Reviews in Aquaculture, 1–19 doi: 10.1111/raq.

12338

Main issues and challenges for sustainable development of

salmon farming in Chile: a socio-economic perspective

vez1,3,4, Jorge Dresdner2,3,4, Yanina Figueroa3 and Miguel Quiroga2,3,4
Carlos Cha
1 Faculty of Economics and Business, University of Talca, Talca, Chile
2 Department of Economics, University of Concepcio
n, Concepcio
n, Chile
3 Interdisciplinary Center for Aquaculture Research (INCAR), Concepcio
n, Chile
4 Research Nucleus on Environmental and Natural Resource Economics, Concepcio
n, Chile

Correspondence
Jorge Dresdner, Department of Economics,
University of Concepcio
n, Casilla 160 - C,
Concepcio
n, Chile. Email: jdresdne@udec.cl
Received 6 December 2017; accepted 23 Feb-
ruary 2019.
Abstract
We identify and discuss the main problems and challenges in sustainable develop-
ment faced by the salmon farming industry in Chile from a socio-economic per-
spective. This perspective is broad, in that it includes how the industry interacts
with society and the environment, but also limited, in that it only assesses the
impact on different social groups and economic agents. First, we present a brief
description of the structure and socio-economic relevance of salmon farming in
the country. Second, we identify and discuss the primary current issues in the sus-
tainable development of salmon farming in Chile. Third, we identify and discuss
the challenges for developing sustainable salmon farming in Chile, including reg-
ulatory design and sectoral management, options for future expansion of the
industry, responses and adjustments in the face of climate change and climatic
variability, and the proper handling and growth of public-private cooperation
and goods governance.
Key words: salmon aquaculture, socio-economic development, issues and challenges, Chile.

and semi-public agencies such as Fundaci
on Chile. This led

Introduction
Activities related to salmon farming in Chile can be traced
back as early as the end of 19th century. For many decades,
however, the activity revolved around recreational pur-
poses, sport fishing, experimenting, and exploring its feasi-
bility. It was not until the end of the 1970s when the
salmon farming industry started its phase of commercial
development in the country (Hosono 2016).
The growth of the salmon farming industry in Chile dur-
ing the first three decades of its commercial phase (1975-
2007) was the result of different factors, including endow-
ment of natural and environmental resources, low costs of
labour, and a business and political environment that
clearly favoured the development of export-oriented indus-
tries (Barton 1998; Barton & Murray 2009; Asche & Bjørn-
dal 2011). Moreover, Hosono (2016) and Katz (2006)
suggested that the rapid development of the industry from
the end of the 1960s and through the 1970s was also due to
the direct efforts of both the Chilean government and inter-
national cooperation, particularly with the ‘Japan-Chile
Salmon Project’ and the pro-active intervention of public
to the creation and transfer of specific knowledge, which
contributed to the development of this industry in the
country. Foreign capital brought new technologies and has
been associated with a rise in the scale of production and
vertical integration in the industry (UNCTAD 2006).
The establishment phase of the salmon farming industry
in Chile ended with a sanitary crisis in 2007. This crisis
began in July 2007 with outbreaks of the infectious salmon
anaemia (ISA) virus that continued until 2008 (Bustos
2012; Hosono 2016). Before the ISA virus outbreak, the
Chilean salmon industry was among the most competitive
in the world (Asche et al. 2009). After this crisis, the indus-
try went through a restructuring process that involved new
expansion and growth, which it has experienced up to
today. The changes reshaped the industry in terms of
number of firms, ownership, production levels, location
decisions, employment and major regulatory transforma-
tions (Estay & Ch
avez 2015; Iizuka & Katz 2015; Dresdner
et al. 2017). The industry adjusted to new regulatory
measures, while also dealing with other sanitary and health
threats, such as sea lice (Caligus rogercresseyi) and SRS

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avez et al.
(Piscirickettsiosis), that appeared as production increased.
(This phenomenon is not particular to Chile because all
other important salmon-producing countries have experi-
enced similar challenges (Asche et al. 2009)). The regula-
tory reform in Chile and the sustained efforts for sanitary
control led to a significant increase in production costs over
time, which reduced the industry’s external competitiveness
and competitive advantage (Iizuka & Katz 2015; Little et al.
2015).
The ISA sanitary crisis made it clear that the develop-
ment trajectory of the Chilean salmon industry was not
sustainable. Even from a strictly private point of view, the
cost competitiveness that the industry previously enjoyed
could not be maintained because the sanitary costs were
high and continued growing, eroding Chile’s position in
world markets. But the sanitary crisis was just an indication
of a more fundamental problem in the ‘production model’
of salmon farming: the presence of environmental external-
ities that make private costs different from social costs. As a
consequence, private decisions on production levels
became higher than what is optimal for the industry. The
crisis revealed that environmental and social issues needed
more attention so that a national strategy could be devel-
oped to give sustainability to the industry. Chile’s search
for this strategy is what characterizes the evolution of the
salmon industry after the ISA sanitary crisis (Fuentes &
Engler 2016).
There are a number of reasons why studying this expe-
rience is interesting from a socio-economic perspective.
First, there is relatively little knowledge on socio-eco-
nomic issues in salmon aquaculture. This information is
important for evaluating the impact of the industry on
society and for assessing how, through the design of
polices, outcomes can be affected. The Chilean case offers
an important stock of knowledge in this area, as can be
assessed by the reference list in this article. The evidence
we provide will serve as a benchmark for judging other
experiences worldwide, especially considering that the
Chilean disease crisis was not unique. Production was
reduced to a quarter of its previous capacity in the Faroe
Islands after an ISA outbreak in 2006, and to a lesser
extent in Canada. Other diseases have also affected this
industry (Asche et al. 2009). Second, Chile is an example
of a rapid-growth economy that has competed success-
fully in world markets, creating jobs and providing
income for people in the industry. However, its success
has been limited with respect to other aspects of sustain-
able development. There are important lessons that can
be learned from this specific development pattern.
We should warn the reader that our definition of ‘socio-
economic perspective’ on salmon farming is a broad one. It
follows the tradition of economic analysis, which considers
the interaction of salmon farming with society in general,
2 © 2019 Wiley Publishing Asia Pty Ltd
including the industry itself, but also its interrelations with
the rest of the economy and society, with the rest of the
world economy, and with the environment. However, the
socio-economic perspective restricts the scope of the paper
in that it only considers the socio-economic aspects of the
issues. Thus, it includes biological and environmental issues
such as diseases and antibiotics, but from the perspective of
their effects on different socio-economic agents (as an
externality).
The aim of this article was to review the socio-economic
literature on salmon farming in Chile, with a special focus
on those issues not properly solved and with pending solu-
tions, and to discuss the existing challenges for a sustain-
able development of the salmon industry. The selection of
the issues was primarily driven by the amount of academic
work conducted on them, assuming that their importance
is reflected in the effort taken by the research community.
We try to give a logical order to this information by defin-
ing different issues and then analysing and discussing each
of them.
The paper develops as follows: in the second section, we
present a brief description of the structure and socio-eco-
nomic relevance of salmon farming in Chile. In the third
section, we identify and discuss the main current issues in
the sustainable development of salmon farming in the
country. In the fourth section, we identify and discuss the
challenges for the development of sustainable salmon farm-
ing in Chile, including regulatory design and sectoral man-
agement, options for the future expansion of the industry,
responses and adjustments in the face of climate change
and climate variability, and the proper handling and
growth of public–private cooperation and governance.
A brief description of the structure and socio-
economic relevance of salmon farming in Chile
The industry is organized into four main vertical stages:
freshwater phase (production of eggs, fingerlings and pre-
smolts), farming/fattening, processing and trading/exports.
Related industries include: feed provision for salmon, ani-
mal health services, transportation, equipment, etc. Three
main species are produced: Atlantic salmon (Salmo salar),
Pacific salmon (Oncorhynchus kisutch) and rainbow trout
(Oncorhynchus mykiss), which represented 73 per cent, 15
per cent and 12 per cent of the total harvest in 2016 respec-
tively (SERNAPESCA, 2016). Figure 1 presents the total
production of main species of salmonids in Chile during
the 1985–2017 period. The drop in production in 2008 and
the following years reflects the impact of the ISA sanitary
crisis on salmon production. There was a new drop in 2016
due to a severe harmful algae bloom outbreak (Montes
et al. 2018). Hence, the industry is highly susceptible to
environmental shocks.
Reviews in Aquaculture, 1–19

