Quantifying the Economic Contribution of Aquaculture Production Within a Rural Livelihood System: A Decomposition and Quasi-Experimental Approach

Aquaculture production contributes to livelihood systems through the channels of employment, nutrition, farm productivity, and income growth. Empirical information on the welfare impact is relatively sparse for Nigeria. Using novel survey data on household welfare standards collected by the National Bureau of Statistics, income inequality was decomposed across livelihood systems and the relative contribution of aquaculture income estimated. In addition, the average effect of aquaculture production on selected welfare outcomes at the level of a household was determined using Propensity Score Matching technique and controlling for model specification bias. From the results, a uniform increase in aquaculture income was found to reduce income inequality and thus an equalizing enterprise income source in livelihood systems. The estimated average treatment effect on the treated (ATT) reveals that aquaculture production has a statistically significant impact on consumption and poverty reduction. Combining the results, we conclude that small-holder aquaculture production alleviates poverty, but the extent depends on the inclusiveness of programmes targeted at promoting aquaculture production. A possible implication of this result is that for aquaculture development in rural and urban areas to be poverty reducing; aquaculture income growth should be accompanied by additional policies and regulations supporting vulnerable fish farmers, such as the provision of marketing facilities, extension services, access to credit, and other market services.