Regional economic planning of shrimp aquaculture in Mexico

Aquaculture plays a critical role in alleviating demand pressures caused by increasing fish consumption and over-exploitation of fishery stocks. While aquatic foods are generally considered low-revenue generators in comparison to other protein-sources, aquaculture products help to support food security, income, and higher standards of living, particularly in developing countries. Decision makers, i.e. policy-makers and farmers, are challenged with the responsibility of planning and conducting aquaculture development in a sustainable way whereby social, environmental and economic goals are simultaneously satisfied. Existing studies that economically evaluate the industry for its current and historical performance, and future development scenarios are invaluable to sustainable planning, but have not been developed in Mexico. This dissertation is comprised of two essays applying Economics and Operations Research theory to regional economic planning for the sustainable development of shrimp farming in northwest Mexico. The analyses are carried out both at the micro (farm) and macro (industry planning and development) levels based on an unbalanced panel of shrimp semi-intensive farms containing primary-source information at pond level for the period 1994, 1996-1998. Using an input distance function approach, the first essay examines total factor productivity (TFP) and technical efficiency (TE) using both traditional (T) and environmentally-adjusted (EA) indicators. The reduction in TFP was determined to be due to a technological regression as reflected by increased input-intensive production technology resulting in an increase in undesirable outputs. The learning curve resulting from a shift from white shrimp to blue shrimp production species resulted in higher FCRs, water exchange and pollution emissions, despite increasing shrimp yields. In all years except 994, EA TE and EA TFP were lower than the traditional TE and TFP scores. TE and TFP had an opposite behavior than yields in this period of time. In order to improve the technological change (TC) component of TFP in light of stable TE scores, increased government assistance in disseminating technological know-how is necessary to improve TFP at a faster rate during the transition period. A sensitivity analysis also revealed the economic feasibility of the implementation of pollution abatement technology based on the calculated shadow price of N and P pollutants at USD $6.35/kg and $8.3/kg respectively. In the second essay, a multi-criteria decision making (MCDM) model was developed to evaluate the sustainable development of shrimp farming in the northwest region of Mexico (States of Sonora, Sinaloa and Nayarit) based on government objectives for aquaculture development in Mexico. Three possible production systems among two species were investigated. The optimal combination of new shrimp farms within 22,500 ha over a five-year period is determined. The planning objectives assumed in the MCDM model are maximization of employment (E), foreign exchange earnings (XG), and economic rent (ER), and total pollution (TOTALPOLL) minimization, subject to land availability and local market demand constraints. Under a preliminary evaluation of single objective optimization, XG and ER maximization produce similar results: USD $888.6 and $322.5 million in foreign exchange earnings and economic rent respectively, and the creation of 6,150 jobs. The MCDM model was implemented using Feasible Goals, which allows for the simultaneous graphical evaluation of decision maps arising from trade-offs among efficient solutions. When fully allocating the available land (22,500 ha), the multiobjective development of the shrimp farming industry produces 7,490 new jobs, ER and XG of USD $204.5 and $497.6 million respectively, with a total pollutant discharge of 2,000 tons. The multiple-criteria optimization strongly favors semi-intensive systems (93% of the total 466 new farms), producing 57,119 tons of shrimp by 2005. The sustainable development of the industry based on the assumptions of this analysis does not suggest intensification of systems. Rather, the results of the MCDM analysis support the claim that semi-intensive farms, which are more common in Mexico, promote sustainability. Based on the findings of each of the essays, it is suggested that production performance indicators are needed on a periodic basis for the evaluation of the shrimp industry of Mexico. Production performance measurements may better assist farmers in the decision-making for industry sustainability and growth. Moreover, direct determination of N and P discharges by farms are recommended in future studies as well as incorporating risk and employing longer time series