Previous pageTable of ContentsNext Page

Aquaculture Economics in Latin America and the Caribbean

A Regional Assessment

Max Agüero and Exequiel González

1. THE PAST, PRESENT AND FUTURE OF AQUACULTURE

According to the latest official statistics on world fisheries and aquaculture production for 1990 (FAO 1997), total fish production in Latin America and the Caribbean (LAC) was

24 million t, representing approximately 22% of the world total. Of this total, small pelagic marine fish represented about 75%, and aquaculture production only 2% (i.e., 472 000 t).

Aquaculture production in the LAC region, both in quantity as well as in value, is insignificant when compared to other continents and is relatively new compared to the ancient aquaculture tradition of Asia. However, the two dominant aquaculture species (shrimp and salmon) are well known worldwide. Shrimp production represents approximately 21% of the world total shrimp production (GLOBEFISH 1996) and, in 1994, Chilean salmon represented about 16% of the world salmon production (Fundación Chile, 1996). The relative importance of all other cultured species in the region is minimal.

In general, aquaculture production systems have rapidly evolved from artisanal to semi-industrial or industrial. Technology transfer, improved communication systems and the liberalization of the regional economies have facilitated this new trend, triggered by increased demand from developed nations.

Although ecosystems in the region offer strong potential for aquaculture, its development is still in its infancy. Shrimp production boomed by the mid-1980s, while the spectacular growth of Chilean salmon production (a tenfold increase) took place only during the last decade.

The region has a wide variety of ecosystems with strong potential for developing aquaculture activities; the inland and coastal waters of Mexico and Brazil are by far the largest and most promising ecosystems. Thus, the potential for aquaculture is large, although not yet fully quantified.

Central America does not have many alternatives for large-scale aquaculture, except for the possible developments that could take place in the Gulf of Fonseca, which is one of the largest ecosystems in the Central America and Caribbean region. However, in order for this to occur strong efforts would be required to overcome several constraining factors. Efforts could include improving inter-governmental coordination for sustained agreements among countries in the region, strengthening political stability (PRADEPESCA, 1996), and improving infrastructure (e.g., transport and communication facilities, freezing capacity).

The Caribbean Islands offer limited potential for increasing aquaculture activities, in spite of the fact that several islands present the necessary natural and environmental conditions.

Besides salmon and shrimp aquaculture, other less important species for culturing are algaes and seaweeds, abalone, tilapia, cachama, and a wide variety of other local species.

The major developments in the next decades will probably take place in Mexico, Brazil, Ecuador and Chile, as a consequence of their productive ecosystems and the implementation of investment projects supported by multilateral banks (e.g., the World Bank, the Inter-American Development Bank/IDB).

The per capita consumption of seafood in LAC is relatively low (except for Peru, which has a large tradition of seafood consumption). Most of the production is therefore exported to international markets; indeed, over 90% of shrimp and salmon production is exported, mostly to developed nations.

Processing technologies are still being developed, even for the main species of the region. The potential exists to further increase the value added through greater processing of aquaculture output before export.

The breakthroughs of the salmon and shrimp aquaculture industries have shown the potential of aquaculture products as attractive international commodities. The emerging breed of Latin American entrepreneurs is now viewing aquatic resources not just as food products but as commodities that can become highly demanded and valued in international markets.

It is important to note that until very recently, government policies in most countries of the region had paid little attention to the promotion of aquaculture as a major economic activity. The traditional approach had been to regard it more as a local, food-supplying activity for subsistence, conducted by communities rather than as investment-induced industries. Only a few countries like Mexico, Chile, Brazil and Ecuador have made efforts to develop national aquaculture programmes. However, these programmes are generally viewed as part of a larger rural development programme (Lemay, 1997) and not as aquaculture development programmes per se. This attitude of the past is reflected in the fact that the World Bank and IDB, the two main sources of financial resources for the region, have shown (until very recently) little interest in these activities, as compared to agriculture, mining, forestry, tourism, and infrastructure.

