Use of wild fish in aquaculture and its effects on income and food for the poor 4036.1.2 Negative externalities: income for some – costs for others
When shrimp farming started on the east coast of India, it was common to convert
rice fields to shrimp ponds. However, as shrimp farmers flushed shrimp ponds with
brackish water, they eventually caused a build up of salt in the soil and also in the
surrounding lands. This made these lands less suitable for growing rice or other crops,
and the farming households who where not part of the shrimp culture activities would
see their income fall. This is an example of an externality^54 created by aquaculture.
In a growing and functioning economy, the availability of factors of production
fluctuates following modification of existing technologies and/or access to new
markets. This means that enterprises have more or less difficulty in making ends meet
as needed labour or raw materials may increase in price or the demand for the finished
product may fall. The beneficial side of these shifts in availability is that factors of
production are used where they produce the most value. Therefore (and sometimes in
spite of much protest), governments are generally reluctant to interfere in the market
to redirect the use of factors of production.
However, when an enterprise causes externalities, those who suffer them have a
better chance of obtaining public redress than do those who protest about market
swings. The individual who suffers the consequences of an externality can point to a
“failure” in the market: the fact that the entrepreneur does not compensate those who
suffer economically (or otherwise) because of his/her enterprise^55.
Dealing with undesirable outcomes in most economies is a political process. The
issue for public authorities, who should act in this process, is one of deciding how
to deal with market swings and negative externalities. A decision on their part must
include information on the extent and nature of the externalities. How many individuals
are concerned and how are they affected? In poor economies, effects on income and
nutrition are fundamental knowledge.
However, given international agreements on trade and national practice in respect
of economic and fiscal policies, most governments have limited freedom to effectively
use pro-poor policies to mitigate negative outcomes originating in the practice of using
fish as feed in aquaculture.6.2 Pro-poor, national policies for feed fisheries
The previous discussion of feed fisheries has shown that governments may want
to intervene in feed fisheries in order to improve the situation of the poor and
undernourished. Their situation may be improved as measured by: food supplies,
employment and income generation, and sustainability of marine fisheries.6.2.1 Food supplies
Governments could buy small pelagics on the open market and provide them at a
subsidized cost in institutional feeding programmes (hospitals, schools, military, etc.).
However, given the public expenditures involved, it would seem unlikely that in
poor economies such schemes could be maintained for any length of time or cover a(^54) An economic side-effect. Externalities are costs or benefits arising from an economic activity that affects
someone other than the people engaged in the economic activity and are not reflected fully in prices. For
instance, smoke pumped out by a factory may impose clean-up costs on nearby residents; bees kept to
produce honey may pollinate plants belonging to a nearby farmer, thus boosting his crop. Because these
costs and benefits do not form part of the calculations of the people deciding whether to go ahead with
the economic activity, they are a form of market failure, because the amount of the activity carried out if
left to the free market would be an inefficient use of resources. If the externality is beneficial, the market
would provide too little; if it is a cost, the market would supply too much. (http://www.economist.com/
research/Economics/alphabetic.cfm?LETTER=E)
(^55) A few decades ago, many aquaculture activities were rightly blamed for causing pollution, an externality,
in many ecosystems. At present, there exists a considerable body of knowledge about how to deal with
pollution caused by aquaculture, and the industry has done much to reduce it.