(Patil Pawan G. and M.Krishnan, 1998, The Kandeleru Shrimp Farming Industry and its impacts on the rural economy: an empirical analysis, in Ramesh Chand and V.C.Mathur

(Eds.), Agriculture Industry Interface, Advance Publishing Concept, New Delhi – 110 064,pp.156-173)

THE KANDALERU SHRIMP FARMING INDUSTRY AND

ITS IMPACTS ON THE RURAL ECONOMY: AN EMPIRICAL ANALYSIS#

Pawan G. Patil* and M. Krishnan**

Introduction

The role that brackishwater shrimp aquaculture development has played on India's economy is substantial. Indian marine exports were the second largest foreign exchange earner in 1994-95 primarily because of high value shrimp exports to Japan, Europe and the United States. Shrimp (captured and cultured) constituted 70.2 per cent of the total marine export value in 1994-95 which slipped slightly to 67.3 per cent in 1995-96 due to fluctuations in export prices. According to the latest export statistics, farmed shrimp alone generated over Rs.1,500 crore for the Indian economy in 1995-96 (MPEDA, 1996).

Amidst its economic boom in the coastal areas, shrimp farming is creating concern over its degradation of he environment (Flaherty and Karnjanakesorn, 1995; APO, 1995; Southgate and Whitaker, 1992) and its marginalization of local inhabitants from coastal resources (Sebastini et al., 1994; Bailey, 1988). The markets have yet to incorporate the brackishwater shrimp farming in India's maritime states. Instead the environmental and social costs associated withrapid growth and development of environmental and social costs associated with this industry's negative externalities are often borne by the rural poor, who __________________________ * This research was conducted with the partial support of the Rajiv Gandhi Foundation, New Delhi, India while the first author was serving as the 1996-1997 Rajiv Gandhi Foundation Scholar. The results presented in this paper are preliminary and should be treated as such. The overall paper is subset of a wider study: A Microeconomic Analysis of the Impacts of Brackishwater Shrimp Aquaculture on Rural Producers and the Environment in Nellore District, Andhra Pradesh (Patil, P.G., London School of Economics, 1997). We would like to thank the staff of BFDA (Nellore) for the their assistance in our data gathering efforts. The ideas expressed in this paper are our own and do not necessarily represent the above mentioned institutions. We alone are responsible for any errors. * Corresponding author; London School of Economics, Houghton Street, London WC 2A 2AE, United Kingdom; tel:44-171-837-8888 ext.5921; fax 4-171-713-5158; e-mail: p.patil@lse.ac.uk ** Local Major Advisor to first author and Senior Scientist ( Economics), Central Institute for Brackishwater Aquaculture, Chennai – 600 008, India.

rely on natural coastal resources for their livelihood. In the literature, however, these claims remain anecdotal with little empirical support. In our paper we move beyond the traditional literature in this subject area by providing empirical support to claims made both in opposition to and in favour of this industry.

The economic analysis and policy conclusions presented in this paper draw on two types of data collected from Nellore District. Primary data were collected from 518 brackishwater shrimp farms located along the Kandaleru creek in Nellore District of Andhra Pradesh. Additionally, Socio-economic and impact data were collected from surveying local populations in 26 vilages located along the Kandaleru creek and the Bay of Bengal and adjacent to clusters of shrimp farms.

Our paper is divided into six section. In section one we present an overview of the relationship between farm size, ownership status, production technology and output. In section two we examine the growth and development of the Kandaleru shrimp industry between 1993 and 1997. In section three we analyse the industry's impact on the growth and development of ancillary industries. In section four we assess shrimp farming's impact on fishing and farming communities living adjacent to shrimp farm clusters. In section five we offer policy recommendations toward the sustainable development of this industry. In the final section we offer three concrete recommendations and some concluding remarks. Kandaleru Shrimp Farm Characteristics

