15. Environmental Cost of Shrimp Farming in the Coastal Paddy Lands of South India

The study estimated the externality cost of soil salinity caused by shrimp farming on paddy productivity by comparing an affected village, Poovam, with an adjacent unaffected village, Thiruvettakudy. Soil salinity status was normal in both the villages in the pre-shrimp period (1994–1995). But soil samples of 2005 showed that soil salinity was in the normal range in the unaffected village. A spatial pattern in soil salinity was observed in Poovam lands. The per-hectare net returns from paddy is ₹ 5348 in Thiruvettakudy against a loss of ₹ 5058 for Poovam farms. The estimation of paddy production functions with different specifications reveals that salinity has a negative and statistically significant influence on paddy yield. The average gains from salinity reduction ranged from ₹ 1000 to 5000/ha^-1 depending on the production function specifications. This amounts to a yield increase of 172–836 kg/ha^-1. The study suggests the need to have a regulatory framework of taxing externalities for sustainable agricultural development in the coastal region.