Sustainable mangrove-friendly aquaculture development - Myanmar

ACKNOWLEDGEMENTS

The report ‘Sustainable Mangrove-Friendly Aquaculture Development’ was prepared under the oversight of Mr. Charles Selestine, Sustainable Finance Programme Manager of WWF-Myanmar, and Dr. Pyi Soe Aung, Conservation Director of WWF-Myanmar.

Lead Authors

Forest Ecology and Community Development Researcher (UQ)

Dr. Sang Phan

Juan Jose Robalino

Officer (GGGI)

Expert Reviewers

Catherine Lovelock

Aaron Russell (GGGI)

Natural

Gustavo Nicolas Paez (WWF-Myanmar)

WWF-Myanmar,

&

and GGGI express

for the

deepest

provided by

Cuong Chu, Dr. Ha Tran, Mr. Myo Myint, UQ’s local team in Myanmar, Ms. Nera Mariz Puyo (GGGI), Ms. Thinn Thinn Khaing (GGGI), and Mr. Jack Bathe (GGGI).

Supported

based

a decision of

This study received

and

Disclaimer

WWF-Myanmar does not make any warranty, either express or implied, or assume any legal liability or responsibility for the accuracy, completeness, or any third party’s use or the results of such use of any information, apparatus, product, or process disclosed of the information contained herein or represents that its use would not infringe privately owned rights. The views and opinions of the authors expressed herein do not necessarily state or reflect those of

1. EXECUTIVE SUMMARY

The World Wide Fund for Nature (WWF) started its programme in Myanmar in 2014, with the strong belief in the need to collectively protect Myanmar’s forests and rivers, ensuring a future for Myanmar’s precious wildlife. WWF-Myanmar is keen to explore avenues to conserve mangroves whilst providing sustainable livelihoods. Further, WWF-Myanmar sees the need to catalyze nature positive responsible investments from the private sector, to ensure the long-term viability of any initiatives.

WWF-Myanmar is developing the Ayeyarwady River Landscape as a priority area. The need to counter the rapid deforestation of mangroves in Myanmar led the Project to explore suitable initiatives related to mangrove conservation and restoration in the Ayeyarwady Delta. In December 2020, WWF-Myanmar, together with other partners, carried out the “Scoping study on mangrove restoration and increasing resilience in the Ayeyarwady Delta”. In July 2022, a study on Community-Based Sustainable Management of Mangroves was conducted with a local NGO partner.

The main goal of this study is to support mangrove restoration and rehabilitation and to increase resilience in the Ayeyarwady Delta by providing evidence of the ecosystem services provided through the implementation of mangrove-friendly aquaculture, as well as to support reaching sustainability in the value chain of key aquaculture products in the region.

METHODOLOGY

The analyses conducted in this report follows the goals of GGKP’s ‘3Returns Framework: A method for decision making towards sustainable landscapes’ and the IUCN’s report Aquaculture and Nature-based Solutions’. These guiding sources aim to promote sustainable development by mainstreaming natural capital in development planning while presenting the synergies between aquaculture and marine conservation through the emerging concept of Nature-based Solutions (NbS).

The valuation and investment analysis at the production level (i.e., mangrove-friendly aquaculture) in this report follows the 3Returns Framework. The analysis followed this Framework to facilitate decision-making, support the assessment of environmental and social impacts, identify the efficient allocation of resources, support the identification of best practices for sustainable landscape interventions, and establish clear foundations for bankability to drive project implementation.

In order to identify the synergies between aquaculture and NbS, this report has used the IUCN NbS Global Standard framework and criteria in order to assess the implementation of mangrove-friendly aquaculture practices in the Ayeyarwady Delta. The criteria has been taken into consideration during the valuation and investment analysis for mangrove-friendly aquaculture practices to frame it as a naturebased solution.

ANALYSIS & RECOMMENDATIONS

A cost-benefit analysis for extensive aquaculture without mangroves and with mangroves within the ponds provided evidence of higher monetary benefits (from USD 65 to 250 per hectare per year) from aquaculture practices with mangroves within the ponds. Furthermore, results from an investment analysis from a landscape perspective found that the greater benefits from potentially implementing mangrove-friendly aquaculture practices in mangrove land outside nationally protected areas are not only attractive in monetary terms, but also significant in terms of non-monetary benefits (i.e., carbon sequestration, green jobs, and species diversity). Implementation of mangrove-friendly aquaculture practices in suitable ponds in mangrove land will improve the status of natural capital in the Ayeyarwady Region, as well as the number of people provided with capacity development for conducting sustainable economic activities directly linked with an increase in their adaptive capacity. The analysis did not consider strategies to increase the area of conservation land, although this could also be considered as a part of the strategies to conserve mangrove cover.

