Mink farming is the biggest agricultural industry in Nova Scotia. (CBC)

Mink breeders in southwestern Nova Scotia have lost an appeal and will be required to comply with increased environmental restrictions.

The municipality of Yarmouth recently passed a bylaw that increases the amount of space a farm must be set back from a well or body of water. The changes were put in place to protect water systems in the area.

But a group of mink farmers appealed the change, saying the Yarmouth council was contradicting its stated policy of promoting agriculture.

The farmers asked the Nova Scotia Utility and Review Board to order the council to follow its own policies. But on Thursday, the board released a decision in favour of the municipality.

Mink farming is the biggest agricultural industry in the province, producing $80 million in export sales. Half the mink farms in Canada are located in Nova Scotia.

The review board said it found the council's decision to extend the distances between mink ranches and watercourses reasonable.

The board is also calling for an investigation of mink farms and a mink food processing plant to see whether they are responsible for large amounts of blue-green algae blooms in local water systems.