Figure 1 Salmon farming in Chile by species, 1985–2017. Source: Authors’ elaboration based on data from Sernapesca. ( ) Rainbow trout, ( )
Pacific salmon, ( ) Atlantic salmon, ( ) Other species.
Early in its commercial phase, salmon farming was com-
posed of a reduced number of small firms that depended
on foreign supply of inputs and technology (Bustos 2012).
Over time, the industry expanded, and the dependence on
foreign inputs and technology was reduced. Some of these
firms were multinationals, operating in global markets with
production opportunities in different locations around the
world. Industry expansion was observed along with a pro-
cess of vertical and horizontal integration (Olson & Criddle
2008; Perlman & Ju
arez-Rubio 2010). This process was
associated with the merging of firms and cluster formation,
mainly to exploit economies of scale/agglomeration and
reduce production costs (Montero 2004; Perez-Aleman
2005; Perlman & Ju
arez-Rubio 2010; Asche et al. 2013).
Despite that process, the industry in Chile exhibits low
levels of ownership concentration (Dresdner et al. 2017).
Chile enjoys propitious conditions for the development
of salmon-culturing. Some of the conditions that favoured
the development of this industry were low labour costs,
domestic fishmeal production, access to risk capital and a
controlled disease situation (Barton 1998; Bjørndal & Aar-
land 1999; Bjørndal 2002). These factors, together with
strong governmental support of technology transfer in the
early stages of this industry (Montero 2004; Perez-Aleman
2005; UNCTAD 2006), and the development of industrial
agglomeration characterized by the growth of large foreign
companies in the later stages of the industry (UNCTAD
2006; Perlman & Ju
arez-Rubio 2010), underpinned the
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Salmon farming socio-economic perspective
competitiveness of salmon farming in Chile. Although for-
eign investment was important in later stages, it was not
quantitatively significant in the early developmental phases
of the industry due to the unstable returns and some cli-
matic misfortunes that discouraged greater investments
(Montero 2004). In contrast, high mortality during the
production process (including escaped salmon), the precar-
ious infrastructure in the southern regions of the country,
and lows levels of research and development (R&D) threat-
ened the initial cost-advantage of Chilean salmon (Bjørndal
& Aarland 1999; Bjørndal 2002). Its orientation towards
international markets (considering production during the
North hemisphere’s off-season periods), product value
added, consumer demand characteristics and segmentation
were other factors that explain the competitiveness of Chi-
lean salmon in its beginnings (Barton 1998; Bjørndal 2002).
Chilean salmon farming developed mainly near-shore in
a zone of channels and fjords and, to a lesser extent, in inte-
rior lakes. In its origins, the industry grew around Puerto
Montt and Chilo
e Island, in a small territory of about
300 km2 located in Los Lagos Region in southern Chile
(Iizuka & Zanlungo 2016). The sector expanded mainly by
increasing the intensive use of space, but also by extending
the areas covered by farming. But the expansion came
without controls. This development path, the lack of coor-
dination mechanisms between private firms, and a loose
regulatory system contributed to the collapse of the indus-
try by 2007 with the ISA sanitary crisis (Asche et al. 2009;
3
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avez et al.
Hosono et al. 2016). Recovery from that crisis implied
reducing fish density within the salmon farms and reducing
the concentration of farms within the same area (Iizuka &
Zanlungo 2016). Geographically, the core of salmon-cultur-
ing shifted from Los Lagos region to the southern regions
of the country, especially to the Ays
en region. By 2012–
2013, this region had surpassed Los Lagos region as the
main salmon-producing region in the country (Dresdner
et al. 2017). In Figure 2, the shift in the labour composi-
tion between regions after the ISA sanitary crisis is clearly
depicted.
The regulatory authority for fishing and aquaculture
activities in Chile is the Undersecretary of Fisheries and
Aquaculture (UFA), which belongs to the Ministry of Econ-
omy, Development and Tourism. The National Fisheries
and Aquaculture Service (SERNAPESCA), which also
belongs to the Ministry of Economy, is in charge of moni-
toring and enforcing regulations. (For aquaculture activi-
ties, there are also other Chilean regulatory agencies with
both regulatory and enforcement responsibilities in specific
matters including, for example, environmental and sanitary
regulations, labour regulations, use of marine space and
setting location, operation of concessions, animal health,
etc.)
The general regulatory framework for aquaculture in
Chile, along with its modifications and several specific
complementary laws and rules (Fuentes 2014), is provided
by the General Law of Fisheries and Aquaculture (GLFA,
1991). The regulatory development of aquaculture also
Figure 2 The evolution of employment by region in the Chilean salmon industry, 2000–2014. Source: Dresdner et al. (2017). (
Region, ( ) Aysen Region, ( ) Magallanes Region, ( ) Total employment.
4 © 2019 Wiley Publishing Asia Pty Ltd
includes several forms of self-regulatory initiatives by the
private sector, including voluntary agreements for clean
production, integrated management system, etc. These
efforts were intended to increase production standards and
introduce good practices in fish health, quality, food safety,
environmental protection and work safety. Most of these
efforts were coordinated by Salmon Chile A.G., an associa-
tion of the major private companies in the salmon farming
industry, along with public institutions, including regional
governments, the UFA, the Ministry of Health and the
National Environmental Commission (currently the Min-
istry of Environment) (Ch
avez et al. 2011).
Initially, the GLFA included overly general and weak
norms regarding aquaculture (Ch
avez et al. 2011; Fuentes
2014). Moreover, the development of the industry up to
the ISA sanitary crisis was achieved within a weak regula-
tory environment (Asche et al. 2009; Barton & Fløysand
2010; Bustos 2012), relying excessively on confidence in
self-regulation and long-run oversight from the industry
(Iizuka & Katz 2015). By 2005, weak regulations and
enforcement in this industry had been publicly recognized
(e.g. OECD/ECLAC 2005).
The self-regulatory strategy was dramatically modified as
a result of the ISA sanitary crisis, after which a series of reg-
ulatory reforms were implemented. Initially, the reforms
addressed the need to respond quickly to the crisis, but,
subsequently, these measures were refined and incorpo-
rated into the GLFA. Four laws were enacted on sanitary
regulations and regulations for aquaculture concessions
) Los Lagos
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(Law N° 20,434 of 2010; Law N° 20,583 of 2012; Law N°
20,597 of 2012; Law N° 20,657 of 2013). Their purpose was
to introduce a new sanitary management scheme for the
industry, new regulatory tools for the UFA, and a stronger
monitoring and enforcement role for SERNAPESCA. Exist-
ing sanitary regulations were strengthened, including regu-
lation for high sanitary risk (RESA by its Spanish acronym)
and environmental regulation (RAMA by its Spanish acro-
nym) for aquaculture (Fuentes 2014; Fuentes & Engler
2016). Furthermore, a new self-reporting system for envi-
ronmental and sanitary information, the INFA (by its
Spanish acronym) was established to make the provision of
environmental information to the government mandatory.
Most importantly, for the first time, methods and standards
for implementing sanctions and punishment were clearly
stipulated (Iizuka & Katz 2015).
Most regulatory changes have been introduced since
2009. The new regulatory framework includes defining geo-
graphical areas for monitoring and surveillance; procedures
for stocking, harvesting and fallowing; a mandatory fallow
period between production cycles; new production stan-
dards, including fish densities; and more stringent sanitary
measures and environmental control (Dresdner et al.
2016). Moreover, the new regulations created a new institu-
tion called ‘barrio’ (neighbourhood) or ‘group of conces-
sions’ located within a similar geographical, oceanographic
and epidemiological area. The law required that all farms
that belonged to the same barrio had to follow a synchro-
nized production calendar (either 24 or 21 months), and
that they should collectively manage sanitary and environ-
mental conditions. This meant that these farms had to
simultaneously implement sowing, harvesting, medical
treatment and 3 months of fallowing (Iizuka 2016). Coor-
dinating production allowed for better control of the trans-
mission of pathogens. High-risk activities for the dispersal
of pathogens, such as transportation for feed or other
inputs and slaughtering, were better controlled. Other nec-
essary measures, such as controlling fish escapees and creat-
ing appropriate distances between farms, were also to be
jointly implemented among the firms within a ‘barrio’
(Iizuka & Katz 2015).
The salmon farming industry caused significant and
rapid changes in the regions of the country where it devel-
oped, with particular impacts on local coastal areas that
were traditionally devoted to small-scale agriculture and
artisanal fisheries. The economic effects of this develop-
ment also included productive and technological changes
and a new orientation towards international trade and glo-
bal markets. There were also new labour market develop-
ments and opportunities, including employment options
for other segments of the labour force, for example for
woman and youth. These economic effects were not only
seen in the fisheries and aquaculture sectors but also in
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Salmon farming socio-economic perspective
other related productive sectors, including services, trans-
portation, infrastructure and communications.
The country’s aquaculture exports are concentrated in
products from salmon farming, representing 73.5 per cent
of the total exports of the fisheries and aquaculture sector.
The salmon farming industry evolved over time from pro-
duction of low-added-value goods towards product with
greater value added, incorporating new processing lines
such as fresh, refrigerated, frozen, smoked and preserved
salmon. Moreover, the product formats have also diversi-
fied to include whole, fillet and pieces, among others.
Employment for women increased with the development of
the salmon farming industry, especially direct employment
in processing plants. However, linked to the ISA virus out-
break of 2007, one of the major short-run impacts was
observed in employment opportunities, with major hiring
concentrated in 2009 in specific locations, including Puerto
Montt (on the mainland) and Quell
on (on Chiloe Island)
(Dresdner et al. 2017).
Current issues in salmon farming in Chile
In this section, we will identify and discuss some of the
main current issues for the sustainable development of sal-
mon farming in Chile: First, issues related to externalities
and other market failures that occur in salmon aquaculture,
where we concentrate our discussion on diseases and
antibiotics; then, the conflict over the use of space; there-
after, issues related to the insertion of the industry into
world markets; and finally, the vulnerability of the industry
to exogenous (natural and anthropogenic) shocks, gover-
nance, community perceptions about sustainable develop-
ment, social conditions and investment are also addressed.
Externalities and other market failures
Salmon farming is an industry based on natural resources.
It demands water, environmental conditions and wild fish
(Ch
avez et al. 2011). Barton and Murray (2009) suggested
that the impacts of this global industry are highly contin-
gent upon geography. Thus, there are several concerns
about the impact of the development of salmon farming at
the local level because it shares and competes for physical
and ecological resources that might generate environmental
and socio-economic degradation (ICES 2011). It generates
residuals from fish faeces and uneaten food (Buschmann
2002; Soto & Norambuena 2004; Buschmann & Fortt 2005;
Buschmann et al. 2006), leaked antibiotics and the release
of other pharmaceutical or chemical products that pollute
the surrounding environment (Miranda & Zemelman
2002a,b; Buschmann & Fortt 2005; Miranda & Rojas 2007).
It might spread pathogens such as the ISA virus and sea lice
to the native biota (Sep

