"It is the salmon industry which has allowed me to stay here," says Alistair Geddes, looking out of his office window at the shafts of sun lighting up the rain-swept sea and a scattering of islands.

A tall, softly-spoken man, Geddes has worked in fish farming since he was a teenager, and is in charge of the small team which runs the Ardmaddy and Pol Na Gille farms on the Argyll coast. Without the industry Geddes – who at 46 has lived in Argyll all his life and is raising two children – would have been forced to move away. There are plenty like him, he says. "Where I live, in Lochgilphead, there are a lot of fish farmers. The four or five houses around us all have someone working in fish farming."

It's a raw, windy winter's day on the boat to the 1000-tonne floating concrete platform that is the headquarters of the Pol Na Gille farm off the small island of Shuna, south of Oban. Geddes's colleague Greig MacPhail, 36, was working as an engineer in Berkshire when a fish-farming job came up eight years ago, allowing him to return to his home village of Kilmartin, north of Lochgilphead. He is now raising two sons aged four and six here, which means they can have the kind of childhood he had. "Village life is brilliant for children," he says. "Fish farming is becoming a trade which people can get into for a career. Of course it's good for the area."

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The Ardmaddy and Pol Na Gille sites are to expand: the former will almost double in capacity to hold up to 2500 tonnes – 500,000 fish – when it moves to Port Na Morachd, almost a kilometre south down the eastern side of Seil Sound, the strip of water across which the Bridge Over The Atlantic links the island of Seil to the mainland. The capacity of Pol Na Gille will increase by 70% to 1500 tonnes. The workforce for the farms will expand from around five full-time equivalents to seven; work supplying and servicing the farms will grow. Their owner, Meridian Salmon Group, says it put £1.4m into the local economy in wages last year, with 44 workers at nine sites in mid-Argyll, and £1.7m-£2m went to local suppliers.

The expansion at Ardmaddy and Pol Na Gille, however, has sparked a forceful protest against what campaigners say is environmental damage. The Save Seil Sound protesters fought Meridian's application for a licence from the Scottish Environment Protection Agency (Sepa) for the new Ardmaddy and lost. They are now opposing the farm's application for planning permission.

Exports of Scottish salmon to the Far East are up more than twelve-fold in the past three years and more expansion for salmon farms is likely on the west coast after First Minister Alex Salmond signed a deal for Scottish salmon to be exported to China. Planners report a recent upsurge in applications to expand and create farms, the result of which will be not only further tension across the Highlands and islands, but also a recurrence of the eternal question: how do we retain the beauty of the landscape while making a living from it?

The sky is a pile of dirty sheets as the Porpoise II heads towards Jura, the rain falling in a thick, sodden mist. On a rock stands a glum convent of black shags, unable to fly on soaking wet wings. As we approach the Gulf of Corryvreckan between Jura and Scarba, passengers on the wildlife-watching trip spot the brown bodies of porpoises barrelling out of the water a few hundred metres away.

Skipper David Ainsley manouevres the boat, and soon the porpoises are rolling close to us: we can see their eyes and smooth, muscular backs. Minutes later a seal rears out of the water, doing an upright back-stroke with a flapping fish in its jaws before gulping its quarry down.

Ainsley has worked here for 25 years. His company, Sealife Adventures, employs three people, and there are a dozen further tourism boats, employing many more. He believes the wildlife which creates those jobs and draws in canoeists and sailors, and the undersea life that attracts divers, are at risk from fish farms, in particular the plans to expand Ardmaddy and Pol Na Gille, which lie close to the Firth of Lorn Special Area of Conservation.

Ainsley and Ewan Kennedy, a retired lawyer from the Argyll village of Kilmelford, have led the fight against Meridian, securing around 800 objections to the application for planning permission for Ardmaddy. I talk to them in the kitchen of Ainsley's house on Seil, a vast window framing the view south to the Garvellach islands. Ainsley also leads dive tours and has a degree in marine zoology. He has seen what fish farms do in the "allowable zone of effects" (AZE) beneath them, where Sepa accepts fish effluent will have a considerable seabed impact.

He has filmed clouds of dull grey matter kicked up as divers pick up dead shells below a local fish farm. The effects go further than AZEs, Ainsley says. West of Ardmaddy in Seil Sound, "seabed diving isn't right. There's a greyness, a lack of a lot of species, and you can tell this seabed is not what it used to be".

Ainsley is cautious about making claims without possessing the facts to back them up. After telling me the seabed in nearby Cuan Sound – just inside the conservation area – has lost pollution-sensitive jewel anemones, he dives there twice to check his assertion. He thinks the small clusters of the anemones he saw don't match older reports of impressive displays, but he can't be sure. "We have to make sure objections stand up," he says. "We're not objecting for no good reason."

