factor that increases the threat of infection with strange diseases is the increment of import of eggs and the use of salmon by-products as food products for other animals. Until now, it has been detected the transmission of at least one exotic disease to a local species, endangering the local fauna of the Aysen and Chiloé Archipelagos. Such transmission was due to the escape from cages of four million salmon specimens between 1993 and 1996. Another serious environmental impact is caused by the discharge of waste generated by this activity. Only 12% of the aquaculture centers treat their discharge waters (water with blood) while solid waste accumulate in cage bottoms or are otherwise swept to the sea causing a reduction of oxygen in waters and even a decrease of biodiversity. Besides, non-consumed and non-digested food by the fish in captivity generates contamination via sediments and feces respectively. As sediments are of anoxic and sulfuratted nature they deteriorate the quality of waters, accelerating their eutrophication process. Finally, feeding salmon for their production became a problem of global food security because for each kilogram of salmon, 2.7 kg of fish are required as food. Although Chile has 30 thousand kilometers of coast, lacks a global policy on the use of the coastal line in harmony with its development by different users. The plans of the Undersecretary of Fishery are only addressed to regulate aquatic resources, a fact that creates conflicts of interests among the salmon industry, tourism and coastal traffic. The impacts of the AI along the coastal area are the alteration of the quality of water bodies, alteration of ecosystems, in their habitats and the structure of their communities. Finally, studies, investigations and surveys have confirmed that the main problems of the coastal area are the decay of the quality of water, threats to the biodiversity and the conflicts of interests arising among the different users. 12 For the purpose of this study, negative impacts were taken into account because these impacts are those to be mitigated or eliminated from the aquaculture activity. Negative impacts can be classified into physical, chemical, biological and landscaping. A typology of these impacts and their potential consequences are presented briefly in Table 1. Table 1: Typology of impacts of the aquaculture activity. Type of Impact Effect Causes Physical-chemical Eutrophication of water Emissions of nutrients like biological phosphorus (P) and nitrogen columns. (N) are spread over the via non Modification of the environment digested food for fish and primary production and by the feces. This has the zooplankton. impacts on the primary production and changes the of the Changes of sediments in composition sediments on the seabed. seabed communities. Aesthetic Transmission of diseases takes place in three different ways: escape of salmon from their cages to further mix with native species; t0000000000he use of antibiotics in farming centers and the introduction of imported exotic species. Landscape changes in As a consequence of the coastal areas of the sea and expansion of the industry lakes. there are many salmonidfish cages spread over the coast that make less attractive the surroundings. Production of this industry implies traffic of lorries, death of native species, waste of water with blood, inadequate installations from the aesthetics perspective, changes of water transparency; all of which clearly rests an aesthetic value to the landscape. Transmission of diseases to wildlife and potentially to the human being. Source: Weber, 1997; Soto, 1996; Valdés et al ,1995, and López and Buschmann, 1991. 13 The generation of these types of impacts is linked to the production process of salmon in captivity. In fact, farming salmon in captivity entails the installation of cages that cause a change of the original landscape. Besides, the process of production means a significant level of stress caused by the high density of fish within a limited space and by the presence of men working in farming centers. These circumstances change significantly the physiological mechanisms of the fish, which become more vulnerable to diseases. Antibiotics are used to minimized stress, they are thrown into the water and cause potential negative impacts on the aquatic ecosystem. Feeding salmon causes problems to the waters within the cages and the water bodies around them increasing the presence of nutrients in the water. Moreover, the escape of salmonid-fish from the farming centers and the use of antibiotics can cause a massive transfer of medicines to the native population with unknown consequences (Valdés et al., 1995). Besides, the use of large areas along the coast to set the cages has created conflicts with potential users of this land. The following is a separate analysis of the impacts described in the previous paragraphs to offer a better detail of their roots and consequences. 2.1. Impacts caused by feeding salmon in captivity Feeding salmon for their production became a problem of global food security because for each kilogram of salmon, 2.5 and 5 kg of fish as feed are required. Non-consumed and non-digested food by the fish in captivity generates contamination in the form of sediments and feces respectively. As sediments are of anoxic and sulfuratted nature they deteriorate the quality of water, accelerating their eutrophication process. As presented in Figure 1, during the farming cycle, pollution of the habitat is due to two main causes directly related to the food of salmon in captivity. First, non-digested residual food that reaches the bed of the pond in the form of sediment. Second, ingested food but not digested that the fish discharge and goes into the habitat as contaminant. Figure 1: Pollution of the habitat during the farming cycle. Food introduced in the system Feedin g stage Food consumed Nonconsumed food Sediments Harvesting stage Fish produced Nondigested food Feces Source and Elaboration: Programa de Investigaciones en Energia, PRIEN, (Program of Energy Investigation), 1996. 14 Nutrients in fish feed exceed the requirements of farmed fish and in spite of the fact that, in general, aquatic environments are able to metabolize these organic residues and recycle nutrients with a proportional increase in biological productivity, the result is a depletion of oxygen in water, an excessive flourishing of algae and the accumulation of anoxic and sulfurous sediments accumulated between fish cages or on the bottom of ponds, which are finally carried into the rivers or seas where the cages are found. Regardless of the fact that the flourishing of algae may be attributed to nutrients from the farms or any other resources, it may cause damages to the salmon production business in various ways. Firstly, the growing of algae may deoxygenate the waters in which salmon and other animals breathe, a circumstance that may also occur when algae die and decompose. Secondly, some concentrations of certain types of algae may cause a mucosity to cover the gills of salmon, which in turn results in infections, gill hemorrhage and fish suffocation. Moreover, salmon are carnivorous fish and as such their feeding poses serious ethical problems, which refer to the use of fish as feed, in spite of the fact that the same may contribute best to worldwide food security if they were directly consumed by humans. Data from the FAO in 1992 revealed that 5.1 million tons of caught fish were used as feed for farming 1.9 million tons of salmon, trout, sea shrimps and other species. Thus, between 2.5 and 5 kilos of caught fish are required as feed per every one kilo of carnivorous products (Naylor et al., 2000). In 1995, approximately 15% of fish was used as feed for the worldwide production of fish and it is expected that by 2000 this figure may reach a 20% increase. Even though this report does not consider the relative efficiency of feeding fish in captivity, the growing AI will no longer be able to have an unlimited stock of native fish for feeding purposes, since most of these resources are being currently overexploited and their biomass has been seriously impaired. 2.2. Impacts caused by escapes of farmed salmon There exist four millions of salmon specimens that have escaped from the cages in farming centers and now live in the southern seas. They cause a strong impact on the local fauna as they compete for common food and space; they modify the genetic resistance and cause diseases to the wild salmon. This is a situation of extreme danger for the wild fauna of Chiloé and Aysén. Salmon that escape the ponds threaten native species as they compete for food and places to live. They are potential carriers of diseases and if they reproduced with wild species they may damage their genetic resistance because the genes that are apt to survive in the farm dilute the genes developed to exploit and survive under natural conditions. 15 According to Moreno et al. (1997) estimations, approximately 4 million specimens of salmon have escaped from the ponds to the natural environment between 1993 and 1996. The three main species that have escaped are rainbow trout, coho salmon and Atlantic salmon. Although the authors specify that the population of escaped salmon for the year 2000 will not exceed 30,000 individuals, the estimation does not consider the potential of reproduction or the ability of adaptation of each of these species to their new environment. Based on these facts, it is possible to assume that a percentage of the four million specimens could have become acclimated and reproduced in the numerous rivers of the Chilean north Patagonia. In this regard, Jara et al., (1997), point out empirical evidence that an inverse pattern of abundance between salmonid-fish escaped from cages and the native fauna in the interior sea of Chiloé –in those places investigated where the salmon abounds- it can be observed a minor presence of native species and vice versa. This may be explained by the competence for food and spaces to live generated between the two groups of fish and because the salmon consume benthonic and pelagic species. Moreover, the salmon in captivity are constantly treated with antibiotics to protect them from diseases. Therefore the escape of salmon may cause a massive transfer of medicines to the native population with unknown consequences. If we considered these data and tried to include this information in relation to the population size about escaped salmon, we could be facing a situation of extreme danger for the native fauna of the Chiloé and Aysén Archipelagos. 2.3. Use of biocides and antibiotics From the beginning, the national salmon industry has registered a steady increase of the use of antibiotics to prevent diseases. In comparison with Norway, the levels of use are remarkably superior. The administration of antibiotics causes a serious problem because they reach both infected and healthy individuals creating a resistance to future medicines used to combat everyday diseases. More research is needed as regards the effects of medicated diets to generalize its use. Besides, the use of salmon by-products as food for other animals constitutes a potential path for the transmission of diseases. The Chilean salmon industry has used different biocides and antibiotics, almost since the beginning, with the purpose of eliminating or diminishing bacterial, viral or parasitic diseases, among others. In 1990, the salmon industry used approximately 13 tons of antibiotics (as a total pure drug), 65 tons in 1995 and about 100 tons in 1998 (Graph 2). 16 Graph 2. Total consumption of antibiotics between 1990 and 1998. 100 Tons 80 60 40 20 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 Years Source: Terra Australis Chile counts with little information about the quantity of antibiotics actually used in the AI. However, if we compare the consumption of the antibiotics registered in special centers of the salmon aquaculture industry in Chile and Norway2 we conclude that the difference in amount of antibiotics is significant. In relative terms, in 1993 (only year to compare with the available information) Chile used 75 times more antibiotics per kilogram of salmon produced than Norway (Annex 1, Table E). The conclusion is that Chile is exposed to more risks than Norway in relation to the adverse impacts caused by the use of antibiotics. At present, this use is general and has gone, in some way, from an indirect use through water mass and food to a direct administration through individual shot. When comparing, between Chile and Norway, the use of antibiotics in relation to the production, it can be observed that in Chile the use of antibiotics increases whereas in Norway diminishes (Graph 3). Graph 3. Kilograms of antibiotics per tons of salmon produced in Chile and Norway 0,6 0,5 Kgs./Ton. 0,4 Chile Noruega 0,3 0,2 0,1 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 Años Source: Terra Australis 2 Norway dropped its level of antibiotics due to the development of vaccines incorporated to the food (Weber; 1997). 