An approach to valuing ponds within farming systems for aquaculture

water is an unconventional economic good because it is:-a 'fugitive' and re-usable good,-a public good and often under common property regime,-a stochastically supplied and distributed resource,-subject to economies of scale in provision,-essential to plant and animal life, with no substitute,-associated with many non-market environmental qualities and values. In the context of arid and semi-arid climates, where water resources are scarce and where multiple uses of water have to co-exist to support a variety of life systems, competition for the products and functions of water resources (see Box 1) is likely to be intense and to involve problems of opportunity costs and externalities (Hodge & Adams 1997). Opportunity costs may be defined by the 'sacrifice' made, and its related forgone income, in allocating a scarce resource to a particular purpose rather than another (Pearce & Turner 1990; Lipsey & Harbury 1992). For example, at the farm level, integrating aquaculture within irrigation systems may lead the farmer to face two different 'dilemmas' during the dry season when water scarcity is felt more strongly:-Either use pond water to irrigate vegetables/fruits/rice crops OR keep it to stock fish for later consumption.-Either use feed or some sort of fertilisation to enhance pond culture OR use 'untreated' pond water for livestock and household use. (Pant & Demaine 1998 with reference to Thailand). If the farmer makes the right choice, its financial consequences are likely to be positive, since the foregone benefit of the non-adopted option, or 'bad' choice, should be lower than the financial benefits of the 'good' choice. In theory, it should be possible to attain a point of equilibrium where the benefits of all water uses are maximised. However, as will be detailed further, a high number of factors and uncertainties compose the 'choice' function and render decision-making a highly complex process. One of these difficulties relate to current land use patterns, in particular when these are unplanned. For example, the planting of deep-rooted perennials close to water bodies might increase the rate of water loss during the dry season. Eucalyptus has been planted extensively as an economic source of timber and pulp and is often planted as boundaries. Such species do not require 'watering' but are very important in the overall farm surface/ground water balance. In addition, if surface water bodies are sited in areas with higher ground waters, they may have much more water available for longer in the year. This illustrates …