Estimating Pollution Abatement Costs of Salmon Aquaculture: A Joint Production Approach

Salmon aquaculture generates good output (i.e., salmon) and bad output (e.g., pollution). A joint production function approach is applied to model both outputs simultaneously. Two environmental production technologies are specified, namely, regulated and unregulated technologies. Two production functions with different mapping rules are applied. Pollution abatement costs are estimated based on a series of data from the Norwegian salmon aquaculture industry. Results indicate that pollution abatement costs vary among observations and models. On average, pollution abatement cost is estimated to be about 3.5% in terms of total farmed salmon production, and 6.5% in terms of total revenue of farmed salmon. (JEL D24, Q22)