Among mangrove-friendly aquaculture practices suitable for mangrove areas in the Ayeyarwady Region, including crab-culture and polyculture (shrimp and crab), crab-culture is the most ‘mangrove-friendly’ practice due to the smaller

area needed for ponds and the necessary depth of ponds. In addition, mangroves in good condition within ponds have a direct benefit on crab health and productivity overall, while for polyculture, higher ratios of closed mangrove canopy cover can lower shrimp productivity due to lower temperatures of the water under tree shade.

For analyzing the potential impact of implementing mangrove-friendly aquaculture practices in suitable ponds in mangrove areas, three scenarios were defined and modelled for the period 2022-2042. The first scenario, a Business as Usual (BAU) scenario, reflects what would happen if no mangrove-friendly aquaculture practices are implemented and mangrove areas continue to be used as in the current situation. The two Green Growth Scenarios consider the potential implementation of mangrove-friendly aquaculture practices for polyculture and crabculture in suitable ‘pond areas on mangrove land’ – 38,269 ha identified. However, Green Growth Scenario 2 also considers the potential monetary impact of prioritizing crab culture due to its more ‘mangrove-friendly’ characteristic and from monetizing carbon sequestration through carbon credits.

From a landscape perspective, the investment needed to implement mangrove-friendly aquaculture practices in suitable ponds in

mangrove land in the Delta (38,269 ha) has been estimated at USD 50.83 million to USD 61.92 million, considering a period of 20 years (2022 – 2042) and depending on the relative emphasis on carbon sequestration potential and crab culture vs. polyculture. It is estimated that around 50% of the total investment needed for mangrove-friendly aquaculture practices needs to be allocated for planting and rehabilitating mangroves within aquaculture ponds.

An analysis of the Net Present Value and the Return on Investment during multiple periods of time for current practices versus the implementation of mangrove-friendly aquaculture practices showcases the profitability of current and mangrove-friendly practices from 2027 to 2042. Under mangrovefriendly aquaculture practices profitability is higher than current practices but at the same time, the investment needed is significantly higher. The slow and minimum adoption and implementation of mangrove-friendly aquaculture practices despite their greater benefits can be explained by the socioeconomic conditions of the Region and the lack of resources for investment. The shift from economic activities dependent on extractive actions to sustainable production models that require significant investment for their implementation is constrained by the high opportunity cost in the short-term.

The results provide evidence that any efforts for monetizing ecosystem services, for instance carbon sequestration through the sale of carbon credits, can increase the returns from implementing mangrove-friendly aquaculture practices, thereby decreasing the opportunity cost of moving

from current practices to improved production practices. In addition, following the IUCN NbS Global Standard framework, key positive impacts on societal challenges have been estimated as presented in the following page.

Societal Challenges Mangrove land areas suitable for shrimp and polyculture (ha)

Climate change mitigation and adaptation

Disaster risk reduction

Economic and social development

Mitigation: total carbon sequestration 2022-2042: 3,340,416 MtCO2e Adaptation: number of people supported to cope with the effects of climate change : 8,265

Increase in value of coastal protection: USD 177.54 million

Net Present Value (2022-2042, disc. Rate – 7%): USD 552.98 million

Return on Investment: 14.49 (ratio) Benefit-Cost ratio: 3.16 (ratio)

Green Jobs: 2,667 (FTE green jobs created and maintained)

Human healthAnticipated health benefits from improved nutrition (protein consumption)

Food securityIncrease in aquaculture production (value in PV – 2022-2042): USD 75.51 million

Water security No impacts in water quality if following Good Aquaculture Practices (GAqP)

Ecosystem degradation and biodiversity loss Improvement in biodiversity (Shannon index): 0.25

An assessment of the production inputs needed to support a sustainable aquaculture industry highlighted that there are currently no operational hatcheries in the Ayeyarwady Region that can sustainably supply the stocks needed for a responsible production system, even after implementing mangrove-friendly aquaculture practices. Challenges to sustainable supply include the low availability of natural stocks and multiple barriers to establishing a hatchery. For the latter, two of the most challenging obstacles to ensuring a successful implementation and operation of hatcheries in the Ayeyarwady Region are access to adequate saline water and access to electricity. Considering these challenges, the study suggests two solutions for establishing a hatchery for crab production in the Ayeyarwady Delta in Myanmar:

1. Build a crab hatchery in Chaung Thar town area, in the west of the Ayeyarwady Region, far from the mouth of the Ayeyarwady River and its freshwater influence. This will facilitate access to water with salinity > 20 ppt year round. This town has access to the national electricity grid, which makes it convenient for operating a crab hatchery. In addition, Pathein University has a fishery and mangrove experimental station near the town of Chaung Thar, which is a suitable place to set up a medium to large-scale crab hatchery. The disadvantage of this location is that it is far from the crab farming area on mangrove land in the townships of Pyapon, Bogale and Labutta, so transportation costs are high. The survival rate of the crabs may be jeopardized as they are easily shocked by the sudden change in the environment when moving from the hatchery to ponds.