Nonetheless, a new trend is emerging in the LAC region in which the fisheries and aquaculture sector is now being viewed as a potentially important sector for economic development. New interest in the sector is reflected in the recent passage of fisheries and aquaculture laws in several countries of the region (e.g., Chile, Colombia, Peru), attempting to restructure a number of old and scattered decrees and regulations into more consistent legislation.

However, the trend described above responds more to the emerging realization of the importance of coastal and marine areas, than to aquaculture per se. Current coastal management programmes and policies are increasingly incorporating environmental considerations and the need to make better use of coastal ecosystems (i.e., mangroves, bays, estuaries, channels and fjords). Still, little reference is being made in the new laws and regulations to factors facilitating or promoting development of inland aquaculture activities.

In summary, the potential for aquaculture in Latin America and the Caribbean is well recognized; governments are beginning to identify management alternatives that not only improve food supply and income-generating activities, but also harness the highest possible economic benefits. At the same time, the growing concern for sustainability and environmental preservation is beginning to impose constraints on development alternatives, even while external forces are pushing towards a more intensive use of natural and environmental resources (i.e., through globalization, foreign investment and technologies, increased demand etc.). The end result will depend on several factors, namely: institutional

efficiency; consistency in regulations and enforcement; local capacities to sustain entrepreneurial efforts in new developments; and the provision of appropriate infrastructure in addition to technical and financial support.

2. MAJOR TRENDS IN AQUACULTURE ECONOMICS RESEARCH AND PUBLICATIONS

The distinctive feature of research (and publications) in aquaculture economics in Latin America and the Caribbean, is the fact that most research in this area has been and is being conducted by non-economist professionals. As a consequence, most of the research work and literature on this topic is descriptive in nature, based on aggregate figures or general trends, and is highly qualitative.

The research area of aquaculture economics in Latin America is little developed. What exist at present, in terms of published material, are primarily monographs dealing generally with case studies, overall country assessments of fisheries sectors, which include aquaculture, policy reports (mostly descriptive) and conference/workshop proceedings.

As in most infant fields of research, aquaculture economics in the region is evolving in an unstructured way. No major funding from government sources is available except to meet specific demands either from private investors or development agencies. Thus, there are neither research traditions nor agendas.

The following section provides is a brief synthesis of printed material, based on material contained in the Latin American and Caribbean Bibliography. (Note that numbers given as reference refer to the corresponding entries in the Bibliography.)

2.1 Micro-economics and production economics

A few case studies dealing with the costs and earnings of specific cultured species, feeds and production systems, are of significant importance in terms of analytical techniques and data quality. Yet, most have been conducted under a comparative static framework with no reference to the dynamics of either the ecosystem (in production) or markets (in factor and commodity demand). The exceptions are Gonzalez (1993) and Bonifaz and Parks (1993). In the first article, biotechnical, ecological, and policy factors are integrated in a multisector and dynamic bio-economic model, determining the optimal intertemporal allocation of mangrove areas in Ecuador for shrimp production versus other alternative uses. The second article presents a dynamic model for the Ecuadorean shrimp mariculture industry, using optimal control theory to determine optimal postlarvae and shrimp production levels. The prevailing approach is more engineering than economic, deterministic in nature and specie/site-specific (23, 25, 27, 29, 31, 33, 38, 49, 54, 55, 58, 59, 61, 66, 70, 75, 77, 81, 82, 83, 100, 101, 109, 111, 112, 113, 117, and 118). Their predictive capability is therefore limited and generalizations for management purposes may provide misleading signals, as ecosystem interactions (synergisms) and externalities are rarely considered endogenously (except in the cases of 22 and 52).

Case studies deal with a restricted set of species, with a great proportion focusing only on shrimp, salmon, tilapia and seaweeds. A few others discuss carps, oysters and mussels.

There have been no efforts to determine or analyze resource-use efficiency criteria within a regional, national, or ecosystem approach. Most existing studies that could be classified under this topic are concerned with the estimation of profit margins, returns to investment or aggregate profits for the production unit but rarely to the firm or industry as a whole. Also, they are aimed at determining and evaluating alternative management strategies at pond, cage or firm level, but not at the national level. A few development plans have been proposed in countries like Mexico and Peru (43 and 78), although no available studies showing their full costs and benefits (market and non-market costs/benefits) were found.

