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Title: Evaluation of External Market Effects and Government Intervention in Malaysia’s Agricultural Sector: A Computable General Equilibrium Framework
Published in: Working Papers Series
Author/s: Kim Leng Yeah, John Yanagida, and Hiroshi Yamauchi*
Year: 1993
Number: 93-8
Summary:

This paper attempts a social cost-benefit analysis of scientific versus traditional shrimp farming in West Bengal, India. Using primary data, the paper shows that although intensive or scientific shrimp farming yields high returns as compared to traditional shrimp farming, when the opportunity costs and environmental costs of shrimp farming including disease risk are accounted for, scientific shrimp farming loses its advantage. In fact sensitivity analysis shows that if expected benefits were to fall short by 15% and costs rise by a similar proportion, scientific shrimp farmers report higher losses than traditional shrimp farmers. But large traditional shrimp farmers continue to report positive net returns. These results are also most pronounced for small and marginal scientific shrimp farmers. Further if the probability of disease risk is also accounted for, scientific shrimp farming reports significant losses whereas traditional shrimp farming in most cases shows positive net returns. In the light of the high social and environmental costs, and risks, this paper questions the rationale behind promoting intensive or scientific shrimp farming, especially among small and marginal holdings as an income-generating activity or poverty alleviation measure. It also suggests that policy makers need to factor in sustainability concerns while formulating policies to promote intensive shrimp farming.