17 The main biocides and antibiotics used by the AI are: oxitetraciclina, oxolinic acid, flumequina, quinolona, cefquinona and enrofloxacino. The treatment and control of diseases in water organisms are very different to those applied to terrestrial animals. Fish, are in direct contact with the microorganisms that may provoke the pathologies, they are in the same environment where the microorganisms developed and are transported. Thus, it is difficult to prevent dissemination of a disease in water farming centers. All those factors that have an incidence on water quality will have an impact on the development and survival of the microorganisms that cause the diseases and at the same time on these species and their resistance to be infected. The level of antibiotics given to fish varies according to the species and the stage of development. Besides, in our country, notwithstanding its use, death rate of infected fish in captivity is not controlled. In Chile, the main diseases affecting salmon are the bacterial diseases that affect the kidney (BKD) and Rikettsia. The last one is the disease that causes the largest amount of losses and is controlled with 80% of the amount of antibiotics used. Although there is no vaccine already to combat Riketssia it can be treated with antibiotics: (oxolinico acid and flumequina) and tetraciclinas (oxitraciclina). Furthermore, the use of medicines in salmon is not limited to infected specimens but the treatment goes to the whole aquatic ecosystem. This leads to the generation of microbial specimens resistant to the antibiotics within the whole ecosystem and this implies the need to use new and stronger medicines to combat more resistant organisms. For the purpose of preventing the propagation of antibiotics in the aquatic ecosystem, medicated feed is often used. In Chile, although the use of antibiotics in feed is admitted by the national food industry, such use is made without sufficient knowledge of its actual impact. Notwithstanding the fact that in Chile the level of diseases is not similar to that in Norway, some measures other than the use of antibiotics could be adopted, such as better quality in fish feed, stress avoidance and stimulation of the immune system. Yet, the responsibility for choosing what the market offers lies in fish producers and, more frequently, the owners of farming centers opt to medicate feed and order the same from manufacturers. Diets that include medicine are a big challenge to food industries of salmon and each one chooses different actions about the technology to be used. However, not only the quality of the medicine should be protected but the lack of risks of cross-contamination should also be ensure because it is probable that residues of medicine remain in the production line and then contaminate the food for fish that did not require the treatment. For this reason, it is recommended the use of independent lines to supply medicated diets. An example of the previous paragraph is given by the industry Trouw Chile that separated the line of medicated food in a line of independent production two years ago. This industry offers the diet “Respons” that stimulates the immune system and diminishes the death rate. The components of the diet (glucones, high levels of vitamin C, special vitamin premix and an extruded diet of high energy) prevent infections, stimulate the 18 immune system and reduce the consumption of antibiotics. This diet has been used successfully in the farming center Mares Australes because it reduces the use of antibiotics and related costs. However, there are opinions against the use of glucones (a main component of Respons), as they stimulate the non-specific immune system, so it is not certain that this element helps in preventing diseases. Due to this uncertainty, salmon farmers are still using already known diets, which reveals the need of a further research of this issue. Other existing dangers caused by the use of antibiotics in food are that products like fishmeal and oil produced with salmon, which are being offered for consumption to the food industry for fish3. The main risk is the possibility of recycling the diseases, like the bacterial ones that may generate a similar impact to that of the “mad cows” in Great Britain. 2.4. Use of immune stimulants Immune stimulants are chemical substances, drugs, stressants or activators of the immune system and of the unspecified or macrofacigo system, so they do not generate memory and they have a short duration action. They can be administered alone to activate non-specific defense mechanisms or they can be administered with a shot to increase a specific immune response too. The interest in the use of stimulants in farming centers started several years ago, but the initial expectations were overestimated because many farmers thought that they could replace vaccines and antibiotics. Although this situation, there has been further work on the issue to develop better products that could be integrated into the farming cycle of fish and as a defensive barrier against pathogens. Among the companies that develop stimulants (some of them in the trade and others in the search and development phases) are Nutreco, Aquaculture, Bayer and Veterquímica. Immune-stimulants do not replace vaccines, they are neither antibiotics nor corrective agents, but they prevent diseases in fish. For that reason the, concept of their use in farming centers should be changed. However, it is important to know that they are not 100% effective because the response in some fish is better than in others, thus immune stimulants conform only one of the tools that keep the good health of the fish. Control of diseases in farming centers should be focused, firstly, on preventive measures in relation to water quality, technology and reproduction techniques and secondly on the elimination of factors that favor diseases in fish (food components, food with residues, pollution, high density of fish, inappropriate places, insufficient health control and microbial conditions in the water). The risk of diseases can be reduced with the use of improved food, through a better resistance to diseases, when selecting specimens during 3 These are by-products of aquaculture and have been developed in order to take advantage of the residues originating in this industry. 19 the crossbreeding, in an ecologically management and through the use of stimulants and vaccines (though in practice they are difficult to develop). 2.5. Import of eggs Although the proportion of eggs imported diminished in relation to the total production of salmon, the risk of diseases is latent due to the growth, in absolute numbers, of the import of eggs during the last years and the increase of the production itself of the salmon. Since the arrival of the first eggs to our country, several exotic diseases have been introduced. They affect mainly salmon species and they could be transmitted to the local fish fauna. When importing eggs, species that do not belong to the habitat and with resistance to certain types of diseases and weaknesses to others are introduced. Besides, due to the lack of health control, these eggs carried bacteria and virus which may multiply rapidly in an environment different from the original. Therefore, the national production of eggs has been promoted, and according to Graph 4, we can point out that the amount of imported eggs diminished in relation to the farmed volume for different salmon species. This could be used as an approximate indicator of the risk of introduction of diseases4. The downward trend is remarkable for rainbow trout (since 1994) and for the silver or Pacific salmon (since 1992). In this case it indicates the existence of an important national production of eggs. Graph 4. Eggs imported per harvested ton, 1990-1997. (millions of eggs) millones ovas/ ton. cosechada 3,5 3,0 2,5 Salmón Atlántico 2,0 Salmón plateado 1,5 Trucha arcoiris Total 1,0 0,5 0,0 1991 1992 1993 1994 1995 1996 1997 Source: Compendio de Acuicultura, 1999, and Anuarios de Pesca de SERNAPESCA Elaboration: Terra Australis According to the previous paragraph it could be infer a lesser risk of diseases caused by the import of eggs. However, the most important issue when evaluating the risk of a disease outbreak is the volume, in absolute terms, of imported eggs. From this point of view, the risk increased in spite of the decreasing rates, as may be observed in Graph 5. 4 A record of the most dangerous diseases for the Chilean salmon industry can be found in Annex 1, Table F. 20 Graph 5. Import of Eggs, 1991-1997. (millions of eggs) millones de ovas 120.000 100.000 80.000 60.000 40.000 20.000 0 1991 1992 1993 1994 1995 1996 1997 Source: Compendio de Acuicultura 1999 Elaboration: Terra Australis 2.6. Outbreak of diseases Even though little research has been carried out on the outbreak of exotic diseases, the transmission of at least one disease affecting salmon to species of the local fish fauna has been detected. At present, the introduction of bacterial, viral and parasite diseases through the import of eggs and the direct introduction of species of salmon that do not belong to our habitats is acknowledge. Of these diseases, the bacterial ones are the most offensive to the salmonidfish and in time for the wild fish fauna too. The most common diseases are BKD, visceral flavobacteriosis (RTFS), external flavobactoriosis, enteric red mouth disease (ERM), piscirickettsiosis (SRS), marine anemia (nucleospora salmonis) and vibriosis. The increase of the number of species infected with diseases can clearly be observed in Graph 6, which shows that, while the level of production of salmon increases, new diseases have appeared affecting a larger number of specimens evidencing that in our country there is a direct relation between the level of production of the salmonid-fish and diseases registered for their species. In this way, for example, in 1987, the level of the production of salmon salar did not exceed 20,000 tons and the only existing disease was BKD. However, in 1993, when the level of production exceeded 60,000 tons (between trout, coho salmon and salar) the registered diseases increased by four (Caligus SP, SRS, ERM and N Salmo (AM). Likewise, in 1997 the level of production had growth 8 times and the number of diseases 9. 21 Graph 6. Outbreak of diseases in relation to the increase of the production volume between 1987 and 1997. (tons) 180,000 IPN 160,000 A.Salmon. Toneladas 140,000 120,000 U2 100,000 Trucha coho Salar RTFS 80,000 N.Salmon. (AM) 60,000 ERM 40,000 20,000 Caligus sp. SRS BKD 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Años Source: Terra Australis However, due to the lack of information on diseases affecting native fish, it is difficult to point out if these diseases were present in the local fish fauna before the introduction of salmonid-fish. Considering the isolated character of the Tenth Region, it is highly probable that this is not the case. According to Enriquez et al.(1998) a rickettsial organism called “U2” has been isolated from a native species, the puye (Galaxias maculatus) a species related to the salmonidfish species. This finding would confirm the transmission of exotic diseases, introduced through the salmonid-fish, to the local fish fauna, because in previous years the disease was identified in specimens of the Atlantic salmon. However, there is not enough knowledge of the probable impact of these exotic diseases on the local fish fauna. But it is clear that the native fauna is highly unprotected from these new diseases and in danger of being infected. 2.7. Discharge of solid and liquid waste Only 12% of aquaculture centers provide for treatment of discharge water from the processing plant, which means that the resulting water waste is discharged to the environment without having been previously treated. Solid waste accumulates in cage bottoms or is otherwise swept to the sea causing a reduction of oxygen in waters and even a decrease of the biodiversity. The existence of waste in any productive system indicates a defective use of the resources. In the case of the AI, there is great concern about the generation of such waste since it directly affects water as a resource, an important element for other productive processes and a basic element for life. 22 In view of the new regulations and taking into account the growing social pressure and concern about the impact of such waste on the ecosystem, at present, residues of the AI are used to generate by-products, such as salmon oil and fishmeal. However, residues which have not been reused and accumulate in the cages detrimentally affect the quality of the areas adjoining the farming centers. Depending on how strong the tides in these areas may be, residues either remain under the cages or are removed 150 meters away. Residues may accumulate on the seabed causing oxygen levels to lower and permitting the formation of toxic gases during the decomposition process, which may suffocate other animals. Occasionally, this has given rise to dramatic changes in the communities of animals living under the cages, including a reduction of the diversity of species. Liquid waste generated by the salmon processing plant as discharge during the process with water with blood is discharged with other waste of this industry. This liquid waste should be treated at plants located within the work sites. However, only 12% of the aquaculture centers in Chile have their own treatment plants for discharge waters (Aqua Noticias, 1998). Enterprises like Pacific Sur, Cultivos Marinos Chiloé, Patagonia Salmon Farming and Salmones Antártica, among others, have plants to treat waters. Some plants are currently developing the project in order to file it with the Superintendency of Sanitary Services for approval, whereas others are waiting for the sanitary company of the Tenth Region (ESSAL) to put into operation its own treatment plant in order to negotiate an arrangement directly with such authority (La Nación, 1999). In fact, the legislation in force in our country permits sanitary companies possessing sewage treatment plants to treat industrial discharge waters deposited in the sewerage system. The problem lies in the fact that those industries discharging their residues into bodies of water are waiting for the enactment of a definite set of rules in order to take measures in their own plants. This situation may be easily postponed since the new legislation will provide for terms of between 5 and 10 years for the industries to regularize this situation. 