5–10%. D’Souza et al. (2004) used 7, 9 and 11%, while Whitmarsh et al. (2006)
limits the discount rate to 8%. Due to the sensitivity of the NPV to the discount rate,
values ranging from 6 to 9% were used. In the base scenario, the price for one kg of
mussels was assumed to be 1.0 €. Net present value amounts to 5,667,073 €, with
an IRR of 14.73%. When using existing capacities of mussel farming in Lower
Saxony, an investment of about 750,000 € for retrofitting of the vessel at the
beginning of the enterprise will be required. All other costs are assumed to be
similar to those from the basic scenario. NPV levels around 9,622,937 € and an
IRR of 28.11%. Economically, the most promising enterprise is the production of
consumer mussels if existing equipment can be used. But also in the case of a new
vessel and a new land facility profits are likely, since the IRR levels at 14.73%. This
should be in most cases higher than the costs of capital.
11.6.3.5 Sensitivity Analysis
A sensitivity analysis was carried out to assess the economic feasibility, if key
parameters of the economic analysis are changing. As the biomass harvested was
assumed to be at a low level, the positive impact of a 25 and 50% biomass increase
was estimated for consumer mussels as well as an increase of 10% for seed mussel
yield. Fuel costs were increased by 10 and 20% per year, wages by 3% per year,
longline costs by 5% per year and total costs by 5% per year. Discount rates were
varied from 5% over 6 to 8%. The mussel price was changed by 10% in case of
consumer mussels and by 20% in case of seed mussels. The results are shown in
Table 8. The overall result shows the capacity of the production of consumer
mussels with existing equipment to withstand cost increases quite well. In case of a
new vessel and new land facility NPV remains positive except for an overall cost
increase of 5% per year. All calculated discount rates leave NPV to be positive.
11.6.4 Final Conclusion
Assuming a baseline production of 2380 tons of consumption mussels per year (2
plots) the results of the economic study show that the base scenario is clearly
beyond the break-even point. Varying parameter values, such as investment costs
concerning longlines, new vessels or retrofitting, operating costs like wages and
fuel, biomass yield, market price, total cost increases, and different discount rates,
show different levels of feasibility. Offshore mussel production for consumption is
profitable, but profits are less with a new vessel and a new land facility and higher
in the scenarios without a new vessel and a new land facility, respectively.
The NPV and IRR are large enough that this business can be recommended as long
as there are existing capacities. Of course, all businesses can become profitable and
respectively more profitable if costs can be reduced and revenues increased.
11 The German Case Study: Pioneer Projects of Aquaculture …
335
limits the discount rate to 8%. Due to the sensitivity of the NPV to the discount rate,
values ranging from 6 to 9% were used. In the base scenario, the price for one kg of
mussels was assumed to be 1.0 €. Net present value amounts to 5,667,073 €, with
an IRR of 14.73%. When using existing capacities of mussel farming in Lower
Saxony, an investment of about 750,000 € for retrofitting of the vessel at the
beginning of the enterprise will be required. All other costs are assumed to be
similar to those from the basic scenario. NPV levels around 9,622,937 € and an
IRR of 28.11%. Economically, the most promising enterprise is the production of
consumer mussels if existing equipment can be used. But also in the case of a new
vessel and a new land facility profits are likely, since the IRR levels at 14.73%. This
should be in most cases higher than the costs of capital.
11.6.3.5 Sensitivity Analysis
A sensitivity analysis was carried out to assess the economic feasibility, if key
parameters of the economic analysis are changing. As the biomass harvested was
assumed to be at a low level, the positive impact of a 25 and 50% biomass increase
was estimated for consumer mussels as well as an increase of 10% for seed mussel
yield. Fuel costs were increased by 10 and 20% per year, wages by 3% per year,
longline costs by 5% per year and total costs by 5% per year. Discount rates were
varied from 5% over 6 to 8%. The mussel price was changed by 10% in case of
consumer mussels and by 20% in case of seed mussels. The results are shown in
Table 8. The overall result shows the capacity of the production of consumer
mussels with existing equipment to withstand cost increases quite well. In case of a
new vessel and new land facility NPV remains positive except for an overall cost
increase of 5% per year. All calculated discount rates leave NPV to be positive.
11.6.4 Final Conclusion
Assuming a baseline production of 2380 tons of consumption mussels per year (2
plots) the results of the economic study show that the base scenario is clearly
beyond the break-even point. Varying parameter values, such as investment costs
concerning longlines, new vessels or retrofitting, operating costs like wages and
fuel, biomass yield, market price, total cost increases, and different discount rates,
show different levels of feasibility. Offshore mussel production for consumption is
profitable, but profits are less with a new vessel and a new land facility and higher
in the scenarios without a new vessel and a new land facility, respectively.
The NPV and IRR are large enough that this business can be recommended as long
as there are existing capacities. Of course, all businesses can become profitable and
respectively more profitable if costs can be reduced and revenues increased.
11 The German Case Study: Pioneer Projects of Aquaculture …
335