The New Staple State: Political Economy and Public Policy Regimes in Canada’s Primary Industries


Chapter III: “The New Agriculture: Genetically-Engineered Food in Canada” – Elizabeth Moore10 (Agriculture Canada)



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Chapter III: “The New Agriculture: Genetically-Engineered Food in Canada”Elizabeth Moore10 (Agriculture Canada)



Chapter IV: "The Impact of International Trade Liberalization on the Canadian Fisheries Industry" - Gunhild Hoogensen, (Tromso)



Chapter V: "Caught in a Staples Vise: The Political Economy of Canadian Aquaculture” - Jeremy Rayner (Malaspina) and Michael Howlett (SFU)




Introduction:


Aquaculture in Canada is a small, rapidly-growing high-technology resource sector “caught in a staples vise”. On the one hand it is an archetypal case of a new ‘post-staples’ resource industry: combining high capital intensity and sophisticated technology to produce a new, post-staples, version of a classic staple resource – food fish (Hutton, 1994). On the other, it perpetuates many of the same social and economic problems and issues that plagued traditional staples political economies: namely a hinterland location and heavy export reliance (Innis, 1930 and 1933). This chapter assesses these contradictory and sometimes conflicting developments and trends in a resource industry for the most part situated in a very uneven transition towards a post-staples political economy.

(Overly) Optimistic Expansion in the 1980s and 1990s


As it is currently configured, the aquaculture sector is composed of two basic industries, the shellfish and finfish sectors, which use very different techniques to produce different species of marine animals. Shellfish volumes and values remain much smaller than their finfish equivalents at present, with finfish output accounting for about 77% of total volume and 88% of value of total Canadian production in 2003 (Statistic Canada, 2004). The Canadian finfish industry, up until now based largely on Atlantic salmon (Salmo salar) has enjoyed phenomenal growth in output over the last two decades. Output in 2001 alone showed a 25% increase over 2000 levels, and reached 136,000 tonnes in 2002 before falling back to 119,000 tonnes in 2003. Canadian shellfish production grew by 17% between 2000 and 2001, and continued to grow, albeit rather slowly, reaching 35,521 tonnes in 2003. The value of Canadian farmed finfish sales also fell 3.3% between 2002 and 2003, to $643 million, after many years of rapid growth, illustrating the continuing similarities between ostensibly ‘post-staples’ and traditional staples industries. The weakness of the US economy combined with overproduction and fierce competition between the two major producing countries, Chile and Norway, has continued to drive down world salmon prices. Shellfish values, where the species mix is also more diverse and associated environmental problems less severe, have held up rather better, increasing interest in the sector in recent years (PriceWaterhouseCoopers, 2001).

The very rapid growth of aquaculture volumes and values over the last decade is, of course, not unique to Canada (Burros, 2005) and is linked to declines in traditional ‘wild’ or ‘capture’ fisheries. The declines in many significant capture fisheries around the world combined with increasing world demand for seafood products has led to concerns about food security and aquaculture has been widely promoted by governments and international agencies such as the FAO as an essential tool to address the food security issue (FAO, 2004). World farmed salmon production volumes surpassed the wild fishery in 1997 and the development of new farmed species such as cod and tuna is well advanced. Rosy forecasts in this sector are common. Former federal fisheries minister Herb Dhaliwal, for example, predicted a Canadian industry worth $2bn by the end of the decade (Canada, Senate, no date). A widely quoted report by Coopers Lybrand for the federal Western Economic Diversification (WED) program suggested that the value of British Columbia shellfish production alone could climb from $12 million to $100 million between 1997 and 2006 (Coopers Lybrand, 1997). The possibility of creating thousands of new post-staples resource and associated service and other jobs in coastal communities hard hit by declines in other resource sectors has helped persuade governments like that of British Columbia to lift moratoria on new shellfish and finfish farm tenures and launch policies such as the Shellfish Development Initiative (SDI) aimed at doubling areas under tenure over the next decade (http://www.agf.gov.bc.ca/fisheries/Shellfish/shellfish_dev.htm ).



Emerging Problems with Aquacultural Development


As a result of declines in the wild fishery and the growing level of investment in fin and shellfish aquaculture, Canadian aquaculture policy emerged in its modern form after 1984, when the federal government undertook a complex multi-level process of policy renewal after almost a century of benign neglect. Following an initial period in which the foundations for the new policy were laid through intergovernmental agreements, both the federal and provincial governments adopted numerous policies aimed at the promotion of the aquaculture industry.

Yet, in spite of the optimism and the apparent convergence of government policy on promoting aquaculture development, progress in this post-staples sector remains limited in many parts of Canada. For all the efforts to diversify into new species and new locations, the sector has encountered a series of market and environmental problems which have restricted its expansion. The finfish industry, for example, remains dominated by the production of Atlantic salmon in a restricted number of locations in BC and New Brunswick. While the value of farmed salmon output is now twice the landed value of the hard-pressed Pacific salmon fishery, the total value of aquaculture output in Canada as a whole, by contrast, is still less than half the total landed value of Canadian capture fisheries ($580 million compared with $1.2 billion in 2003). Even in British Columbia, the total value of farmed salmon output is still dwarfed by the combined values of the capture fisheries for all species and by the lucrative, tourist-oriented, sport fishery (Marshall, 2003). This makes the capture and sport fishery constituencies and their allies in the federal and provincial governments formidable opponents when the interests of wild fishery and aquaculture come into conflict. Thus, in addition to the weakness of international farmed salmon prices and the shaky financial state of some of the world’s largest companies with operations in Canada, Canadian aquaculture producers face significant scrutiny by a characteristically post-staples coalition of traditional fishers, First Nations and environmentalists concerned about the impacts of the industry on the marine environment, on surviving stocks of wild fish, and on native rights, title and employment. Issues have been raised about every stage of the aquaculture production process, especially the use of wild fish stocks to make feed pellets for farmed fish, the impact of wastes, parasites and diseases on local wild stocks, and the human health implications of therapeutant residues, colourants, and contaminants contained in the final food products.