The are approximately 530 brackishwater shrimp farms located along the Kandaleru creek. Together, they occupy 2, 166 hectares in total area of which 1,675 hectares are water spread. In 1996 the 2,478 ponds in operation produced, 1,788 metric tons of shrimp. This is an average of 450 kilograms of shrimp per pond or 620 kilograms of shrimp output per hectare of water spread area. Similar to other shrimp farming regions throughout India's coastal belt, Kandaleru shrimp farms vary significantly by size, ownership status and production technology used. We discuss each characteristic in turn. Size

On par with the national average, 79 per cent of Kandaleru shrimp farmers produce on land-holdings of less than five hectares. There are 253 small and marginal farmers operating on land-holdings less than two hectares in area. This constitutes 49 per cent of all Kandaleru shrimp farmers. In contrast, 108 farmers on 21 per cent of all Kandaleru farmers produce on land-holdings greater than five hectares. Of these 108 farmers, 43 or 8 per cent of all KAA farmers operate on 10 or more hectares of land (Table 1).

Table 1.

1997 Kandaleru Shrimp farms by size of land-holdings in hectares. ________________________________________________________________________

Land-holdings size (hectares) ____________________________________ <1 1-2 2-5 5-10 >10 Total

________________________________________________________________________ No. Shrimp Farms 202 51 156 65 43 518 Share (%) 39 10 30 13 8 100 ________________________________________________________________________ Source: KAA Database, 1997.

Ownership status

Of the 518 shrimp farmers in the KAA, 285 farmers or 55 per cent reported that they own their farms, 81 or 16 per cent reported that they lease their farm land and 152 or 29 per cent reported that they received their land through a government land transfer scheme for the purpose of shrimp farming (Table 2.) Table 2. Ownership status by size of land-holding in hectares Land-holdings size (hectares)

___________________________________ <1 1-2 2-5 5-10 >10

_______________________________________________________________________ No. of Shrimp farms 202 51 156 65 43 Share (%) 39 10 30 13 8 Farm land owned 50 42 87 59 42 Share (%) 25 82 56 94 98 Farm land leased 0 9 69 6 1 Share (%) 0 18 44 6 2 Farm land transfer 152 0 0 0 0 Share (%) 75 0 0 0 0 _______________________________________________________________________ Source : KAA Database, 1997.

The data reveal that farm ownership status varies with farm size. Ninety-six per cent of KAA farms operating on five or more hectares and 82 per cent operating on an area between one and two hectares are owned by the operators. In the case of the smaller farms, the owners are the individual farmers. In the case of the large fars, 71 per cent are owned by wealthy farmers and 29 per cent are either corporate entities with publicly owned shares or private limited companies.

The majority of shrimp farmers who leased land operate on land-holdings between two and five hectares and are mostly non-natives of Nellore district. Their motivation for coming to the region and entry into the industry was in most cases entirely profit driven. In most cases these farmers came to the Kandaleru region in 1993, before the first major shrimp disease outbreak (Patil, 1997).

All 152 farmers reporting that they received land via a government transfer scheme were entitled to this classification as members of on of India's Scheduled Castes or Scheduled Tribes (SC/ST). Each one of them operates on a total area of less than one hectare of land. Production technology and output Generally, we find a strong positive correlation between average output per waterspread hectare and farm size. The strongly positive and significant Pearson correlation (r=.92; p=0.00) suggests that as farm size increases, the average output per hectare increases. This relationship is further illustrated in Table 3.

