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Subsidy policy for the retirement of aquaculture on the southwest coast of Taiwan: a case study of Budai township, Chia-Yi county

Published online by Cambridge University Press:  01 August 2008

CHAO-NING LIAO  and
MING-HSIANG CHEN
CHAO-NING LIAO
Affiliation:
Department of Economics, National Cheng-Kung University, Tainan, Taiwan. Tel.: +886-6-275-7575 ext. 56321. Fax: +886-6-276-6491. Email: cnliao@mail.ncku.edu.tw
MING-HSIANG CHEN
Affiliation:
Department of Finance, National Chung Cheng University
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Abstract

This paper attempts to explore how the Taiwan government can effectively use subsidies to retire aquacultural farms based on the externality ground subsidence from pumping groundwater, using the town of Budai in Chia-Yi county as an example. The research first constructs the relationship between ground subsidence and groundwater consumption after taking the externality into consideration. An economic model that minimizes the total subsidy expenditure is then used for targeting the fish farms that need to be retired first in order to meet environmental goals. The results show that when the interaction caused by pumping groundwater among neighborhood farmers is considered, the responsibility for achieving the targets of environmental control is not evenly shared by aquacultural farmers. The location, and not the farm size, plays a more important role in determining whether environmental goals can be met.

Type
Research Article
Information
Environment and Development Economics , Volume 13 , Issue 4 , August 2008 , pp. 517 - 536
Copyright
Copyright © Cambridge University Press 2008

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