While Ainsley is guarded, Kennedy claims the new Ardmaddy farm will put effluent equivalent to that of a town twice the size of Oban straight into Seil Sound. He also voices a more general disquiet. "We almost hold these wild fringes of Europe in trust for the whole continent," he says. "The balance has gone completely wrong – there are fish farms in inappropriate paces, and a situation where industry is allowed to do things in the cheapest way, not the best way for wildlife."

Kennedy and Ainsley support the widely held theory that sea lice, which multiply in salmon farms, have devastated wild salmon on the west coast, where most of the 400 farms lie. They say although there is now virtually no wild salmon left around Seil, lice infestation from farms will block their return and travel to other, richer fisheries.

One of their main concerns is the impact on seals. The ever-hungry mammals will always be tempted by thousands of salmon. Despite robust nylon-netted cages, seals still frighten fish and use their powerful jaws to take lumps out of them. Protesters and fish farmers disagree on how to keep them at bay. Campaigners say shooting seals lessens the pull for tourists – cutting numbers and resulting in the sight of dead seals washed up on shorelines – and audio repellents (seal-scarers) also drive away whales and porpoises. The answer, says Ainsley, is double netting. "They need to put a second layer of mesh outside the main cage. That stops the seals getting too close and avoids the need for any shooting, which is horrible, and seal-scarers. But the companies don't want to do this – it costs too much."

The current farm at Ardmaddy, an old-fashioned concrete-and-steel mass a mile south of Ardmaddy Bay, is empty – fish farms are left fallow every few years. But Meridian's new farm at Carradale in Kintyrem, some 70 miles south of Seil, is almost identical to the planned farm at Ardmaddy and is full of fish, so I meet Iain Webster and Angus Matheson and we head south. Webster is area manager for Meridian, running nine salmon farms. Matheson is the firm's west coast environmental manager.

We arrive to find Carradale wreathed in cold drizzle, and a launch takes us to the base barge. The farm, like Pol Na Gille, is modern and efficient. On monitors in the control room swirls of fish swim past underwater cameras. Staff zoom in to check they are eating the food and none falls to the seabed. In the bowels of the base, Matheson points out how quiet the generators are – objectors claim fish farms are noisy but the generators can't be heard outside the barge.

There is, however, a stench coming from the food fed to the salmon. The pea-sized pellets, made mainly from fish, are fan-blown along hundreds of metres of piping to the cages. Matheson picks some out but the smell is so repellent I can't touch it.

We board the boat again and head for the cages, circles of buoyant black plastic tubing about 30m across. Compared to the concrete and steel of the old Ardmaddy farm the plastic and nylon seem softer, the separate cages more spread out and less obtrusive.

Matheson and Webster are humorous, practical men with some 60 years in the industry between them. They dismiss the concerns of Ainsley and Kennedy. Matheson says double nets to keep out seals are impractical since they restrict the flow of water through the cages, and both make the point that they comply with Sepa regulations. Sepa, they say, exists to protect the environment, and if the firm does what Sepa says, its duty is done. "What more can you expect of us?" Webster asks.

A few weeks later at a former printworks at Rosyth in Fife, Meridian, which is owned by the Polish company Morpol, shows off some of its strongest arguments for expanding fish farming.

The firm is spending £20m converting the buildings into a 14,000sq m plant which can process more than the 24,000 tonnes of salmon Meridian produces annually. Instead of going abroad to be filleted, steaked and smoked, as much of the fish is now, it will be processed here. The site will start handling salmon this year, employing 200 to 300 people. With development, managing director Mark Warrington tells me as we tour the vast empty sheds, the plant could employ 600. He also makes a connection between the site and Broxburn, across the Forth, where 1700 jobs are going at Hall's meat factory. Hall's workers with food-handling skills will be welcomed, he says.

When I put the protesters' arguments to Warrington and Matheson during a conference call at the Fife plant, the language they use is illuminating. Matheson will not call the fish effluent from the cages "pollution", and he speaks of "growing" fish, as though he were talking about a crop. Further, the substances used to treat salmon for lice and other problems are not chemicals, but medicines.

Of the end product, Warrington says, "It's looked at by the supermarket as another form of protein and it's all about competitive price and taking up space on the shelves." He probably wants to emphasise the dynamic nature of the industry, but instead it sounds as though he might be discussing cheap, mass-produced food, like battery chicken.

Matheson says the farm at Ardmaddy is being moved not because of pollution problems, as the protesters believe, but because strong currents at the existing site make feeding and administering medication problematic. He concedes that the expansion will mean a larger effluent footprint but says, "Sepa's modelling always makes sure there are sufficient beneficial organisms below a site to keep reworking the sediment, to keep it oxygenated and keep it alive. If it was a dead zone it would be very bad for us - it affects the fish."