Table 3. Average shrimp output by farm size in hectares ____________________________________________________________________

land-holdings size (hectares) _____________________________________ <1 1-2 2-5 5-10 >10

____________________________________________________________________

Avg. Output/ha, kg 330 405 537 821 1,474 ___________________________________________________________________

More specifically, however, shrimp yields are determined by the amount and combination of inputs used or production technology. To discover the relative importance of different inputs on yield we regressed ten production input explantatory variables. From OLS estimation assuming a Cobb-Douglas production function, we conclude that the more intensive methods of production (i.e.greater capital inputs and lower labour inputs per unit area) produce higher pe rhectare shrimp yields. Additionally, smaller farms under two hectares tend to use higher average labour inputs per hectare (in terms of the number of man-days) and less capital inputs or less intensive technology. This general result confirms what others have already proven (APO, 1995). Our result, however, helps to explain the pattern of growth and development of this industry in Nellore and some of its impacts in the Kandaleru region. Specifically, we discuss why the share of small farmers increased and share of large farmers decreased from 1993 to 1997 in the next section. Growth and Development

The shrimp farming industry has rapidly grown along the Kandaleru creek since the first farm began operation 1987. Farmers, encouraged by the possibility of high economic returns, rapidly entered this rural based industry. Since 1993 the total number of shrimp farms operating in this region increased from 254 to 530 in the 1996 season and the total farm area almost doubled from 1,242 hectares to 2,166 hectares.

The Kandaleru shrimp industry suffered a serious setback in 1993-94 when industry-wide

average output dropped from approximately 600 kilograms per hectare to 300 kilograms per hectare due to crop disease (KAA Database, 1997). Farms of all sizes faced fiancial losses forcing the less financially secure to exit the industry. Although data on the number of farms that eixted the industry by size land-holding is unavailable, our data set enables us to analyse the characteristics of new entrants after 1994. We find that the share of farms using more intensive technology (i.e.larger farms) dropped while the share of farms using less intensive technology (i.e.smaller farms) rose.

Table 4 illustrates that since 1993, the share of small and marginal farmers operating on two or less hectares of land increased; the share of medium scale farmers operating on land-holdings between two and five hectares stayed relatively constant; while the share of large private and corporate farmers holding greater or equal to five hectares of land dropped significantly.

Table 4. Share of Kandaleru shrimp farms by size of landholding _____________________________________________________________________

Land-holdings size (hectares) __________________________________

<1 1-2 2-5 5-10 >10 ______________________________________________________________________ 1993 Share (%) 30 9 31 18 12 1997 Share (%) 39 10 30 13 8 % change in share +9 +1 -1 -5 -4 _______________________________________________________________________ Source : KAA Database, 1997.

This is an important finding for two reasons. First, there have been many attacks on the shrimp farming industry by activists alleging that it does not benefit the local community and especially the poor. We found that shrimp farms operating on the smallest land-holdings (less than one hectare) are owned and operated by inhabitants of local villages. In fact, of the 202 farms less than one hectare in size, 150 of them, or 29 per cent of all KAA shrimp farms are operated by members of the SC/ST community who are considered the poorest among those inhabiting the Kandaleru region (BFDA, 1997). Second, the dramatic rise in the number of small farm holdings between 1993 and 1997 suggests that shrimp farming has low barriers to entry for small farmers. We believe this is primarily due to the less capital intensive nature of small farm production and the local availability of key inputs such as feed and seed which keep variable costs relatively low. Ancillary industries

Since the industry's boom in the early 1990s ancillary industries have rapidly developed as essential support services to the shrimp industry. While Patil (1997) suggests that they have benefited local shrimp farmers by lowering overall production costs, it is less clear what overall impact anciallary industries have had on rural inhabitants.

The major ancillary industries developed in Nellore to support the shrimp farm industry include seed hatcheries, feed mills, processing plants and ice plants. The industry requires two principal inputs for production, namely, shrimp seed and feed. Processing plants are needed to sort shrimp by size and package them. Ice is needed for safe storage and transportation of shrimp from the farm gate to processing plants where they are block frozen for export.

Prior to 1990 most medium and small scale Kandaleru shrimp farmers purchased seed collected by the region's fisher community. They prepared their own shrimp feed from indigenous materials. Most corporate farms imported seed and feed from Thailand and Taiwan. In 1992-93, this balance began to shift as corporate farms began purchasing seed and feed produced locally by multinationals who built and operated seed hatcheries and feed mills (Table 5). In the 1996 season almost all farmers operating on land areas over two hectares were purchasing feed and seed locally produced by ancillary industries. Small farmers continued to purchase seed from local fishers who collected shrimp fry from the near shore of estuaries and made their own feed from village resources.