The environmental coalition has adopted tactics familiar from other traditional staples resource areas, such as forestry, and those involving food production, such as struggles over genetically-modified crops and food products, to undermine consumer confidence and promote enhanced government (and industry self-) regulation. In particular they have alleged collusion between industry and government to suppress unpleasant facts about the environmental impacts of finfish aquaculture. US consumers, for example, have been targeted with a slick “Farmed and Dangerous” campaign that has encouraged restaurant-goers to demand wild salmon, has pressured some large US retailers to label farmed salmon as artificially coloured, and urged both to express more general concerns about the negative publicity surrounding Canadian salmon farms (www.farmedanddangerous.org). More seriously still, Congress has been successfully lobbied by the Alaskan salmon fishing industry and its allies to pass “Country of Origin Labeling” (COOL) legislation that will enable the opponents of salmon farming to target Canadian imports. The power of this lobby was recently illustrated when the traditional bargaining between Congress and the administration over the final shape of the Bill resulted in an indefinite delay in applying COOL to agricultural products, but immediate implementation for seafood (http://www.ams.usda.gov/cool/).

While the shellfish aquaculture component of the industry has, until recently, enjoyed rather less intense scrutiny from environmentalists, it has experienced plenty of problems of its own. In BC, for example, more than half way through the SDI the value of farmed shellfish has barely reached a quarter of its ten-year target. Problems of intergovernmental coordination, premature tenure expansion announcements without adequate consultation of local communities, uncertainty surrounding unresolved First Nations’ claims and their impact on the foreshore and coastal waters, declining water quality in traditional growing areas, lack of processing facilities and distribution networks for expanded production, and a host of other factors have surfaced. In PEI, perhaps the most successful example of shellfish industry expansion in Canada, weakening mussel prices, allegations of dumping in US markets, and increasing conflicts with other users have marked the expansion of the industry. A high profile action in the Federal Court by the Sierra Club opposing a 1400 acre mussel aquaculture development by a PEI company near the Cabot Trail in Nova Scotia suggests the difficulty of expanding operations beyond the Island and is indicative that shellfish aquaculture, widely promoted as a “green” industry, is now on the environmentalists’ radar screen. In BC and elsewhere, shellfish aquaculture development now faces the same kind of serious legitimation problems which have bedeviled the finfish sector, threatening not only the future industry, but those operations already established (Hume, 2003a and 2003b; Simpson, 2003a and 2003b; Rud, 2003; McInnis and LaVoie, 2003).




A Post-Staples Policy Process?


This record raises many issues related to how policy-making in this sector has been designed and the principles followed by policy-makers in their activities. Policy-makers have generally ignored or failed to act in accordance with recent thinking on policy design and governance and instead have carried forward a policy process typical of an earlier era of staples resource development (Howlett and Rayner, 2004). In a mature staples economy, the resource allocation conflicts and environmental impacts surrounding the expansion of a new industry were largely managed through traditional instruments of regulation and subsidy. Development was often accepted as an end-in-itself and welcomed by local and metropolitan populations alike (Howlett, 2001). In a post staples economy, metropolitan populations become increasingly disconnected from resource extraction activities with the result that the development of metropolitan post-materialist values intensifies environmental conflicts (Hutton, 1994). In a globalized market place, national and sub-national regulatory and subsidy policies are opened to international scrutiny and environmentally-sensitive and health-conscious consumers can be targeted by environmental activists in even the most distant markets (Cashore, Auld and Newsom, 2003). The farther up the value chain that an industry moves – the further away from production of a traditional un- or semi-processed staple commodity – the more easily identifiable the product and the more intense the scrutiny becomes. This result is a more complex post-staples political economic environment requiring sophisticated policy-making which not only focuses on the use of policy instruments to promote industrial activity, but also those required to legitimate the whole process from the allocation of scare coastal resources to the politics of food production and distribution (Randolph and Bauer, 1999). However, as the discussion below will show, rather than create a system of ‘smart regulation’ for the post-staples era, as Gunningham has termed it (Gunningham, Grabosky and Sinclair, 1998), Canadian policy-makers have until recently pursued a staples trajectory – that is, a single-minded focus on industrial promotion, while leaving existing weak procedural instruments – notably industry-based advisory panels – in place. Although policy-makers are currently responding to the emerging crises in the sector with a plethora of consultations and other procedural devices, the requisite co-ordination is lacking and these ill-considered consultations themselves are now engendering additional problems in the sector (Cook, 2002; Wondelleck, Manring and Cowfoot, 1996; Suryanata and Umemoto, 2003).

Aquaculture as a Problematic Post-Staples Industry


As the Introduction to this volume attests, the significance of having an economy based on the export of unfinished bulk resource commodities (or ‘staples’) lies not only in how these affect policy-making by creating continuing issues with resource location and availability, but also in how populations in staples-dependent areas react to their continued vulnerability to international market conditions (Howlett, 2003). The development of a staple-based economy, for example, often triggers government investments in areas such as transportation and communications infrastructure designed to efficiently extract and ship goods to markets; provisions of export subsidies and credits designed to facilitate trade; and can generate demands for regional development and other government expenditures designed to protect populations from price fluctuations caused by supply and demand conditions in international markets (Naylor, 1972; Hodgetts, 1973; Stone, 1984; Whalley, 1985; Hessing, Howlett and Summerville, 2005).

As Thomas Hutton observed in his chapter in this volume, "mature, advanced" staple economies have several common features which can be combined into a typical political economic “profile”. These include: (1) the substantial depletion of original resource endowments and consequent increasing pressure from environmental groups to inhibit traditional modes of resource extraction and stimulate development alternatives; (2) the increasing capital- and technology-intensiveness of resource extraction processes and consequent decrease in employment in the staples sector; (3) the evolution of development from 'pure' extraction to increased refining and secondary processing of resource commodities; and (4) diversification of economic structure with growth in non-staples related areas such as, tourism, and local administration and services (Hutton, 1994).

