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Do Aquaculture Farmers Have an Incentive to Maintain Good Water Quality? The Case of Small-Scale Shrimp Farming in Indonesia

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  • Hukom, Venticia
  • Nielsen, Rasmus
  • Asmild, Mette
  • Nielsen, Max

Abstract

While shrimp is the most important farmed seafood product worldwide, its production often induces negative externalities as discharge of nutrients to the aquatic environment. If farmers have an incentive to maintain good farm-level water quality, it may also positively affect the surrounding environment, reducing the risk of eutrophication in downstream river systems. If this is done, then the need for public intervention regulating the externalities may be reduced. This study analyzes the incentives for farmers to maintain good water quality by identifying whether technical efficiency increases with improved water quality. Based on interviews with 183 shrimp farmers producing Litopenaeus vannamei and Penaeus monodon in Sidoarjo, Indonesia, technical efficiency was estimated using data envelopment analysis (DEA). A positive correlation between good water quality and technical efficiency was identified using a second stage DEA, but only found in L. vannamei. L. vannamei farmers thus have an incentive to improve farm-level water quality, potentially decreasing the need for public interventions. Moreover, the technical efficiency of farmers of P. monodon was significantly higher than for farmers of L. vannamei. The higher productivity and environmental robustness of P. monodon indicate a possibility for revitalizing the global supply of the species after two decades of stagnation.

Suggested Citation

  • Hukom, Venticia & Nielsen, Rasmus & Asmild, Mette & Nielsen, Max, 2020. "Do Aquaculture Farmers Have an Incentive to Maintain Good Water Quality? The Case of Small-Scale Shrimp Farming in Indonesia," Ecological Economics, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:ecolec:v:176:y:2020:i:c:s0921800919312686
    DOI: 10.1016/j.ecolecon.2020.106717
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    References listed on IDEAS

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    1. César Salazar & Roberto Cárdenas-Retamal & Marcela Jaime, 2023. "Environmental efficiency in the salmon industry—an exploratory analysis around the 2007 ISA virus outbreak and subsequent regulations in Chile," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 8107-8135, August.
    2. Do, Huu-Luat & Ho, Thong Quoc, 2022. "Climate change adaptation strategies and shrimp aquaculture: Empirical evidence from the Mekong Delta of Vietnam," Ecological Economics, Elsevier, vol. 196(C).
    3. Fahma Fiqhiyyah Nur Azizah & Hiroe Ishihara & Aiora Zabala & Yutaro Sakai & Gede Suantika & Nobuyuki Yagi, 2020. "Diverse Perceptions on Eco-Certification for Shrimp Aquaculture in Indonesia," Sustainability, MDPI, vol. 12(22), pages 1-19, November.

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