For the Kandaleru region, ancillary industries have provided employment opportunities for both skilled and unskilled workers. We estimate that the 33 seed hatcheries employ

approximately 1650 workers; the 14 feed mills employ approximately 840 workers; the eight processing plants employ approximately 400 workers in total. While it is clear that their are strong direct and indirect employment opportunities associated with the development of ancillary industries it is less clear as to whether these supporting industries and the shrimp farms themselves are an overall assets to the village economy. Table 5. Growth of ancillary industries in Nellore district ______________________________________________________________ Ancillary Total Units Total capacity industries ____________________________________ (Annual)

1990-91 1992-93 1994-95 1996-97 ______________________________________________________________ Seed hatcheries 0 4 30 33 2380 million

pieces Feed mills 0 13 14 14 78000 mt Processing plants 0 3 6 8 24000 mt Ice plants 8 14 22 24 285 mt _______________________________________________________________ Source : BFDA, Nellore Village Impacts

A pre-tested survey identified the major impacts of the brackishwater shrimp aquaculture industry on the welfare of village located adjacent to shrimp farming clusters in Nellore District. Many of the questions adopted for the survey were raised recently by NGOs and other concerned organisations in Indian and international forums. The overarching concerns stem from alleged negative impacts of the rapidly expanding brackiswater shrimp aquaculture industry on rural communities. In total, 26 villages were surveyed and asked six principal questions regarding aquaculture development

. Are you experiencing salinity problems with drinking water in your village wells?

. Has aquaculture development hindered your access to the creek or beach?

. Has aquaculture development led to enemployment/under- employment problems for you or your family? . Has aquaculture development led to health problems for you or your family? to animal populations in the village?

. Has aquaculture development hindered fuelwood and/or fodder collection?

The survey results indicate that for the entire sample of 26 vilalges, 19 villages or 73 per cent identified agricultural land salinity and blocked access to the cree/beach as a problem in

their village; 17 or 66 per cent of the villages reported that well water salinity was a problem in their village; 14 villages or 54 per cent identified unemployment as a problem; ten villages or 38 per cent reported fodder and fuelwood collection as a problem; and nine villages or 35 per cent identified health problems as a result of aquaculture development as a problem.

Aggregated data for all 26 villages, however presents a distroted picture of the problems faced by specific occupation based villages. Table 6 shows that 94 per cent of those villages comprising fishers identified access to the beach as a problem whereas only 33 per cent of farming based villages identified access as a problem. Similarly, unemployment and health problems, affect a majority of the fishing community, 76 and 53 per cent, respectively, but only one of the farming villages. Approximately 89 per cent of farming communities identified fodder and fuelwood collection as a problem whereas only 12 per cent of the fishing communities did so. Well water salinity, however remained a problem for both 66 per cent of fishing and farming village communities.

Each of the above-mentioned problems have an associated impact on the economic activity taking place within the village community. Overall increases in the amount of time required to carry out a particular economic activity ultimately reduces the overall productivity of the community. In the case of blocked access to the beach or creek, fishers require a longer in faring communities women are required to spend a longer proportion of their day searching for cooking fuel and fodder to feed their animals. Both farming and fishing communities have experienced salinity problems Table 6. Problems identified by coastal farming and fishing communities located adjacent to shrimp in the Kandarelu creek region, Nellore district, Andhra Pradesh ____________________________________________________________________________

Well Access Agri.land Un/under Poor Fodder & water to beach salinity employment health fuelwood

___________________________________________________________________________ Fishing 65% 94% 65% 76% 53% 12% villages (N=16) (11) (16) (11) (13) (9) (2) Farming 66% 33% 89% 11% 0% 89% Villages (6) (3) (8) (1) (0) (8) (N=9) All Villages 65% 73% 73% 54% 35% 38% (N=26) (17) (19) (19) (14) (9) (10) _____________________________________________________________________________ Source : Patil (1997); Number of villages in parentheses. with their drinking water supply. In some cases, women are required to walk up to two kilometres to fetch potable water from the nearest uncontaminated well.

