Climate Change Effects on Shrimp Production in Bangladesh: Economic Insights for Declining Export Revenues

Abstract

Shrimp, often called to as the "white gold" of Bangladesh, ranks as the second most exported product after ready-made garments. The shrimp industry is crucial for increasing national income, generating employment, and earning foreign currency for Bangladesh, but it is adversely affected by various climate-related factors. Applying unit root tests, co-integration, ordinary least squares (OLS) methods, and one-way ANOVA, the study evaluates how climate factors influence shrimp production and assesses whether foreign exchange earnings have significantly increased with the rise in shrimp production from 1990 to 2022. The results reveal that moderate humidity, greenhouse gas emissions, mean temperature, and rising Ganges water levels positively affect shrimp production, with greenhouse gas emissions, mean temperature, and water level increases showing significant results at the 1 percent level of significance. Conversely, precipitation and areas affected by flooding have adverse effects on shrimp production, also significant at the 1 percent level. Additionally, despite the rise in shrimp production, export earnings have not increased significantly, although they have a long-run association. The research identifies several factors contributing to the decline in export revenue, including limited product variety, high production costs, global economic downturns, decreased global demand, rising domestic consumption, trade barriers, inadequate export subsidies, dishonest trading practices, lack of quality control, reliance on extensive farming, the Covid-19 pandemic, devaluation of domestic currency, and inefficient supply chain management. This study proposes key strategies to enhance shrimp export revenues, including diversifying into value-added shrimp products, increasing the production of vannamei shrimp, integrating modern technologies, ensuring the availability of healthy fingerlings, adopting semi-intensive farming practices, improving supply chain management, modernizing processing facilities, boosting incentives for exporters, and maintaining political stability.