Shellfish WatProtected area designations - amending proposals: partial business and regulatory impact assessment

7. Costs

7.1 Shellfish producers

It is difficult to quantify the additional benefits to shellfish producers of being included within SWPAs. One approach, used previously, is to consider the profits from shellfish producers within SWPAs.

The methodology used for the designation of SWPAs considers economically significant shellfish production, which is defined as the production of Mussels and Oysters, the main species produced in Scotland in terms of value and tonnage. The Scottish Shellfish Farm Production Survey 2024 notes that the Common mussel and Pacific oyster remain the main species produced in terms of value and tonnage^[2].

In 2024, the industry was estimated to be worth approximately £14 million at first sale value and had 100 active businesses, employing 241 full-time, part-time and casual staff^[3].

There are currently 101 classified shellfish harvesting areas for relevant species^[4], of which 81% are within 52 SWPAs. Therefore, the average business first sale turnover is £140,000, and the average turnover of each SWPA (with production in) is £203,000. Assuming a 30% profit margin, the average profit per SWPA is £61,000 per annum.

However, this may overestimate some of the benefits of SWPAs since not all profits from shellfish production are a result of SWPA designations, indeed currently 19% of Shellfish Harvesting Areas are outside of SWPAs. That said, this method may also underestimate some benefits, like the protection of rural jobs.

An alternative option to estimate the benefits of SWPAs could be to estimate the costs avoided of having shellfish classified as Class A, for example, the costs of depuration, the costs of relaying stock before harvesting, and the costs of lost contracts due to a classification of less than Class A. We would welcome any available information on these impacts.

7.2 Scottish Water

We intend to engage further with Scottish Water to better understand the potential implications for the new designations and de-designations proposed. This is important to support investment decisions that offer best value for money through the introduction of a disproportionate cost analysis to ensure all users of the water environment are adequately considered when determining possible shellfish designations.

As an initial assessment, the average investment by Scottish Water was used to estimate investment costs. Scottish Water has invested approximately £72.7 million across 34 SWPAs since 2002^[5].

Based on Scottish Water investment costs against the total number of shellfish designated waters it can be surmised that the average (mean) investment for Scottish Water in a designated shellfish protected area is in the region of £2.14 million per SWPA (£72 million across 34 designated protected areas where investment was undertaken).

For this initial assessment, the one-off investment cost for Scottish Water investment where required is assumed to be:

Low SW investment = £1.07 million (50% of mean cost)

Medium SW investment = £2.14 million (mean cost)

High SW investment = £3.21 million (200% mean cost)

There may also be additional operational impacts associated with operating Scottish Water assets. For example, Scottish Water may apply additional treatment, such as UV where relevant to protect SWPAs. There are both financial and carbon impacts as additional treatment may be energy intensive. There may be additional operational requirements from the designation of new SWPAs. Conversely, the de-designation may remove these impacts. However, we understand the operational costs are likely not significant compared to the capital investments set out above, so these have not been included in the analysis. However, we intend to work with Scottish Water to consider if this is the right approach.

7.3 Food Standards Scotland

FSS monitor and classify Shellfish Harvesting Areas. This monitoring and classification are independent of SWPAs, i.e. monitoring takes place whether a shellfish harvesting area is inside or outwith an SWPA. Monitoring of Shellfish Harvesting Areas undertaken in SWPAs is used by SEPA to classify SWPAs. However, one of the intentions of SWPAs is to support sustainable growth of the sector. It may, therefore, be reasonable to assume that designating new SWPAs will encourage the establishment of new Shellfish Harvesting Areas and additional costs to FSS.

Estimated costs^[6] for FSS associated with include:

Annual cost of classifying and maintaining a new shellfish harvesting area - £32,669.39 - £69,557.71

Annual cost of maintaining a shellfish harvesting area - £3,918.48 - £13,804.92.

The estimated annual costs for FSS used for the designation of new shellfish harvesting areas are assumed to be:

Low: £33,000 for the first year and £4000 for subsequent years

Medium: £52,000 for the first year and £9,000 for subsequent years

High: £70,000 for the first year and £14,000 for subsequent years

It is difficult to predict how SWPAs will encourage expansion of the sector. For example, 29 current SWPAs have had no production for at least 3 years. Given there is already production in the new areas proposed for designation, and therefore these areas are proven to be attractive to producers, as an initial estimate we have assumed that for every two new designations there will be one new Shellfish Harvesting Area over a 10-year period.

7.4 SEPA

Investigations into sources of pollution can be expensive. This analysis assumes an investigation will need to be done at any sites that are less than Class A but does not commit SEPA to undertake any investigations. For example, of the 14 new SWPAs proposed in Option 2, five are less than Class A.

We understand the cost of investigations can reach up to around £100,000, although this is not typical. The cost of investigations depends on their nature and can range from simple desk-based analysis of available data to more detailed monitoring and modelling. These can typically range from around £4,000 up to around £35,000. The costs assumed for this Partial BRIA are:

Low: £5,000

Medium: £20,000

High: £35,000