No studies on industry organization (structure, behaviour and performance), consumer segments and behaviour (demand functions and elasticities), or factor shares (factor efficiency and income distribution) for the various production systems (functions) were found.

2.2 Household economics

Studies analyzing the contribution of rural aquaculture to household economies are scarce. Only general estimates, based on gross figures of total production or employment (by species or production system), were found (13, 15, 21, 32, 39, 50, 57, 58, 64, 74, 78, 80, 85, 92, 98, 100, 102, 111, 115, and 122). However, existing time series data in most countries would hardly allow more refined analysis.

References to the impact of aquaculture on other non-aquaculture economic activities are generally made in terms of effects on specific factors, such as water and soil quality, sedimentation, diseases, sanitary conditions or the growth rate of culture species (8, 26, 27, 51, 111, 114). Nonetheless, the impact of aquaculture on farmers is rarely valued or evaluated (3).

2.3 Socio-economics

The social impact of aquaculture is usually regarded in the existing literature in terms of employment, foreign exchange generation or food supply (8, 11, 15, 28, 39, 50, 55, 57, 58, 68, 74, 85, 90, 91, 92, 96, 97, 98, 124). However, references to these impacts are descriptive and based on assumed positive impacts (i.e., increased production is assumed to be associated directly to improved community employment and incomes; increased export earnings are assumed to mean increased community welfare, etc.). Therefore, positive impacts are extrapolated from assumed factors and rarely based on in-depth analysis (income elasticities, income distribution, net benefits of increased ecosystem use).

Little analysis or research has been conducted into the social costs of environmental change (e.g., disruption of scenery in natural areas), cultural change (e.g., community relocation), and changes in employment structures or consumption patterns derived from new aquaculture activities. Unfortunately, when disrupted ecosystem functions or cultural patterns are not valued or taken into account, this perpetuates the assumption (by default) that the opportunity cost of rural communities is close to zero, which tends to inflate the attractiveness of aquaculture.

2.4 Macro-economics

Several recent studies have looked at the economic effects of aquaculture on national development and the environment and vice versa; however, most of them are descriptive in nature and based on aggregated values (1, 2, 3, 4, 11, 17, 26, 30, 44, 51, 68, 71, 73, 75, 76, 87, 91, 98, 103, 106, 125, 127, and 132). A few studies have dealt with valuing and evaluating the economic impact of alternative resource use strategies, especially those making intensive use of the ecosystem like mangrove conversion for shrimp pond production or the use of lakes for salmon cage culture (3, 22, 52, 58, 66, 75, and 82). Also, a few have analyzed the effects of agriculture practices (e.g., pesticides, logging, human waste disposal or industrial pollution) on aquaculture activities (3 and 52).

Almost no work has been conducted attempting to conceptualize and measure the economic potential of aquaculture within a macro-economic perspective, integrating renewable resource dynamics with the carrying capacity of the ecosystems and cost/price ratios (22 and 52).

2.5 Environmental economics

Most of the research in aquaculture economics in the LAC region dealing with environmental impacts and sustainability costs are related to the estimation of physical, biological and chemical impacts, and rarely to the determination of the economic value of these impacts (26, 51 and 75). No studies quantifying the environmental costs of aquaculture development (valuing externalities) were found; thus, the environment has rarely been considered as an endogenous factor in determining the economic performance of aquaculture (except in 52).

2.6 Market analysis

Several studies have dealt with various aspects of market analysis for aquaculture products, ranging from simple descriptions of total sales and their evolution over time (9, 11, 19, 28, 34, 46, 53, 55, 85, 86, 95, 97, 105, 116) to more elaborate market studies attempting to determine product acceptability and willingness to pay for cultured fish (3, 16 and 60), market penetration (25), the relations of market strategies to profit indexes (61), distribution chains (127) and price elasticities (60).

