Economic analysis of rural and artisanal aquaculture in Ecuador

Abstract

Three different types of culture and conditions were tested to determine the profitability of Rural and Artisanal Aquaculture Project in Ecuador: monoculture of the freshwater fish named locally cachama (Piaractus brachypomus), monoculture of red claw crayfish (Cherax quadricarinatus) and polyculture tilapia (Oreochromis sp.) – cachama (Piaractus brachypomus). The economic models used for this particular analysis were Net Present Value (NPV) and Internal Rate of Return (IRR). Using these methods in combination with a sensitivity analysis foresaw the feasibility on investment for the monoculture of red claw crayfish (Cherax quadricarinatus) showing a Net Present Value (NPV) of 11,458.80 USD, which was the highest among the trials, at 8.65% real interest rate and Internal Rate of Return 44%, followed by the monoculture of cachama (Piaractus brachypomus) with NPV of 10,130.82 USD at the same discount rate and IRR 35%, respectively. The third place in order of profitability goes for the polyculture tilapia (Oreochromis sp.) and cachama (Piaractus brachypomus) with NPV of 1,888.99 USD and 8.65% real interest rate. The IRR percentage registered on the last type of culture was 19%, being the lowest among the three types of production analyzed. Among the conditions tested in the sensitivity analysis, there were: the sudden increase in discount rate, 10% increase in costs, 10% decrease in benefits, simultaneous 10% increase in cost and 10% decrease in benefits, 10% increase in feed cost, 10% increase in price of fingerlings and larvae and reduction in survival rate to 73%, 50, 25.1% with 80% as optimal. On this sensitivity analysis, the monoculture of red claw crayfish (Cherax quadricarinatus) overcame most of the conditions tested being defeated by the reduction in survival rate in the order of 50 and 25.1% which NPVs turned out to be negative; -7,429.60 USD and -22,004.70 USD, respectively. On this case the IRR was indefinable. Nevertheless, still some speculations about certain conditions such as broad experience in the Aquaculture field and technological advantage might be serious factors to be considered at the moment to select this investment and they must be analyzed carefully.