Transaction Costs and Institutional Innovation: Sustainability of Tank Aquaculture in Sri Lanka
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Date
2006
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Publisher
South Asian Network for Development and Environmental Economics (SANDEE)
Abstract
Freshwater community-based aquaculture was introduce to village irrigation tanks in
the dry zones of Sri Lanka in order to off-set the limited supply of animal protein
available to residents in inland areas. This paper examines transaction costs associated
with the management of community-based aquaculture in Anuradhapura district, the
most important inland fish production area in the country. Using data from 41 tanks
and 340 households, the study finds that community-based aquaculture involves three
types of management forms: tank management by farmer organizations, mangaement
by sub-group within farmer organizations and out-sourcing of management to third
parties. All three institutional arrangements involve transaction costs associated with
information provision, collective decision-making, and protection of fish harvest from
poachers. While the costs of information provision and collective decision-making are
relatively low under all three institutional arrangements, the cost of protection is
significant and is considerably reduced when the entire farmer’s association is involved
in tank management. In general, while community based fisheries contributes cash flow
to farmer organizations and bolsters village food security, the benefits to individual
farmers are low. Hence, farmers have little incentive to participate in collective action.
Of the three different institutional arrangements, management by farmer sub-groups is
the most successful in providing benefits to participants. The study suggests that
sustainability of community-based aquaculture depends on successes in experimenting
with institutional arrangements that can minimize transaction costs and achieve adequate
returns to participants through productivity gains from tanks.
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Keywords
Community-Base Aquaculture, Transaction Costs, Farmer Organizations, Irrigation Tanks, Fisheries, Sri Lanka