Every great business story begins with a problem to solve. 

By the mid-1980s, Norway had finally bred a type of Atlantic salmon that it could keep in pens. 

This was no small feat given salmon are notoriously savage. 

After years of unsuccessful breeding attempts resulting in the wild salmon attacking each other, farmers and scientists had created the perfect fish: a fast-growing breed of salmon that was also more docile than its wild ancestors. 

Now they just needed to sell it — but here was the problem: Norway's biggest untapped market, Japan, hated raw salmon. 

Sushi has been consumed in Japan for more than 1,000 years but the Japanese had historically preferred tuna, seeing raw salmon as parasite-ridden and unpleasant to the palette. 

So Norway's government came up with a plan — a 10-year marketing scheme they dubbed "Project Japan" with one goal: to sell salmon sushi to Japan. 

A worker on a salmon production line in Norway. (Foreign Correspondent: Tyler Freeman-Smith)

A major salmon cooperative had gone bust, leaving Norway with 30,000 metric tonnes of salmon and no buyer.

So the government sold 5,000 metric tonnes of the fish to Japan and began wooing importers and restaurateurs at the Norwegian embassy in Tokyo to sample the product.

After a decade of persistent marketing, Norway had broken through. 

Today, salmon sushi is a staple of Japanese cuisine, all thanks to the Norwegian government.

"It's like selling sand in the Sahara," says author of The New Fish, Kjetil Østli, over lunch at an Oslo restaurant.

"Now you can go to every street corner in big cities in the world and you buy salmon sushi," says his co-author, Simen Sætre.

"I mean, that has been the reason that salmon has been such a big success."

Norway's rivers are home to wild Atlantic salmon. (Foreign Correspondent: Tyler Freeman-Smith)

Ann-Britt Bogen fishes for wild Atlantic salmon in the Gaula River in central Norway. (Foreign Correspondent: Tyler Freeman-Smith)

Combined with the omega 3 craze of the 1980s and 90s, the salmon obsession went global, transforming Norway's salmon farming industry into a behemoth.

The salmon industry has become a symbol of Norwegian ingenuity, and a source of national pride.

But in the decades since, the country that gave birth to a global salmon industry has in some ways become a victim of its own success.

Foreign Correspondent travelled to Norway to see how the country is now grappling with the ecological and ethical fallout of its decades-long salmon boom.

Norway's new oil

Norway now supplies more than half the world's Atlantic salmon.

Its industry is about 18 times the size of Tasmania's, reaching across the globe with farms in Scotland, the Faroe Islands and Chile.

Few industries have transformed a country quite so quickly.

In just five decades, salmon farming has reshaped Norway's coastline, with large circular pens floating in its fjords, each holding up to 200,000 salmon.

It's turned remote fishing villages into industrial hubs and created tens of thousands of jobs.

As an $18 billion industry, salmon is Norway's second biggest export after oil.

Salmon farms now dot the coast of Norway. (Foreign Correspondent: Tyler Freeman-Smith)

Salmon farm nets can contain up to 200,000 salmon. (Foreign Correspondent: Tyler Freeman-Smith)

Today, salmon farming companies are powerful global players, backed by a Norwegian government determined to expand the industry under the banner of sustainability.

"Along the coast there are some incredibly rich individuals, and they have strong lobby groups. The politicians in Norway, they want to find the next industry after the oil," Sætre says.

"Salmon is supposed to be the new oil," Østli adds.

"So if you oppose this industry and you are critical, then you are kind of opposing the Norwegian future."

But increasingly there's debate over whether the industry has reached the environmental limits of what the fjords can bear.

An angler tries to hook a wild Atlantic salmon during the first week of the annual fishing season in Norway. (Foreign Correspondent: Tyler Freeman-Smith)

Fjords paying the price

There is no floor to most salmon farms, so fish faeces, urine and uneaten feed pass through the open nets and directly into the fjord.

The waste acts like fertiliser, loading the water with excess nutrients that can encourage the spread of damaging algal blooms.

When it takes hold, that opportunistic algae can overwhelm the ecosystem, choking kelp forests, depleting oxygen and, in extreme cases, wiping out much of the marine life below.

Rising ocean temperatures are exacerbating the problem.

As the climate warms, harmful algae is thriving in conditions that make blooms larger and more destructive.

Agricultural run-off and industrial pollution are also adding nutrients to the water, compounding the pressure on Norway's fjords.

Photographer and freediver Aleksander Nordahl has been documenting what's happening under the surface for the past three years.

He's teamed up with a group of scientists to document the effects of salmon farming across Norway.

Photographer and freediver Aleksander Nordahl has been documenting the environmental impact of fish farms in Norway's fjords. (Foreign Correspondent: Tyler Freeman-Smith)

"Places I've been diving here have changed from one year to another. Not in a small sense," he says. "You cannot recognise the place from one year to another."

On a chilly morning on the cusp of summer, we took the plunge into 8 degree Celsius water to see the underwater impacts of a salmon farm in the Midfjorden.

Diving into the ocean, away from aquaculture, we found pristine kelp forests — but as we moved into the fjord alongside a salmon farm, the contrast was stark.

