The prohibitive costs of gaining approval to farm aquatic species such as mussels and kelp in New South Wales is stunting the industry's growth, university researchers say.

A new report says government regulation should be amended to better support the emerging regenerative aquaculture industry.

It says proponents are forced into the same expensive planning pathway as new coal mines.

University of Wollongong researchers examined the potential to further develop the potential prospects of the nature-based, feed-free aquaculture industry on the south coast of New South Wales.

Their report, funded by the state government, found 76 per cent of community members on the South Coast, from the Shoalhaven to Bega Valley, supported the idea of having regenerative aquaculture in the region's waters.

But lead researcher Michelle Voyer said operators starting out in the industry needed to spend close to half a million dollars on a State Significant Development (SSD) application process.

Comparatively, she said this rigour of state government paperwork was the same level of scrutiny which a new mine or a major road infrastructure would undertake before commencing.

"That's not to say environmental assessments should not proceed to the highest possible standards.

"But what we've found is that there's a whole lot of prohibited levels of risks being put on individual proponents within the industry."

Another key recommendation in the report suggested potential aquaculture zones should be developed by the NSW government rather than individual businesses.

Skills, knowledge lost interstate

In South Australia, the state government has set up aquaculture zones which help to significantly reduce costs and risks for individual companies.

Sea Health Products owner Jo Lane said that was why she uprooted her whole life and family from the Eurobodalla region of NSW to South Australia to farm golden kelp.

"If you look at what's happening in other states in Australia and look at the impact of what we're doing [kelp farming], it is quite a low impact activity and there's huge costs [in NSW] to prove it is a low impact activity," Ms Lane said.

She said she attempted to trial farming golden kelp on the South Coast but after eight years of navigating complex and costly regulations in NSW, she decided to pursue her dream elsewhere for a fraction of the cost.

Red tape impacts industry

Ms Lane said she undertook a scoping document and engaged with a consultant to conduct environmental background research last year for a cost of almost $100,0000.

She said she was then quoted just under $400,000 to complete the Secretary's Environmental Assessment Requirements (SEARs) as part of the SSD process.

"These kind of costs are prohibitive for a small business like mine.

"That's before you buy an anchor, that's before you set up a hatchery, or buy a boat."

She said she planned to stay in South Australia to trial farming kelp while still holding a preliminary approval for a site in Two Fold Bay on the Far South Coast.

"I'm concerned about the state of the marine environment and the impacts of climate change," Ms Lane said.

"Kelp farming has so many positive benefits for the region.

"I do hope that we can get some policy change or support in the near future to help grow this industry."

First Nations collaboration

The report also found a high degree of support from First Nations communities on the South Coast.

Walbunja man and Joonga Land and Water Aboriginal Corporation manager, Wally Stewart, engaged with University of Wollongong researchers on the project.

His organisation has been building an Aboriginal fishing co-operative on the South Coast.

Mr Stewart said he hoped the report would prompt the government to amend regulations.

"To get this business up off the ground we need government to come and work with us closely and start pulling their finger out," Mr Stewart said.

"Aquaculture is a major part in this Aboriginal fishing industry business that we're trying to build for the South Coast.

The New South Wales government has been contacted for comment.