Sea lice represent a persistent and growing problem, challenging the resilience and growth of the salmon aquaculture industry. In this Norwegian case study, we studied and discuss how the absence of policy instruments directed at stimulating breeding for lice resistance (LR) might be explained. We found well-documented opportunities for selection progress for LR. Hence, breeding on LR appears with an untapped potential. We discuss how market-based, legal, institutional and interest-based factors can explain the absence of policy instruments stimulating LR breeding. Methodologically, we obtained data from document and literature studies and interviews with key players (salmon breeders, farmers, nongovernmental organizations (NGOs) and governmental bodies in Norway). First, LR is a polygenic trait, which makes it poorly suited for patenting. Furthermore, if only a small proportion of fish farmers choose seeds with higher LR, other operators can easily take on the free-rider role because they will not suffer from reduced gain in growth performance as a result of a much stronger emphasis on LR in the breeding goal. The market is thus not expected to stimulate stronger selection for LR in Norwegian salmon breeding. Second, neither genetic engineering (e.g., gene editing), still struggling with consumer acceptance, nor the uncertainty associated with possible changes in the Norwegian Gene Technology Act stimulate investment in LR via, for example, CRISPR technology. Thirdly, public policy instruments in their entirety have targeted other types of innovations against salmon lice, and none have so far been used to stimulate breeding companies to emphasize LR more strongly in their breeding programmes. From a political point of view, it seems that breeding has been left to the market and the private sector. However, neither the NGOs nor the public seem to be aware of, or pay significant attention to, the breeding potential to improve LR and fish welfare. Fragmented management of the aquaculture sector can camouflage the close ties between political and business interests. The industry is hesitant to invest significantly in long-term breeding targets such as significantly higher genetic LR. This may strengthen the assumption that strong economic interests will reduce the role of science in knowledge-based management. As farmed salmon are increasingly being exposed to stressful delousing treatments, mortality and associated welfare problems have increased significantly. For instance, large fish die more often from cardiomyopathy syndrome (CMS), resulting in growing demand for CMS-resistant salmon. This gives rise to a paradoxical situation: increasing treatments with high mortality and fish welfare issues in farmed salmon, while the lice threat to wild salmon persists.