Norwegian aquaculture management and non-point source pollution

Non-point source (NPS) pollution of the salmon lice parasite Lepeophtheirus salmonis from Norwegian fish farms poses environmental risk for Norway’s wild Atlantic salmon stocks. To mitigate wild smolt mortality caused by this NPS pollution, the so-called traffic light system (TLS) was implemented in 2017. The system divides the Norwegian coast into 13 production areas, using wild smolt mortality as an ambient environmental indicator. Based on their aggregate impact on the indicator, salmon farmers can receive an increase or decrease in maximum allowed biomass. The TLS shares similarities with proposed ambient regulation methods in NPS pollution literature, including a collective penalty-reward incentive scheme. However, the effectiveness of this scheme in Norwegian salmon aquaculture remains uncertain. We analyze reported lice counts from farms between 2012–2024 to assess the TLS impact on NPS pollution of salmon lice. We find that a collective punishment-reward scheme is likely to be effective if the reward resembles a subsidy. However, the true effect of the TLS is likely to be limited by weaknesses in the management framework itself, as farmers may perceive a disconnect between their individual pollution and their aggregate impact on the environmental indicator.