Sustainable Aquaculture Innovation Cluster (SAIC): business and regulatory impact assessment 2026

Introduction

This Business and Regulatory Impact Assessment (BRIA) supports the Scottish Government’s Sustainable Aquaculture Innovation Cluster (SAIC) Business Case. The business case is near-final, with this BRIA contributing to its finalisation by further considering the business impacts.

The purpose of the business case is to determine the future of aquaculture innovation funding, currently managed by the previous Sustainable Aquaculture Innovation Centre (also called SAIC). The business case favours the option of a new entity operating independently to facilitate and, where appropriate, distribute bid-based funding for projects to academia and industry. The new entity, also expected to be referred to as ‘SAIC’ although now standing for ‘Sustainable Aquaculture Innovation Cluster’, will not exercise regulatory enforcement powers in its role in shaping access to finance and partnerships, but does have the potential to influence market behaviour and competitive conditions.

The Scottish Government is undertaking a series of impact assessment screenings with respect to the business case.

The SAIC that is operating until it launches as an independent entity will be referred as the original SAIC while the SAIC that will be established as an independent entity will be referred to as new SAIC or just SAIC.

Context

Aquaculture is a strategically significant industry for Scotland, underpinning economic growth, rural and coastal employment and the nation’s global reputation for high- quality seafood. The latest Marine Economic Statistics available show that the aquaculture sector contributed £468 million in gross value added to the Scottish economy in 2023 and producers directly employed 2,200 people^[1].

The Scottish Government supports the development of a sustainable aquaculture sector, operating within environmental limits, and recognises the considerable social and economic benefits the sector delivers today and can deliver in the future.

The Scottish Government recognises that the coordination of aquaculture innovation is a strategic need if the Scottish aquaculture sector is to remain productive and internationally competitive in the face of biological challenges, climate change and increasingly complex stakeholder expectations. SAIC acts as a neutral coordinating body across government, regulators, industry and academia, aligning innovation activity with national policy goals.

The purpose of the business case being assessed is to develop new arrangements that enable the long-term sustainment of aquaculture innovation support as has been delivered by the previous SAIC project, which was part of the Scottish Funding Council’s (SFC) innovation centres programme. The Scottish Government is working with the aquaculture sector, Crown Estate Scotland (CES), original SAIC and other partners including Highlands and Islands Enterprise (HIE) and the University of Stirling (UoS) to develop proposals for long term support for aquaculture innovation, continuing to facilitate arrangements which help to maximise the productivity of Scotland’s marine resources. This includes consideration of governance arrangements, funding and key deliverables.

The plan for SAIC as an entity will be a non-regulatory enabling intervention designed to support Scottish aquaculture businesses to improve productivity through innovation. The entity will not introduce new statutory requirements, licensing conditions, reporting obligations or enforcement powers and participation is entirely voluntary.

Intended outcomes of establishing SAIC:

• Increase innovation across the aquaculture sector by funding suitable projects
• Improve productivity and operational efficiency by seeing innovation adopted into business practices

Direct regulatory impacts are expected to be minimal. However, indirect impacts may arise through the way funding is allocated which could influence competitive dynamics within the aquaculture sector.

Issue and why it needs to be addressed

The original SAIC was established in 2014 as a project of the UoS supported by funding from the SFC. The original SAIC has supported more than a hundred innovative projects, has played a vital role in knowledge exchange and thought leadership and has supported the delivery of a “team Scotland” approach to aquaculture development alongside Government, industry and development agencies. SFC funding has now ended and SAIC currently operates on a transitional basis, through to 31st March 2026, with funding from SFC and Marine Directorate. It is necessary to develop a sustainable and long term solution for aquaculture innovation finance, in order to maintain and enhance these benefits for Scotland.

Scotland’s aquaculture sector faces growing pressure to improve productivity, resilience and environmental performance while operating complex commercial and regulatory environments.

Scotland’s Aquaculture sector is a key contributor to rural employment and exports, however the sector faces:

• Rising environmental pressures such as sea lice, water quality, benthic impacts
• Slowing productivity and significant mortality
• Increasing public scrutiny
• Fragmented innovation landscape
• Growing international competition

Furthermore, innovation in aquaculture generates significant knowledge spillovers, meaning that the benefits of research and development are not fully captured by the organisation that undertakes the investment. New techniques, technologies and data are often shared across the sector through staff mobility, academic publication, supply chains and informal networks. As a result, individual firms face weak private incentives to invest at the socially optimal level leading to systemic underinvestment in innovation.