Fishers' productivity and general well being are also affected by health related problems caused by shrimp farm effluent discharge from jetties into the near shore area where they fish. In

addition, they complain that their nets get cut by the effluent discharge pipes that extend up to 50 metres into the sea. Salinity of agricultural land is a problem faced by farming communities and some fishing communities that rely on the productivity of small vegetable plots for private own consumption. Factors contributing to village responses

In the preceding section we broadly examined the nature and extent of problems faced by both fishing and farming communities. Now we examine the severity of each problem identified by each village and offer possible explanations by correlating different farm characteristics with village responses and identifying any relationships of statistical significance (see Tables 7 and 8).

We sorted our data set by occupation to see if any significant correlation exist for fishing and farming communities independently of each other. Table 9 presents the sign of only significant correlation between shrimp farm characteristics and rank ordered village impacts for each occupation based village. Results

Well Water Salinity: WWSALIN is positively correlated with FARMDST suggesting that villages located further away from shrimp farm clusters experience fewer drinking water problems. In fishing villages FARMSZ, WSA, TPONDS and TCORP are positively correlated with WWSALIN suggesting that villages adjacent to more corporate farms or larger shrimp farming clusters suffer less from well water salinity. WE believe this counter-intuitive result holds primarily because sea-based fishing villages are supplied clean drinking water from adjacent corporate shrimp farms as part of a government compensation scheme. In farming villages there is a high degree of negative correlation between shrimp clusters with high output levels and poor drinking water (r=-0.95; p=0.00).

Blocked Access: ACCESS is negatively correlated with FARMDST suggesting that villages located further away from shrimp farm clusters experience greater problems with access to the sea or creek. This result is particularly significant for fishing communities (r=0.54; p=0.02) due to their dependence on the sea for earning a living. Table 7. Definitions of farm characteristics and village impacts (Mean/Standard Deviation) _________________________________________________________________ FARMSZ : Size of shrimp farming cluster in hectares (268/197) WSA : Size of shrimp farming cluster's waterspread area in

hectares (180/156) FARMDST : distance in kilometres from shrimp farm cluster to the adjacent village (1.02/0.4) SEADST : distance in kilometres from shrmp farm cluster to the Bay of Bengal (8/12.7) TPONDS : the number of ponds in a shrimp cluster (216/178) TOUTPT : total output of shrimp cluster in metric tonnes (152/139) TCORP : total corporate and private limited companies in each shrimp farming cluster

(2.8/3.2) TINDIVID : total number of non-corporate shrimp farming cluster (23.8/26.7) TOWN : total number of farms producing on land owned by operator in each cluster

(11.3/18.6) TLEASE : total number of farms producing on leased land in each cluster (2.3/5.9) TTRANS : total number of farms producing on government transferred land in each cluster

(9/25.2)

OCCUP : occupation of village; O denoted farming village; I denotes fishing village WWSALIN : villages reporting well water salinity problems ranked by its overall impact on

team ACCESS : villages reporting blocked access to the beach or creek ranked by its overall

impact on them AGSALIN : villages reporting salinity of agricultural land ranked by its overall impact on

them UNENEMPL : villages reporting unemployment or underemployment ranked by its overall

impact on them HEALTH : villages reporting problems with health ranked by its overall impact on them FODFUEL : villages reporting problems with fodder and fuelwood collection ranked by its