I steer the conversation towards seals. Meridian doesn't use acoustic repellents because seals grow accustomed to them, Matheson says, but it is seeking permission for them at Ardmaddy in case better ones are developed in future.

"Seals are very, very inquisitive," Warrington says. "We will shoot as an absolute last resort: that's only when we get a rogue seal and there's a risk of damage to the nets and [the possibility of] escapes."

But to my surprise – and, I suspect, to Matheson's – Warrington says a predator net half a metre outside the existing net, with a wider mesh to allow a good flow of water, is perfectly possible. "We have the potential to do that if we have a problem," he says. It's close to what Ainsley suggests.

It is when the company deals with the argument that the new Ardmaddy farm will produce as much effluent as around 20,000 people that the gulf between the two sides is most apparent. Matheson's counter-argument is simple: a fish farm replaces what nature no longer produces. "Fish effluent is something naturally occuring," he says. "If we hadn't fished the seas out there would be a lot more fish in Seil Sound at the moment producing crap."

Warrington is aware of pressures to move farms further offshore but says, "Until someone comes up with hard scientific data that fish farming does have an environmental impact, and it's not just based on gut feeling or a sea urchin that might be affected by global warming or sea temperatures or a number of different factors, it's difficult for us to look at other developments [further out to sea].

"The same goes with the wild fish lobby: show us scientific data that says fish farms have a detrimental impact on wild fisheries and I will look at taking the fish farms out to sea or remodelling them. The remit from the Scottish Government is clearly for the industry to grow sustainably and that's what we want to do."

Having heard two dramatically different takes on the effect of effluent, I talk to Douglas Sinclair, Sepa's aquaculture expert based in Orkney, to see which holds up to his objective scrutiny.

He explains how seabed samples and a computer model of currents are used to determine the capacity of a site. Sepa scientists then use their judgment, erring on "the angels' side", to avoid pollution problems. Of Matheson's argument about the harmlessness of fish effluent, he says, "Even if there were 1000 tonnes of wild salmon or wild cod or ling swimming about the area, they don't sit over one patch of seabed and deposit their waste. Their waste would be far more dispersed because they move around continually. It's a spurious comparison."

And the protesters' comparison with human effluent? "Fish farms per se have a fairly significant population equivalent, but don't be too badly side-tracked by that: so does every other industry we license. Look at distilleries, look at a cheese factory, anything like that, any of these have discharges that are made all round the Scottish coast – they all have a high population equivalent, but that in itself is not a problem.

"It sounds very alarmist but the management of discharges of that scale is something we have done effectively in Scotland for 40 to 50 years, and if they weren't sustainable we wouldn't license them. Our job is to make sure that - the scale of the discharge is in tune with the environment into which it is made.

"We can go back to a subsistence lifestyle and have no industry, manufacture no food, but that is not the way I want to live."

The objections of Kennedy and Ainsley have been backed by the Scottish Wildlife Trust, of whose Lorn and Mid-Argyll members' group Ainsley is treasurer. The trust cites a lack of assessment of risk to the conservation area, besides threats to tourism, wild salmon and wildlife.

But after losing the Sepa licence fight, the protesters can now only object to the planning application, which Argyll and Bute Council is likely to rule in February. The main environmental issues are dealt with by Sepa, so the objectors will claim the site is a visual intrusion and a hazard to navigation. They will also be able to make representations about sea lice, but the planners will take advice from Government agency Marine Scotland, which says the jury is still out on whether lice from farms damage wild salmon stocks.

Should the council grant planning permission to the Ardmaddy farm, the objectors' last hope might be court action. The Pol Na Gille site already has planning permission to expand and that is awaiting Sepa approval, which Save Seil Sound will probably contest.

The National Trust for Scotland recently called for marine national parks, one of which would cover the Seil Sound. Such a move would be unlikely to stop fish farms, as one aim of Scottish parks is economic development, but it could change the game.

In the Loch Lomond and Trossachs National Park, the gold mine at Tyndrum, opposed by environmental groups, was given the go-ahead, but only after the mining firm was pushed back to the drawing board to do more to reduce environmental impact.

With global markets and industrial jobs driving expansion, the power of a park authority to insist on more controls could be the way to strike a balance between fish-farm firms and those who want a pristine environment. But perhaps rather than campaigners or businessmen with an inevitable eye on the bottom line, we should listen to local men such as Alistair Geddes. The industry pays him well, but he's also aware of the benefits of living in the midst of natural glory.

In a wooded bay at Pol Na Gille, Geddes tells me, "It's not in our interests to dirty our nests. We have to look after the environment: if we look after it, it will look after us."