Summary:
Headline estimates of the economic impacts of Scottish salmon exaggerate economic benefits by focussing on gross rather than net effects and disregarding counterfactuals. This exploratory study examines evidence for net effects on Skye & Lochalsh. It finds that:
Rigorous economic impact assessment of net benefits is hampered by an over-reliance on self-reporting and the absence of granular economic data for sectors other than salmon farming.
Headline estimates do not take account of displacement effects on other businesses competing with salmon farms for marine and coastal space, environmental resources and labour. For example, other firms experience additional costs, reduced revenues and labour recruitment difficulties. In Skye and Lochalsh, salmon farms are estimated to account for c.137 jobs. Of these, stakeholder testimony suggests that c.9% to 28% may not be net additions to local employment due to displacement effects.
Equally, centralised government systems mean that public revenue raised from the salmon sector is not ring-fenced back to communities hosting salmon farms, including those in Skye & Lochalsh.
Moreover, aggregate public revenue raised from salmon farming is at least partially offset by tax breaks and grant aid to salmon farming itself plus expenditure by public bodies on behalf of the industry.
Current voluntary community benefit sharing, both in cash and in-kind, is relatively small compared to industry profitability and typically not determined by communities themselves. Additional environmental externality costs also arise, albeit they are not easily quantified in financial terms. Full externality effects may take further time to become apparent. The predominance of foreign ownership of Scottish salmon farming increases the scope for leakage of economic benefits rather than their retention locally through recycling of profits.
In addition, exposure to global markets, pests and diseases, and international consolidation results in a degree of volatility for output and employment. Increased public revenue raising and/or ring-fencing back to communities with a greater say over its allocation could increase local democratic accountability and local community benefit sharing to more fully compensate for negative economic and environmental effects.
Governance arrangements for the sector could be improved. For example, at the operational level, reliance upon self-reporting by farms, lack of clarity about respective roles and responsibilities for different public bodies, and the consultation response burden on communities could all be reviewed.
At the strategic level, the Scottish Government could more clearly articulate the trade-offs between different policy objectives and how these should translate into spatial prioritisation and targeting for Local Authorities reacting to license applications.
Greater adherence to published official guidance for economic appraisal, monitoring and evaluation would be helpful for scrutinising policy coherence and benefit sharing.
