Marco Pieterse (BlueLeg Monitor), Steef Peters (Water Insight), Daniel Fairweather (Willis Aquaculture Insurance Brokerage), Mark Vos (Crawford & Company)
Aquaculture is a high risk production sector, the industry’s growth has resulted in a concentration of production in key areas, with large loss events a feature of the sector. Insurance, where offered, tends to be expensive, and the risk carried by the farmer is significant. New tools available to the farmer and risk professional enable better risk management and facilitate better management practices, codes of conduct, traceability and standard operational procedures. Being able to identify, monitor, and define risk enables the farmer to better control risks facing his operation and can result in reduced insurance premiums and wider coverage.
This paper presents a short overview of the state of the aquaculture insurance industry and the use of innovative remote sensing tools for monitoring specific risks related to Harmful Algal Blooms.
Fish farming as a sector is growing massively on a global basis. Aquaculture has an estimated global production value of €75 billion – with salmon farming having grown 10% year on year for the last 20 years. Wild fish catches have been static for the last 25 years, and the growing shortfall in fish supply must be met by aquaculture.
Despite the size of the industry in monetary terms, insurance as a risk management tool has made limited inroads in aquaculture. Industry sources estimate that less than 3% of all aquaculture operations are insured globally. Insurance coverage is primarily focused on large
scale professionally managed farms, with typical premiums between 3% and 5% of the insured sums, indicative of insurers perception of the risk within this industry.
The global reinsurance company Swiss Re recently presented an overview1 of the major causes of global insurance claims . These are listed in descending order: frequency losses, diseases, storms, algae and jellyfish, equipment failure and ‘super chill’ (extremely low winter temperatures leading to freezing of coastal waters).
Here we focus on one particular risk , hazardous algal blooms, which severely impact aquaculture. During a bloom, the oxygen content of the surface water is reduced, toxins are released and direct contact of algae with fish gills lead to high fish mortality or significantly reduced growth.
Scientists generally agree that there are three main reasons for the observed increase of algal blooms:
1. global warming (favoring growth of algae)
2. increasing run-off of nutrients like phosphates and nitrates into surface water
3. distribution of invasive species by ballast water of ships.
If a bloom is detected fast enough, farms have a number of measures they can take to mitigate the impact of a bloom which can include:
• stop feeding (encouraging the fish to stay deeper in the water column)
• deploying “plastic skirts” or tarpaulins around the cage as a barrier
• using compressed oxygen pumps in the cages and/or pumping up unaffected water from deep under the cage site
In a number of major aquaculture producing countries, such as Canada, Scotland, Ireland, Chile, Australia and South Africa the risk of algal blooms near fish farms is significant. Recorded incidents of algal bloom have resulted in losses of tens of millions of dollars to fish farmers and insurers.
The role of remote sensing in aquaculture in risk assessment and control
BlueLeg Monitor and Water Insight of The Netherlands have developed a series of satellite and handheld remote sensing products and services for aquaculture. These enable farmers and insurers to assess the algal bloom risk within an area based on historical data stretching back over 10 years. Having historical records to work with also enables historic baseline analysis to be undertaken to assist in monitoring environmental impact of aquaculture operations. Additionally, insurers and loss adjusters may also benefit from this and other remote sensing services in evaluating damages.
The BlueLeg Monitor system is based on the combined use of satellite data and mobile monitoring instruments giving real time, in situ data collaboration. These in situ instruments have been developed both for hand held applications and fixed position use. Satellites monitor large
areas (typically in a range of kilometers) once a day while hand held/mounted (WISP) units monitor and assess local environmental conditions, with the two systems being interpreted together. Current and historical optical measurements can be converted, using state-of-the-art proprietary algorithms, into relevant water quality indicators such as chlorophyll-a, phycocyanine (blue algae pigment), CDOM (colored dissolved organic matter), water transparency (Secchi) and suspended matter,.
WISP monitors are currently being used by users all over the world, from the Dutch Rijkswaterstaat (Department of the Dutch Ministry of Waterways responsible for water infrastructure and water quality in the Netherlands), the Amsterdam Water Authority Waternet , through to the Australian CSIRO, among others.
The growth in aquaculture, with the support from industry participants, including insurers, is set to continue, and with it the requirement to grow sustainably. By identifying, monitoring and managing risks, the ability to grow sustainably increases. This benefits all sectors of the industry. Support for the industry will increase as the ability to asses risk improves and remote sensing of algal blooms affecting aquaculture operations globally will assist in this. Wider applications of this technology are already assisting other industries to monitoring key risks, with terrestrial farming, heavy industry and environmental stakeholders using satellite imaging on a daily basis.
Van Anrooy, R.; Secretan, P.A.D.; Lou, Y.; Roberts, R.; Upare, M. Review of the current state of world aquaculture insurance. FAO Fisheries Technical Paper. No. 493. Rome, FAO. 2006. 92p.
Rosema, Andries FESA Micro Insurance: satellite indices breakthrough, FARMD 2012
Marco Pieterse (M.Pieterse@bluelegmonitor.com), Dr. Steef Peters (Peters@waterinsight.nl), Daniel
Fairweather (Dan.email@example.com) and Mark Vos (Markvos@crawco.nl)
Marco Pieterse is co-founder of BlueLeg Monitor, a Dutch company
that has developed satellite and in situ water quality information
services for among others the aquaculture sector.
Marco has a Master in Agricultural Economics from Wageningen
University, has over 15 years venture capital /venture development
experience. After graduation worked in the food industry, and
consecutively at a World Bank financed venture capital fund in Latin
America and at Gilde’s Food & Agribusiness Technology Fund. For
the last 12 years he has been active in developing several clean tech
Dr Steef Peters is co-founder of Water Insight and co-founder of
BlueLeg Monitor. Steef has a PhD in hydrology and is specialized in
remote sensing of evapotranspiration and water quality. He has
almost 20 years experience in deriving water quality information
from optical measurements. Steef was coordinator of the European
FP5 project REVAMP and is coordinator of the FP7 projects CoBiOS
and GLaSS. At Water Insight he and co-owner Marnix Laanen
developed the prize winning WISP-3 system, a handheld
spectrometer for close monitoring purposes.
He currently specializes in time series analysis and service- and
indicator development for a.o. aquaculture.
Daniel started his professional career as a fish biologist, before moving into the insurance industry in 2000 as an aquaculture claims and placing broker. After a few years broking, Dan moved into underwriting, where he became the senior underwriter at RSA before moving to the Global Aquaculture Insurance Consortium. He is now the Director of Aquaculture at Willis, supporting aquaculture clients globally. As well as insurance placements Willis are also developing a number of value added risk services to assist clients to identify, monitor and ultimately control risk.