Diversification of the local economy, in particular, creates important new political forces who see their interests as different from and sometimes in conflict with the old staples sector. Hence, while a mature staples political economy may still be characterized as "resource dependent", the economy is, in fact, more diffused and diversified than in the past and the politics of resource policy processes change accordingly. As Hutton suggests, if this diffusion, diversification, and resource depletion continues, then an economy may make a further transition towards a "post-staples" one in which “severe pressures on the critical resource sector coupled with the prospect of even more substantial contractions in the near future lead to an internal reconfiguration of growth and development”. Typically this involves a significant increase in metropolitan shares of population and employment, the emergence of regional economic centres and the decline of smaller resource-dependent communities and the emergence of new resource industries, like aquaculture, built on the rubble of depleted ‘classic’ staples (in this case, the failed ‘wild’ fishery).

The key to understanding aquaculture development as a post-staples industry lies in the complex interpenetration of the different sectors of a staples and post-staples political economy, the uneven impact of the changes at the sectoral and subsectoral levels in the new and old economies, and the consequent novelty of the political challenges posed by post staples development both within particular sectors and across the political economy as a whole. In countries like Canada, whose history has been strongly marked by the evolution of traditional staples industries, post-staples resource policy options are heavily constrained by policy legacies and path dependencies from the earlier era, notably the existence of towns and population centres, companies and industrial structures, labour skill sets and trade union organizations, and other remnants of bygone, or dwindling, classic staples activities. Resource industries do not disappear, to be seamlessly replaced by an expanding service sector or “the new economy”, but assume new forms and are layered with elements of older political economic regimes in an uneven process of transition that is, perhaps, rather more complex and difficult than Hutton himself suggests (Rahnema and Howlett, 2002).

In this light, Canada aquaculture can be seen as a “problematic” post-staples resource industry strongly marked by the governmental, corporate and community attempts to make the transition from the failed or failing mature staples fishery economy. In spite of its aura of high-tech novelty, Canadian aquaculture retains many of the features of its mature staple predecessor. Both industries are oriented to export, almost exclusively to the US. In 2002, 55% of Canadian farmed salmon output was exported to the United States, which represented over 90% of the Canadian export market and output closely tracks US exports (Statistics Canada, 2003). And the Canadian aquaculture sector also remains mired in the export of low value-added bulk products. With the Chilean industry spurred by their greater transportation costs to move ahead in value-added production, the “commodity market” in whole fish has been left to the Canadians and their favorable advantage vis a vis the US market.

Both the finfish and shellfish industries remain heavily dependent on bulk production of a basic “unfinished” product. The Canadian aquaculture industry is well aware of the weakness of its position and continues to try to break out of this low-value “staples trap” through diversification into new products and new markets, but its success to date has obviously been limited. The salmon industry has made some efforts at moving up the value chain to sell fillets rather than gutted whole fish in recent years and sales of salmon fillets to the US increased threefold in volume and nearly quadrupled in value between 1998 and 2003 (Statistics Canada, 2004). But fillets still account for only a little more than a quarter of export volumes. Shellfish producers have had similar difficulties moving to such higher value products as live oysters and ready to eat shellfish products such as clam or mussel-based sauces.



The Finfish Sector


It is also the case that aquaculture, like its wild fishery predecessor, is unevenly developed across the country. In the finfish case, the industry has developed very rapidly but unevenly on both coasts. The leading province, British Columbia, is the fourth-largest producer of farmed salmon in the world and the BC industry has seen equally rapid consolidation, moving from over 100 companies in 1988 to only 12 in 2003. The capital for the transition has come largely from Norwegian multinationals, which have bypassed Vancouver and created a regional economic centre in Campbell River. The Norwegian interest in the BC industry is clearly motivated by their desire to locate production for the US market inside NAFTA and, as such, reproduces a feature of the old staples-related “branch plant” manufacturing economy. Nonetheless, some backwards and forwards linkages have developed in this sector. Feed and equipment are produced in Canada and exported to other jurisdictions and there is investment in hatcheries producing juveniles for growing out on the farms.11 There are also significant resources being deployed in researching scientific and technological solutions to the problems faced by the industry, such as reducing the amount of fish protein in food pellets and breeding fish with increased resistance to the diseases and parasites found in intensive sea cage culture.

At the same time, the first payoff from this more capital intensive kind of aquaculture is, as usual, the reduction of labour inputs per unit of output. In spite of the very rapid expansion of aquaculture output, aquaculture employment has grown much more slowly and some provincial industries, like BC salmon farming, have recently seen almost no employment growth at all. As the Canadian Centre for Policy Alternatives noted, “BC’s fish farm industry (including the vast majority of processing) was 60 times larger in 1999 than it was in 1984, but employment merely doubled over that period. During the 1990s, BC’s industry tripled its production without any increase in employment” (Marshall, 2003: 16). Like many classic staples, much of the work is part-time, seasonal and relatively low-tech.

Similarly, while aquaculture is seen by the state as a valuable substitute for the declining capture fishery, this development has created a complex environmental discourse which is more challenging than Hutton’s original picture of more environmentally-friendly resource extraction in post-staples sectors. As we have noted, aquaculture is accused by environmentalists and fishers alike of contributing to the decline of wild fish stocks and the degradation of coastal ecosystems and consequently does not function, as it might, as an environmentally friendly substitute that would allow the recovery of an overexploited traditional staple. Other elements of the overall post-staples political economy, notably recreation and tourism, add to the mix of interests and conflicts. Where coastal tourism, for example, is marketed as a “visit to a pristine environment”, fishfarms are identified as an alien intrusion.

