Bio-economics of Cage Aquaculture
Externalities in Lake Volta in Ghana
Wisdom Akpalu
UNU-WIDER, University of Ghana, Ghana
&
Worku T. Bitew
SUNY-Framingdale, NY, USA
Global Conference on Inland Fisheries
Rome, January 26-28, 2015
Introduction
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Aquaculture can contribute to minimizing hunger and
malnutrition in SSA
In addition it could provide significant employment
opportunities
Globally, aquaculture has exploded over the last 30+
years
Paradoxically, SSA has not contributed to the growth
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Its contribution to < 1% to global production
Aquaculture in SSA must growth at >8.3% each year to
meet protein requirements
©2015 W. Akpalu
Introduction
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A number of initiatives in SSA has resulted in increased
investment in aquaculture in recent times.
But cage culture generate negative externalities.
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Nitrogen released from feeds generates eutrophication
Diseases could be spread from cultured fish
Escaped species from cages could alter the genetics of wild
stocks
Aquaculture could impact profitability of wild catches.
Moreover, aquaculture investment is dominated by FDI.
©2015 W. Akpalu
Introduction (Ghana)
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Lake Volta has a surface area of 8,502 km²
Its annual landings are estimated at about 29,000 metric
tons
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lake has the potential of yielding annual catches up to
200,000 metric tons
Total ladings from inland fisheries constitute about 10%
of national catch
The mean annual growth rate of aquaculture is about
16% since 2000. (< 500mt to >7000mt between 2003 and
2009)
The main species farmed is Tilapia niloticous (80%)
©2015 W. Akpalu
Research Questions
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How can a policy instrument be employed to internalize the
environmental opportunity cost of aquaculture?
How should the space be allocated between aquaculture and
capture fish production?
What is the optimum tax on catch revenue, if investment in
aquaculture is FDI?
©2015 W. Akpalu
The Theoretical Modeling Strategy
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The Capture Fishery Problem
The Fish Farmer’s Problem
The Social Planner’s Problem
Model with FDI in aquaculture
©2015 W. Akpalu
The Capture Fishery Problem
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The “Price of fish” depends on the wild catches and
harvest from aquaculture.
Cage culture entails conversion of a fraction of the
carrying capacity of the lake.
Cage culture generates negative spillovers (External to
capture fishery)
A reaction function is obtained from the model: Wild catch is
a function of the size of aquaculture.
©2015 W. Akpalu
The Farmer’s Problem
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The “Price Effect” of wild catch on aquaculture
profitability.
Aquaculture externalities on wild stocks:
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Takes away fishing areas and thereby increasing the cost
per unit harvest of capture fish(NOT internalized)
Negative externalities on the environmental carrying
capacity (NOT internalized)
Another reaction function is obtained: Cage area as a
function of wild catch
The TWO reaction function are solved. BUT the solution
is SUBOPTUMAL
©2015 W. Akpalu
The Social Planner’s Problem
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OBJECTIVE: Maximize Total Surplus from both
fisheries (Capture and Aquaculture)
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Pollution is now accounted for and Pigouvian tax is
obtained.
The tax is imposed on the polluter (i.e., Fish Farmer)
RESULT: (OPTIMAL)
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Increases the MC of farming and limits output.
Increases Wild Catch
Increases Total Surplus
©2015 W. Akpalu
Foreign capital in Aquaculture
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Issues:
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Capital for aquaculture comes from FDI
Ad valorem tax is employed
An isopemetric constraint is imposed on the model
Optimum cage size, ad valorem tax, and pollution tax is
derived.
©2015 W. Akpalu
Thanks for Listening!
©2015 W. Akpalu