Estimating the Environmental Cost of Shrimp Farming in Coastal Areas of Chittagong and Cox's Bazaar in Bangladesh

Abstract

During the last three decades shrimp has remained one of the major export items in Bangladesh. It contributes to the development of this country by enhancing export earnings and promoting employment. Coastal wetlands and agricultural lands are used for shrimp culture, which reduces agricultural opportunity and peasants’ income, and destroys the mangroves and coastal eco-system. These are the external environmental costs which are not reflected in farmers’ price and output decisions. This study has aimed to estimate those external environmental costs through the contingent valuation method. The calculated environmental cost of shrimp farming is $13.66 per acre per year. Findings suggest that once the external costs are internalized, current shrimp production and shrimp price will no longer be optimal. Thus alternative policy recommendations have been proposed so that shrimp farming becomes a sustainable and equitable means of aquaculture.