2.8. Mortality of sea birds and mammals The attack of predators causes losses to the AI of 21 million dollars yearly, which led to the slaughtering, with cruel and illegal methods, of more than five thousand of sea lion specimens during the 80s and beginning of the 90s. Coastal sea birds and mammals have always been active elements of the southern landscape. It is outstanding the variety of sea birds, mainly of seagulls, fardelas, cormorants, ducks, and penguins, among others. Although the diversity of marine mammals is inferior they still have and important place. There are no estimations on the population density before the set up of the farming centers but it has always been considered that there is a large number of them in the waters of the Chiloé and Los Chonos Archipelagos. In Los Chonos there are endemic species of the Chilean dolphin (Cephalorhynchus eutropia) and the sea otter (Lutra provocax) that live in the southern 23 coasts of Chile. There are also species of wide distribution like killer whales, ballena franca, South American sea lion and the common sea lion (Otaria flavescens). Since the cages were set up a conflict started among salmonid-fish farming centers, on one side, and sea birds and mammals, on the other side, particularly, with the common sea lion because they attacked the cages to obtain food. For more than ten years the salmon industry and the corresponding authorities did not consider this situation. As a result of this conflict, the use of several methods was advised in order to protect salmonid-fish from the attack of those animals. The companies installed protecting nets and nets against sea lions. The first ones are located between one or two meters on the surface, closing the mouth of the cage and the second ones are placed in the water around the cages and in certain cases under the cages. The use of nets against sea lions causes their death by immersion. In practice, cruel methods are still being used to eliminate sea lions, like the manslaughter of specimens in their resting place or reproduction colonies with firearms. Some specimens, caught in the farming centers are also killed with sticks, others die due to the compulsory ingest of carbide (death caused by bloating) and the carving up of specimens which are tied up near the cages as a “lesson” for those specimens prowling around (Oporto et al., 1991). These practices were devastating during the eighties and middle nineties and the result was the death of 5,000 to 6,000 specimens of the common sea lion (Otaria flavescens), an unspecified number of Chilean dolphins (Cephalorhynchus eutropia) and the austral dolphin (Lagenorhynchus australis) and occasionally of the Minke whale (Balenoptera acutorostrata). The industrial sector has justified the methods by stating that sea lions produce an enormous economic damage to the production activities and requested to the corresponding authorities the necessary authorizations to kill them, which the authorities have occasionally granted. However, in almost every case, these activities of eliminating sea lions have been carried out clandestinely and outside the legal framework. According to a study by Brunetti et al. (1998) attacks by sea lions may cause the loss of about 21 million dollars per year to the salmon industry and this represents 3% of the sales, considering the insurance, purchase and maintenance of nets, security guards, and the death and escapes of salmon during sea lion attacks. 2.9. Changes of the landscape The set up of cages has deteriorated the landscape although the opinion of the AI people, even jeopardizing the development of other economic activities, specially because the installation of the cages implies the decay of the quality of water. 24 With the installation of cages in the southern coast of Chile a new element has been incorporated to the landscape that changes the historical image of these places, specially of the Chiloé Archipelago. According to people from the salmon industry, the presence of cages has been a contribution to the landscape and tourism because they attract more visitors. However, this version –clearly intentional- should be supported technically, with documents and impartially, because local people and tourists have a different opinion as they consider that the cages are visual contaminants due to the deep change of the landscape. Although the last fact is not documented, the rejection is as clear as that expressed before any type of contamination that changes the life style and the original landscape in places affected by several environmental impacts. Besides, local people who were traditionally engaged in small-scale agriculture and small-scale fishing were limited in their extractive activities of coastal marine resources due to the aqua licenses that decreased the coastal land apt for fishing work. Until today there is no study or data with measures or quantities about the effect of the cages on the landscape and tourism because the development of the latter is probably linked to multiple factors, specially economic ones (type of change, the general economic situation of the country, the circumstance of neighbor countries, etc.) and not only to environmental factors. 2.10. Use and availability of the coastal line The main problems of the coast are the quality of water, threats to biodiversity and conflict of interests arising among different users. The impacts of the AI along the coast are the alteration of the quality of water bodies, ecosystems, their habitats and structure of their communities. The Chilean land counts with approximately 3,000 kilometers of coast from north to south, which added to the coast of the island of the Patagonico Archipelago exceeds the 30,000 kilometers of coastal line. The coast or coastal region is defined as the strip that goes from the fiscal beaches located along the coast, the beach, bays, gulfs, straits, inland channels and the territorial waters that belong to the Republic –under the control, fiscal inspection and supervision of the Ministry of National Defense and Marine Undersecretary. This territorial land is requested for several uses by different entities and for different activities developed nationwide. It is also and important space for the Chilean social, economic, historic and cultural development. The limited area of the coast and the territorial waters are under the influence of natural and anthropic processes. The anthropic effects on the ecosystems, derived from different development activities, may cause changes, which in certain cases may be irreversible. Damages on the coast may also endanger the socioeconomic development of a whole region if the environment factor is not considered when using natural resources. 25 Along the Chilean coast there is a unique demographic reality. It has population concentrations in the center and in the coast in both extremes of the country. In the First, Second, Third and Fourth Region in the north and the Tenth, Eleventh and Twelfth Region in the south, almost 100% of the population lives in the coast. More than half of the national population (about seven million people) lives in the coast, but out of this percentage, most of the people concentrate in the extremes locations of the country. Due to the system of free market in the country, the use of coastal resources has only been regulated by extraction shares and the capture of aquatic species according to their own characteristics and population density. However, the use of the coastal line and its resources has not been considered from an integral perspective. There is a growing concern by the community as regards the use of the coast. During the last years this concern was translated into a series of activities and investigations and on surveys conducted to determine the most urgent issues affecting the use of the coast. The investigations state that the first problem in the coast, and the most urgent to be solved, is related to the quality of the water which, in other words, means that the polluted areas should be identified. The second problem is related to the threatens to the biodiversity and the third problem to the appearance of more conflicts between different users, mainly of the Industry of Maritime Transport, Tourism and Aquaculture, including the salmon industry. In relation to the AI, the environmental investigations have identified that the main impacts of the aquaculture salmon industry along the coast are: Alteration of the quality of water bodies caused, mainly, by salmon's food: - Eutrophication - Increase of the organic matter. - Consumption of oxygen - Increase of CO2 - Increase of nitrogenous and phosphorus - Emission of bioactive compounds Trophic alterations and habitat alterations of the ecosystems as well as alterations of the structure of the communities caused by the escape of salmon, diseases and the import of eggs. Change of the landscape caused by the installation itself of the cages The Chilean Government, through its Undersecretary of Fishery, is developing a plan to use the coast. It specifies the more appropriate areas for aquaculture activities, exclusive use for small-scale fishing, management areas, et cetera. However, this plan is addressed to the use of coastal water resources and they do not have an integral vision on the use of the coast. This situation gave origin to conflicts of interests among different production activities that profit from the use of the coast like the salmon industry, tourism and coastal traffic. Recently, in Puerto Montt, there was a conflict of interests between some salmon industries in the area, and the probable establishment of a harbor nearby. This 26 situation shows the lack of a management plan of the coast, which is being used based on the existing demand from different sectors. Consequently, it is necessary to implement an environmental policy through a multisectoral plan that harmonizes the use of the coast among different users. This should be based on a sustainable development basis and a strategy of scientific and technological research towards the conservation of the natural assets and different biological ecosystems because of their crucial nature for the development of the present and future generations. 2.11. Standards of environmental quality According to the environmental standards of water quality it could be determined that five of the eight lakes examined in the Tenth Region, have high levels of environmental degradation. The most polluted lakes are located in the Province of Chiloé and the AI may be the main cause of this situation. Eutrofication, modification of the primary production and the zooplancton, changes of the sediments and the communities of the seabed, transmission of diseases to the wild fauna and potentially to the human being are expressed and syntetized in terms of the quantification of phosphorus (P) and nitrogen (N) emissions generated by the AI. These are the elements that significantly affect water quality, preventing the appropriate quality to be obtained for the different uses, such as water for drinking, swimming, fishing and water sports. There are some guidelines that can be used to qualify the environmental condition of coastal areas, lakes and lagoons. The qualification of water bodies are: oligotrophic, mesotrophic and eutrophic. In general terms, oligotrophic means: “…the water is crystalline, with little production of algae and low concentration of nutrient, specially of nitrogen (N) and phosphorus (P)”. Eutrophic refers to water bodies that “…have a high production, non- transparent, usually coffee or dark green color with algae and filaments along the edge and very often with an unpleasant odor”. (Soto, D and Campos, H; 1996). And the mesotrophic state is an intermediate situation between the two mentioned before. As a consequence of the eutrophication of the lakes, the quality of the water is poor, affecting the potential economic activities that need waters with a better quality for their development. Table 2 presents the environmental standards on the basis of three parameters (phosphorus, nitrogen and chlorophyll) and the corresponding qualifications of water, depending on its use. 27 Table 2: Environmental standards: General classification (international) that represents the trophic or productive state of lakes and lagoons (APHA, 1981). Phosphorus, total (g/l)* Nitrogen Chlorophyll WATER QUALITY FOR (NO3-N) (g/l) Drinking Swimming Fishing (g/l) Oligotrophic 1-10 1-50 1-5 G-VG VG G Mesotrophic 11-30 60-200 6-10 R-P G VG Eutrophic >30 200 >15 VP R-P R-P Source: Soto, D y Campos, H. (1996). * (g/l)= micrograms per liter Note: Rating of water quality: VG=very good; G=good; R=regular; P=poor; VP=very poor Water sports VG VG R Table 3 illustrates the results of a study on the quality of the water of eight lakes in the Tenth Region where the salmon farming aquaculture industry is practiced. The lakes are Ranco (Province of Valdivia), Rupanco (Province of Osorno) and Llanquihue (Province of Llanquihue) and Tepuhuico, Tarahuin, Cucao, Natry and Huillingo located in the province of Chiloé. When comparing the environmental standard with the levels of pollution of these lakes, it was noted that the five lakes in the Province of Chiloé present contaminants in excess, particularly the lakes Cucao and Huillinco, with levels of nitrogen exceeding 15 and 22 times respectively; the limit from which are considered within the eutrophic range. According to some studies consulted, the AI may be the main cause of this pollution. Table 3: Level of phosphorus, nitrogen and chlorophyll in the lakes of the Tenth Region (g/l). Phosphorus Nitrogen Chlorophyll Ranco 3.8 16 w/i Rupanco 9.2 12 w/i Llanquihue 3 15 w/i Tepuhuico 15.8 w/i 3.9 Tarahuin 22.1 188.7 w/i Cucao 217.1 3100.9 w/i Natri 23.2 299.1 w/i Huillinco 322.9 4493.1 w/i Source: Campos, Hugo, 1997 Soto, D. and Campos, 1996 Note: w/i = without information Surprisingly, even though the Llanquihue lake absorbs a large number of farming centers there are no negative environmental condition indicators present therein. This may be due to the large size and depth of the lake. The contribution of P by the salmon aquaculture is estimated at 12.8% of the total amount of phosphorus presented in the lake (Soto, 1993). In the lake Ranco there are some signs of eutrophication on the edge of the lake (Soto and Campos; 1996). The main contribution of Phosphorus comes from natural tributaries (erosion caused by deforestation in the basin). Therefore, the contribution from the farming centers is not significant. Based on the previous paragraph, we cannot conclude that the activity of farming centers in lakes Llanquihue and Ranco is positive but simply there are no significant environmental impacts present. In other words, if the AI continues expanding in that area 28 it is probable that the negative indicators registered in the lakes of Chiloé may also be found in the other lakes of the region. 