Topic Area: Aquaculture
Geographic Area: Ecuador
Focal Question: How can shrimp mariculture survive when breeding habitats are a free access resource?
Sources:
(1) Parks, Peter J. and Bonifaz, Manual "Nonsustainable Use of Renewable Resources: Mangrove Deforestation and Mariculture in Ecuador" found in Property Rights in a Social and Ecological Context The World Bank, Washington D.C.1995: 75-82. also in Marine Resource Economics 9(1): 1-18.
(2) Leung, PingSun and Lee, Donna J. And Hochman, Eithan "Bioeconomic modeling of Shrimp and Prawn: A Methodological Comparison" found in Hatch, Upton and Kinnucan, Henry Aquaculture: Models and Economics Westview Press, Boulder, 1993: 39-54.
Reviewer: Conrad Saam, Colby College '96
Review:

Ecuador has traditionally been the largest supplier of shrimp to the United States; however, in recent years Ecuador's maricultural shrimp industry has suffered losses. This can be partially explained by market forces; fluctuations in prices and increased competition from Asia which uses more efficient methods have both hurt Ecuador's exports. However, the most important factor is the current scarcity of post larval shrimp caused by the destruction of the mangrove habitat.

Shrimp mariculture requires the creation of ponds below the high tide line, which is often accomplished by the clearing the mangrove forests. These ponds are then stocked with post larval shrimp (Pennaeus vannamei have proved to be the most productive species in Ecuador) which are harvested upon maturation with nets. The post larval shrimp are supplied by artesanos who collect them from estuaries and beaches along the coast. Artesanos face a very low cost of entry, in that the only equipment they need is a small hand net. This ensures a very competitive industry which supplies mariculturalists with post larval shrimp at minimal cost.

The larval stage of Pennaeus vannamei occurs in the open ocean, but the post larval shrimp spend three to five months growing in the mangrove lined estuaries in Ecuador. This nutrient rich environment is ideal for fast growth and also offers protection from natural predators. The shrimp then return to sea to reproduce. The mangroves also serve to maintain water quality and provide sufficient oxygen for a variety of marine species. This externality is not considered in the shrimp pricing or the destruction of the habitat.

Shrimp mariculturalists originally developed ponds among intertidal salt flats; however, as the demand for shrimp continued to grow these flats became crowded and they began to clear the mangrove forests. Between 1979 and 1991, one fifth of Ecuador's mangrove forests were cleared for shrimp mariculture.

During the early eighties markets shrimp production in Ecuador rose by 600%. This was primarily caused by two factors. In 1982, the area experienced the El Nino phenomenon which was a southward shift in warm ocean current. This increased the reproduction rate among Pennaeus vannamei which created an unusually high supply of post larval shrimp. A large demand, maintained the price for shrimp in the United States. The abundance of post larval shrimp and high demand induced mariculturalists to clear more and more mangrove forest to create ponds. Natural and market forces caused a huge overexpansion of shrimp pools at the expense of the mangrove forests. The destruction of the forests caused future declines in the shrimp population. The sad result is that since 1985, half of the ponds are being utilized, and mariculturalists are paying higher and higher prices for the diminished supply of post larval shrimp. Ecuador now faces a very tough situation due to increased competition from more productive foreigners, lower shrimp demand and most importantly, a lower supply of post larval shrimp.

To answer these problems, the author suggests a tax to internalize the externalities caused by the loss of the mangroves. As proposed, the tax should include discounted stock effects of additional habitat and also non-shrimp related environmental benefits. The author seems to believe that a tax to reduce mangrove deforestation would halt the reduction of the post larval shrimp supply; however, this seems to be a case of too little too late. If half of the ponds are not even being used due to lack of post larval shrimp, no incentive to clear mangroves currently exists anyway. The author suggests a tax on artesanos to internalize the marginal scarcity rent for post larval shrimp to allow the shrimp population to recover. It seems, however, that it would be very difficult if not impossible enforce a tax on a group of people whose only market entry requirement was the price of a hand net.

The major problems seem to be with the allocation of property rights and the legal system. All mangrove ecosystems, beaches and estuaries are considered public access for shrimp collection. This causes drastic exploitation of the post larval shrimp. No attempts have been made to regulate the artesano suppliers. The enforcement of laws has also been lax. Laws were passed in 1975 and 1985 outlawing the conversion of mangrove forest to shrimping ponds; however, deforestation continues at a rate of 3,000 hectares annually. Extremely underpriced concessions to build shrimp ponds are given for a ten your period. This is clearly too short a time period to develop a sustainable focus. The Ecuadorian government should concentrate on a long run approach and protect habitats that enhance the stock of post larval shrimp.

A potential private solution to the problem would be to create successful, cooperative zones, where the mangroves are protected which leads to high availability of post larval shrimp. This requires a focus on a local area. The effects of deforestation must have a local effect on the shrimp population. Secondly agreements between mariculturalists and artesanos must be exclusive, ensuring that shrimp stay within the same geographical area throughout their life cycle. Parks (1995) indicates that this strategy has been successful in Bahia, Brazil.

It seems that the shrimp industry has created an artificially high capacity to satisfy the high demand of the early eighties at the expense of long-run sustainability. This overinvestment occurred at the expense of the mangrove forests, which in turn led to a decimation of the post larval shrimp supply. Ecuador must act quickly to maintain its position in the market in the face of increased foreign competition; however, as their own lesson points out, they must not take a short run focus.