And, again, while a mature staples economy often pits urban populations with strongly developed post-materialist values against the inhabitants of resource hinterlands who simply perceive environmentalism as a threat to their livelihoods, the more complex post-staples landscape creates a more complex politics as well. In particular, as the history of recent conflicts in the forestry sector has shown, there is the possibility of linking urban environmentalism with traditional resource users whose livelihoods are threatened by new resource developments. Aquaculture has created just such an opportunity, with opponents organizing around a core conception of “nature” that stigmatizes aquaculture as “artificial”, “unnatural” and “dangerous”. The paradoxical idea that escaped farmed fish are a kind of pollution flows directly from this conception of natural and unnatural activities (Mansfield, 2004). As a result, it is no exaggeration to say that Canadian aquaculture is facing a legitimation crisis and not, as might be expected, a smooth and almost inevitable transition in political economic hegemonies.



The Shellfish Sector


Shellfish aquaculture is on similar trajectory, with PEI as the most advanced province, one which is even less far forward in the transition to an overall post staples political economy than BC. While the shellfish industry remains considerably smaller and less capital intensive than its finfish counterpart, we have also seen the beginnings of a consolidation into a smaller number of large companies engaged in more intensive forms of cultivation. Much the same complex post-staples alignments of interests as can be found in the finfish sector can be observed here as well, it least in embryonic form. Shellfish farming, for example, is beginning to be accused of disrupting natural coastal ecosystems rather than taking resource pressure away from them, with alleged negative impacts on migratory birds and their habitat leading the list of charges. There are visual and other social impacts on owners of waterfront properties and conflicts with the increasingly important tourism and recreation industries. Leasing beaches and nearshore waters for shellfish production often ends up excluding other users, sometimes those engaged in traditional wild fisheries of shellfish species other than those being farmed, such as clams. While shellfish aquaculture is often promoted as a source of employment and revenue for small coastal communities, especially First Nations, there are significant obstacles to the geographical dispersion of the industry and a tendency to observe the characteristic post-staples “clustering” of successful enterprises to the exclusion of less-favoured locales. Certainly the model of New Zealand, the global leader in the farming of shellfish species likely to be successful in Canada, suggests a model of concentration and increasing intensity (Clancy, 2002).

It is not surprising, then, that both finfish and shellfish aquaculture have proven to be contentious sites of political and policy struggle, existing at the cusp of the transition from a staples (wild-fishery) to post-staples (farmfish) resource sector. This causes substantial regulatory challenges for governments, especially those dedicated to industrial promotion. In what follows, we focus on describing and then evaluating the existing mix of policy instruments used in the aquaculture sector in Canada, focusing on the less well-known shellfish sector but noting the unique problems of finfish aquaculture where relevant.



The Existing Canadian Aquaculture Regulatory Framework


Rather than face a choice among a huge number of policy tools, governments only have a limited number of “resources” which can be used to give effect to their plans and ideas (Salamon and Lund, 1989; Salamon, 2002; Lowi, 1985; Bemelmans-Videc, Rist and Vedung, 1998; Peters and Van Nispen, 1998). Four broad categories of governing resources exist (Hood, 1986; Lundquist 1987; Anderson, 1977; Baldwin, 1985). Governments can confront public problems through the use of the information in their possession (‘nodality’), their legal powers (‘authority’), their money (‘treasure’), or the formal organizations available to them (‘organization’). Policy tools tend to fall into two types: substantive instruments – like public enterprises or user charges - designed to directly deliver or affect the delivery of goods and services in society; and procedural instruments – like the creation of advisory committees and government re-organizations - used to alter aspects of policy deliberations (Howlett, 2000; Rothmayr, Serduelt and Maurer, 1997; Timmermans et al, 1998). Figure 1 below provides illustrative examples of the different types of policy tools which are based on each ‘resource’ category.
Figure 1. Policy Instruments, by Principal Governing Resource

(Cells provide examples of instruments in each category)

Nodality

Authority

Treasure

Organization

Information Monitoring and Release

Command and Control Regulation

Grants and Loans

Direct Provision of Goods and Services and Public Enterprises

Advice and Exhortation

Self-Regulation

User Charges

Use of Family, Community and Voluntary Organisations

Advertizing

Standard Setting and Delegated Regulation

Taxes and Tax Expenditures

Market Creation

Commissions and Inquiries

Advisory Committees and Consultations

Interest Group Creation and Funding

Government

Reorganization


Source: Adapted from Hood, 1986.

Governments use these resources both to manipulate policy actors by, for example, withdrawing or making available information or money or using their coercive powers to force actors to undertake activities they desire, and to affect the extent and type of representation of actors enjoy in policy-making processes.

Most policy sectors feature the use of “bundles” of instruments rather than single tools. (Gunningham and Sinclair, 1999; Harter and Eads, 1985; Grabosky, 1995; Sterner, 2003; Young, 1997; Sinclair, 1997). These mixes have often developed over a long period of time, sometimes in a very haphazard fashion and have become more or less permanent arrangements or what are sometimes referred to as implementation styles (Linder and Peters, 1991). As the aquaculture case illustrates, a sectoral implementation style constitutes one of the most stubborn policy legacies that can impede the transition from a staples to a post-staples economy. With this in mind, the evolution of the implementation style found in the Canadian aquaculture sector will be set out at both the federal and provincial levels and its status as a legacy from the staples area demonstrated.



The Federal Situation


The Canadian approach to aquaculture, like the Canadian approach to almost every other policy area, is deeply affected by Canadian federalism. Aquaculture is not mentioned by name in the Constitution Act (1867) or in any subsequent Constitution Act or amendment. Federal involvement is based directly on jurisdiction over sea coasts and inland fisheries (s. 91(12)), over navigation and shipping, over Indians and land reserved for the Indians, and through the federal power to enter into international treaty obligations. Indirectly, federal jurisdiction also derives from federal government activity in the area of environmental protection, and from case law concerning the regulation of international and inter-provincial trade. Finally and more speculatively, the federal declaratory power might be used to bring an aquaculture project or projects under federal jurisdiction and the non-mention of aquaculture might provide grounds for exercise of the federal residual power over undefined areas. Provincial involvement, on the other hand, is based on constitutionally-protected jurisdiction over property and civil rights within the province, over provincial crown lands, over matters of a merely local or private nature within the province, over municipal institutions and over the regulation of lands underlying freshwater lakes, rivers and tidal areas within bays, inlets and estuaries. Provincial jurisdiction also derives from existing provincial activity in the field of environmental protection and from case law supporting provincial rights to implement treaty obligations entered into by the federal government in areas of exclusive provincial jurisdiction. The Constitution Act (1867) recognizes a shared jurisdiction over agriculture, which has not, as yet, proved significant for aquaculture policy.