overall impact* _______________________________________________________________ * The method of ranking a particular problem vis-a vis other impacts is explained in note 7 given at end of this article. Unemployment and Underemployment: Villages located further from the Bay of Bengal face fewer employment problems than those located closer to it. Negatively correlated FARMSZ (r=-0.42; p=0.05) and WSA (r=-0.37; p=0.08) with UNENEMPL suggest that villages adjacent to large farming clusters with large water spread areas experience significant unemployment or underemployment problems. Additionally, villages adjacent to a greater number of corporate shrimp farms are affected by underemployment. This result is most likely because local corporate farms are no longer employing local labour to collected seed and make feed because of the consistent availability of these inputs from ancillary industries. Table 8. Matrix of correlation coefficients between farm characteristics and village impacts as ranked by all 26 villages surveyed in the Kandaleru region _____________________________________________________________________________ Variables WWWSALIN ACCESS AGSALIN UNENEMPL HEALTH FODFUEL (N=26) ____________________________________________________________________________ FARMSZ 0.26 0.22 -0.22 -0.42* -0.29 0.31 WSA 0.28 0.10 -0.32 -0.37** -0.17 0.21 FARMDST 0.37** -0.36** 0.16 -0.07 -0.16 0.02 SEADST -0.04 0.27 -0.25 -0.47 0.54* -0..71* TPONDS 0.27 0.14 -0.31 -0.29 -0.08 0.06 TOUTPT -0.31 0.32 -0.35 0.38 NC -0.15 TCORP 0.31 0.10 -0.31 -0.36** -0.12 0.13 TINDIVID 0.07 0.18 -0.08 0.21 0.40* +0. 55* TFARMS 0.11 0.19 -0.11 0.16 0.37* -0.52* TOWN 0.21 0.10 -0.40 0.49* 0.42** 0.51* TLEASE -0.06 0.09 -0.26 0.34 0.29 -0.41 TTRANS -0.08 0.14 0.29 0.09 0.27 -0.35 ___________________________________________________________________________ *Denotes significant at 95 per cent level; ** Denotes significant at 90 per cent level; Sample Size=26 villages; NC indicates not calculated. Note: A negative coefficient indicates that this impact is more distressful (i.e.it was ranked lower) for villages adjacent to shrimp farms with a larger or higher farm characteristic.

Table 9. Matrix of Significant correlation between farm characteristics and village impacts; ranked by both fishing and farming villages and analysed independently Variables WWSALIN ACCESS AGSALIN UNENEMPL HEALTH FODFUEL FARMSZ Fishing +** Farming (-*) Farming (-*) Fishing (+**)

WSA Fishing+** Farming (-*) Farming (-*) Farming (+**)

FARMDST Fishing(-*)

SEADST

TPONDS Fishing (+**) Farming(-*) Farming(-*)

TOUTPT Farming (-*)

TCROP Fishing(+**) Farming(-*) Fishing (-*) Farming (-*)

TINDIVID Fishing (-*)

TFARMS Fishing (-*)

TOWN Fishing(+*) Fishing (-*)

TLEASE

TTRANS Fishing (-*)

*Denotes significant at 95 per cent leve; ** Denotes significant at 90 per cent level; Sign of coefficient and significance level for farming villages in parentheses. Fishing Villages (N=9); Farming Villages (N=17). Note: A negative coefficient indicates that this impact is more distressful for villages adjacent to shrimp farms with a larger or higher farm characteristic. Health: HEALTHdecreases significantly with SEADST which implies that villages located further from the sea experience fewer health-related problems. Highly significant negative correlation between FARMSZ, WSA, TPONDS, TCORP and HEALTH suggest that those farming villages adjacent to larger farm clusters face greater health problems. This problem is specific to fishing communities due to exposure to contaminated effluent discharged into their fishing areas as explained earlier. Fodder and Fuelwood: FODFUEL and SEADST, TINDIVID, TFARMS and TOWN are all negatively correlated and significant at the 95 per cent level. This implies that villages located further from the sea or adjacent to shrimp clusters with fewer farms or adjacent to farms individually owned experience greater problems with fodder and fuelwood collection. We know from an earlier result that 89 per cent of the surveyed farming communities identified fodder and fuelwood collection as a problem due to the development of brackishwater shrimp aquaculture