ulveda et al. 2004; Cabello 2007a,b),
and escaped salmons could predate and compete with other
5
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avez et al.
species (Soto et al. 2001; Buschmann et al. 2006; Nikl-
itschek et al. 2013; Sepulveda et al. 2013). The use of phar-
maceuticals and chemicals to control diseases might also
affect public health (Millanao et al. 2011; Cabello et al.
2013). In Chile, there have also been concerns about the
impact that salmon production might have on ecosystems
and local communities. A critical view on this issue can be
found in Claude et al. (2000), Doren and Gabella (2001),
Buschmann (2001), Buschmann and Pizarro (2001),
Buschmann et al. (2002), Pinto (2007) and Terram (2008).
There have also been concerns about the impact that the
expansion of this activity into the Ays
en Fjord System
could have on this pristine area (Vester & Timme 2010;
Niklitschek et al. 2013). However, the impact that environ-
mental changes produced by salmon farms have made on
the socio-economic system are not well established. There
is a lack of information about how ecosystems have been
affected by the operation of the salmon farms. In instances
where impacts are observable, they are heterogeneous and
highly contingent on the characteristics of the site studied,
so it has been difficult to establish a link between the opera-
tion of salmon farms and their socio-economic conse-
quences. The common pool resources and public goods
nature of several inputs, or environmental conditions
employed in production, that are affected by this industry,
could generate externalities if adequate regulations and
institutions do not exist to internalize the costs that this
activity produces on third parties (Fuentes & Engler 2016).
The Chilean industry grew until the year 2000 without
major concern for diseases (Bjørndal 2002), although it did
show some concerns over salmonid rickettsial septicaemia
and sea lice, especially in densely populated and closed
farmed areas of Los Lagos Region (Asche et al. 2009). The
ISA outbreak in 2007 produced a large reduction in the
production of Atlantic salmon, with severe socio-economic
consequences (Asche et al. 2009; Iizuka & Katz 2011,
2015). Asche et al. (2009) tried to understand why the
response of the firms and the regulatory body involved
were not appropriate as they amplified the adverse conse-
quences of the disease outbreak. Iizuka and Katz (2011,
2015) suggested that this was a consequence of institutional
weakness in dealing with externalities generated by the
common pool characteristics of many resources shared by
the activity, the lack of comprehension of the ‘social tech-
nology’ necessary to secure long-term sustainability, and
because companies and public officials favoured the short-
term growth of the industry (Iizuka & Katz 2011, 2015).
Barton and Fløysand (2010) described the crisis as the
result of the inadequate socio-institutional interaction,
such as poor social relations and alliances at local and
global level, where, as a result of the crisis, more adequate
governance arose. The presence of diseases and their con-
trol has direct economic effects on the salmon firms.
6 © 2019 Wiley Publishing Asia Pty Ltd
Dresdner et al. (2019) estimated that the presence of sea
lice, on average, increased production costs by 1.40 USD
per kilogram of produced salmon, as sea lice reduce bio-
mass growth. They also showed that, despite the high cost
of sea lice treatments, these interventions increased produc-
tion and profit without an increase in unitary costs. The
impact of diseases has radically changed the ‘self-regulated
production model’ in Chile and called for more involve-
ment from the Chilean central government. However, a
definite model has not yet been found. This is definitely a
pending issue in Chilean salmon farming.
Antibiotics in salmon farms are administered to prevent
infections that arise from a weakening of the fish’s immune
system. This weakening is due to stress caused by the con-
ditions in which it grows: intensive cultivation, high densi-
ties and manipulation of specimens (Buschmann & Fortt
2005). In Chile, the growth of this industry has been
accompanied by heavy use of antibiotics in lakes, rivers and
the ocean (Wolff 2004; Burridge et al. 2010). One example
is the use of flumequina, employed exclusively in aquacul-
ture, which increased its use from 30 to 100 tons between
1998 and 2002 (Bravo et al. 2005). This has generated seri-
ous concerns about the use of antibiotics in Chilean salmon
farming and was highlighted in a report from the Organiza-
tion for Economic Co-operation and Development
(OECD/ECLAC 2005). For instance, in 1995, the total med-
ication for farmed salmon in Chile surpassed 50 tons, while
in Norway 1 year later, that figure was less than 1 ton.
(Tveter as 2002).
There are major reasons to be concerned with the
increasing use of antibiotics. They are usually administered
through fish feed. Unconsumed feed falls to the marine
bottom and could enter the trophic web, affecting plankton
diversity (Cabello 2004). For instance, residues of two
antibiotics, tetracycline and quinolones, were found in the
meat of two species of wild fish consumed by humans,
r

