Spotlight on Iceland

Iceland faces its most consequential environmental decision in decades as parliament prepares to debate legislation in September 2025 that will determine whether Norwegian salmon farming companies can continue expanding operations in the nation's pristine waters — or whether Iceland joins Denmark and other jurisdictions in restricting sea cage aquaculture.

Why it matters: While proponents argue the industry brings economic opportunities and jobs to rural areas, mounting evidence suggests the environmental costs may outweigh the benefits. Mowi and Salmar‘s Icelandic operations have experienced significant challenges with sea lice outbreaks, forcing emergency harvests and raising questions about the industry's long-term viability in Iceland's conditions. Additionally, regular escapes of farmed salmon from operations continue to threaten wild salmon genetics across the North Atlantic.

The scale of foreign investment: Mowi, a $13 billion Norwegian corporation, now controls substantial portions of Iceland's approved 106,500 metric tons of salmon production capacity through its subsidiary Arctic Fish.¹ While foreign investment can drive economic development, critics question whether overseas control of marine resources serves Iceland's long-term interests. Norwegian companies are increasingly seeking new territories² as environmental problems at home mount, with the industry facing record fish mortality rates and ongoing challenges with sea lice, escapes, and waste accumulation in traditional operations.

Recent disasters expose the model's failures:

• Mass die-offs: Icelandic Salmon struggled with biological issues throughout 2024, forcing reduced harvest volumes and revenue drops as sea lice and disease ravaged operations.³

• Feed crisis deepens: The latest FAIRR report reveals five major salmon producers increased their use of fishmeal from whole fish by up to 39% between 2020-2024, worsening the industry's reliance on depleting wild fish stocks.⁴

• Marketing lies exposed: Iceland recently ruled that salmon farming company Arnarlax cannot market their products as “sustainable,” recognizing the fundamental contradiction in industrial sea cage operations.⁵

• Escapes continue: Thousands of farmed salmon regularly escape from operations, threatening wild salmon genetics across the North Atlantic.⁶

The environmental cost:  Salmon farms decrease wild salmon populations, pollute waters and harm wildlife, and contribute to global food insecurity. Iceland's native salmon populations, already under pressure from climate change, now face the additional threat of sea lice, diseases, and genetic pollution from industrial farms.

The feed sustainability crisis: The FAIRR Initiative's latest analysis of 61 investors managing $12.7 trillion in assets reveals a deepening crisis: salmon producers increased their absolute use of fishmeal from whole fish by as much as 39% between 2020-2024,⁴ despite industry promises of sustainability. With nearly 90% of global fisheries overfished or exploited at maximum levels,⁷ the industry's feed demands represent an accelerating assault on marine ecosystems. This contributes directly to global food insecurity, as the industry takes wild fish that could feed people in developing nations and converts it into luxury protein for wealthy consumers, creating a net loss of global protein and displacing nutrition from those who need it most.

Public opposition grows: A majority (65.4%) of Icelanders now oppose open-net salmon farming, with only 13.9% supporting the industry, according to a July 2024 Gallup poll. Yet foreign corporations continue expanding operations against the democratic will of Iceland's citizens.⁸

Iceland's ecotourism at risk: Tourism has become Iceland's economic lifeline, contributing approximately 9% to GDP and accounting for 9.7%⁹ of total working hours in 2023. The industry is the third largest employer in Iceland ¹⁰ and has been the primary driver of economic recovery since the 2008 financial crisis. Iceland welcomed over 2.3 million tourists in recent peak years ¹¹ — nearly seven times the country's population — drawn specifically by its reputation for pristine, untouched nature.

However, Iceland's famously pristine waters and marine life are now at risk from open net pen farming, threatening the very foundation of its tourism appeal. As noted by conservation experts, "People from all over the world escape to this remote, untouched island to experience its unspoilt nature... It would be tragic if the country went the way of Norway and Scotland, which have both seen incredible environmental devastation from salmon farms."¹² The pollution from sea cage operations — with each ton of farmed salmon producing waste equivalent to 16 people ¹³ — directly contradicts Iceland's carefully cultivated image as an eco-tourism destination.

The crossroads moment: Iceland stands at a critical decision point with parliament set to debate legislation in September 2025 that will shape the industry's future. The Progressive Party has proposed limiting foreign ownership of aquaculture companies to 25%,¹⁴ arguing that “the nation's resources should be under domestic control.”

The alternatives emerge: While open sea cage operations struggle, Iceland is pioneering more sustainable alternatives. The coastal town of Þorlákshöfn has become home to "Salmon Row" (Laxabraut),¹⁵ where multiple companies are building large-scale land-based salmon farms using advanced recirculating aquaculture systems (RAS). First Water has already harvested 2000 tons from its 52-hectare facility and targets 50,000 tons annually by 2030.¹⁶ This and other land-based operations use Iceland's naturally filtered seawater and proximity to international shipping ports, offering a more sustainable alternative to sea cages.

Closed containment testing: Even Norway, the epicenter of traditional sea cage farming, is experimenting with alternatives. Norwegian companies are testing closed-containment systems like the Watermoon¹⁷, a 72-meter submerged closed-container system which collects sludge and excess feed, reducing pollution in the surrounding marine environment. And the Norwegian government is encouraging farmers barred from expansion in environmentally fragile fjords to attempt closed containment,¹⁸ recognizing that innovation is needed to address the fundamental problems of open sea cages.

The stakes are significant: With more than 55,000 people signing petitions calling for an end to open-pen aquaculture in Iceland and international advocacy groups like Patagonia supporting restrictions, Iceland faces competing pressures. The industry argues it provides essential rural employment, while environmental groups point to successful alternatives in jurisdictions that have moved away from sea cage farming.

The bottom line: Iceland faces a complex balancing act between economic development and environmental protection. With a tourism industry worth billions and thousands of livelihoods at stake, the September 2025 legislation will test whether Iceland embraces proven alternatives like land-based farming and closed-containment systems, or risks its pristine reputation and economic foundation by continuing with the environmentally problematic sea cage model that multiple jurisdictions including Alaska, Washington, and California have restricted based on environmental concerns.