2.7 Socio-economic aspects of technology transfer

Although several studies dealing with the socio-economic aspects of aquaculture were found (4, 6, 8, 13, 15, 16, 17, 19, 20, 21, 22, 23, 24, 25, 30, 32, 35, 36, 51, 52, 57, 87, 91, 92, 94, 97, 104, 115, 125, 126, and 132), only a couple dealt with the relationship between society and technology and the social problems surrounding the transfer of technology from one society to another (90 and 96).

2.8 Information and research assessment

The only two publications examining the need for and the nature of integrated/holistic economic information, the current state of knowledge and the requirements for research are the report produced by the World Bank in 1991, as result of the SFIR (132), and the bibliography on Marine Science Aquaculture and Fisheries Resources, produced by Bermudez et al. (1983) (18).

3. RESEARCH NEEDS IN AQUACULTURE ECONOMICS

It is important to note that aquaculture economics has not been a subject of research per se in the LAC region, as are other aspects of aquaculture (i.e., genetics, technology, fish disease, processing). As a consequence, research in aquaculture economics has been conducted mostly as a by-product of larger research efforts. Emphasis has been placed on simple cost-return analysis or gross estimation of foreign exchange, income and employment generation. Many of the studies conducted on these topics fall under the headings of market studies, production economics and socio-economic aspects, consisting mainly of analysis of production, trade flows, price trends and cost structures with little statistical analysis. The salient feature of most of these studies is their descriptive nature and lack of assessment and predictive capacity.

There is also a high concentration of studies on a few species, notably, shrimp, salmon, tilapia and seaweeds. Furthermore, given the mix of issues simultaneously addressed in these studies (i.e., physical, chemical, biological, technical, economic and social), the relative importance of economic aspects is usually minor. In the absence of a comprehensive and unifying framework, the findings and conclusions of an economic nature in these studies become diluted.

Research in aquaculture economics is therefore required in the various areas listed in the following sections.

3.1 Concept, methods and techniques

Traditional methods for conducting economic and financial analysis need to be adapted to the characteristics and requirements of aquaculture systems. More specifically, impacts of feed-back loops need to be endogenously considered in assessing the economic performance of aquaculture production systems; the carrying capacity of the ecosystems and population dynamics of the resource need to be related in determining optimal firm/industry size over time; and the socio-cultural factors need to be articulated when determining basic performance parameters or indicators.

The use of territorial planning techniques such as geographic information systems (GIS) need to be investigated as a tool for spatial allocation of aquaculture activities, dealing with key social, economic, biotechnical and ecosystemic factors. Microcomputer-based, quick assessment programmes to determine optimal size of production systems (pond/cage, firm, industry) should be developed, both as a management tool as well as a planning device.

3.2 Data and information requirements

Currently, the lack of appropriate and timely data on the various factors determining the performance of aquaculture systems prevents, in many cases, sound research. Minimum cost-effective data sets should be determined for different culture systems, species, and ecosystems. Research on the identification of the key factors referred to above, and cost-effective procedures for data acquisition and processing, should be encouraged.

3.3 Environmental impact assessment

Methods and techniques to conduct environmental impact studies and assessments need to be improved for their application to aquaculture activities; research on the most frequent environmental impacts caused by the different culture systems and practices needs to be conducted to identify the basic and most important parameters of the cost-effective relationships. Preventive, remedial or mitigating measures should also be investigated with due consideration to social and cultural factors (i.e., acceptability, cost-effectiveness, governance).

3.4 Policy and management

Much research needs to be conducted on the economic contribution of aquaculture to the local/regional/national economy (i.e., within national accounting), the valuation of suitable ecosystems for aquaculture, and the distribution of benefits among the different segments of society. Another area needing research is the social and economic valuation/assessment of management/development policy performance under alternative strategies.

3.5 Future market assessment

The area of market analysis and research in aquaculture economics needs to be further improved in terms of data quality, analytical techniques, depth, focus, and usefulness. The emerging globalization process is creating great potential for aquaculture development in the Latin American and Caribbean via capital/technology inflows and increased production. However, demand aspects including product, pricing, target market, and trade strategies, have not been investigated under these new emerging conditions. The more integrated the Latin American and Caribbean economy is, the more vulnerable to external factors it becomes, and the more difficult it becomes to realize the full benefits.

Previous pageTop of PageNext Page