Alternative Economic Instruments for Regulating Environmental Spillovers from Aquaculture: An Assessment

Unfavourable externalities are generated by many social and economic activities. Aquaculture is both a source and a victim of several of these spillovers. Such externalities threaten sustainable development and often are sources of economic inefficiency and market failure. Their control can help to sustain economic development and improve the ability of economies to satisfy human wants. However, economic regulation is not costless and different policy instruments often have different side-effects, some of which may be unwanted. Furthermore, their impact can vary depending on the attribute of production to which they are applied, for example, to inputs, outputs, emissions, etc. Consequently, the assessment of alternative economic instruments for regulating environmental spillovers from aquaculture is much more complicated than some economists and non-economists have led us to believe. The following alternative policy instruments for the control of spillovers from aquaculture are among those considered: 1. Limits on, or regulation of stocking rates, or densities of fish, or of aquacultured products. 2. Regulation of the nature of inputs to aquaculture, for example, maximum allowable nitrogen and phosphorous content of fish food in Denmark. 3. Taxes on pollutants or emissions from aquaculture farms. 4. Subsidies for pollution reduction. 5. Tradeable pollution or environmental-use permits. 6. Provision of property rights; bargained solutions. 7. Spacing and zoning regulations. 8. Knowledge and information provision. 9. Controls on the use of inputs, such as water and trash fish, the withdrawal of which is capable of causing environmental damage. 10. Prohibition of the use of specified aquaculture techniques or practices. 11. Preservation or conservation orders, for example, preservation of fringing bands of mangroves for natural treatment of wastewater. In assessing alternative policy instruments for control of spillovers from aquaculture, account must be taken of the comparative agency costs involved in each and limitations on the knowledge available to policy-makers. The relative adaptability of alternative policy instruments to changing circumstances may also need to be considered. These and other factors influence the practicality of using the available alternative policy instruments.