Inevitably, the working out of the complex jurisdictional issues here has involved the usual more or less rancorous series of negotiations punctuated by appeals to the courts. Wildsmith usefully summarizes the outcome as founding Canadian aquaculture policy on the basis of provincial rights to determine how property and resources are used within the province “hemmed in by” the federal power to enact legislation to protect wild fisheries and navigation and shipping (Wildsmith, 1982). A series of early fisheries cases stemming from The Queen v. Robertson established that the federal power to legislate under s. 91(12) does not create any proprietary right with respect to a wild fishery and is confined to protection and conservation. There were early attempts to reconcile the potential conflicts of regulatory authority over aquaculture by negotiated agreement, though no pattern is discernable. The 1912 oyster agreement between BC and the Dominion, for example, delegated the enforcement of federal regulations to the province. The 1936 Mollusc Agreement between Nova Scotia and the Dominion took the opposite tack, delegating the power to grant leases to the federal fisheries minister (Wildsmith, 1982; Parisien, 1972). Thus, some kind of working agreement appears to have been reached during the early years of aquaculture on the understanding that federal-provincial cooperation based on local production characteristics was essential if Canadian aquaculture was not to be strangled at birth.

In practice, the jurisdictional tangle that resulted from this strategy proved to be a considerable obstacle to the sustainable development of the aquaculture industry. The industry complains about the added cost of regulatory overlap and duplication, while duplication of authority allows federal-provincial blame-avoidance strategies to contribute to a dangerous vacuum in addressing the pressing and potential social and environmental impacts of the industry. When aquaculture entered into its modern period of rapid expansion in the 1980s an attempt was made to tackle the jurisdictional problem within the prevailing model of intergovernmental federalism. The First Ministers issued a statement of national goals and principles for aquaculture at their meeting in 1986 and this statement was followed by a series of Memoranda of Understanding between the provinces and Ottawa that attempted to provide the basis of a common working relationship between the two levels of government which could still be tailored to the circumstances of each province. These MOU’s superceded the previous patchwork of agreements and delineated agreed upon areas of exclusive jurisdiction and areas for intergovernmental cooperation. While there was a certain amount of learned debate about the legal status of the MOU’s at the time (British Columbia, 1991), and environmental organizations have periodically made noises about testing what they see as an unconstitutional delegation of powers from (environmentally friendly) federal to (industry-dominated) provincial governments in violation of the basic scheme of ss. 91 and 92 of Constitution Act, there have been no cases to date.

Another key decision taken at the time, in 1984, was the designation by the federal government of the Department of Fisheries and Oceans (DFO) as the lead agency for aquacultue regulation. While this move clarified the lines of responsibility in the federal government12 it was not without its drawbacks. As critics of DFO’s role in aquaculture development continue to complain, it placed aquaculture within a ministry that had strong historical links with capture fisheries and long-established connections with fisheries clients on both coasts. Moreover, it effectively foreclosed an embryonic, but potentially very fruitful, debate about whether aquaculture was more appropriately understood as a kind of farming, to which an agricultural rather than a fisheries model of regulation could be applied. The MOU’s in most provinces give provincial agencies control over site selection; over lease or licence approval, including the terms and conditions attached to leases and licenses; and over most operational aspects of fish farms; but DFO exerts a powerful influence over many of these decisions.

Two older pieces of classic “command and control” legislation, the Fisheries Act and the Navigable Waters Protection Act (NWPA) provide the opportunity for DFO control. Depending on the nature of the process for inter-agency referrals developed in each of province, section 35 of the Fisheries Act gives DFO significant ability to deny development or require modification of proposals for new or amended leases and licences where there is the possibility of harmful alteration, disruption or destruction (HADD) of fish habitat. At the operational level, the potential for some fish farming practices to fall under s. 36 of the Fisheries Act, “the deposition of deleterious substances into waters frequented by fish”, and the regulatory regimes surrounding the capture and movement of seed stocks and the movement of new species such as abalone have also caused problems. As is common in Canadian environmental regulation, both ss. 35 and 36 of the Fisheries Act are written to allow extensive administrative discretion and the lack of transparency in the exercise of this discretion is often at issue. 13

The provision of the NWPA that triggers an environmental assessment under the Canadian Environmental Assessment Act where a “work” may be a significant hazard to navigation, poses a different set of problems. Whereas environmental assessment is potentially an important policy instrument that could allow for both public involvement and the adoption of a more holistic approach to assessing the environmental impacts of new resource development, it has not been used in this way for aquaculture. Involvement has been limited to the right to be notified and express an opinion and more complex environmental interactions have generally been ignored in developing assessments. Despite these restrictions, however, from the industry point of view, the ability of DFO to cause delays in the approvals process has been a significant irritant and has resulted in calls for a “single window, one-stop shopping” approach where assessments would be even more streamlined than at present. A critical tool for the potential re-legitimation of aquaculture activities has thus fallen into disfavour with all parties.

