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Executive Summary:

Business Dependence on Ecosystem Services: How to Identify Risks & Opportunities? An Ecosystem Services Review on Salmon Aquaculture in Chile.

The Challenge

“Healthy ecosystems form the basis for numerous business operations. Some industries depend to such a great extent on the services ecosystems provide, that the degradation of their quality can pose severe risks to the entire business. At the same time, many companies contribute to the degradation of ecosystem services via the same business operations which depend on the ecosystem’s health. In the last decades, businesses have contributed to the deterioration of ecosystems directly or indirectly causing deforestation, droughts, salinization, virus outbreak, biodiversity loss and others. Yet, many companies are not aware of the environmental consequences of their business operations due to the intangible nature of many ecosystem services. The study presented in this report aims to evaluate the relationship between healthy ecosystems and business performances. The challenge is to deliver insights in the dependencies and impacts businesses have on ecosystems and the services they provide. In addition, to provide information about and insights in the consequent risks and opportunities arising from this relationship that will support industries in their transition towards more sustainable business practices.

The Approach

The study focuses on the salmon aquaculture industry in Southern Chile; an industry that heavily depends on the health of the ecosystems in which it operates in. As a frontrunner in adapting sustainable business practices and one of the largest aquaculture businesses in Chile, the company Los Fiordos agreed on participating as a case study. Not only the company but also the whole industry and the Chilean economy had to record significant losses due to a virus outbreak in the salmon aquaculture industry in 2007, creating urgency for further research. To evaluate the relationship between healthy ecosystems and business performances, a Corporate Ecosystem Services Review is conducted on Los Fiordos’ production operations. This five-stepframework was developed by the World Resources Institute and identifies risks and opportunities faced by businesses based on their dependence and impact on ecosystems and the services they provide.

Thereafter, conditions & trends in the company’s priority ecosystem services are investigated in order to identify risks and opportunities resulting from these changes. Furthermore, this enabled the development of business strategies to minimize the potential risks and maximize the potential opportunities.

The Process

The necessary data was compiled through interviews with local stakeholders using structured and semi-structured surveys, and an extensive review on the scientific literature. In addition, semi-structured interviews were held with managers and other staff of Los Fiordos, a consultation session was conducted in relation to the identification of priority ecosystem services and a final full-day workshop was held to arrive at the priority risks and opportunities as well as to develop six business strategies accordingly.

The study involved the participation of the salmon aquaculture company, an environmental economics research consultancy, the VU University of Amsterdam, WWF-Chile, WWF-The Netherlands and Rabobank. The contribution of this multitude of actors provided valuable perspectives and support to the development of the study, which in turn contributed to achieving directly actionable results with relevance to all parties involved.

The Results

The study revealed that our case study, a salmon aquaculture company in Southern Chile, is primarily highly dependent on regulating ecosystem services and, furthermore, has a real negative impact on their maintenance. The identified regulating services are oxygen supply, water purification, waste treatment, maintenance of soil quality, and pest mitigation. In addition, the companies’ operations, amongst other impacts, are perceived to decrease the availability of a number of ecosystem services for other local stakeholders, although the company does not depend on them for the production of salmon. These services are artisanal fisheries, ethical and cultural values, and recreation and ecotourism.

Changes in the ecosystem services the company depends on or impacts result in potential risks for the company. These risks are: negative perceptions by local stakeholders, sudden fluctuations in production due to changes in the natural system, a reduced productivity due to low water quality and ecosystem health, and a mismatch between the Aquaculture Stewardship Council (ASC) requirements for feed components and the company’s real possibilities to purchase certified fish products for feed. On the other hand, there are business opportunities for the company by implementing practices that contribute to environmental protection, such as increasing productivity and decreasing unpredictability of natural change through innovation, increased access to funds for innovative research due to front-runner position, an increase in market share in existing and new markets through ASC certification, and securing a healthy ecosystem through the promotion and support of the implementation of Marine Protected Areas (MPAs).

Six strategies were articulated to minimize risks and maximize opportunities faced by the company. The goals of these strategies are: 1) to improve the companies’ image; 2) to increase the number of innovation projects and the funds (both internal and external) to finance this innovation; 3) to develop a market strategy for ASC certified products; 4) to develop ecological indicators to measure, monitor and manage the company’s impacts on the environment and to reduce changes in the priority ecosystem services; 5) to open a dialogue with the ASC regarding the certification of products for fish feed; and 6) to promote Marine Protected Areas. Besides the specific results achieved for each of the five steps of the ESR, other overall conclusions of this study are:

  • This research was extremely successful in revealing the relationship between salmon aquaculture practices and ecosystem health in the study areas, although from a qualitative perspective. This provided an important insight to the company on how crucial it is for its long-term survival to get an understanding of the natural environment in which they operate. To further build the case, future research should focus more on quantitative scientific data in order to ensure unbiased and measureable results.
  • This ESR, and the particular approach applied in this study, provided a structured tool for the management of the company to understand how important ecosystem services are for its business operations, and how these same business operations can endanger the ecosystem services it needs to function. At the same time, the study showed that practices aiming to promote environmental protection and sustainability can minimize the risks for the company arising from environmental degradation, and thereby secure future operations. The strategies defined during this study most probably contribute to a sustainable long-term productivity as well as the maintenance of the local ecosystem’s health. The collaboration between different organizations during this study also contributed to the success of the project and the relevance of the results for the company, the other stakeholders involved and the wider scientific community and salmon sector in the region.
  • The insights obtained from the interaction with local stakeholders created also awareness by the management of the company about the negative perceptions that some of these stakeholders have of the practices of the salmon aquaculture sector and about how these practices affect important ecosystem services for these stakeholders. The study also showed that one of the main challenges that the company, and the salmon sector in Chile as a whole, face is the lack of dialogue and cooperation between policy-makers, local stakeholders, the scientific community, and salmon businesses…”

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