29 Chapter 3 SOCIAL AND ECONOMIC IMPACTS The sudden increase in salmonid-fish production in Chile seems to have contributed significantly to the development of the Tenth Region and Chile itself. However, this is not so. In the first place, there is a need of 40% less workers in farming centers by reason of technological changes. On the other hand, the benefits arising from the AI were not distributed among workers, quite to the contrary, the functional distribution of income is highly regressive since businessmen have not honored their “axiom” that salary increases should be in line with increases in productivity. There is a noticeable increase in non-distributed profits gained by industrialists. The share of salaries and taxes in the value-added5 of the AI shows that its contribution to the development of the region and Chile has been poor and inadequate. Both indicators show a downward trend over the last few years in contrast with the profits gained by the companies, which have increased over the same period of time. Moreover, it has been found out that the increase in income resulting from this industry is less beneficial to workers and the National government and that, as concerns workers, less skilled workers have been the most damaged. The AI has also a greater pressure on fisheries resources and the competitive use of them, which has caused the small-scale fishing to decrease systematically. This has given rise to a structural change evidenced by a reduction in the number of workers who used to devote to such business independently and who nowadays discharge duties as workers in farming centers and companies engaged in the production of salmonid-fish. In Chiloé, the social and cultural impact has been highly remarkable. Men traditionally engaged in fishing, harvesting of shellfish and algae, as well as to small-scale agriculture have migrated and, once self-supporting, now depend on third parties to earn their livings. They have sold their lands, impoverished their families and developed undesirable habits (increased alcoholism), thus contributing to the loss of a distinctive culture in the country. 5 The Value Added (VA), by definition, is equal to the sum of the wages (salaries), indirect taxes, consumption of fixed capital and gross profits. It corresponds to the total income generated by an activity. 30 3.1. Economic Impacts 3.1.1. Chile and the Global Production of Salmonid-fish The growth of the global production of salmonid-fish was sustained by the Chilean production. The growing supply of this product created a fall of its price within international markets. The gross production of Chilean salmonid-fish (rainbow trout, Atlantic salmon and Pacific salmon) reached 141,377 tons in 1995, an amount that at the following year reached 199,085 tons and 247,970 in 1997. The global production of the Atlantic salmon increased by 487,538 tons during 19871996; 77,286 of which pertain to Chile and 410,252 to other countries, the percentages of said increases were fixed at 15.9% and 84.1%, respectively. The relevance of the growth of the Chilean production within the global production is evidenced when considering that in 1996 the first was 1,886 times larger than the production of 1987 whereas the same indicator for the production of other countries was hardly 8.2 times. The global production of the Pacific salmon during the same period under analysis is clearly illustrative of the situation of the Chilean industry. In fact, the global production of this type increased by 59,732 tons while the production in other countries decreased by 5,487 tons; thus Chile fully absorbs the increase in the global production and replaces the decrease in other countries increasing its production by 65,219 tons. Moreover, in 1996, the production of other countries was only 0.6 times than that registered in 1987 while the Chilean production increased 37.9 times. Finally, the global production of the rainbow trout showed an increase of 146,193 tons in 1987-1996; the Chilean production absorbs 53,484 tons and other countries 92,709 tons; representing 36.6% and 63.4% of the total increase respectively. In 1996, the production of this variety in other countries was only 1.4 times than that registered in 1987, while the Chilean production increased 57.6 times. Therefore, the growth of the Chilean production of salmonid-fish contributed significantly to the growth of the global industry (Annex 1, Table G). This larger availability of salmonid species is responsible, to a large extent, for the fall of prices of the salmon and trout in the global market. With regard to the downtrend of the price of salmon in the global market, Achurra (1995) says that “it was due to the oversupply from Norway since 1989”. However, the figures permit us to disagree with such assertion because, although it was true that Norway significantly increased its production (according to data provided by the author) so did Chile; therefore, the oversupply originates mainly in both countries. 31 3.1.2 Exports: Prices and Commercialized Volumes Chilean exports of salmon and trout have increased between 1988-1998 by 2,584 and 9,300 per cent respectively. Such growth was sustained by the increase of the physical production of both species by 3,752 and 6,226 per cent respectively. Prices present a clear downtrend in the case of the salmon (-30%) while the downtrend of the trout can only be verified during the second five-year period of the analysis. The expansion of exports continues growing but at a minor rate. National exports of salmon (in millions of dollars) have an enormous and systematic growth since 1990. In 1998 exports were 6.1 times those of 1990 and 400 times higher than those of 1985. This growth of 2,584% during the decade 1988-1998 led to a decrease of the prices by –30%. Therefore, it is clear that the physical increase of units exported caused, on one hand, the increase of this macroeconomic indicator and, on the other hand, the increase of the Chilean supply of this product in the global market which caused a fall of prices (Graph 7). In this way, during the first five-year period 1988-1993 the tons of salmon exported increased by 1,292% and for the second five-year period 1993-1998 the growth was 177%. An important percentage although the very minor variation in comparison to the first five-year period (Annex 1, Table H). Graph 7. Chilean exports of salmon: volume and prices, 1988-1998. (tons and thousands of US$/ton) 120 120 95 100 74 80 60 38 40 20 105 20 3 43 52 27 7 6 5 4 3 2 1 6 0 miles US$/ton. miles toneladas 140 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Volumen Precios Source: Foreign Trade Indicators, Banco Central de Chile. Elaboration: Fundación Terram Exports of trout show a higher rate of growth than that of the salmon, both in monetary terms and physical units. In fact, in 1998 exports were 106 times than those in 1995 climbing to 54,658 tones in 1998. The level of prices for this product registered a steady increase until 1992, as it can be observed in Graph 8 and from that year on it started to decrease. However, if we consider the five-year period 1988-1993 there is a clear growth of the level of prices of 77% while during the 1993-98 second five-year period, there was 32 a negative growth of -14% which confirms the hypothesis of the global oversupply in this industry. Graph 8. Chilean exports of trout: volume and prices, 1988-1998. (tons and thousands of US$/ton) 54.66 miles toneladas 50 5 44.69 40 6 4 33.15 30 3 22.54 19.55 20 2 16.32 miles US$/ton 60 10.98 10 0.86 1.77 1988 1989 4.02 5.47 1990 1991 1 0 0 1992 1993 Volumen 1994 1995 1996 1997 1998 Precios Source: Indicadores de Comercio Exterior, Banco Central de Chile. Elaboration: Fundación Terram. The increase of the exports of trout was based on both the increases of prices during the first five-year period and the climbing of physical units exported during the same period. In this way, for the first five-year period under analysis, the amount of trout exported increased by 1,789% and for the second five-year period the increase was minor but reached 235%. This meant an increase of 6,226% for the whole decade. (Annex 1, Table H). If we consider the global figures given for the five-year periods we could conclude that the export expansion showed a clear tendency to increase but at a lesser rhythm. Actually, both physical exports and in value, for salmon and trout, showed growth rates during the 1993-98 five-year period inferior to those of the 1988-93 five-year period, Graph 9. The growth rate for physical exports of salmon (in tons) for the first five-year period is 7 times than that of the second five-year period whereas the growth of exports in value (in dollars) is 8 times during the first period than that of the second period. As regards the trout, physical exports during the first five-year period is 7 times higher than the second five-year period whereas the exports in value is 17 times higher. 33 Graph 9. Growth of the Chilean exports of salmon and trout during the five-year periods 1988-1993 and 1993-1998. Salmón 3182% 1292% 2000% Trucha 1045% 177% 1000% 1789% 4000% 134% 235% 186% 2000% 0% 0% volumen 1988-1993 miles US$ 1993-1998 volumen 1988-1993 miles US$ 1993-1998 Source: Annex 1, Table H Elaboration: Fundación Terram. As a result of said pattern of the exports the currency generated out of the AI increased systematically between 1994 and 1998, during the last year the records were double than in 1994. Exports of salmon and trout increased from 353 million dollars in 1994 to 732 million dollars in 1998. 3.1.3. Demand of Food Products The production of fishmeal, raw material for the salmonid-fish industry registers amazing growths during the last years in the Tenth Region. This caused undesired impacts of pressure over fisheries resources. Farming salmonid-fish generates an important demand of food, mainly of fishmeal. It has been estimated that at the global level, a third of the amount of fishmeal is used as food for the aquaculture industry (Naylor et al., 2000). Chile is the second producer of fishmeal in the world, an element highly important for the development of the AI because of its competitive advantage that other worldwide producers lack. Until 1995, the production of fishmeal in the Tenth Region was not important if compared to the total national production. However, since that year, the production of fishmeal started to increase considerably in the region while at the national level started to decrease drastically (Graph 10). 34 Graph 10. Production of fishmeal; total national vs. Tenth Region, 1992-98. (tons) 1.800.000 14.000 1.600.000 12.000 1.400.000 10.000 1.200.000 tons 800.000 6.000 600.000 tons 8.000 1.000.000 4.000 400.000 2.000 200.000 0 0 1992 1993 1994 1995 Total nacional 1996 1997 1998 X regi ón Source: Servicio Nacional de Pesca, SERNAPESCA, 1998 Elaboration: Fundación Terram The increasing production of fishmeal at the regional level, both to supply the demand of the AI and of other economic sectors, national and foreigners, that use this product, creates indirect environmental effects with clear economic impacts. In fact, while the production of fishmeal increases it is possible to identify at least two undesired impacts. First, the fact that there is more pressure on fisheries resources used to produce fishmeal, which means a considerable reduction of this resource. Second, the competence created by the captures with other economic agents like small-scale fishers who had lived from this activity. As we will see later, these captures have decreased greatly over the last year. 3.1.4. Exported Products During the last years the composition of the basket of exports has changed: fresh products are increasing and frozen ones decreasing. This could be due to a change in the demand by foreigner consumers. The composition of the basket of export goods per type of product slightly varied between 1994 and 1998. In 1994 frozen products represented 55.6% and fresh products 44.4% but in 1998 frozen products fell down to 49.4% and fresh products escalate to 50.6%6. Export of fresh products present a steady increase at a rate of 131,5% during said four-year period and an annual average rate of 23.7%. The growth is based on the large increase of exports of fillet that increased by 414.7% for the four-year period while fresh Pacific and Atlantic salmon showed a negative growth of –13.4% during the same period (Annex 1, Table I). 6 Frozen and fresh products include Pacific salmon, Atlantic salmon and fillet. 35 Increase in frozen products is lower as compared to that in fresh products, showing a 81.2% growth during the last four years. Similarly as in fresh products, exports of fillets show the highest rate, with a 280% increase over the same period. It is believed that the reason for a decrease in exports of frozen products is a shift in the demand of consumers in the countries of destination of Chilean exports, since they prefer filleted and fresh products. Note that under the category of frozen products, the value of shipments of Atlantic salmon decreases to an annual average rate of –1% during 1994-1998 while the Pacific salmon increases at an average rate of 16% (Annex 1, Table I). This could be explained by the fall of prices in the case of the Atlantic salmon due to the important increase of the Chilean supply which in 1996 was 1,886 more than that of 1987. 3.1.5. Target Markets of Exports Preeminence is still on the Japanese and North American markets for the export of products of the national AI. At the same time the number of countries were shipments are sent increases as well as the absolute figure of exporters. The target markets for salmonid-fish exports are mainly two: the United States and Japan. The share in the market is 59% for Japan and 29% for the United States. The European Community and Latin America are markets of lesser importance with a share of 5% for each market. Other markets represent only 2% (Graph 11). Graph 11. Target markets of the exports for 1995-98 (% average). Am é r ica Latina 5% Com unidad Eur ope a 5% EE.UU 29% Otr os m e r cados 2% Japón 59% Source: Annex 1, Table J Elaboration: Fundación Terram The target markets of exports have been fairly stable during the 1995-1998 period. In fact, there are small variations for the United States and Japan. In 1995, both countries received 29.2% and 60.4% of shipments of salmonid-fish respectively. In 1998 said percentages fell by 57.6% and 28.8% respectively. In 1995 Latin America received 2.9% 36 of the exports and in 1998 increased by 6.2% compensating for the decrease in the markets of Japan and the United States (Annex 1, Table J). Within this international context, the Chilean salmonid-fish experienced a clear expansion, because in 1987 the product was offered in 17 countries and 10 years later these products supply the market of 50 countries. This increase was due to the expansion of the European market, the Latin American and the growing participation of Asian countries. This diversification of the market has also translated into an increase of the number of national export companies. In 1987, there were 37 export companies of salmonid-fish, of which only one traded 21% of the volume while in 1995 the number of export companies increased by 203 of which the most important one traded only 6% of the total volume. 