In the fashion of a mature staple, the regulatory regime for aquaculture has also been complemented by the use of informational, expenditure, and organizational instruments (OCAD, 2002). These include the development and continuing support of an aquaculture research capacity within DFO and Canadian universities, a variety of federal tax incentives for farming and small business, the extension of farm credit facilities to fish farmers, and various targeted expenditures through the regional development agencies, currently ACOA and, to a lesser extent, WED. Nonetheless, supporters of aquaculture development have continued to look enviously at the substantial subsidies enjoyed by Canadian farmers, keeping alive the idea of using an agricultural model for aquaculture regulation. As the federal Commissioner for Aquaculture Development has argued, while the resolution of the regulatory issues will provide some support to the industry, “the federal government should also analyze the appropriateness of other measures to ensure that aquaculture and other food sectors in Canada operate on a level playing field” (OCAD, 2001: 20). He noted especially the various kinds of income support and stabilization programs, including crop insurance, enjoyed by terrestrial farmers but not (yet) by their marine counterparts.

Procedurally, various types of instruments have been used in this sector, many of which are also familiar to traditional staples sectors. At the intergovernmental level, coordination of aquaculture policy between the federal and provincial governments is handled by intergovernmental negotiation. To that end, after their discussion of aquaculture at the First Ministers’ Conference in 1986, governments pursued aquaculture policy issues through the Canadian Council of Fisheries Ministers, later renamed the Canadian Council of Fisheries and Aquaculture Ministers (CCFAM). CCFAM was responsible for the negotiation of the Agreement on Interjurisdictional Cooperation With Respect to Fisheries and Aquaculture in 1999 and subsequently created the Aquaculture Task Group (ATG), to work on aquaculture policy-related issues (Vanderzwaag, Chao and Covan, 2003).

Among the network management projects recently completed by the ATG is the Canadian Action Plan for Aquaculture. It was envisaged as a mechanism that “would be a means of organizing information, linking activities, be cohesive and provide a measuring tool for achievement of objectives. The Plan would be high level and set the broad pan-Canadian direction but be implemented by each jurisdiction according to their specific circumstances” (Record of Decision, 2001). The development of a national industry organization, the Canadian Aquaculture Industry Alliance (CAIA), formed in 1995 and a member of the Alliance of Sector Councils, has been driven by, and complemented, these efforts at network management on the government side.

These traditional Canadian tools of federal-provincial network management were accompanied by some relatively minor departmental reorganization at the federal level. Concerns about the capture-fishery culture within DFO led to the creation of the Office of the Commissioner for Aquaculture Development (OCAD) reporting directly to the fisheries minister, intended to act as a “champion” for the development of the industry. DFO also underwent a minor reorganization, creating an Office of Sustainable Aquaculture. While OCAD’s mandate was extended by two years, it was eventually wound up in 2004. Some evidence of subsystem spillover, once again from agriculture, has been the creation of the Canadian Food Inspection Agency in response to public concerns about food safety and the cozy relationship between regulators and (terrestrial) farmers and its involvement in the regulation of aquaculture food quality.

Information instruments have been used sparingly at the federal level, and, where they have been used, finfish aquaculture has been in the spotlight. Aquaculture was the object of an investigation by the Senate Standing Committee on Fisheries, which took submissions, held public hearings and published a report in June 2001. DFO had a similar consultative process before issuing its Aquaculture Policy Framework. Calls for a Royal Commission, directed largely at environmental issues arising from finfish aquaculture, have to date fallen on deaf ears.

The peculiarity of the regulatory framework at the federal level is clear. Although the main objective of post-1980 federal policy is undoubtedly the development of the industry, the principal regulatory instruments and the mandate of the lead agency supposedly charged with implementing the policy are both designed to protect the wild fisheries and other water users from negative impacts by aquaculturalists. Moreover, the means chosen, traditional command and control regulation, actually tend to exacerbate the conflicts between these different interests rather than provide a framework in which their conflicts could be resolved. Unfortunately, neither the mandate itself nor the peculiar nature of the instruments used to carry it out is the contingent outcome of policy choices that could easily be reversed. Both are in fact based on the constitutional division of powers and reflect the limit of federal jurisdiction to what Wildsmith so aptly calls the “hemming in” of provincial jurisdiction over the property and resources used for aquaculture. This is not an atypical result of efforts to regulate post-staples industries, and further exacerbates issues related to the layering of mature and post-staples resource sectors.



Provincial Developments


If the federal approach reflects the generally ambivalent attitudes of federal agencies and their clients towards aquaculture, the provincial picture is more clearly focused on promoting aquaculture development as a safe and legitimate activity in the coastal zone and as a promising replacement for traditional staples industries. However, although there are tentative experiments with novel and more appropriate policy instruments, like the federal government, the provinces have generally transferred the regulation and subsidy regimes that they inherited from other staples directly to aquaculture, compounding the legitimation problems of the industry and, paradoxically, hindering the very developments they are attempting to promote.

As noted above, the Memoranda of Understanding (MOU) between the federal and provincial governments usually established provincial regulatory oversight for the operational aspects of aquaculture, including the siting of new farms and the mitigation of impacts such as the stocking densities of sea cages, the escape of farmed fish from cages, and the “acceptable” levels of waste discharges and the noise, odour and other disagreeable side-effects of farming. In all provinces, authorities began by adapting the traditional Canadian “licensing and permitting” regulatory regime to aquaculture. That is, use of the water column or the foreshore for aquaculture requires a license from the province, the terms of which will set legally allowable levels of otherwise impermissible discharges and protect the operator from prosecution. The drawbacks of licensing and permitting regimes are well known. The actual levels of discharge are set by closed-door negotiation between the licensee and the province, the cumulative and interaction effects of different substances and multiple operations are usually ignored, and enforcement tends to be weak. Prosecutions, even in the rare instances when deemed in the public interest, are usually hampered by the Canadian judicial system’s dislike of absolute liability offences and the consequent acceptability of due diligence defences (Boyd, 2003).

As the situation in BC, the finfish farming pioneer, illustrates, while this approach, backed up by loan guarantees and other subsidy programs, allowed for the rapid growth of the industry, it did nothing to legitimate it with either traditional coastal users or the urban populations who were expected to buy the product. By the mid 1990s, faced with mounting evidence of poorly-sited salmon farms, lax enforcement of regulations, concerns about the interaction of farmed fish with declining populations of wild fish, and conflicts between shellfish farmers and other users of the foreshore, BC announced a moratorium on the issuance of new aquaculture licences.