obalo (Scorpaena hystrio) and cabrilla (Elginops maclovi-
nus), around salmon aquaculture pens in the Cocham
o
area, Los Lagos Region (Fortt et al. 2007). The passage of
antibiotic resistance genes from aquatic bacteria to human
and animal pathogens has been demonstrated, indicating
that industrial use of antibiotics in aquaculture negatively
affects the antibiotic therapy of human and animal bacterial
infections (Cabello 2004; Millanao et al. 2011; Cabello
et al. 2013). The Chilean situation triggers important con-
cerns because it includes the use of fluoroquinolones in
aquaculture that are able to remain in the environment for
years (Wolff 2004). The use of large volumes of a wide
spectrum of antibiotics in an aquatic environment heavily
contaminated with human and animal pathogens also
amplifies the opportunities for gene transfer among bacte-
ria, facilitating the emergence of antibiotic resistance and
more pathogenic bacterial recombinants. The detection of
Reviews in Aquaculture, 1–19

residual antibiotics that can modify the normal flora of the
population in salmons marketed for human consumption
also stresses the need for controlling the use of these antibi-
otics and the presence of residual antibiotics in aquaculture
food products (Cabello 2004; Wolff 2004). The excessive
use of antibiotics has a direct effect on development pro-
spects for the Chilean industry. Consumer awareness is ris-
ing and people are becoming increasingly concerned with
the quality of the food they eat. A preference for minimal
medication is likely to emerge (Bjørndal & Aarland 1999),
such as been found in the US market (Ortega et al. 2014).
The use of space: competition, conflict and coordination
requirements
Salmon aquaculture demands space. Since 1991, regulation
of salmon aquaculture by the GLFA and the special legisla-
tion for aquaculture concessions, has allowed the establish-
ment of a stock of granted concessions where salmon can
be produced. The conflict over the use of marine space has
been present since the inception of commercial salmon
aquaculture at the end of the 1970s on Chilo
e Island
(Ram
ırez et al. 2009; Bustos-Gallardo 2017). It is a conflict
primarily between the growing salmon aquaculture indus-
try and artisanal fishermen over traditional fishing grounds
(‘caladeros de pesca’) allocated to aquaculture farming.
Later, the conflict has involved other social factors, such as
mussel aquaculture producers, tourist operators, sea trans-
port firms, local governments (through the impact on local
environmental conditions), non-government organizations
and indigenous communities.
With the artisanal fishermen, the conflict is evident
since marine salmon farming takes place within the first
mile off-coast, which is the same area used by fishermen
who extract benthic resources and some demersal fish-
eries. Other potential conflicts between salmon producers
and artisanal fishermen originate from environmental
issues such as salmon escapees, eutrophication, use of
antibiotics and disease transmission, as discussed in sec-
tion 3.1 (Pav
ez 2015). However, not all relations with arti-
sanal fishermen are conflictive. As Pav
ez (2015) points
out, there are also collaborative relations that are in the
mutual interest of artisanal fishermen and salmon produc-
ers. With a declining availability of wild fish stock, salmon
aquaculture offers an additional labour opportunity to
fishers. Moreover, the job opportunities offered are more
stable and promise more predictable incomes for fishers’
families. At the same time, artisanal fishermen have been
able to supply a qualified labour force for certain complex
and high-risk activities necessary in salmon farming, such
as diving.
Mussel aquaculture producers compete with salmon pro-
ducers over the use of marine space for farm installation,
but, at the same time, there is an unsettled discussion on
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Salmon farming socio-economic perspective
the potential (positive or negative) environmental interac-
tions related to productivity. There is no evidence of this
interaction in the Chilean case (Pav
ez 2015), but interna-
tional researchers have suggested that salmon farming may
have positive effects on mussel growth located in the same
neighbourhood as a consequence of the nutrients supplied
to the water by the fish farming, which adds to primary
productivity (Whitmarsh et al. 2006). However, this activ-
ity might also have negative impacts on mussel growth
because of pollution or bioconcentration of chemical com-
ponents used for sanitary treatments in the salmon industry
(Stirling 1995). Tourism seems to have been favoured by
the impact that the salmon industry has had on the general
level of economic activity and on the development of
infrastructure and communications in southern Chile.
Tourist agencies, however, are still an unorganized group,
so they do not have a clear (known) standpoint on poten-
tial conflicts over space with this industry (Ram
ırez et al.
2009). Finally, there is a conflict over space with indigenous
communities. In general, these communities are more
concentrated on livestock and forestry activities. However,
there is an opinion against industrialization and the use of
their ancient marine spaces for aquaculture activities
(Ram
ırez et al. 2009). The political position of the
indigenous communities has improved with the enactment
of Law over Marine Coastal Spaces for Native People
(LMCSNP) (Ram
ırez et al. 2009). This law allows the
communities to ask for the administration of delimited
marine areas off the coast that can be shown to have been
customary used by people of their ethnicity. Although this
law does not affect marine space uses already legally
assigned, it might affect the future expansion of the salmon
aquaculture industry and other activities that make use of
the marine space, as well as informal activities already in
process.
Resistance to granting more area to salmon aquaculture
is presently growing in the country, especially after the ISA
sanitary crisis. Two new specific demands for regulating
area use have arisen from different stakeholders. On the
one hand, artisanal fishermen have asked for official recog-
nition of their traditional fishing grounds. A new regulation
to define how fishing grounds are identified is currently
under discussion. On the other hand, the indigenous com-
munities are beginning to request their ancestral marine
area rights at an increasing rate, based on the LMCSNP.
These two demands are relevant for salmon aquaculture
since the GLFA does not allow aquaculture concessions to
be geographically superimposed with fishing grounds in
national and marine parks, marine reserves, ancestral mar-
ine areas, or areas defined as tourist attractions. This dis-
cussion does not affect already granted concessions, but
impinges on new areas that are intended to be used for
aquaculture production. In this sense, it affects the future
7
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avez et al.
expansion of salmon aquaculture and also the relocation
process of salmon farms initiated after the 2007 sanitary
crisis as a means to reduce salmon densities in specific terri-
tories. To the extent that this relocation is hampered, it
might introduce important costs and inefficiencies in sal-
mon production. The intensive use of antibiotics and dis-
ease treatments is partly a consequence of too high a
concentration of salmon growing farms in limited spaces
(Iizuka & Zanlungo 2016).
Moreover, the expansion of salmon aquaculture in the
earlier stages of the value chain has also created concern in
other regions of the country. Specifically, the use of space
for the development of freshwater facilities for salmon
breeding and growing in other parts of the country seems
to generate conflict with other potential uses of space such
as tourism. A perception study in the Araucan
ıa Region
(south-central Chile) showed that the population has a
negative attitude towards the idea of establishing new sal-
mon centres in pre-Andean, freshwater areas (Alfaro &
Pe~na-Cort
es 2012).
Insertion in the world market and market niches for Chilean
salmon
One view of Chilean salmon aquaculture’s insertion into
world markets is that it was, to a great extent, the result of
an export-oriented policy and the existence of an interna-
tional demand for salmon (Barton 1998; Montero 2004;
Vage 2005). However, a different perspective that empha-
sizes the organizational and governance structure of the
resulting development of the salmon industry in Chile can
be found in Iizuka (2004), Katz (2006), and Iizuka et al.
(2016). These authors focus on the decisive role that a set
of different factors had on the industry’s take-off and inser-
tion in world markets. Among these, they mention educa-
tion and human resources, the way the industry was
organized, the support it received in various ways from the
government, and changes in the institutional setting. How-
ever, they also stress that this process was imbalanced,
being successful in ‘catching up’ with the main competitors
in the world markets in terms of productive capacity, but
remaining behind in other aspects, such as innovative
capacity, development of local technological capabilities,
sanitary and environmental standards, and institutional
development in general.
The competitive advantage of Chilean salmon was ini-
tially based on lower production costs (Bjørndal 2002). At
the end of the 1990s, Chilean-produced salmon was, at
most, 50 cents of a dollar per kilogram cheaper than the
salmon produced in Norway (Bjørndal & Aarland 1999;
Bjørndal 2002). However, after the ISA outbreak in 2007,
new sanitary regulations (Dresdner & Estay 2016), and the
displacement of many southern farms (Estay & Ch
avez
2015), unit production costs increased significantly,
8 © 2019 Wiley Publishing Asia Pty Ltd
surpassing the average costs of other main salmon-produ-
cing countries. There were several sources of cost increase,
such as the expensive sanitary treatments against different
pathogens, the relocation of farms from more- to less-pro-
ductive areas, the increase in transport costs generated by
new regulations and farm locations that were distant from
export hubs, and the costs associated with capital idleness
as a consequence of the mandatory resting periods. After
the ISA sanitary crisis, the Chilean industry has been strug-
gling with cost reduction. Two factors hindering this task
are the low level of investment in R&D (Iizuka et al. 2016)
and the importance of transport costs in international trade
for this market (Bjørndal & Aarland 1999). It is worth men-
tioning that throughout this period, Chilean salmon was
still competitive in the international market where prices
are determined and there was no room for Chilean produc-
ers to pass cost increases on to buyers (Asche et al. 2018).
Moreover, in some markets where consumer demand was
selective, e.g. the U.S. market (Ortega et al. 2014), the
extensive use of antibiotics might have been a factor that
reduced demand for Chilean salmon. Nevertheless, the sal-
mon industry in Chile was able to diversify products and
markets after the ISA crisis (Asche et al. 2018), showing
important advances in several ‘new’ markets, such as Latin
America and Europe (Banco Central de Chile 2017). How-
ever, the trends in global markets such as the increasing
importance of private standards for sustainable salmon
production (Washington & Ababouch 2011), traceability
(Thompson et al. 2005) and increased price volatility
(Øglend 2013) should be more fully understood to be able
to develop a clear future strategy for Chilean salmon in
world markets.
Another perspective in relation to the world market is
how the Chilean salmon industry affects international mar-
kets. The general view is that the world salmon market
works competitively (DeVoretz & Salvanes 1993; Steen &
Salvanes 1999; Jaffry et al. 2003; Fofana & Jaffry 2008;
Asche & Bjørndal 2011); thus, there is no major room for
any country to exert market power. However, Xie et al.
(2009) reported some evidence of decreasing demand elas-
ticities for world farmed salmon, suggesting that this
absence of significant market power could change in the
future.
Williams et al. (2009) introduced the notion that Chi-
lean supply conditions have the potential to affect world
salmon markets. In this article, the effect of increased Chi-
lean production of Atlantic salmon, coho salmon and rain-
bow trout on the ex-vessel price and revenues of Alaska’s
sockeye salmon (Oncorhynchus nerka) was analysed. They
concluded that an increased supply from Chile negatively
affected both variables because of the impact on the Japa-
nese final demand market. This effect, though, should be
moderated in the future because revenues in the Alaskan
Reviews in Aquaculture, 1–19