3.2. Impact on other economic sectors: tourism and small-scale fishing 3.2.1. Tourism There is little evidence on the negative impacts of the AI on the tourism of the Tenth Region. However, there is, at least, one case of a tourism investment enterprise that did not take place because of the pollution of the waters in one of the lakes in Chiloé. As there is no study on the relation-cause-effect between the aquaculture industry and tourism activities it is difficult to make final remarks on this issue. Even though several methodologies could be used to measure the loss of the well being of the tourists because of the loss or decrease of the environmental quality of recreational places caused by the development of the AI there has been no attempt to measure such impact. That is why we just limit our comment to stress that there may be a negative impact on tourism due to the effect of the aquaculture industry on the quality of waters and the landscape. In fact, there is an initiative of tourism development in the lake Natri (Chiloé) that could not be fulfilled due to the high level of pollution of the water. It should also be considered that the AI has not suffered the adverse effect of ecological antipropaganda, mainly because issues related to fishing are quite rejected in the country. This means that there are no social or ecological groups that have undertaken the issue of adverse impacts of this activity and this prevents the reduction of tourism flow. 3.2.2. Small-scale fishing There is a clear decrease of disembarkation from the small-scale fishing sector due to a structural change of the occupational behavior of the Chilotes and to the decrease in the biomass of marine species. 37 In order to analyze the potential impact of the salmon activity on the small-scale fishing sector (via more pressure upon fisheries resources and the competitive use of the resources) we consider the total capture in four important areas of fish disembarkation: Calbuco, Ancud, Castro and Quellón. The captures under consideration include all fish species, except salmonid-fish species, for the 1990-1997 period. All this information is summarized in Graph 12. As shown, there has been an important decrease in captures since 1990 and the downward trend is similar for all areas under consideration. Such decrease is substantial in the areas of Calbuco and Castro. Graph 12. Small-scale fishing disembarkation, without considering salmonid species by geographic area, 1990-1997. (tons) 14.000 12.000 toneladas 10.000 8.000 Calbuco 6.000 Ancud 4.000 Castro 2.000 Quellón 0 1990 1991 1992 Castro 1993 1994 1995 Calbuco 1996 1997 Source: Servicio Nacional de Pesca, SERNAPESCA, 1998. Elaboration: Fundación Terram. Pressure on fisheries resources in the Tenth Region was translated into a systematic decrease of the small-scale fishing –in contrast with the situation of salmon species which at the same time resulted in a structural change of the work force in the areas under analysis. This means that people normally engaged in small-scale fishing are nowadays working in a large number of farming centers and companies engaged in the processing of salmonid-fish (fresh-cool, frozen, smoked, et cetera.) which, nowadays, abound in the areas previously mentioned. Another powerful factor is the decrease of the biomass due to the notable increase of the production of fishmeal, which is undoubtedly generating pressure upon fisheries resources as well as competence for them. In other words, there is an overexploitation of coastal marine resources that jeopardizes small-scale fishing in the Tenth Region. 38 3.3. Social Impacts 3.3.1. Distribution of the Income 1990-1995 The growth of the AI contributes poorly to the development of the country and creates inequality in terms of distribution, a fact that is evidenced by the analysis of the share of salaries and taxes to the value-added of this activity. Both indicators show a fall during the last years in contrast with the levels of profits of the companies which increased steadily during the same period under analysis. The estimated work force participating in the salmonid-fish subsector is approximately 23,000 people; 15,000 of them are direct employees and 8,000 are benefited indirectly. According to Brunetti et al. (1998) the salmon industry in the Tenth Region represented 85% of the salmon industry of the country and employed an average of 21 workers per farming center and as we already mentioned, 10 of them have been replaced by technological improvements. However, it should be taken into account that even though the exact number of workmen is not known because many of them work on a temporary basis, after 1998, many of the work force is being replaced by technological improvements in the farming centers. For example, wooden cages were formerly manufactured in carpenter shops located at each farming center. Since 1992, these cages were replaced by PVC (plastic) cages thus leading to the first technological change resulting in the reduction of the work force in the industry. Similarly, until 1997-1998, feeding of fish in captivity was done manually, and 8 to 15 persons were needed for a group of 10 cages7. At present, workers have been replaced by automatic feeders, a fact that has caused 8 to 10 workers to be dismissed in each farming center. Therefore, if we concluded that data provided by Brunetti et al. (1997) regarding the average of 21 workers per farming center is correct and if we considered the technological changes previously mentioned we could conclude that at present there is a 40% less of employment of workers within the aquaculture industry than in 1998. As concerns the distribution of income within the aquaculture industry, it is important to mention that it shows a regressive dynamic during the period under consideration. In fact, the share of profit (g) in the value added increased by 11.9% between 1990 and 1995 while the added salaries8 (w) and taxes (tx) decreased to a rate of -8.4% and –3.6% respectively (Annex 1, Table K). 7 8 Each contains 10 cages inside. Added salaries equal the sum of all the salaries of employees (wemp) and unskilled workers (wnc) 39 As can be observed in Graph 13 the profits of the sector in the Tenth Region represent between 48 and 65 percent of the value-added during the period under analysis with an increase of the share rate by an annual average of 6.1%. Graph 13. Evolution of the share of profits in the value added of the AI in the Tenth Region, 1990-1995. (%) % del VA 65% 64,20% 60,92% 60,46% 56,93% 55% 48,52% 45% 1990 1991 1993 1994 1995 Años Source: Encuesta Nacional de Industria Anual ENIA 1990 - 1995. Elaboration: Fundación Terram Based on the information of Graph 14 we can observe that the share in the VA of unskilled employees’ salaries (wnc) varies between 21% and 15% during 1990 and 1995 while that of the employees (wemp) between 11% and 7%. Though share of wemp diminished by –3.2% during the same period, this decrease of the share of the wnc is larger, -5.2%. This evidences that the increase of the incomes generated by the growing exports of salmonid-fish was not translated as an increase of the incomes of employees, measured as a percentage of the VA, on the very contrary, the share decreases during this five years under analysis in detriment to unskilled employees (Annex 1, Table K). Graph 14. Evolution of the share of salaries of employees and unskilled workers in the VA of the AI in the Tenth Region, 1990-1995. 25% % del VA 20% 20,86% 20,31% 16,30% 17,32% 15,69% 15% 10% 10,89% 10,20% 9,98% 7,67% 7,46% 5% 1990 1991 1993 1994 1995 Años wemp wnc Source: Encuesta Nacional de Industria Anual ENIA, 1990 - 1995. Elaboration: Fundación Terram. 40 Finally, when analyzing the trend of payment of the income tax and the Value-Added Tax (VAT) (Graph 15) we can observe that the total amount does not exceed 10% of the value-added and that decrease shown since 1990 has not recovered during the period under analysis. In fact, the decrease of the share is approximately 2% during these 5 years. The recovery of taxes since 1991, as you may observe in the Graph, was basically due to the increase of the industries that declare their taxes. In short, the share of the salaries and the taxes in the value-added decreased while the share of profits increased; thus, proving the inequality in terms of distribution and contribution to the development of the country of the growth dynamic of the AI. Furthermore, not only we can state that the largest incomes generated by this industry benefited less the employees and the State but also that within the group of employees the most damaged were the less skilled. Figure 15. Evolution of the share of the income tax and VAT in the value added of the AI in the Tenth Region, 1990-1995. (%) 9% % del VA 8% 7% 6% 5% 4% 3% 1990 1991 1993 1994 1995 Años Source: Encuesta Nacional de Industria Anual ENIA 1990-1995 Elaboration: Fundación Terram 3.3.2. Salaries and Productivity When examining the share of salaries of the Gross Net of the Production (GNP) you can observe the lack of balance between the growth of the salaries and the productivity and a clear loss for the employees. A different method of evaluation of the impact of distribution of an economic activity consists in the analysis of the share of salaries in the Gross Value of the Production (GVP)9. In this case we need to know the evolution of the –salary-product (value of the salaries over the sales value) and the physical production of the work10. 9 The gross value of the production represents the value of the sales of the industry For further information and application of this approach see Agacino, 1994. 10 41 Graph 16 illustrates the growth rates for salaries and production taking into account the 1990-93 and 1993-96 periods. During the first period, salaries grew at an annual average rate of 18% and the productivity of work 31%, respectively. During the second period the difference became inferior but the growth in production was higher than the increase in salaries. To conclude, salaries in 1996 were 2.6 times that of 1990, whereas the work production was 3.3 times that of 1990. Graph 16. Evolution of the annual growth of salaries-productivity and share of salaries in the GVP, 1990-1995. (%) % 35 30 25 20 15 10 5 0 1990-1993 Índice salario-producto 1993-1996 1990-1996 Índice producción física del trabajo Source: Annex 1, Table L. Elaboration: Fundación Terram The results illustrated in this section confirm the results shown in the previous section as concerns the share of salaries in the value added and we conclude that the functional distribution of the income was highly regressive during the period under consideration. Furthermore, the “axiom” of businessmen was not observed at the time of collective bargaining with workers, such axiom being that raises in salaries will be conditional upon an increase in production. On the contrary, we can observe an increase of not distributed profits of the industrialists. 3.4 Sociocultural changes of the local communities Development of the AI, mainly in Chiloé, has affected the characteristics of the so called “Chilota culture’. The Chilota communities have moved away from their land and the economy of subsistence. Their customs are changing drastically with the opening of farming centers and processing plants. The south of Chile, specially the Chiloé Archipelago, is the place most used by farming centers of salmonid-fish to carry out their activities. In this particular region there is a culture widely known as the “Chilota Culture”, which is a combination of the customs of 42 the inhabitants of the island known as Huiliches and Spanish settlers who mixed with the natives. Out of this genetic and cultural mixture originated the “Chilota Culture”. Traditionally, the inhabitants of the Chiloé Archipelago were men engaged in fishing, collecting shellfish and algae and in small-scale agriculture. They mostly depended on their ability to farm the land and on the extraction of fish and seafood. A characteristic of this kind of development is that the island was divided into small plots of 2 or more hectares, mainly along the coast because towards the inland the population density decreases and the land areas are larger. Traditionally, each family carried out fishing and farming activities. They based their economy on fresh, salt and smoked products from the sea and the land. This situation led them to apply new technologies because of their island character they were isolated from the rest of the countries, as well as their customs. At present, with the accelerated industrial development, the work force of the island, in the beginning the whole family participated, was concentrated on the young people who gradually abandoned the work of their own land, in many cases selling it and accepting jobs in different types of industry or commerce. The AI is one of the economic activities that has captured most of the work force in Chiloé. This fact seems positive but had a strong negative cultural impact because if the local people accept those job positions they abandon the work on the land and fish; thus they abandon their practices and natural richness. Consequently, they went through a category under which they were the owners to a category under which they depended on third persons to survive, selling their lands and impoverishing their families, developing negative habits, contributing to the lost of the Chilota culture. This cultural change does not belong exclusively to the AI. However, the overexploitation of fisheries resources caused by the salmon industry which reduce to a large extent the availability for the development of extractive fishing and the significant contribution of this industry to the unfair distribution of the benefits of the economic development are elements –all of them- that contribute to the weakening and probable disappearance of such traditional culture. The question is, what kind of progress lead certain economic activities that, like aquaculture, decrease the economic autonomy of the population decreasing the quantity of small-scale resources available and contributing to inequality? 