Collaborating Institution(s)
Auburn University

Upton Hatch
Co-PI (TBA)
Honduras US PI (TBA)

Note: Schedule has been revised. See Addendum to the Ninth Work Plan

Objectives
1) To evaluate alternative aquaculture production systems (i.e., the different established PD/A CRSP pond nutrient input strategies) in terms of both profitability and risk.
2) To develop a capability to fine-tune technologies based on cooperation with farmers.
Techniques will be developed to evaluate the profitability and riskiness of aquacultural systems. These techniques will be packaged into “user-friendly tools” that CRSP biologists and others can use to quickly establish if a tilapia production strategy is likely to be profitable and easily implemented by producers, and at what level of risk to the grower. This preliminary profitability and risk determination procedure will allow CRSP researchers to use their limited resources more efficiently by concentrating their research on production strategies deemed most likely to be profitable at an acceptable risk level.

Significance
The goal of CRSP is to increase the availability of animal protein by developing appropriate pond aquaculture systems. The adoption of the developed pond aquaculture systems depends in great part, among other things, on the expected net returns. Aquaculture as a farm enterprise is not without its risks. The proposed economic research differs from many economic evaluation processes in that it explicitly addresses economic risk, will be developed for use by interdisciplinary researchers, and focuses on developing research treatments that are likely to be implemented by farmers.

The goal will be a technique that can assist pond researchers in screening possible technologies for pond trials. Economic indicators will be used to allow researchers to put priority on treatments that pass an initial economic screening. Thus, economic criteria will be integrated with biological ones in targeting research to the most promising technologies for the end users—the farmers. The technique will be “preliminary” in the sense that it will be a first screening of potential technologies before they have been used extensively in the field and will be based almost exclusively on research pond results. A more in-depth economic evaluation would follow several years later, based on on-farm results and detailed analysis of the adoption process (not in the scope of this proposal).

Anticipated Benefits
When the technique is successfully developed using data from CRSP countries, it can be disseminated to other sites and will be put in practice, where possible. The goal for this proposed research will be a technique that will be easily implemented by biological researchers with a minimum of consultation with an economist.

Identification of Beneficiaries
Farmers need improved techniques in producing protein for family nutrition. The proposed techniques should allow a more focused research effort on tilapia growing techniques that are likely to be adopted by farmers, be they subsistence-, small-, or commercial-scale farmers.

Although the proposed effort will focus on tilapia in Honduras in 1998–2000, the technique should be rather easy to adapt to other locations and species. In general, it might be expected that the technique would be easier to apply to tilapia production in other areas than to other species. Since it is envisioned to be dependent almost solely on pond research data, differences in local growing conditions for a specific species would be reflected in the pond results. The technique’s applicability to other species may be less clear, since some species may have important economic differences, for example, price differences by size and dependence on inputs not readily available in the local area.

Both the economic results and the technique could make an important contribution to the Data Analysis and Synthesis Team (DAST) expert systems aquaculture model. The technique proposed might be useful to the DAST effort by providing an early indication of economic feasibility for a given tilapia technology toward a specific target population of farmers, i.e. subsistence-, small-, or commercial-scale farmers.

Collaborative Arrangements
The International Center for Aquaculture and Aquatic Environments (ICAAE) has made a major commitment to interdisciplinary research and extension. The results of this commitment have been the development of a cadre of expertise in the sciences and social sciences focused on the development of economically viable and environmentally sound aquaculture production systems. Collaboration on this project will be with the principal investigator at the Honduras site and with the CRSP/DAST team. Most collaboration will be in the form of interviews to understand the CRSP experimental data or for data retrieval from the CRSP aquacultural database.

Experimental Design/Methods
Baseline fish production data (nutrient inputs, stocking rates, etc.) collected during the course of CRSP experiments over the last ten years will be used. In addition, prices of nutrient inputs and sales prices of fish and any seasonal fluctuations will be obtained from CRSP country PIs. Using these data, economic indicators of profitability and risk will be determined. Expected enterprise returns are not known with certainty, but have an associated distribution of returns. A large expected profit may have associated with it a wide distribution, and thereby a higher economic risk. Inherent seasonal price distributions for inputs and outputs will be incorporated into the analysis by using available spreadsheet software.

Site(s): Sites involved include Honduras. Project staff will perform most of the work at Auburn University, but will work closely with Honduras project staff. One trip to Honduras will be required each year.

Research Plan
The plan is to concentrate on the fish production, pricing, and environmental data from Honduras during the first year while the software is being programmed and refined.

Identification of Deliverables
1) An evaluation of alternative aquaculture production systems (i.e., the different established PD/A CRSP pond nutrient input strategies) in terms of both profitability and risk.
2) Techniques will be developed to evaluate the profitability and riskiness of tilapia production systems in general.
3) These techniques will be packaged into “user-friendly tools” for use by biologists in the field and also provided to the DAST element of the PD/A CRSP for incorporation into their financial analysis program.

Schedule
During 1999 and 2000 the focus will be on development of the profitability and risk determination algorithms. Data from the Honduras CRSP freshwater tilapia experiments will be used initially. As the programs are tested and refined, interviews with local farmers will be used to fine tune the analysis. The method could be tested at additional CRSP sites (not included in this proposal) to further expand the robustness of these analytical tools.

Final Report Submittal
A final report will be submitted by 30 April 2001.

References
Castillo, S., T. Popma, R. Phelps, U. Hatch, and T. Hanson, 1992. Family-Scale Fish Farming in Guatemala. International Center for Aquaculture and Aquatic Environments Research and Development Series Number 37. Auburn University, AL.
Green, B.W., D.R. Teichert-Coddington, and T.R. Hanson, 1994. Development of Semi-Intensive Aquaculture Technologies in Honduras. International Center for Aquaculture and Aquatic Environments Research and Development Series Number 39. Auburn University, AL.
Hatch, U. and C. Engle, 1987. Economic analysis of aquaculture as a component of integrated agro-aquaculture systems: Some evidence from Panama. Journal of Aquaculture in the Tropics, 2:93-105.
Hatch, U. and C. Tai, 1997. A survey of aquaculture production economics and management. Aquaculture Economics and Management, 1:12-27.
Hatch, U., R. Agbayani, and E. Belleza, 1996. Economic analysis of prawn (Penaeus monodon) culture in the Philippines, II: Grow-out operations. Asian Fisheries Science, 9:127-141.