sockeye market had become less sensitive, as this species’
share in total high-valued salmon production had
declined over the years. In contrast to this, Quezada and
Dresdner (2017) analysed the impact of the sudden
decline in Atlantic salmon supply in the U.S. market as a
consequence of the ISA virus crisis in 2007 and found
that although the quantities supplied by Chilean firms
decreased in a synchronized manner, no lasting effect on
the Atlantic salmon price in this market was found. The
decrease of Chilean supply was rapidly substituted by sal-
mon supplied from other salmon-producing countries.
One possible explanation for the observed difference
between these results on the capacity of the Chilean sup-
ply to affect world market prices is that they are focusing
on specific markets (market niches) in the development
of global salmon market. These markets may behave dif-
ferently and on different periods than the world market.
The Japanese market was more sensitive to the seasonal
supply that Chilean coho and rainbow trout offered off-
season in the northern hemisphere. However, with the
introduction of frozen products to the market, the supply
should have stabilized over time and eroded this advan-
tage. In the case of the U.S. market, the supply is mainly
fresh Atlantic salmon, which can be produced continu-
ously over the year by several countries. Thus, given the
world-installed capacity, it is easy to substitute the pro-
duction of one country for another, and prices are pri-
marily determined by demand conditions.
Vulnerability to shocks
The vulnerability to shocks and the capacity to adapt to
them is a relevant issue for Chilean salmon aquaculture.
Although shocks might be of diverse natures, two shocks
have been prominent in the 30 years of development of the
salmon industry in Chile: First, the disease outbreak created
by the ISA virus in 2007. This was a ‘man-made’ shock gen-
erated by a sanitary crisis. The second one was the harmful
algae bloom (HAB) in the first term of 2016 that led to a
mortality of almost 40 thousand tons salmon, equivalent to
24.9 million salmonids (Buschmann et al. 2016). It also
resulted in social and political upheavals in the Chilo
e
archipelago.
The poor capacity of Chilean aquaculture to respond
rapidly to the ISA sanitary crisis is well documented in the
literature. Asche et al. (2009) were surprised that the sal-
mon industry and government had not learned from the
experience of other salmon-producing countries that had
previously undergone similar crises and did not introduce
disease management schemes before the crisis. This was
even more astonishing as some of the companies operating
in Chile had previous experience with ISA virus outbreaks
in other countries. Asche et al. (2009) pointed out the need
for good governance to achieve sustainable development of
Reviews in Aquaculture, 1–19
© 2019 Wiley Publishing Asia Pty Ltd
Salmon farming socio-economic perspective
the industry. (The fact that the first reported outbreak of
the ISA virus in 2007 was in a farm owned by Marine Har-
vest, a Norwegian multinational firm with previous inter-
national experience on this type of outbreaks, and that the
virus may have been transmitted via imported salmon eggs
from Norway (Vike et al. 2009), even if this evidence has
been disputed (Kibenge et al. 2009), has given rise to
research on how the incentives for firms that operate in dif-
ferent environments with distinct sanitary regulations
might operate (Fischer et al. 2017)).
Iizuka and Katz (2015) and Iizuka and Zanlungo (2016)
focused on the lack of institutions and the lack of consider-
ation paid to endogenous capabilities, such as local knowl-
edge and capacity building, and to local ecological
conditions in the design of regulatory policies as condition-
ing factors for the emergence and development of the crisis.
In Dresdner et al. (2017), the economic and social conse-
quences of the regulatory framework designed to cope with
the sanitary crisis were assessed, and in Dresdner and Estay
(2016), the cost of the sanitary regulations in terms of for-
gone profits were calculated. The latter show that sanitary
regulations might be highly costly; although the empirical
application suggests that the trade-off between sanitary
regulations and forgone profits at 2010 should be flat,
implying that the cost of choosing an excessively high level
of biosecurity near the actual situation should not imply
important additional costs. In Bustos (2015a,b) and
Bustos-Gallardo and Irarrazaval (2016), the consequences
of the ISA crisis in terms of the basic development strategy
of the sector is analysed. They concluded that, in spite of
the new regulatory framework installed and its conse-
quences on industrial organization and despite some
‘fractures’ in the way the community considers the role of
the industry with regard to labour and environmental
issues, a new (post-neoliberal) scheme has not yet emerged.
The solution to the crisis can be found by deepening the
extractive- and resource-based development path followed
by the industry.
In the case of the HAB shock in 2016, the event was very
recent, and empirical literature on it is still scarce. HAB
had a tremendous impact on salmon mortality. Public con-
cern rose about the potential impact that the dumping of
4,600 tons of dead salmon, 75 nautical miles off the coast,
could have had on the intensity of HAB. The scientific
commission that reviewed this case discarded the idea that
the salmon dumping could have any significant effect on
HAB (Buschmann et al. 2016). However, one important
issue that this event highlights is the high level of discredit
that the salmon industry maintains in some sectors of the
population (see Barton & Roman 2016). Moreover, the
effect of HAB on salmon mortality raises the question of
how prepared the salmon industry and Chilean institutions
are to meet these kinds of shocks.
9
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avez et al.
Governance and community perceptions on sustainable devel-
opment
A great deal of information is beginning to be collected on
this subject. One central issue in the literature has been
evaluating the effect that the initial location and develop-
ment of the salmon aquaculture industry had on the living
forms of the local community, especially in the Chilo
e
archipelago, where the industry first developed in the
1980s. One hypothesis is that the installation of a modern,
transnational, capitalistic industry, supported by the
national state, had a profound impact on the communities’
traditional way of life: a cultural disruption (Claude et al.
2000; Barrett et al. 2002). Traditional, voluntary, coopera-
tive activities and solidarity between neighbours have
declined as a result of a new economic rationality that
emphasizes the possession of consumer goods. This process
has been associated with the arrival of many people from
other regions with different cultural and consumption pat-
terns (Fløysand et al. 2010). This impact could be part of
the explanation as to why there is a popular sentiment and
antagonism against the large corporate firms and the
national government. This animosity was revealed in the
riots in Chilo
e during the summer of 2016, when a HAB
struck artisanal fishermen and seafood and seaweed collec-
tors, among other members of coastal communities (Fløy-
sand & Barton 2014; Barton & Roman 2016). However, the
change in the traditional way of living is not necessarily
perceived as negative by the population. Barrett et al.
(2002) reported the results of a series of interviews where
they found that people are satisfied with the new employ-
ment prospects that have emerged and that there is a per-
ception that the community still retains its culture and
traditions. It seems that the jobs offered by the industry
have formed a very strong link with the local communities
(Bustos-Gallardo 2017). In fact, it has been shown that
poverty decreased considerably more in localities where sal-
mon farms were installed than in localities without salmon
farms (Ceballos et al. 2018). Moreover, even if the modern-
ization brought about by the arrival of the salmon industry
generated profound changes in the rural population’s way
of living, this does not mean that the rural world disap-
peared. It is more likely that new forms of interaction
between the rural and urban worlds and new ways of
understanding the rural world emerged (McPhee-Torres
2015).
The link between the industry and the local communities
seemed to have weakened when the ISA sanitary crisis left
thousands of people without jobs. The new regulatory
framework and the change in localization patterns of the
salmon farms dramatically changed working conditions
after the crisis. Salmon farming was displaced, to a large
extent, to the southern Ays
en region. The imposition of fal-
low periods in salmon farms induced a change in work
10
stability. New shift schedules (10 days on, 3 days off) in
distant work locations (travelling up to 20 hours to reach
operation sites) were introduced in the labour contracts
(Bustos-Gallardo 2017). Moreover, technological develop-
ment required more skilled workers (Dresdner et al. 2017).
All of these changes led to a more highly skilled (and smal-
ler) staff, which might have weakened the connection of the
industry with the local communities. Furthermore, the ISA
crisis disrupted governance in the salmon industry, open-
ing an opportunity for regulatory reform (Roa 2015). This
created another side effect: the legitimization of the labour
movement as a central actor to be considered when dis-
cussing the salmon industry and its future (Oseland 2010;
Oseland et al. 2012). Thus, the number of actors to be con-
sidered for the governance of the industry changed after
this crisis.
In spite of all these changes, even after the ISA sanitary
crisis, the sentiment of the people seems to have been
strongly favourable to the industry (Bustos 2015a). More-
over, it seems that local communities associated the bene-
fits obtained by modernization with the salmon
aquaculture industry. This meant that the communities still
supported the industry (Bustos 2015b). Nevertheless, inde-
pendent of how the general population perceives the indus-
try, the representatives of the municipalities complain
about a global innovation system, which includes both the
Chilean central state and the large salmon companies,
where local authorities do not have much participation
(Fløysand et al. 2010; Barton & Roman 2016).
Another topic related to governance is whether the devel-
opment path followed by the salmon aquaculture sector
can offer sustainability. The salmon industry has grown to
become a major global industry. The regulatory framework
and civil society have tried to keep up with this develop-
ment by introducing sustainability considerations in the
development trajectory (Barton & Fløysand 2010; Cid &
Barriga 2016, 2017). A common vision of what constitutes
a sustainable salmon industry seems to be emerging. In
O’Ryan and Pereira (2015), 10 different principles
embraced by diverse stakeholders were identified. These
principles include: environmental, productive, social, net-
work development and coordination requirements to con-
front high-risk situations, trusting and respectful
relationships with local communities, and appropriate pub-
lic institutions. Moreover, they propose a list of sustainable
development indicators associated with these principles
that could be used to monitor the industry. In spite of
this, several conflicts based on different beliefs and held by
different stakeholders, which cannot be independently
denied or confirmed, have arisen (Salgado et al. 2015).
This implies that simply revising the facts is not an effective
strategy in resolving these conflicts. A strategy that
addresses the roots of these beliefs should be addressed if
Reviews in Aquaculture, 1–19
© 2019 Wiley Publishing Asia Pty Ltd