43 Chapter 4 NEW CONCEPTS: THE “GREEN” GDP AND THE ENVIRONMENTAL GAP Investments required in 1997 for the salmon production industry to reduce its level of pollutant emissions amounts to an aggregate figure between 14 thousand to 16 thousand million pesos, depending on the conversion factor used. Such assessment takes into account the mitigation costs to be incurred to remove thousands of tons of phosphorus and nitrogen deposited on the bottom of waters, upon having been thrown away as residue of feed after its consumption by fish. In search for a correct use of the National Accounts System, this report suggests a new indicator -the green GDP- that deducts the traditional GDP11 the depreciation of the natural assets, the loss of natural resources and contamination of the environment. Total Mitigation Costs (TMC) are key factors to calculate the Green GDP since they may be used to assess the depreciation value of the natural assets. Another key concept is the so-called “Environmental Gap”, that is the difference between the traditional GDP and the Green GDP. Between 1990 and 1996, the traditional GDP grows 3.2 more times while the Green GDP increases only 2 times. The problem is that there is a sustained growth in the Environmental Gap and there is also tendency that such gap may become wider since 1990 to date. This tendency will remain steady for as long as the AI continues to grow under similar conditions as those prevailing at present, that is, setting aside and disregarding several costs which are not being disbursed nowadays but which will undoubtedly be paid in the future, not only by the companies engaged in the aquaculture business but by other economic activities and the social community as well. 4.1. Accounting of Natural and Environmental Resources. Conceptual Aspects 4.1.1 Brief description of the System of National Accounts (SNA). The System of National Accounts is a record of the transactions carried out by a countryat an aggregate level- within its own territory and with the rest of the world. These accounts show the performance of macroeconomic variables, such as private consumption, governmental expenditures, gross geographic investment and net exports, etc., over a certain period of time, regularly one year. 11 Gross Domestic Product represents the aggregate output of goods and services annually produced by an economy. It is the indicator of the total income generated by one country. 44 The SNA illustrates the evolution of economy and became a good tool to evaluate the economic policy, “since it is the only set of statistics which provides a coherent description of the historical evolution of the various economic activities from the perspective of production and utilization of goods and services”12 4.1.2 Unfavorable opinions on the SNA Some of the drawbacks of the SNA as concerns the environment are summarized below, on the basis of the statements of Claude and Pizarro. (1996): Environmental degradation. Firstly, environmental degradation, resulting from atmospheric pollution or the discharge of waste matter originated in consumption or production activities which damage the ecosystems; however, these circumstances are not recorded by the SNA. If we assume that the environment forms part of the environmental capital stock, then degradation causes a decrease in stock and/or a loss of productivity of the environment by degradation and, consequently, a decline in social welfare levels. Secondly, the environmental “replacement” and “protection” expenses (such as the efforts to reduce atmospheric or acoustic contamination) incurred by the Government, the companies and families are deemed as an increase in the GDP. To the extent that the pollution levels increase so will the environmental “restoring” activities and, as a consequence, the GDP, and this implies a restoration of the welfare destroyed by the effects of pollution. Utilization of natural resources The SNA’s main drawback it that it fails to consider the availability of natural resources as part of the economic richness and the productive assets, which entails that the depletion of such resources is not considered as depreciation of the capital. This issue becomes more important when we refer to economies which are based on the exploitation of natural resources. The SNA also considers the exploitation of natural resources only as an income or production; however, the decrease in the stock of resources is overlooked. This could lead to an inefficient management of such resources, by favoring their use and increasing the exploitation rate without considering the fact that even though such activities could give rise to a significant economic growth, this would be to the detriment of the future availability of resources, thus adversely affecting the welfare of future generations13. The explicit non-inclusion of natural resources in the concept of capital and richness is due to the hypothesis that natural resources are unlimited or absolutely replaceable. Since 12 Socioeconomic Indicators, Banco Central de Chile, 1985. The underlying concept is that of Sustainability, which has been dealt with by several authors. Dixon and Fallon (1989) consider the various approaches to this concept. 13 45 the SNA has its theoretical foundation in Keynesian Macroeconomics, such variables as production and employment are being particularly emphasized. This entails that such aspects will have priority over the efficient use of natural resources. To conclude, we should say that taking into account the deficiencies mentioned above, it is difficult to postulate economic policy patterns aimed at the sustainable and efficient allocation of the natural resources and the environment, which is a contradiction from the perspective of the strict economic rationality and contradicts one of its main precepts as a science. Consequently, for an appropriate use of the NSA, from the sustainable perspective and the strict use of economic rationale, it is essential to build up a new indicator, the Green GDP, that includes the loss of natural resources and the pollution of the environment as depreciation of the available capital, a fact that clearly reduces the performance showed by these indicators. This new indicator, the green GDP, is the difference between the traditional GDP and the depreciation of the natural capital. 4.2. Assessment of the “Green GDP” and Mitigation Costs in the Salmon Aquaculture Industry in the Region of The Lakes 4.2.1 Emissions and Mitigation Costs14 Total Mitigation Costs (TMC) are key to determine the green GDP. In order to remove deposited contaminants from the bottom of water bodies used for aquaculture processes, the industry should invest 14 thousand or 16 thousand million pesos for 1997, depending on the conversion factor used. Scope of the pollution: The emission of pollutants of the AI, mainly nitrogen (N) and phosphorus (P)15, is increasing with the production of salmonid-fish. Nitrogen registers the largest increase in 1997 to more than 6,000 tons. Phosphorus registers a slower increase and in 1997 reached about 2,000 tons (Graph 17). 14 Mitigation costs represent a method of assessing the value of depreciation of the natural capital to adjust the Gross Domestic Product (GDP). A method to capture these costs is applying the policies of green taxes to sustain this activity. 15 See Chapter 2 for the effects of these contaminants on the environment. 46 Graph 17. Pollutants (P and N) generated by the AI 1990-1997. (tons) 7.000 toneladas 6.000 5.000 4.000 Fosforo 3.000 Nitrogeno 2.000 1.000 0 1990 1991 1992 1993 1994 1995 1996 1997 Source and Elaboration: Fundación Terram Mitigation Costs of the AI: The assessment of the TMC considers the investment needed to remove phosphorus and nitrogen deposited on the bed of water bodies after the fish have consumed the food. For that purpose it is crucial to know the amount of food needed to obtain a unit of product (in this case the salmon), i.e., the conversion factor food/fish (A/Y). Two values for this factor were used for the assessment: one more efficient (1.2) than the other (1.8)16. The TMC naturally increases vis-a-vis the emissions of the industry; such cost increased significantly since 1990 and reached in 1997 values ranging from 14 to 16 million pesos17 at 1994 currency exchange. In 1990 this cost was approximately 2 thousand million of pesos (Graph 18). However, according to a study by PRIEN (1996) these costs range from 9 thousand million pesos in 1990 to 11 thousand million pesos in 1992 which is significantly larger to the estimated under this study. millones de pesos de 1994 Graph 18. Mitigation costs depending on the conversion factor, 1990-1997. (millions of $ at 1994 currency money) 16.000 14.000 12.000 10.000 CMT, A/Y=1,8 8.000 CMT, A/Y=1,2 6.000 4.000 2.000 1990 1991 1992 1993 1994 1995 1996 Source and Elaboration: Fundación Terram. 16 Methodological aspects are found in annex 2. According to a study by PRIEN-Universidad de Chile (1996) requested by CONAMA and Banco Central, conversion factors by the end of the 80s and beginning of the 90s are higher than those used in this study (higher than 2, depending on the year). So these values should be considered as traditional ones. 17 The value in 1994 currency of the pesos is obtained by multiplying the value in dollars given in Table A, Annex 2, by the 1994 nominal average exchange rate amounting to 420$/1US$. 47 4.2.2 Green GDP and Environmental Gap The Environmental Gap is defined as the difference between the traditional GDP and the green GDP. In fact, the trend of the Environmental Gap is to widen over the time, a fact that explains why the aquaculture industry keeps growing under the present situations, i.e., externalizing costs that should incorporate. Theses costs will be pay in the future, both by the aquaculture companies themselves and by the alternative economic activities like tourism and by the society as a whole that will be deprived, among other things, of areas of special beauty and environmental purity. Difference between the Green GDP and the Traditional GDP: The green GDP is the result of the traditional GDP less the total mitigation costs18. Based on said procedure, the green GDP is slightly inferior to the traditional GDP19. However, when considering the Environmental Gap, understood as the difference between the traditional GDP and the green GDP, as a percentage of the traditional GDP, we observe that there was an increase since 1990 for both hypothesis about the conversion factor already mentioned. It is also important to underline that while the traditional GDP increased twice between 1990 and 1996, the Environmental Gap is 3.2 times for the same period. The green GDP increased at a slightly inferior level if compared to the traditional GDP; in 1996, it was 1.9 times higher than the 1990 green GDP (Table 4). YEAR 1990 1991 1992 1993 1994 1995 1996 1996/19 92 Table 4: Green GDP and GAPS GDP-green GDP of AI, 1990-1996. (millions of pesos at 1994 currency exchange and %) FC=1.8 FC=1.2 Gap Gap GDP Green GDPGap/GDP Green GDPGap/GD GDP green (%) GDP green P GDP GDP (%) 74,677 72,423 2,254 3.02 72,604 2,073 2.78 72,026 68,699 3,327 4.62 68,966 3,060 4.25 124,886 119,860 5,026 4.02 120,264 4,622 4.52 103,540 97,277 6,263 6.05 97,780 5,760 7.93 123,138 115,049 8,089 6.57 115,699 7,439 10.71 170,043 158,676 11,367 6.68 159,589 10,454 8.03 243,879 227,835 16,043 6.58 229,124 14,755 9.35 2.0 1.9 3.2 2.2 1.9 3.2 3.4 Source: Own elaboration 18 Details about the methodology used are found in annex 2. It should be taken into account that the mitigation costs do not capture all the environmental costs generated by the AI in terms of landscape and aesthetic issues, risks of spreading diseases to other native species, among others. 19 48 Increasing trend of the Environmental Gap: We have already define the Environmental Gap as the difference between the traditional GDP and the green GDP and we indicated that, as the percentage of the GDP, the same had an increase since1990 for both hypothesis about the conversion factor already mentioned. Graph 19 also illustrates the trend of the traditional and green GDP. It indicates a steady increase since 1990; this trend will be constant while the AI expands under the present conditions, i.e., externalizing costs that are not presently paid but that will be paid in the future, without any doubt, mainly by the aquaculture companies and alternative activities like tourism and by the society as a whole as it will not be able to enjoy areas of a special beauty and environmental pureness. Graph 19. Environmental Gap, 1990-1996 (millions of pesos in 1994 currency exchange). millones de pesos de 1994 16.000 14.000 12.000 10.000 8.000 6.000 4.000 2.000 0 1990 1991 1992 1993 1994 1995 1996 Source and Elaboration for Graph 19 and 20: Fundación Terram. The same situation can be better observed when examining the trend of this Environmental Gap. It seems important not to underline the estimated differences but the trends. In this sense, it concerns the evolution shown by the Environmental Gap. Graph 20 illustrates an index for the GDP and the Environmental Gap considering 1990 as the basis. It indicates that the Index for the Gap (IGAP) increases more than the Index for the GDP (IGCP). Note that the difference between the indexes increases with time. This means that the industry is moving away from the sustainable development Graph 20. Indexes for GDP and Gap (IGDP and IGAP) (1990=100;A/Y=1.2.) 