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An Economic Analysis of Shrimp Farm Expansion and Mangrove Conversion in Thailand

We analyzed the factors determining mangrove conversion by shrimp farmers in the coastal provinces of Thailand between 1979–1996. The profit-maximizing behavior of a shrimp farmer converting mangrove area under open access conditions is modeled. Aggregate mangrove clearing by all farmers in coastal areas is empirically estimated through a provincial-level panel analysis. The price of shrimp, minimum wage, distance from market, ammonium phosphate price (used for feed), population growth, gross provincial product, and the density of shrimp farms influence mangrove clearing and shrimp farm expansion. Based on the analysis, various policy options to control mangrove deforestation in Thailand are reviewed. (JEL O13, Q22, Q23)