an effective shared view that can be acted on is to be found
among stakeholders of the aquaculture sector.
Social conditions and investment
There have been serious concerns that the competitive
advantage in this industry has been partially due to cheap
labour and bad labour conditions. Barrett et al. (2002)
and Phyne and Mansilla (2003) examined the impact of
the salmon industry on the people and communities of
the Chilo
e archipelago. They found evidence of low wage
levels and poorly enforced or nonexistent health and
safety standards. Ganga et al. (2010) also found salaries
with a large variable component aimed at extending the
work schedule further than the legal limits. This labour
situation is attributed to a lack of monitoring and
enforcement of the labour law from the public institutions
in charge and a lack of interest on the part of the firm
owners to promote good relations with workers and com-
munity organizations (Ganga et al.2010). Nevertheless,
Bjørndal and Aarland (1999) and Bjørndal (2002), com-
paring total labour costs between Chilean and Norwegian
firms, did not find considerable differences; although they
did find a more unequal distribution of salaries within the
Chilean firms.
The development of salmon aquaculture has offered an
opportunity for the insertion of women into the formal
labour market in the regions where the industry has devel-
oped. Their participation is quantitatively important, espe-
cially in the processing sector. In 2014, women represented
up to 42 per cent of the employed labour force in this sec-
tor in the Los Lagos region (Dresdner et al. 2017). The con-
version process from a traditional society, with very low
participation of women in the formal labour market, to this
significant insertion, seems to have gone smoothly. One
reason for this might have been that local women had pre-
vious experience from working in the agriculture sector
which prepared them for adapting to the cultural changes
that working in salmon aquaculture implied (Ram
ırez &
Ruben 2015). However, several tensions have been associ-
ated with their participation in the labour market, such as
the psychological and physical wear of assuming labour,
social and family responsibilities in a man-made environ-
ment (Aravena 2009), the hard labour conditions (humid-
ity, cold, noise and small spaces) encountered in the
workplace (D
ıaz 2001), the limited access to childcare facil-
ities, sexual harassment in the workplace (Pinto 2007) and
wage discrimination (Ram
ırez & Ruben 2015). In some
respects, the situation seems to have improved over time
(D
ıaz 2001), but there are many issues pending about
women’s insertion in the salmon aquaculture sector. More-
over, we could not find literature that addresses the positive
impacts that this insertion might have had on women’s
wellbeing.
Reviews in Aquaculture, 1–19
© 2019 Wiley Publishing Asia Pty Ltd
Salmon farming socio-economic perspective
Investment has been analysed as an issue for sustainable
salmon farming from two viewpoints: First, to what extent
has foreign investment impacted the local economy as a
factor of dependency or development (Fløysand 2015)?
Dependency implies a foreign investment that dominates
production and employment in the local economy, but that
does not transmit experience, knowledge, innovation or
technological transfer, while development includes these
latter aspects. Fløysand concludes that Norwegian invest-
ment in the Chilean salmon industry can be seen as a case
of moderate development, at least in the expansion phase
of the industry, but that to fully reap the potential benefits
of foreign investment, it is necessary to develop a more ade-
quate regulatory framework and local policy that promote
sustainable development. Second, what is the role of public
and private investment in the development of the locations
where salmon farming takes place (Avil
es 2015)? This per-
spective points out that, contrary to the view that private
and public investment are in conflict with each other and
that the growing phase of salmon aquaculture in Chile was
primarily dominated by private investment, these two types
of investment are complementary. Public investment in
connectivity, education, housing and health developed in
the Chilo
e province closely complemented the private
investment in production facilities and private connectivity.
Thus, the view of a purely industry-led development based
on private investment is questioned, emphasizing instead
the importance of public–private alliances to generate sus-
tainable development.
Discussion and conclusions: Main challenges for
sustainable development of the salmon farming industry
In this section, we review the main challenges that the sal-
mon aquaculture industry must confront in order to be
aligned with ‘sustainable development’. These challenges
emerge from the industry’s past and the way it has not
resolved, or has poorly resolved, some issues. At the same
time, these challenges raise important and interesting scien-
tific questions that should be addressed by researchers
working on the socio-economic aspects of salmon aquacul-
ture in Chile and elsewhere. Our analysis includes a discus-
sion of challenges related to regulatory design and sectorial
management, opportunities and options for future expan-
sion, the need to confront greater vulnerability in face of
climate change, and public–private cooperation and gover-
nance. The section ends with some general conclusions for
future research from a socio-economic perspective for sal-
mon farming in Chile.
Regulatory system and sectoral management
The specific regulatory design of the salmon farming indus-
try in Chile is beyond the scope of this work; however, it is
11
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avez et al.
clear that the industry has specific components not encoun-
tered in other economic sectors, which should be consid-
ered in a modern regulatory framework for the sustainable
development of the industry. These include, among others:
externalities affecting firms that belong to the industry,
other economic sectors and local communities; spatial
heterogeneity due to variations in environmental condi-
tions; and international and multinational firms with pro-
duction opportunities abroad, which, along with domestic
firms, supply global markets with different production and
consumption standards.
The impact that environmental changes generated by sal-
mon farms have had on the socio-economic system are not
well established. But this does not mean that they do not
exist or that they are irrelevant. Some of the negative
impacts of externalities might not be equally distributed in
territorial terms and could be especially relevant for local
areas with few productive alternatives. One important
externality is the extended use of antibiotics, which could
generate bacterial resistance, having important conse-
quences for human health. This calls for regulation to help
internalize this externality in a context where consumers
are growing more aware and more concerned about the
quality of the food they eat (Bjørndal & Aarland 1999). As
a result of this concern, farmed salmon has lost some of its
‘natural’ image, giving organically farmed salmon and wild
salmon, as well as other wild species, a potential commer-
cial advantage. In the future, it seems reasonable to expect
an increased importance in product eco-labelling and
third-party certification to discriminate between salmon
suppliers, with a greater focus on geographic origin and
mode of production (Smith et al. 2010; Cid & Barriga
2016). If the authorities intend to deal with these externali-
ties, it is necessary to improve our understanding of this
certification movement and the consumer response to these
labels.
Salmon farming’s externalities may affect not only
other firms in the industry operating in the same location
but also other economic activities and communities close
to production sites. As discussed, the industry in Chile is
operating in different locations across the country, with
recent significant expansions into the Patagonia. This sit-
uation generates new regulatory challenges. For example,
it is expected that the effect that externalities within the
industry will have on other firms will vary greatly
depending on the farm environment and its location;
therefore, designing cost-effective intervention calls for
different regulation adjusted to these heterogeneous con-
ditions (Dresdner et al. 2019). Moreover, the design of
regulation for salmon farming in Chile should consider
the fact that firms operating in the national territory have
different property/ownership structures. There are domes-
tic, foreign and multinational firms. Some of these firms
12
operate in global markets with production opportunities
in different locations around the world. The incentives to
control externalities and reduce risk that firms face could
be different for national versus foreign firms. Policy
should include some specific regulations or restrictions
for foreign firms (Fischer et al. 2017). For example, for-
eign firms have the possibility of restricting production
in one domestic site, while increasing it abroad or vice
versa, which might affect disease risk domestically and
abroad. The main message is that a greater degree of flex-
ibility to adjust production is likely to affect firms’ beha-
viour (production decisions in different locations) and
the risk of diseases due to the more or less intensive use
of the production sites. Consequently, this aspect should
be considered in regulatory design, especially in the pres-
ence of differences between domestic and foreign regula-
tory standards. Thus, the design of proper interventions
might call for discriminatory (non-uniform) regulations.
On the contrary, a ‘one-size-fits-all’ type of regulation
might induce too much and/or too little control, depend-
ing on the specific location, may not achieve its targets,
and could increase both the compliance and enforcement
costs.
According to our previous discussion, two main chal-
lenges emerge from the conflict over space: First, finding an
appropriate way to allocate marine space between alterna-
tives. The lack of well-defined property rights over the
space precludes the use of a market mechanism to assign
spatial rights. The basic use is allocated by law. Therefore,
there is a need to develop regulatory plans that define the
way the aquatic resources are utilized. Second, it would be
naive to think that some procedural rules would resolve the
conflict over resource uses. This is more obvious when
stakeholders have different beliefs that cannot be denied or
confirmed independently (Salgado et al. 2015). Thus, there
is a need to generate arenas were the different stakeholders
can communicate and where political agreements over
space regulation and allocation can be attained. To do this,
the different stakeholders’ groups need to be able to discuss
and agree upon a shared view about the territory. Better
understanding the visions and demands of the main stake-
holders involved in this conflict can be very useful for mov-
ing in this direction. In this context, the role that the
government can play in promoting these arenas and leading
the way for general political agreements between the parties
is crucial.
Options for expansion
There are several challenges that the industry is facing
related to the possibilities for its future expansion. First, the
new regulatory framework appears to be orientated at
reducing fish density within the salmon centres and reduc-
ing the concentration of centres within the same area for
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© 2019 Wiley Publishing Asia Pty Ltd