development. Policies Toward Sustainable Development

Sustainable shrimp farming practices require minimal disruptions to the surrounding ecosystem and coexistence with rural communities that have historical ties to the land and waters. Efforts to accomodate the Indian brackishwater shrimp aquaculture industry within its coastal zone regulatory policy framework have been difficult. Both regional and national pro-aquaculture lobbying groups claim that regulatory agencies have catered primarily to traditional constituency groups such as local inhabitants and the environmentalists acting on their behalf.

In December 1996, the Supreme Court of India passed a landmark judgment banning all shrimp aquaculture operating within 500 metres of the high tide line. This was a decisive win for environmental activists. This order in effect bans over 95 per cent of all brackishwater shrimp farms from operating in India. However, in March 1997 the Indian Parliament passed the Aquaculture Authority Bill, 1997 which exempted shrimp farms from the Supreme Court Decision. The stay was a direct result of a co-ordinated regional and national effort by big business houses in India engaged in the shrimp industry. The general flip-flop between the Supreme Court and Parliament is bound to continue due the significant loop holes in coastal zone management (CZM) policy and the relative lack of objective analysis concerning this issue.

We believe that this problem is due to an intrinsic problem within the system--that the existing institutions placed in charge of coastal zone management have not been designed to evaluate and identify appropriate solutions to problems arising from brackishwater shrimp aquaculture development. A review of national, state and regional policy development illustrates that: (1) aquaculture policy models and economic policy information have played minor roles in policy decision-making; (2) The lack of economic analysis is due to the generally weak role of economics within the coastal zone management process, the complexity of environmental and economic relationship and the real lack of relevant qualitative and quantitative data. This fundamental problem is what we call the field-policy gap. The field-policy gap

An information gap exists between socio-economic and environmental problems occuring in local areas and effective policy making. The gap between the rural environment and policy formulation and implementation exiss due to a lack of comprehensive qualitative understanding of ground level relities and a lack of quantitative data to objectively examine a variety of hypotheses regarding industry-community interactions (illustrated in Fig.1)

The field-policy gap can be bridged by: First, acquiring an understanding of the nature of the problem at the level of the village community. A qualitative understanding of coastal issues stem from discussions with local government and non-government officials operating in the areas in question. Second, quantitative analysis requires methodologically sound data collection and rigorous socio-economic analysis. Third, a shared vision of the nature of the problem and possible solutions can be achieved through participatory discussions with local communities and local government operating in the region. This approach could lead to informed policy-making.

Concluding Remarks A variety of rapid changes are taking place in the rural economy that are affecting the

traditional livelihood of historical inhabitants both adversely and beneficially. A delicate balance is needed between promoting the development of an industry that generates large capital inflows to the national economy and industrial growth in rural areas and punishing this sector for its associated negative externalities. Our analysis pinpoints relationships between shrimp farm characteristics and village welfare. Based on our results we can suggest three conrete recommendations.

1. Require a minimum distance between shrimp farms and coastal village 2. Provide clear access through farms to the creek or sea 3. Monitor contamination levels and treat farm effluent before discharge

More detailed analysis is needed before any comprehensive recommendations can be

given to ensure the sustainable development of the shrimp farming industry in the Kandaleru region with regard to its coexistence with rural inhabitants. Notes 1. The Kandaleru creek and surrounding region was chosen as the study site for this research for

primarily three reasons. First, the Kandaleru creek is unqiue in that it does not play host to any industry other than to shrimp farming. The Kandaleru creek is, therefore, a model brackish water body from which insights can be made regarding the impacts of brackish water shrimp aquaculture on the environment and on local populations inhabiting its banks. Second, a variety of secondary data exist for this region because of its close proximity to the district capital, Nellore. Third, because of its close proximity to a local port (Krishnapattanam) and to a major rail lik to Madras, shrimp are easily transported for export. Therefore, shrimp farming in the region boomed in a relatively shorty period of time.