The immediate impact of the moratorium was to create a perverse incentive among existing operators to intensify the very practices that were at issue. As we have seen, with favourable market conditions, but a moratorium on new provincial sites, both finfish and shellfish output grew strongly in the late 90s, growth that was achieved not just by opening operations in other provinces, but by increasing stocking densities on BC fish farms and mechanizing shellfish operations, with easily foreseeable results in terms of increased environmental damage and pressures. Opposition to aquaculture among the various and disparate constituencies solidified into an advocacy coalition bound together by a shared discourse that stresses the “unnatural” character of fish farming, dangerous to the natural environment and to human health alike. Thus, while the BC government used what it considered to be the breathing space created by the moratorium to commission a wide ranging scientific study, the Salmon Aquaculture Review, the coalition of opponents was already one step ahead, ready to criticize the scope of the Review, its science, and its recommendations (BC EAO, 1997). They were even well-organized enough to fund a parallel process, the Leggatt Inquiry, named for the retired BC Supreme Court justice who chaired it, which provided a forum for alternative evidence and the predictable conclusion that salmon aquaculture as currently practiced poses unacceptable risks to the marine environment and prejudices First Nations rights and title on the coast (Leggatt, 2001).

Nonetheless, the Salmon Aquaculture Review made a number of recommendations for regulatory reform that helped promote a general convergence on “smarter” regulation in BC and in the Atlantic provinces where finfish farming takes place. The reforms have focused on incorporating an improved “template” of management planning into licences, backed up by more stringent and transparent reporting requirements and by regulations if necessary. In other words, the emphasis is now on the progressive adoption of improved management practices that are expected to improve the perception of outputs rather than on the outputs themselves. These improvements take place “in the shadow of hierarchy”: the threat of regulatory enforcement (Scharpf, 1997) Thus, BC and Newfoundland now require a Best Management Practices Plan with respect to escapes as a condition of licensing, backed up by legislated reporting requirements. New Brunswick has provincial guidelines for escape prevention practices that must be incorporated into management plans and a Code of Practice that addresses issues of net pen construction and maintenance. On siting, BC has identified and either moved or closed the worst sites (usually those where tidal scour was insufficient to stop wastes accumulating around the site) and, like Newfoundland, Nova Scotia and New Brunswick, now requires extensive baseline survey data for monitoring changes in the seabed caused by farm operations. Waste discharges are still controlled by licensing conditions in Newfoundland and Nova Scotia, but approached through Best Management Practices Plans and monitoring against the baseline data in New Brunswick. In BC, the Salmon Aquaculture Review recommended that the province adopt New Brunswick’s approach if it couldn’t do better, but the government has opted for a lengthy process to develop its own standards. Thus, in spite of all the baseline date that is collected, BC currently has a standard only for Hydrogen Sulfide in sediments, predictably attracting the derision of aquaculture’s opponents (Connell, 2004).

Unfortunately, provincial progress towards the use of smarter procedural instruments has been much less evident. Like many other inquiries, the Salmon Aquaculture Review called for the adoption of an Integrated Coastal Zone Management approach to the planning and future development of aquaculture. While coastal zoning, in the sense of the identification of priority best uses for different parts of the coast, has become a common approach at the provincial level, what is lacking is integration. In part, this is the familiar Canadian problem of divided jurisdiction. Federal planning under the Oceans Act includes a commitment to use the key tools of ICZM, including Integrated Management Plans, Marine Environmental Quality Guidelines, and a network of Marine Protected Areas but even here integration is hampered by the involvement of other federal agencies with their own plans, their own guidelines and their own protected areas. Coordinating these activities with the provinces has proved even more difficult and most observers have concluded that genuine ICZM in Canada remains a fairly distant prospect. The industry has reacted with caution or hostility, fearing a more cumbersome planning process and further loss of productive sites. Environmentalists have largely given up waiting for an integrated policy and have moved into issue campaigning and international certification. Whatever its theoretical virtues, ICZM offers no immediate hope of securing and legitimating the place of the aquaculture industry on the coast in the immediate future (BC EAO, 1997; Fernandes and Read, 2001; Parkes and Manning, 1998).

In part, however the painfully slow adoption of ICZM is also related to the wider issue of the appropriate extent of public participation in aquaculture development. As even mature staples industries, such as forestry and mining, have discovered, intelligent public participation is critical, not just to deal with the increasingly complex interactions of different user groups in a crowded resource landscape, but also to obtain that elusive social license or “licence to operate” from environmentally-sensitive post-materialist, and largely urban populations (Yandle, 2003; Cook, 2002; Gunningham, Kagan and Thompson, 2003; Montpetit, 2002). And, as noted above, obtaining social license is even more pressing when the product is food. Here, the record of provincial governments and the aquaculture industry has been dismal. Aquaculture development was generally handled by traditional government and industry committees with a mandate only for expansion. Later, as conflicts with environmental and other user constituencies flared, management plans were opened to public consultation. However, as the forest industry learned twenty years ago, the public will generally not get involved in writing the footnotes to plans whose basic parameters have already been decided in policy and practice (Rayner, 1996). In its shellfish planning process, the BC government rediscovered that this kind of involvement is only successful where there are currently low levels of development and conflict (ironically, of course, precisely those areas where the industry finds it uneconomic to operate); in high intensity areas, these processes satisfied no one.