A bloom of harmful turf algae was choking the kelp, carpeting it in a brownish sludge.

"When I swam around, the first couple of years I was just screaming inside and now I'm just sad," Nordahl says.

Contested science

Oxygen levels in some of the deepest parts of the Hardangerfjord, one of the country's most intensively farmed fjords, have dropped by as much as a third since the 1950s, according to biologist Tom Pedersen.

"The major change we see is the level of oxygen in the deeper part of the fjord, which has changed dramatically," he says. "Without oxygen, nothing lives."

Oxygen depletion is driven in part by warming waters linked to climate change, but Tom says the nutrient pollution from intensive salmon farming is adding to the pressure in already stressed fjords.

A Norwegian regional government regulator, Pedersen is responsible for issuing salmon farming permits in his area. 

He says he was receiving applications to quadruple the scale of farming in the fjord but rejected them out of concern over the ecological impacts.

"The disadvantage with the salmon farm is that it's not a closed system," he says. "It's like a livestock building put into the sea without walls, without a floor, without a roof."

But it's not just oxygen levels that are changing.

Chemicals and heavy metals used in decades past have built up in the fjords too.

"We've been measuring pesticides at a site that has been fallow for 20 years and it was still there," he says.

"It doesn't dissolve. It doesn't just disappear. There's no magic here. What's thrown into the water stays in the water. It's quite simple."

Sjømat Norge spokesperson Krister Hoaas disputes claims that oxygen levels are dropping in Norway's fjords due to fish farming.  (Foreign Correspondent: Tyler Freeman-Smith)

Those findings are contested by Krister Hoaas, the spokesperson for Sjømat Norge, the salmon industry's influential lobby group.

"In the fjords where the oxygen level has been going down, it's mostly on points where it's not farming activity," Norge says.

"So the scientific community do not agree on that and the Institute of Marine Research that do deliver the annual risk assessment to the Norwegian government are saying that emissions are not a problem."

He concedes that while there have been consequences in some fjords, the industry works within environmental limits.

"Every industry and every food industry has an impact, and the goal is of course all the time to reduce the impact as much as possible. That goes without saying."

The troubling rise of 'production' fish

Global demand for salmon has more than doubled in the past 25 years, and last year alone production in Norway increased by almost 200,000 tonnes.

But with it has come an increase in the number of lower-quality fish that arrive in slaughterhouses with wounds and defects.

These fish are filleted and sold to the international market.

So-called 'production fish' with flesh wounds. (Supplied: Norwegian Food Safety Authority)

While most of Norway's salmon is considered either "superior" or "ordinary" grade, in less than a decade the amount of lower grade "production fish" has more than doubled.

Some salmon develop wounds from diseases and parasites that have grown in prevalence since the creation of salmon farming, in part due to rising sea temperatures.

Former Norwegian government veterinarian Trygve Poppe says industrial-scale fish farming is largely to blame.

"Most of the disease and welfare problems we see in farmed fish today are the results of the way we are treating the fish and breeding the fish," he says.

Most of the salmon that develop ulcers are still perfectly safe to consume.

"You can cut away the ulcers so you don't see it as a consumer and then you will just buy those small pieces of salmon, vacuum-packed frozen salmon and you don't see anything of this," he says.

But an uncomfortable ethical question lingers.

Former Norwegian government veterinarian Trygve Poppe. (Foreign Correspondent: Tyler Freeman-Smith)

"This is obviously a very painful condition for the fish, as it would be in humans," he says, showing Foreign Correspondent recent photos of production fish taken by Norway's food safety authorities.

"So they have most likely suffered a very long time before they were killed and slaughtered."

Building a giant egg

Norway's salmon industry has recognised that it needs to change and adapt.

Salmon farmers like the company Hofseth have invested millions, aided by government subsidies, into technological innovations to reduce environmental impacts.

The company is building a giant submersible pen that sits deeper under the water, out of the reach of the parasitic sea lice that can ravage salmon farms.

It's also designed a closed farming system that contains waste and separates the salmon from the surrounding water, protecting both the fish and the fjord.

Hofseth salmon farm project director Ole Andre Nordal. (Foreign Correspondent: Tyler Freeman-Smith)

The Hofseth Urdaneset salmon farm in Norway. (Supplied: Hofseth Aqua)

They call it "the Egg".

"We farm fish inside and the fish is separated from the sea so we can handle biological risk," says Hofseth project director, Ole Andre Nordal.

"This is the first prototype, and we are building a bigger-sized Egg."

It has reduced the number of young fish that die but it comes at a cost of at least 10 times more than a standard open net pen.

Krister Hoaas from the industry lobby group says that Norway is pursuing sustainable growth.

"We have to have growth within the limits that nature can cope with in a good way, and that would imply introduction of a lot of different production methods," Hoaas says.

"It's a very young industry. We have farming on land for 10,000 years; we have fish farming for 50 years. So we've come a very long way in a very short time."

Watch Norway's New Oil tonight on Foreign Correspondent at 8pm on ABC TV, ABC iview and the ABC New In-Depth YouTube channel.