700,00 600,00 500,00 400,00 IPIB 300,00 IBRECHA 200,00 100,00 0,00 1990 1991 1992 1993 1994 1995 1996 49 Chapter 5 TWELVE RECOMMENDATIONS FOR NEW POLICIES A first element to reflect on is the consideration of the methods that development processes are undertaken both at the national and regional level. Researchers commonly accept their work with a non-critical attitude vis-a-vis the subject matter under analysis and, occasionally, with an openly apologetic intention. Such attitude cannot possibly be supported in the long term. One cannot state that “the dynamic evolution of salmon farming in Chile could cause such industry to become the main export-generating business within the national fishery sector, surpassing the fishmeal industry, since there are no natural limitations to increase the supply ...” (Achura 1995). Such statements cause economic growth, without any further grounds, to become a fetish, something which sought without questioning, without even asking about the social and environmental aspects associated from such development processes and explicitly disregarding the physical and natural limitations that every production activity reaches. As already stated by Herman Daly (1993), we should bear in mind that while the economy grows, the ecosystem (of which economy is a subsystem) remains unchanged; therefore, it is clear that the development of the economy has limitations which must be studied and analyzed. A second important aspect is related to the dynamic negative externalities generated by this production activity. Each lake and sea possesses a capacity to absorb nutrients but, provided that such capacity is surpassed, it diminishes and causes such bodies of water to become more vulnerable. Consequently, in the event emissions of the AI continue in aquatic bodies, the damage will be higher along with mitigation costs, for which reason it is of the essence to concentrate on this economic and environmental problems in advance so as to prevent the possible occurrence of any irreversible events which cannot be easily assessed and therefore, cannot be easily remedied20. 5.1 CONCLUSIONS The main conclusions arising from this study are briefly presented below: 1. There are no solid bases to validate the hypothesis of the sustainable development of the aquaculture industry in the Tenth Region or in the country. This is crucial because of the importance of the activity for the livelihood of the families settled in the Region of The Lakes, mainly in the Province of Chiloé. 2. There was a remarkable increase in salmonid-fish production in Chile in comparison with the worldwide production. In fact, in the 1987-1996 period, the Chilean production of the Atlantic salmon increased 1,886 times while worldwide production only 8.2 times. In the case of Pacific salmon, the production in Chile increased 37.9 This approach was already introduced in the 70’s by the environmental economist David Pearce (1985 and 1994). 20 50 times against worldwide production, which increased only 4.6 times. Chilean production of rainbow trout increased 57.6 times and the same indicator for worldwide production is only 1.6. 3. As a consequence of the above paragraph, there has been a fall in salmonid-fish prices apparently due to the oversupply from Chile and Norway. 4. According to the information available, there is little evidence to date that the AI caused negative impacts on the tourism industry, mainly because of the lack of an analysis of the cause-effect relation between both activities. However, the pollution of the lakes in the province of Chiloé is notorious and general and this will cause, without any doubt, a negative impact in terms that there will be less sites of present and future tourism interest. 5. As regards small-scale fishing, there is a conspicuous decrease in fish unloading, particularly in the Calbuco and Castro areas. The main reason for this is the overexploitation of the fisheries resources and the increase of job demand caused by the AI that was translated into a change of activities of people who were formerly engaged in small-scale fishing and nowadays they work as workers under a labor relationship in farming centers and companies of frozen and canned fish. In addition to the overexploitation of the fisheries resources, another important element is the large increase of the production of fishmeal in the Tenth Region, an industry which had an unknown pressure on marine resources until 1995, a fact that reduced employment opportunities and the development of the small-scale fishing. 6. With the appearance of technological changes in farming centers, there was a need of approximately 40% less of personnel. These changes started in 1992 with the substitution of wooden cages, built in the centers, by plastic ones. Afterward, the manual process of feeding fish in captivity was replaced by automatized feeding which implied the decreased of the work force by approximately 10 people per farming center. 7. The distributive dynamics of AI is highly regressive. Precisely, in the 1990-1995 period, the share of salaries and taxes in the value-added decreased by –8.4% and – 3.6% respectively whereas the share of profits increased by 11.9%. The impact of such regressive dynamics has been stronger on unskilled workers. 8. Upon analyzing the evolution of production and salary-product ratio, it may be noticed that production has increased at a faster rate than actual salaries. As a consequence of this, the share of salaries in the gross production value has decreased. This represents an additional element to validate the foregoing conclusion. It further proves that the “axiom” of businessmen that salary increases must be closely related to an increase in production has not been observed in this industry; on the contrary, a large part of the increment of the production was directed to the increase of the profits. 51 9. The Environmental Gap –difference between the traditional GDP and the green GDP, though not significant in absolute terms tends to increase over the time. In fact, it increases more rapidly than the GDP. 10. The percentage that represents the Environmental Gap in the traditional GDP tends to increase. In fact, in 1990 the gap represented 3.02% and in 1996 increased by 6.58%, i.e., the Environmental Gap as a percentage of the GDP doubles between 1900 and 1996. 11. The information available about the environmental impacts attributable to the AI lead us to the conclusion that such impacts have been significant, particularly, in the lakes of the Province of Chiloé. In fact, out of the five lakes as to which supporting scientific data have been gathered, five are polluted and four highly polluted. 12. Imports of eggs per each ton of salmonid-fish produced has been falling since 1990; however, in absolute terms there is a tendency to increase the volume of imports; thus, increasing the risk of introducing and spreading diseases. 13. In order to control introduced exotic diseases, Chile uses 75 times more antibiotics than the Norway industry with the subsequent damage to the environment. 14. Escaped salmon create conflicts with the local fauna because they transmit new diseases, they compete for the space (mainly in spawning places) and food. This situation endangers the local fish fauna. 15. The systems used to protect the cages cause death to sea birds and mammals. Besides, in some farming centers, the controversial killing of sea lions still happens, a fact the led to the extinction of some colonies in the interior part of the Archipelago of Chiloé. 16. The environmental costs that could be measured until the present, a product of the emissions of nutrients into the environment are not yet significant, in absolute terms, but they present a steady increase between 1990 and 1996. This trend will be constant while the AI expands under the present conditions, i.e. externalizing costs not paid at present but which, without any doubt, will be paid in the future mainly by aquaculture companies and by alternative activities like tourism and by the whole society. 52 5.2. RECOMMENDATIONS From the environmental and economic perspective, the accelerated growth of the Chilean AI was sustained, partly, by the lack of allocating the actual environmental costs, which are not considered by the industry at present. Thus, the basis of resources of this economic activity is subject to changes that, if not corrected, will mean in the medium term the stagnation and subsequent reduction of the salmonid-fish industry as well as the deterioration, in some cases irreversible, of the natural environment in the Tenth Region. The present situation of the salmon industry is unacceptable because it implies that all the Chilean people –specially those living in the Tenth Region- must bear the environmental costs. They should also accept the constant expansion of the Environmental Gap between the traditional GDP and the green GDP as well as the fact that the increase of the production is not reflected in the salaries. In order to change positively the present situation of the salmon industry into a sustainable aqua industry the following recommendations are presented: 1. Use closed farming systems, with impermeable barriers between the salmon and the surrounding waters of the ocean/lake that will allow the recovery of polluted waters and their subsequent treatment. 2. If compared to global production, the Chilean salmonid-fish production had remarkable growth. In fact, the Chilean production of the Atlantic salmon during the period 1987-1996 was 1,886 times whereas the global production was only 8.6 times. In the case of the Pacific salmon, Chile increased its production by 37.9 times whereas the global production only increased by 4.6 times. In the case of the trout, Chile produced 57.6 times and the global production was only 1.6 times. 3. Reduce the import of eggs to decrease the risk of introducing diseases and make efforts to produce eggs in the country with health certificates. 4. Give preference to preventive methods over treatments that combat diseases and develop health programs per area and not per company or center. 5. Systematic monitoring in farming centers to take timely measures and protect the public health against the use of drugs and diseases resistant to medicines. 6. Develop activities that will favor the exchange of techniques among the companies and seek joint solutions to environmental problems that may affect them. 7. Develop monitoring activities of the environment to adopt better and appropriate management actions according to the reality and variability of the production circumstances. 53 8. Create an environmental bond that will permit the immediate and total restoration of the ecological damages as a result of the outbreak of diseases, escapes of salmon, genetic pollution and other catastrophic events. 9. Prohibit the use of nets or other elements that kill sea birds and mammals. Replace them with harmless systems to the local fauna. 10. Put into effect the prohibition to use firearms and any element that may cause the direct or accidental death of the wildlife. 11. Create a special tax that will permit to capture and collect from the industries the free use of natural patrimony. It should also permit to charge this activity the negative external costs that generates and lead to a level of a sustainable activity. 12. Reach the agreements needed so that the increases in productivity are in line with the increases of the actual salaries to lead to a better distribution of the incomes generated by this activity. 54 ANNEX 1: TABLES Table A: Tons harvested in farming centers of salmonid-fish, 1991-1997. Pacific Salmon Atlantic Salmon Rainbow Trout Tenth National Share Tenth National Share Year Tenth National Share 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Region (tons) (tons) % 472 972 1,558 2,808 5,689 10,835 14,235 18,437 19,947 27,050 34,926 51,885 52,134 57,059 500 1,144 1,769 4,040 6,933 13,413 17,954 22,165 25,150 34,524 44,037 66,988 73,408 76,954 94 85 88 70 82 81 79 83 79 78 79 77 71 74 Region (tons) (tons) 0 0 41 41 165 165 1,843 1,860 9,478 9,498 14,160 14,957 23,324 23,715 28,854 29,180 33,783 34,175 53,779 54,250 76,113 77,327 95,742 96,675 104,607 107,066 % 100 100 99 100 95 98 99 99 99 98 99 98 Region (tons) (tons) % 288 435 434 539 1,775 4,209 7,244 13,180 19,658 28,268 36,677 49,141 68,516 63,947 619 1,007 945 1,267 2,871 5,481 8,393 15,515 22,257 32,326 42,719 54,429 77,110 75,108 47 43 46 43 62 77 86 85 88 87 86 90 89 85 Source: Servicio Nacional de Pesca, SERNAPESCA. Anuarios Estadísticos de Pesca, 1985-1998. Elaboration: Fundación Terram. Table B: Number of Farming Centers at the national level and in the Tenth Region, 19931998. Tenth Region Year No. of Centers 1993 1994 1995 1996 1997 1998 581 491 592 930 780 663 Average annual growth (%) Average annual growth (No.) Annual Growth (%) -15 21 57 -16 -15 National No. of Centers 723 628 723 1,161 948 823 Annual Growth (%) -13 15 61 -18 -13 6% 6% 14 17 Source: Servicio Nacional de Pesca, SERNAPESCA, 1998. Elaboration: Fundación Terram. 