More successful efforts in the finfish sector in the Atlantic Provinces have addressed the criticism of token consultations by centring on community involvement in the award of new licenses, especially the Nova Scotia Regional Aquaculture Development Advisory Committees (RADACs). These innovative attempts to bring local constituencies onside began with a pilot project in the Wedgeport and Pubnico area that sought to reach agreement between the developer and local communities on how to proceed. Now, RADACs are constructed of representative of the main local interests, that may include fishermen, aquaculturists, recreational boaters, waterfront landowners, business operators and local politicians — in short, people and groups affected by the installation of an Aquaculture site. The result of this process is then passed on to the Minister of Fisheries and Aquaculture as a recommendation. Currently there are RADACs in operation in Digby/Annapolis, Wedgeport, Pubnico, Shelburne, Mahone Bay, the Eastern Shore, Guysborough, Isle Madame, Tatamagouche and East St. Margarets Bay. The government hopes that most areas with significant potential for Aquaculture development will form community RADACs. Areas not covered by a RADAC will have input through public hearing processes (http://www.gov.ns.ca/nsaf/aquaculture/radac/index.htm).

Provincially, trends in the shellfish sector remain less clearly articulated. The environmental impacts of shellfish farming are generally less significant in terms of scale than sea cage finfish aquaculture and policy development has generally focused on finding appropriate sites, speeding up the joint approvals process with federal authorities and providing loan guarantees and subsidy programs for farmers. PEI, the leading shellfish province, provides an intriguing exception to the general rule of provincial control over licensing and regulation: their MOU effectively streamlines these procedures by ceding provincial powers to the federal DFO. BC, by contrast, has struggled to find the new sites that would allow for the expansion of its shellfish industry envisaged under the province’s Shellfish Development Initiative, but has acted to protect the operations of existing sites by bringing shellfish aquaculture under the Farm Practices (Right to Farm) Act. A voluntary code of conduct developed by the industry sets out what are considered “normal farming practices” and these now receive legal protection against upland owners who might complain about noise or odour. In addition to the Nova Scotia RADACs noted above, New Brunswick has some useful experience with community-led efforts to expand the range of possible sites for shellfish aquaculture by identifying sources of pollution and improving water quality. In general, however, policy development lags behind the finfish sector and shows the same tendency for piecemeal and incremental adaptation of historical policies, with innovation tightly constrained by the inability to coordination federal and provincial initiatives (Howlett and Rayner, 2004).


Conclusion


Even after discounting some of the hyperbole surrounding industry growth forecasts, it is clear that farm-raised seafood will become an increasingly important component of the Canadian resource economy, largely replacing the declining traditional wild capture fishery. The combination of Canada’s extensive coastline and its proximity to US consumers is an irresistible attraction to investment in the industry, as the recent history of multinational involvement in BC salmon farming underlines. As this overview has shown, Canada’s aquaculture implementation style, with its traditional staples mixture of regulation and subsidy overseen by industry advisory groups in a clientilist relationship with pro-development provincial government agencies, is ill adapted to the challenges of steering aquaculture through the complexities of a post-staples political economy.

Compounding the problem are two significant policy legacies. The first is the constitutional division of powers and subsequent case law around jurisdiction over fisheries combined with the decision to treat aquaculture as a species of fishery, including the nomination of DFO as the lead federal agency. As the federal Commissioner on Environment and Sustainable Development noted in 2004, three separate reports by federal and provincial auditors-general pointed to federal-provincial coordination as the weak link in aquaculture policy: “All three audits identified gaps in co-ordination between the federal and provincial governments. Despite numerous committees, agreements, and protocols between the two provinces [BC and New Brunswick] and the federal government, problems still exist” (http://www.oag-bvg.gc.ca/domino/reports.nsf/html/c20041005ce.html)

The second policy legacy is the policy style inherited from the staples era. As in many other traditional staples sectors, the preferred substantive instrument in aquaculture policy has historically been regulation augmented, especially after 1984, with extensive use of another category of substantive instrument, financial incentives (Bohm and Russekk, 1985). Recently, however, there have been a number of initiatives that suggest at least the outlines of a more sophisticated approach, better adapted to the context of a post-staples economy. At the federal level, the passage of the Oceans Act and the development of Canada’s Oceans Strategy has potentially wide-reaching consequences for aquaculture. Some of these consequences are evident in the federal Aquaculture Policy Framework, including a commitment to improve network governance and a shift towards ecosystem- rather then resource-based management. The provinces have also adopted some new policy mixes, promoting self-regulation in schemes such as regulations that require the adoption of Best Management Practices by salmon farmers. In the smaller and less controversial shellfish sector they have encouraged adherence to voluntary codes of conduct. In both sectors there have been efforts at eco-certification and schemes to label farmed fish as organically raised (“Stolt Sea Farms, 2003). As we would expect from the literature on incentive-based private regulation, however, movement in this direction faces many obstacles and has not proceeded very far (Gunningham and Rees, 1997; Grabosky, 1995a and 1995b).In spite of the commitment to improve network governance and various efforts to involve new stakeholders, the use of industry advisory committees continues to be the predominant procedural technique of governance in this sector.

This regime of aquaculture policy development and implementation in Canada, put into place over the past two decades, faces two major problems corresponding to the two sides of the same vise that is squeezing most resource industries in the post-staples economy. On one side, aquaculture, particularly salmon farming, faces intense competition from foreign low-cost producers who are already moving up the value chain. On the other, it faces equally intense pressure as a result of its location in a rapidly diversifying rural economy, with many competing uses in the coastal zone. As a result the industry is receiving attention not just from the metropolitan environmental movement but also from significant interests in its own backyard: traditional fishers, First Nations, the recreation and tourism industry and “lifestyle” landowners. The coalescence of these groups into an advocacy coalition whose shared core value promotes “natural” uses of the ocean and stigmatizes aquaculture as unnatural is a real threat to the continued expansion of the industry envisioned by Canadian governments. In fact, the salmon farming industry is already fighting an uphill battle against a perception that it is a dirty industry of last resort, suitable only for coastal communities without any other prospects of survival, the maritime equivalent of hog farming. Net pen culture of promising new species risks being tarred with the same brush and even shellfish farms will have to move quickly to avoid sharing a similar fate.







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