Shrimp Aquaculture in Bangladesh is a major economic activity. Shrimp exports in 1998 were at US$ 260 million - a 70% increase from 1980. The economic success of liberalisation is recognised but there is strong criticism of the negative, often irreversible, impacts on the environment and on social issues such as landlessness and social discord. Partial cost-benefit analysis (CBA) was applied using costs of land degradation, of human health impacts and of mangrove destruction due to shrimp farming. Benefits were the income derived from export of processed shrimp. Land degradation causes a loss of 0.11% of total Gross Domestic Product (GDP) in foregone agricultural production, a reclamation cost of 0.22% of GDP and a cost of cattle loss equivalent to 0.01% of GDP. Water pollution from shrimp farming impacts on human health at a cost (adjusted to average income) equivalent to 0.09% of GDP. Mangrove destruction causes annual income loss equivalent to 0.02% of GDP and a biodiversity loss of US$ 2.2 million. In 1998, the benefits of shrimp export amounted to 1.1% of GDP. The CBA ratio emerges as 0.21 on a production loss basis and as 0.30 on a restoration cost basis. The cost is thus 21% to 30% of the total benefit. Solutions recommended include a mix of MBIs and CAC approaches comprising:

• a land use tax;
• effluent charge on pollutants of water;
• a soil conservation fund;
• mixed rice-shrimp farming and clear land zoning;
• licensing of shrimp farms;
• mandatory mangrove development;
• a ban on shrimp catch by trawlers;
• strengthening of property rights; and
• a rationalising of current laws.

In Bangladesh, a major requirement is that all stakeholders, especially local communities, must be involved in the decision-making process.