Citation: Engle, C.R.; van Senten, J.; Clark, C.; Boldt, N. Has the Regulatory Compliance Burden Reduced Competitiveness of the U.S. Tilapia Industry?. Fishes 2023, 8, 151. https://doi.org/10.3390/ fishes8030151 Academic Editor: Yang Liu Received: 10 January 2023 Revised: 25 February 2023 Accepted: 27 February 2023 Published: 2 March 2023 Copyright: © 2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). fishes Article Has the Regulatory Compliance Burden Reduced Competitiveness of the U.S. Tilapia Industry? Carole R. Engle 1, *, Jonathan van Senten 2 , Charles Clark 2 and Noah Boldt 2 1 Engle-Stone Aquatic$ LLC, Strasburg, VA 22657, USA 2 VA Seafood AREC, Virginia Polytechnic Institute and State University, Blacksburg, VA 24061, USA * Correspondence: cengle8523@gmail.com Abstract: Emerging research on aquaculture governance has pointed to the conundrum of negative global environmental effects from economic incentives for aquaculture production to shift from more highly regulated to less regulated countries. This study has focused on examining whether regulatory costs on U.S. tilapia farms may have contributed to their contraction in contrast to the growth of global tilapia production that contributes to the volume of seafood imports into the U.S. A national survey (coverage rate = 75% of tilapia sold; response rate = 18%) found that on-farm regulatory costs accounted for 15% of total production costs on U.S. tilapia farms, the fifth-highest cost of production. The total direct regulatory costs nationally were $4.4 million, averaging $137,611/farm. Most problematic were regulations of effluent discharge, predatory bird control, international export, and water and energy policies. Manpower costs for monitoring and reporting were the greatest cost of regulatory compliance. The lost sales revenue resulting from regulations was $32 million a year, or 82% of total annual sales, indicating that the regulatory framework has constrained the growth of U.S. tilapia farming. The smallest tilapia farms had the greatest regulatory cost per kg. This study provides evidence that regulatory costs, along with other challenges related to live fish markets, have contributed to the decline in U.S. tilapia production. Increased competitiveness of the U.S. tilapia industry will require a combination of: (1) improved regulatory efficiency that reduces on-farm cost burdens without reducing societal benefits; (2) research and on-farm extension assistance to evaluate new tilapia fillet equipment; and (3) research on changing consumer preferences to provide guidance on effective strategies to penetrate the large U.S. fillet market. Keywords: tilapia; U.S. tilapia farming; regulatory costs; aquaculture economics; regulations Key Contribution: The regulatory compliance burden was the fifth-greatest cost on U.S. tilapia farms and, combined with the loss of sales revenue resuting from the regulatory framework, has likely contributed to contraction in the U.S. The disparity in regulatory enforcement and control between developed countries like the U.S. and EU with developing countries has likely created perverse economic incentives for aquaculture production to shift to countries with less rigorous environmental management control. 1. Introduction The continued growth of the global human population has led to serious challenges of meeting global food production needs while reducing the often accompanying envi- ronmental and social costs [1]. Effective governance has become ever more critical as the demand for food, but also for improved environmental and social quality, has increased. Safeguarding the environment and individuals within society requires the promulgation of laws, regulations, and rules that are accompanied by effective enforcement [2]. The absence of effective governance leads to negative externalities that include pollution and environmental contamination, as well as unsafe and unhealthy workplace conditions [3,4]. Fishes 2023, 8, 151. https://doi.org/10.3390/fishes8030151 https://www.mdpi.com/journal/fishes