This is particularly acute for aquaculture:

• Research is often high-risk and long-term
• Returns are uncertain and difficult to appropriate

There are also coordination failures between industry and academia and funders. Innovation requires alignment on multiple actors such as businesses, universities, public bodies and investors. In the absence of a coordinating mechanism projects are fragmented or duplicated with sector priorities resulting in missed opportunities.

Moreover, investors and businesses may lack reliable information due to information asymmetries on the commercial potential of emerging technologies, quality of research proposals and the likely returns on innovative projects. This leads to excessive risk aversion, particularly in early-stage innovation, and reinforces underinvestment.

Without intervention these failures are likely to persist and market pressures threaten long term industry viability due to slower productivity growth, reduced innovation and weaker international competitiveness, and weaker resilience across rural and coastal economies.

Aquaculture is a strategic sector for Scotland’s Blue Economy. The establishment of the new SAIC as an independent entity is meant to address these failures and will allow smaller producers to access expertise and resources they could not normally reach, while continuing to support the sector as a whole.

Intended outcomes

Supporting the continuation of SAIC as an independent entity will:

• Improve productivity and operational efficiency
• Increase innovation
• Strengthen data quality and business resilience
• Support small businesses via funding and research projects
• Enhance sector competitiveness and sustainability
• Strengthen collaboration between industry and academia
• Improve access to innovation funding
• Support collaborative problem solving within the sector on shared challenges

Options

a. Do nothing

b. Constitute a new independent legal entity (Option b is the preferred one)

c. SAIC functions are assumed by UoS

d. New host academic body

e. CES hosts SAIC as part of ongoing operations

f. HIE hosts SAIC as part of ongoing operations

g. A new finfish industry led innovation body

Sectors affected

The new SAIC will serve the full Scottish aquaculture ecosystem:

• Aquaculture producers
• Micro and small aquaculture businesses
• Academic and research institutions
• Rural and coastal communities
• Supply chain firms

Geographically, impacts are expected to be strongest in coastal and island communities where aquaculture is a key employer.

Engagement completed, ongoing and planned

Engagement to date has focused on developing the options appraisal and then informing the development of the policy proposal to establish the new SAIC as an independent entity, including its purpose, funding, scope, governance model and high-level operating principles.

Scottish Government officials have undertaken internal and wider public sector engagement across relevant policy areas, including aquaculture, innovation, economic development, and public finance to test the rationale for intervention and alignment with wider strategic objectives.

Officials have also engaged with key external stakeholders, including representatives from industry, academia and existing innovation bodies to explore the nature of market failures, the effectiveness of existing support mechanisms and the case for a more coordinated, sector led approach.

This engagement has confirmed the need for an independent coordination entity and shaped the high-level design of SAIC.

SAIC will be established as an independent entity with the Scottish Government overseeing its alignment with sector priorities, innovation objectives and economic growth goals, maintained via formal grant agreement.

Engagement is ongoing with public sector bodies and delivery bodies to refine the proposed governance arrangements, funding principles and accountability mechanisms.

Further engagement will take place as the policy proposal is developed, such as continued internal engagement to support Ministerial decision-making, engagement with representative bodies to test the proposed operating model, and sector engagement.

SAIC’s engagement and activities will be voluntary, non-regulatory and evidence-based to ensure support is targeted, effective and proportionate.

From a SG perspective SAIC will:

• Work directly with aquaculture businesses by engaging with producers to understand operational challenges and opportunities for innovation.
• Create workshops and events to capture sector needs.
• Coordinate with technology and research partners to identify and test practical solutions for the sector.
• Create funding calls for PhD opportunities.
• Share best practice and lessons learned to improve adoption and outcomes.
• Integrate feedback from their consortium
• Consider wider community and environmental interests by capturing insights from rural coastal communities to promote sustainable practices and resilience.

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

Annex A contains a table summary of the impacts for each option.

Enforcement/ compliance

SAIC will not exercise enforcement powers; compliance will relate only to funding agreements and standard financial governance requirements.

Recommendations/ implementation plans

The preferred option is to establish SAIC as an independent entity. This BRIA is part of a suite of audit documentation prepared to support the decision to fund a new entity. A detailed delivery plan will be set out in the business case. Subject to final approvals of the business case and funding arrangements including Accountable Officer processes, a new entity will be established to deliver aquaculture innovation funding from April 2026, provided via grant offer letter.

Evaluation and monitoring of implementation/ review of BRIA

The effectiveness of SAIC will be reviewed through performance indicators on an annual basis.