sanitary considerations (Iizuka & Zanlungo 2016). As a
result, the industry needs to find new spaces and new tech-
nologies that allow for the expansion of production. Cur-
rently, production is concentrated in the Regions of Los
Lagos and Aysen, with lower production in the Magallanes
Region. Despite some production in this latter region, the
expansion of the industry there is limited by the availability
of space since a significant portion of the areas suitable for
aquiculture in this region are national parks. This situation
has slowed down the expansion of the industry in this
region. Furthermore, through the exempted resolution
R.Ex. No. 3264, the government confirmed that, based on
technical reports submitted by the UFA, no further requests
for aquaculture concessions will be received that include
intensive cultivation of salmonids in the Magallanes
Region, indicating that with the number of concessions
already granted and applications submitted to-date in the
respective area, no spaces are available in this region. More-
over, the recent expansion of production towards the
Magallanes Region, along with the spread of the activity in
that territory, may increase environmental risks and conse-
quently challenge sustainability of the industry (Niklitschek
et al. 2013). It is unclear if a displaced and more disperse
activity in the southern territory is preferable to a more
spatially concentrated industry. Greater dispersion might
increase the negative externalities that are spatially dis-
tributed and the conflicts over use of geographical space.
These effects might be reduced with spatial concentration
(Estay & Ch
avez 2015). Moreover, expansion implies not
only challenges for sustainability related to environmental
issues but also the need to provide infrastructure for aqua-
culture activities and to find a supply of qualified labour to
satisfy the new and increasing demand.
The need for new spaces for future production and the
limitation of space in the protected coastal zones available
have motivated the possibility of cultivating salmon in
exposed areas. Offshore farming could be an alternative for
industry expansion and has been extensively studied (e.g.
Loverich & Forster 2000; Scott & Muir 2000; Jacobsen et al.
2016; Buck & Langan 2017). From an environmental point
of view, this technology would have several benefits, such
as increasing waste dispersal, reducing interaction with
coastal flora and fauna, and minimizing the risk of parasitic
diseases and infections (Holmer 2009). However, there is
still a lack of knowledge about the effects it might cause on
important fish and mammal migration routes and benthic
habitat responses (Holmer 2009). From the social and eco-
nomic perspective, there is no consensus in the literature
on the potential costs and benefits of this option for the
expansion of the sector. Offshore farming is recognized as a
technology that requires a high initial investment and high
costs of operation and labour, but that could potentially
have higher profitability than inshore systems (Holmer
Reviews in Aquaculture, 1–19
© 2019 Wiley Publishing Asia Pty Ltd
Salmon farming socio-economic perspective
2009; Di Trapani et al. 2014). Understanding the social
dimensions and effects of offshore aquaculture remains
incomplete (Buck & Langan 2017).
Another technological alternative for dealing with space
limitations is recirculation aquaculture systems (RAS),
which have also been extensively studied (Dalsgaard et al.
2013; Drengstig & Bergheim 2013; Davidson et al. 2016;
Badiola et al. 2017). These systems are currently used in
Chile for the first stage of salmon farming, but have gained
increasing interest in recent years as a means to intensify
fish production in the fattening stage. Since this technology
allows the operators to control the essential parameters of
water quality for each species, this allows for optimizing
growth, while minimizing environmental impact. The neg-
ative side of RAS is the high investment and operating costs
compared to less intensive systems, which challenges these
systems’ profitability (Dalsgaard et al. 2013).
Reviewing the insertion strategy of Chile in world mar-
kets is another challenge. Chile has been more market-
oriented than competitor countries (Asche & Bjørndal
2011), being able to develop new products and new markets
and to export products with higher degrees of processing
than other countries (Asche & Bjørndal 2011). (There is a
common view in the Chilean salmon industry that prices
are a difficult variable to influence, so the effort of the
industry has been mainly concentrated on cost control.)
This may not be a good strategy if international markets
are segmented through eco-labelling or certification. In that
case, consumers may no longer consider salmon a homoge-
nous product and may be willing to pay a higher price for
eco-friendly products. Therefore, it is necessary to clearly
understand the factors and attributes of the product that
influence its price in different international markets so that
the chosen strategy maximizes social benefits and surplus
in the industry.
Climate change and climatic variability
Apparently, the potential impact of climate change and cli-
matic variability on the salmon industry was not perceived
as noteworthy by stakeholders until a severe HAB event
struck the Los Lagos region during the first term of 2016
(Salmon Expert 2016; Montes et al. 2018). In part, aware-
ness increased as a consequence of the intensity of the phe-
nomenon, but also because of the strong reaction against
the industry that it produced in different stakeholder
groups (Barton & Roman 2016). Local preparedness to pre-
dict, mitigate, and compensate people affected by the
extreme climatic event was rated as low by the public
media. The Instituto Tecnol
ogico del Salm
on (INTESAL),
the technical institution stemming from the main salmon
producer organization – Salmon Chile, began to participate
in a public–private roundtable to increase readiness for
future natural events provoked by sustained temperature
13
C. Ch