2. According to the newly formed Kandaleru Aquafarmers' Association (KAA) registry, there are 518 registered members and no more than 530 farms in total along the Kandaleru creek. Cross sectional data were collected for 518 of the 530 shrimp farms operating along the Kandaleru creek, Nellore District, Andhra Pradesh. Data collected include each farmers' total land-holding, total waterspread area, total number of shrimp ponds, average yield during the bumper harvest of 1996 and during the disease year harvest of 1994, ownership status, and location (name proximity of the nearest village).

3. Variable include: farm size in hectares, number of ponds per farm, number of times shrimp are fed per day, number of aerators used, number of grow out days, average percentage of water exchanged per day, seed stocking density per hectare of waterspread area, number of years in operations, feed in kilograms per hectare of waterspred area, labour inputs per hectare of waterspread area. Model estimation and results are presented in Patil (1997) and available upon request.

4. In India the Supreme Court recently banned all shrimp farms using non-traditional methods of production (i.e. intensive production). The majority of Kandaleru shrimp farmers produce with non-traditional methods of production and, therefore, fear exposure. Due to their sensitivity to sharing production data via a farmal questionnaire, we personally interviewed 83 creek-based farmers of the 518 in the KAA to obtain a representative sample size.

5. We draw this conclusion based on the significant positive correlation between farm size and amount of overall capital inputs used in production. This amount of overall capital inputs used per hectare defines the "intensity" of production and thus the production technology. Higher

capital inputs indicates more intensive production; no capital inputs define traditional production.

6. Data on employment levels was collected by interviewing managers of different ancillary units in Nellore, the capital of Nellore District, Please refer to Patil (1997) for a more detailed analysis of the growth of ancillary industries and their impact on employment levels.

7. Approximately 40 adult males and females were interviewed to have a representative sample size. Each villager was asked to answer each question by answering "yest" or "No". Secondly, they were asked to rank the problem) to 6 (least severe problem). Patil (1997b) provides a detailed discussion on the survey methodology used to collect these data, the data set's strengths and its weaknesses.

8. Shrimp farm effluent is known to be contaminated from excessive biological and chemical inputs used in production.

9. Kandaleru region shrimp farms aer mapped to the specific village they cluster around. Each survey response in coded by the shrimp farm's proximity to the nearest identified village. Each farm is further characterized by its distance from the Bay of Bengal. Thus, ten creek-based shrimp farming localities or "clusters" are identified by local shrimp producers. Similarly, each sea-based farm is linked to the nearest identified village. In most cases, sea-based shrimp farms cover a much larger land an water spread area than the Kandaleru based shrimp farms and are, therefore, adjacent to multiple villages. This distance mapping technique enables us to identify the exact location of each farm by the village adjacent to it. Thus we are able to assess the impact of a shrimp farm cluster on its adjacent village.

10.FARMSZ, WSA and TCORP were found to be positively and significantly correlated at the 99 per cent level.

11. This became apparent during the March 1997 Parliamentary debate on aquaculture. 12. This becomes apparent from examination of the December 1996 Supreme Court Decision on

Aquaculture and the three major reports on impacts of brackishwater shrimp aquaculture used to reach its decision. The most often cited report in the decision, the 1995 NEERI Report was critiqued by internationally renown scientists and experts in brackishwater shrimp aquaculture. In virtually every critique, the NEERI report is condemned as a scientifically unsound study with methodological inconsistencies, unsound economic analysis and conclusions drawn from little or no evidence at all (Patil, 1997). NEERI is a national environment and engineering firm located in Nagpur, India. NEERI was assigned by the Supreme Court to investigate allegations raised by environmentalists that shrimp farming caused severe social and environmental problems in rural coastal areas.

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