55 Table C: Exports in the Tenth Region and share in national exports, 1991-1997 (Thousands of US$ FOB of each year) Exports 1991 1992 1993 Tenth Region National Regional share in national (%) 1994 1995 1996 1997 1997/1991 343,278 444,436 468,534 525,663 742,948 762,066 859,985 2.5 8,988,572 9,920,874 9,324,742 11,368,732 15,901,262 15,407,298 16,682,186 1.9 3.8 4.5 5.0 4.6 4.7 4.9 5.2 Source: Estadísticas Regionales, MIDIPLAN, 1998 Table D: Level of employment in the Region of The Lakes and in the country, 19941997. (thousands of people). Year 1994 1995 1996 1997 Growth 1994-1997 X Region Country Work Employed Unemploy Work Employed Unemploy Force ed Force ed 363.30 349.06 14.24 5,553.80 5,122.70 431.08 367.80 356.70 11.09 5,538.20 5,174.40 363.80 379.40 368.60 10.78 5,600.60 5,298.60 301.90 385.71 373.96 11.75 5,683.80 5,380.20 303.60 6.54 7.13 -17.49 2.34 5.03 -29.57 Source: Instituto Nacional de Estadisticas, INE, 1998. Table E: Use of antibiotics in the salmonid-fish industry in Norway and in Chile. Norway Year 1987 1991 1992 1993 1994 Total Used Productio Antibiotics n (Tons) (Thousand tons) 53 w/i 141 170 220 48 w/i 28 6,1 1,1 Chile Gr. of antibiotics per Kg. Of product 0,91 w/i 0,19 0,04 0,01 Total Used Gr. of Producti Antibiotics antibiotics on (Tons) per Kg. Of (Thousan product d tons) 2,7 42,5 62,2 70 76,3 w/i 55 w/i 190 w/i w/i 1,29 w/i 2,71 w/i Source: Hugo Caro, 1995 Elaboration: Terra Australius Note: w/i= without information 56 Table F: Most dangerous diseases affecting Chilean salmon farming aquaculture industry Disease Epizootic Hematopoietic Necrosis (EHN-Viral) Origin and Characteristics Confined to the Australian territory, it affects fish and trout during their alevin stage. Infectious Hematopoietic Necrosis (IHN-Viral) Present in Europe and North America, it affects mainly the alevin trout and salmon in fresh water at a temperature of between 8ºC and 15°C, although there were some cases in Canada affecting sea fish. Onchorynchus Masou Virus (OMV-Viral) A tumorous-type disease of the Pacific salmon and trout present in Japan and other places in Asia. Young fish of one month of age are the most vulnerable ones, at temperatures below 14°C. Mortality varies but the impact is also associated with tumorous injuries that seriously affect the condition of the fish. Viral Hemorrhagic Septicemia (VHS-Viral) A disease with a great impact on the rainbow trout. Generally, at temperatures below 15°C and in fresh water although also present in seawater. Mortality may vary between 10 to 50% during the first stage. Source: Salmonoticias No. 72, March, 1999 Elaboration: Terra Australius Table G: Global and national production of salmonid-fish (tons and %) Place of production Chile Other countries Total Atlantic Salmon Pacific Salmon Rainbow Trout 87-96 77.286 410.252 % 15,9 84,1 96/87 1.886,0 7,0 87-96 65.219 -5.487 % 109,2 -9,2 96/87 37,9 0,6 87-96 53.484 92.709 % 36,6 63,4 96/87 57,6 1,4 487.538 100,0 8,2 59.732 100,0 4,6 146.193 100,0 1,6 Source: FAO, 1998. Elaboration: Fundación Terram Tabla H: Average annual growth rates of prices, quantities and volume exported of salmon and trout, 1988-1998. (%) Growth rate 1988-93 1993-98 1988-98 Price -18 -15 -30 Salmon Ton Export. 1.292 1.045 177 134 3.752 2.584 Trout Price Ton 77 1.789 -14 235 51 6.226 Export. 3.182 186 9.300 Source: Foreign Trade Indicators, Banco Central de Chile; Elaboration: Fundación Terram. 57 Table I: Salmon exports per type of product, 1994-1998. (thousands of US$). Product/ Year 1994 1995 1996 1997 Fresh Pacific and 73,251 94,685 96,728 Atlantic Fillet 37,502 60,084 93,348 110,753 154,769 190,076 Total Fresh Frozen Pacific 105,567 170,290 147,307 Atlantic 15,652 17,830 13,006 Fillet 17,116 31,087 36,098 138,335 219,207 196,411 Total Frozen 249,088 373,976 386,487 TOTAL % of fresh 44.5 41.4 49.2 % of frozen 55.5 58.6 50.8 Source: Foreign Trade Indicators, Banco Central de Chile Elaboration: Fundación Terram 1998 Annual average growth % Growth 19941998 % 77,624 63,414 1.66 -13.43 147,940 225,564 193,031 256,445 51.13 23.73 414.72 131.55 164,965 17,264 53,622 235,851 461,415 48.0 51.1 172,960 12,658 65,045 250,663 507,108 50.6 49.4 16.16 -1.08 41.89 18.60 20.69 63.83 -19.13 280.02 81.20 103.58 Table J: Target markets of exports, 1995-98. (%) Target Country Japan EE.UU European Community Latin America Other Markets Total 1995 60,4 29,2 6,3 2,9 1,2 100,0 1996 58,4 31,4 4,8 4,1 1,3 100,0 1997 58,3 28,6 5,0 5,6 2,4 100,0 1998 57,6 28,8 5,5 6,2 1,9 100,0 Source: Compendio de Acuicultura 1999 and Salmonoticias No. 72, March 1999. Elaboration: Fundación Terram Table K: Growth of the share of profits and salaries in the value-added of the aquaculture industry in the Tenth Region, 1990-1995. (%) Growth between1990-95 g 11,94 tx -1.97 w -8,38 wemp -3,22 Wnc -5,16 Source: Encuesta Nacional Industrial Anual, ENIA, Code CIIU 3114, Tenth Region. Elaboration: Fundación Terram. Note: g = profit; tx =taxes; wemp =employees’ salaries; wnc =unskilled employees’ salaries; w = wemp + wnc. 58 Table L: Salary-product and work physical production indexes, 1990-96 (1994=100). Year 1990 1991 1992 1993 1994 1995 1996 Annual average growth 1990-93 Annual average growth 1993-96 1996/1990 Salary-product index 57.8 56.6 78.0 89.1 100.00 122.9 147.7 18.1 21.9 2.6 IPFL 38.3 44.9 54.2 73.7 100.0 96.9 124.7 30.8 23.0 3.3 Source: Own elaboration Tabla M: Annual Growth rates of the salaries, product and share of salaries in the GVP, 1991-1996. (%) Year 1991 1992 1993 1994 1995 1996 Annual Annual growth of growth of the Index of Physical Percentage loss in w-p Production of Work W/GVP (%) (%) -2,0 17,0 -19,1 37,8 20,8 17,0 14,2 36,1 -21,9 12,2 35,6 -23,4 22,9 -3,1 26,0 20,2 28,7 -8,5 Source and Elaboration: Fundación Terram. Note: w-p = Index salary-product 59 ANNEX 2: METHODOLOGICAL ASPECT Economic Impacts We considered three species out of the statistics of global production; these species, representative of the Chilean production are the following: the Atlantic salmon, the Pacific salmon and the rainbow trout. We estimated three indicators for each species and they are: (1) the increase of the production between 1987 and 1996; (2) a percentage that, out of the total increase of the industry, represents the increase of the Chilean industry and other producer countries and (3) the growth in production in 1996 as compared to 1987 in Chile, other countries and all the industry. Social Impacts Functional Distribution of Income 1990-199621 The functional distribution of income means the manner in which value-added is apportioned among salaries, taxes and profits in the course of time, differentiating companies on the basis of their size (according to the number of employees). Formally, the analysis develops from the following definitions: The value added (VA) is equal to, by definition, the sum of all the salaries (W), the depletion in the fixed capital (CKF), indirect taxes (Tx) and the gross profits (G), i.e., VAt = Wt + CKF + Tx + Gt (1) The share of Wt, CKF, Tx and Gt is obtained by dividing the previous equation by VAt, the result being, wt + ckf + tx + gt, = 1 (2) the lower case letter stands for the share of each category within the VAt. Within the salaries category we differentiate between employees’ salaries (wempt) and unskilled workers’ salaries (wnct), thus the final share equation is as follows: 21 The statistical information used for this section and for the employment section, embraces all the firms classified according to code 3114 Uniform Industrial International Classification (CIIU) in the X region of Chile. The statistics were systematically arranged by the National Statistics Institute (INE) via the Annual Industrial National Survey (ENIA). The definition of the industrial subsector is as follows: PROCESSING OF FISH, CRUSTECEAN AND OTHER SEA PRODUCTS (CIIU 3114): “Embraces the following processes: salted, dehydrated, smoke, cured, tinned in brine and vinegar, tinned or quickly frozen fish, prawns, oysters, clams, crabs and other sea products. Soups and fish and other products specialties are included, as well as the factory ship engaged in the process of fish and sea products, only if regarded as an individual establishments. Preservation in ice, salt, elaboration of fillets and fish and other sea products on board the fishing ship or the factory ship, except as described before, classified within the group 1301 or 1302, depending on the case”. Uniform International Industrial Classification (CIIU) of all economic activities NU Series M. No. 4 Rev. 2, 1976. National Statistics Institute (INE). According to a wider definition than that for aquaculture industry of salmon; however, the lines of production are minor in the region, thus, in this region said information represents exactly the development of the salmon industry. 60 wempt + wnct + ckf + tx + gt.= 1 (3) Salaries and Productivity A different method to make the evaluation in terms of the impact of distribution of an industry consists in investigating the facts behind the share of salaries in the gross value of the production (GVP) and in this case we need to know the evolution of the –salaryproduct and the physical production of labor. The previous comment can be formally represented as follows22: w w L PY (4) Where w represents the share of salaries in the GVP; w represents the annual nominal salary; P is the price of the product and Y is the quantity of the commercialized product and L is labor. In order to obtain a more concise expression we devised the following nomenclature: w , the actual salary-product P Y b , the average physical production of work L From the previous expressions the share of the salaries in the GVP can now be expressed as: w i.e., the share of salaries in the GVP depends on the actual salary-product and b the physical production of work23. If we add the logarithm function to the previous expression and have it projected in time, we obtain the percentage variation of the participation of the salaries in the GVP. b (5) Where “^” indicates the percentage variation in time. 22 For a further explanation of this approach see Agacino, R. (1993). The salary-product expression was based on the information provided by ENIA 3114, X region on nominal salaries and the Laspeyres-type price index estimated for this calculation. The physical production of work is estimated on the basis of the information furnished by ENIA and the production per line of process in the X region. Based on information provided by fishing annuals we considered 4 processing lines: fresh-cool, frozen, smoked and canned products. 23 61 Assessment of the “Green” GDP in the Salmonid-fish AI In the previous sections we mentioned that the impacts or effects of the salmon aquaculture industry vary. For the purpose of our assessment we only considered the emissions of phosphorus (P) and nitrogen (N). These elements are present in fish food and feces deposited on bodies of water that adversely affect their quality. To start with, we will say that water contamination is defined as follows: “Water contamination means the introduction by man, directly or indirectly, of substances or energy into the habitat (including estuaries) that cause harmful effects, damage living creatures, endanger human health, difficult water activities, including fishing, cause detriment to the use of sea water and reduce their enjoyment” (Barg, 1995). The analytic pattern proposed is based on the so-called Matrix of Input-Product of Pollutant Emissions and is aimed at assessing the emissions through the total mitigation cost (TMC) of the pollution24. This value is subtracted from the traditional GDP indicator of the industry25; thus, the expression for the ‘green’ GDP will be: Green GDP = GDP – TMC (6) The P and N emitted into the environment come from non-consumed food and feces. In general, these components can be expressed in proportion to the food supplied, i.e., the amount of phosphorus (nitrogen) introduced into the environment per unit of food supplied. Now, our interest is to determine the amount of these components that end up on the seabed as food (particles), this measure includes the proportion of phosphorus (nitrogen) emitted into the environment through non-consumed food and feces26. P A N A TMC CA up . . . .Y CA Nu . . . .Y A Y AY (7 ) P and N mean phosphorus and nitrogen respectively. Sub-index u means unit; finally and indicate the percentage of phosphorus and nitrogen in the food deposited on the sea-bottom. The expression of TMC is related to the level of production Y, CAu indicates the unit cost of abatement per unit of phosphorus and nitrogen. The expression within the 24 The cost of mitigation corresponds to the monetary value of mitigation (or diminish) of the emissions of contaminants. 25 The GDP of the AI includes the product generated at farming centers (extractive fishing) and that generated by the fish processing industry (3114). 26 The assessment should be taken cautiously because it is known that the pattern to determine the amount of sediments that end up at sea bottom is more complex and depends on factors which are not included in our calculation. However, the solution for this limit may be found in the analysis of each area where salmon farming takes place, a fact which is beyond this study. 62 square brackets indicates the amount of the component per unit of food and that between parenthesis indicates the amount of food per unit of production or conversion exponent. For assessment purposes, the expressions between parenthesis are constant, consequently, the expression of the TMC is as follows: u u TMC .CA P .CA N . . .Y (8) Where P A N A A Y = tons of phosphorus as sediment per ton of food. = tons of nitrogen as sediment per ton of food. = tons of food per ton of fish. Therefore, the equation for the ‘green’ GDP of the aquaculture industry is expressed as follows: "Green" GDP GDP . CA Pu . CA UN . . Y (9) The values for the unit cost of abatement and parameters were taken from Buschmann (1995) and Barg (1995) respectively and they are: Table A: Value of parameters used in the assessment Parameter27 Value 0.55 (*) (1) 0.225 (*) (2) 3,200 and 9,600 (US$ in 1994 value) (**) CAu of P and N (3) 0.009 and 0.072 (***) (P/A) and (N/A) (4) Note: (*) (**) correspond to average values, (***) these values were checked against those estimated by Campos (1997) in lakes of Chiloé and correspond approximately to those found in the food extruded (food with less amounts of P and N) used in centers operating in those lakes. Values (1) and (2) are found in Barg (1995) and were extracted “Nutrient discharges from aquaculture operations in nordic countries into adjacent sea areas”. International Council for the Exploration of the Sea (ICES) C.M. 1991/F 56. The values in (3) were taken from Buschmann, A. et al (1996). The values in (4) are found in Barg (1995) and were extracted from Wallin, M. and Ackefors, 1992, from Wallin, M. and Ackefors, 1992: “Nutrient loading models for estimating the environmental effects of marine fish farms”. In Marine Aquaculture and Environment, edited by T. Makinen. Copenhagen, Nordic Council of ministers Nord, 1991 (22); 39-55. 27 63 Source: Barg (1995) and Buschmann (1996) Finally, we would like you to note that this way of estimating a synthetic expression for the environmental costs, derived from the emissions of contaminants in the production process to reach an adjusted expression of the GDP is only one of the various possibilities28. 28 Other expressions, derived from the neoclasic-marginalist approach are found in Hartwick (1990) and Hamilton (1994). 64 REFERENCE Achurra, M., 1995. "La Experiencia de un Nuevo Producto de Exportación: Los Salmones". En, Auge exportador chileno lecciones y desafíos futuros. Editores: Patricio Meller y Raúl Eduardo Sáez. 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