avez et al.
increases and deficits in rainfall (Salmon Expert 2016;
Le
on-Mu~ noz et al. 2018).
Scientific information about the social and economic
consequences of these types of events and the territorial dis-
tribution of the costs is very scarce. Gonz
alez et al. (2013)
estimated that the Chilean salmon sector was highly vulner-
able to climate change and that, despite its level of exposi-
tion being medium to low, the impact on the economy
could be large. It has also been suggested that the main
impact from climate change to the Chilean salmon industry
could come from the rise of salinity in estuarine areas, which
could affect salmon productivity and mortality (Gobierno
de Chile 2015, Soto et al. 2019; this special issue).
The socio-economic impact of major events produced by
climate variability on the living conditions of population in
different localities is blurred by the fact that the residence
and work place of the labour force in the salmon industry
(especially in salmon farms) has been increasingly dissoci-
ated, as salmon farming has been relocated to more remote
territories, far from the urban areas. Also, skill require-
ments for the workforce have increased, most likely reduc-
ing the importance of the unskilled, local coastal
population in the industry’s workforce. Thus, productive
disruptions occurring in specific territories as a conse-
quence of these climatic events might affect households that
reside in places quite distant from the farm location, and
the territorial distribution of these effects is unknown.
Moreover, the approach used to analyse this type of events
is still industry-specific. To the best of our knowledge, the
work of Soto et al. (2019) on this particular issue is the first
study that analyses the vulnerability of the salmon aquacul-
ture sector in Chile to climatic shocks and climate change
using a socio-ecological system approach.
Public–private cooperation and governance
The Chilean salmon industry has experienced an extraordi-
nary growth in the past years, providing employment and a
source of diversification of the Chilean export matrix; how-
ever, its contribution to the local development and its rela-
tions with local communities remain controversial. This
could be due to the perception that a large part of the sur-
plus of the industry is moving out of the region and being
concentrated in other specific localities, such as urban
areas. It could also be that the new labour regimes, which
take into consideration contract terms that adjust to the
new regulations, increasing technology that demands more
qualified labour, and/or expansion towards the southern
region of the country that is less populated, have implied
that there are weaker connections between the industry and
the communities where firms actually operate the farming
centres. This perception could also be a result of the com-
petition with other activities for the use of aquatic space
and the externalities generated by this industry. In any case,
14
there is a need to internalize the negative externalities that
the industry generates in the zone, spread the benefits to
rural areas, improve the relationship of the industry with
the communities, and leave a higher proportion of the ben-
efits from the industry in the region. In order to do that,
researchers and policy makers need to better understand
the relationship between the industry and local areas: where
is employment being generated? What are the relations
between salmon culture and other local activities like?
Where are taxes and incomes being paid and spent? What
are the barriers that local communities face in obtaining a
larger share of the industry’s benefits?
During the commercial development process, the salmon
industry faced different difficulties (sanitary crises, social
conflicts, market problems, etc.) that affected the industry
itself, the local communities and other actors directly or
indirectly related to the activity. Some of these problems
have been attributed, among other things, to a lack of good
governance (Vignolo et al. 2007; Bustos-Gallardo 2017).
Some of these problems still persist and are challenges to be
faced by the industry.
Externalities over space, with different firms operating in
similar locations, need coordination. This coordination
should involve not only firms operating in the industry and
the industry itself with regulatory agencies but also the coor-
dination between firms and local communities. Salmon farm-
ing management, like much of the management of marine
resources, is often treated independently, despite having other
sectors competing for the use of similar areas, e.g. fisheries,
tourism and other activities carried out on the high seas.
One of the main challenges in developing good gover-
nance is improving the perception that the community and
consumers have about the industry (i.e. of a polluting
industry with sanitary problems). Because of the new
labour regimes that have emerged as a response to regula-
tory changes, the increasing demand for more qualified
labour, and the expansion of operation towards the south-
ern region of the country, it appears that there are weak
connections between local communities and the industry
operating nearby. Furthermore, consumer awareness is ris-
ing and people are becoming increasingly concerned with
the quality of the food they eat; a preference for minimal
medication is likely to emerge (Bjørndal & Aarland 1999),
such as has been found for the US market (Ortega et al.
2014). Thus, it seems that a new institutional structure that
solves the coordination problems and legitimizes the indus-
try to other stakeholders is required.
Summary and future research
We have identified and discussed the main problems faced
by the salmon farming industry in Chile from a socio-eco-
nomic perspective. Based on its history, we have identified
several challenges for future sustainable development of
Reviews in Aquaculture, 1–19
© 2019 Wiley Publishing Asia Pty Ltd

this industry in the country. Our analyses have included
regulatory design and sectoral management, options for the
future expansion of the industry, responses and adjust-
ments in the face of climate change and climate variability,
and the proper handling and growth of public–private
cooperation, good governance, and knowledge and tech-
nology transfer.
Focusing on the unresolved issues and challenges that
have been detected seems to be a sensible starting-point for
future efforts in socio-economic research. We will briefly
summarize some relevant research areas: First, more cost–
benefit analysis and socio-economic research regarding the
impact of the activity over time and the effects of new regu-
lations are needed. This is especially important to assess the
impact of externalities and heterogeneous conditions on
policy design. Second, the role of public policy in promot-
ing a development path that complements the productive
sector and the requirements of local development should
be studied, especially in the face of the new opportunities
for expansion already taking place. Third, the relationship
between the industry and the international markets, and
the segmentation of foreign consumers and markets, are
areas that need more comprehensive research. Fourth, the
expansion of the industry offshore, challenges in sustain-
ability and adaptation to climate change, and the gover-
nance necessary to coordinate the developing conflicts over
space should also be addressed.
Acknowledgements
This study was funded by the Interdisciplinary Center for
Aquaculture Research (FONDAP No. 15110027, CONI-
CYT, Chile). We also acknowledge partial funding from the
Environment for Development Initiative (EfD) through the
Policy Instruments for Sustainable Management of Oceans
and Marine Resources program. The authors are grateful to
two anonymous referees and the editor for helpful com-
ments and suggestions.
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