2. The second option proposed is to build crab hatcheries in the following locations: Labutta town, Labutta township, and in Myogon village, Pyapon township. These two locations have access to an electricity grid and are easily accessible by road and by river streams. Based on the results of the survey conducted these two locations are close to salt fields from which farmers can buy and transport water with high salinity. High salinity brine can be mixed with low salinity river water to achieve the required salinity for hatchery production. In addition, these two locations are close to the main mangrove aquaculture areas in the Ayeyarwady Delta, making it possible to transport crab larvae to the ponds quickly and conveniently.

To conclude, and considering the potential institutional, social, and environmental risks that the implementation of hatcheries and mangrove-friendly aquaculture practices could face in the Ayeyarwady Region, it is strongly emphasized that local communities and private companies should be involved in the transformation of degraded mangrove land toward more productive and sustainable uses. In terms of leveraging financial resources, access to loans with low interest rates and grace periods could be components of mechanisms to mobilize the resources needed for moving toward mangrove-friendly aquaculture practices in the region. Incentives or accessible resources could be provided by international development assistance that could support the transformation of degraded mangroves into more productive systems with sustainable practices in the Ayeyarwady Delta. Yet, increasing and promoting investment in aquaculture should be done in a way that protects and expands mangroves for the provision of ecosystem services.

Figure 1. Net Present Value (NPV) for three scenarios and for multiple periods of time.

Table 1. Criterion 1 - key societal challenges addressed by implementing mangrove-friendly aquaculture.

INTRODUCTION

The mangrove forests of the Ayeyarwady Delta have sustained one of the highest deforestation rates in Myanmar and among mangroves globally. This loss has been primarily anthropogenic in nature, including the expansion of agriculture and aquaculture land uses, and the harvesting of wood for fuel and construction purposes. Mangrove deforestation has negatively affected the stock of natural resources (particularly forests and fisheries) in the Delta, which represent the main income source for a significant proportion of the population. Deforestation and mangrove degradation has also reduced the capacity of coastal mangrove forests to act as a barrier against waves and storm surges contributing to the loss of 135,000 lives during Cyclone Nargis (2008) (WB, 2020).

Mangrove conservation efforts in Myanmar face significant barriers such as weak governance, lack of technical capacity, and lack of financial resources or incentives for their maintenance (GGKP, 2020). An analysis of satellite data conducted by GGGI and UQ, funded by the World Bank (WB) estimated that a total of 178,961 ha of degraded mangroves remain in the Ayeyarwady Region, of which roughly 88,902 ha are managed directly by private sector landowners (WB, 2020). This study and the analysis of individual value chains highlighted the potential for private sector aquaculture pond owners (WAVES, 2020a) and other agroforestry system stakeholders (WAVES, 2020b) to reverse some of the key drivers of mangrove degradation, while enhancing economic and livelihood returns.

2.1. Policy Rational and Contributions to Myanmar’s NDC

Myanmar has been engaged in designing and implementing the required policies, governance, and programming instruments to address socio-economic development and play its part in mitigating global climate change as well as adapting to it. Myanmar’s Nationally Determined Contribution (NDC) shows the nation’s commitment to climate change mitigation and adaptation by pursuing a balance between socioeconomic development and environmental sustainability.

In Myanmar’s 2021 (Updated Submission) NDC to the UNFCCC , the Forestry Department has set a conditional GHG emission reduction of 256.5 million tCO2e by 2030, by committing to implement, among other projects, the Myanmar Reforestation and Forest Rehabilitation Programme (MRRP) to its full extent. The MRRP (until 2026) aims to restore around 1 million ha of degraded and deforested land through a combination of plantation establishment (including mangrove forest) on both state-owned and private land, Community Forestry (CF), agroforestry, natural forest regeneration, and enrichment planting. Additionally, the projects prioritizing the conservation of important forest areas such as intact forests, mangroves, and unique habitats, are recognized as forestry projects that would contribute to the fulfillment of the NDC.

These national commitments are implemented through several key sectoral policy actors, in particular by the Environmental Conservation Department (ECD) and Forestry Department (FD), both of which are housed within the Ministry of Environmental Conservation and Natural Resources (MONREC), and by the Department of Agriculture (DoA) and Department of Fisheries (DoF), which are housed within the Ministry of Agriculture, Livestock and Irrigation (MOALI).

The ECD is the national focal agency for developing and mainstreaming the implementation of Myanmar’s Climate Change Master Plan (2018–2030) across other sectors. The Master Plan recognizes that climate-smart agriculture technologies and practices in aquaculture (i.e., mangrovefriendly aquaculture) play a critical role in supporting the long-term goal of achieving climate-resilience and pursuing a low-carbon pathway for inclusive and sustainable development.

The DoF is the primary agency mandated to enable aquaculture practices in Myanmar2. The DoF launched the “National Aquaculture Development Plan” (NADP) in early 2020, which has targeted the following by 2022:

• Developing and promoting 6,000 ha of mangrove-friendly farming systems. (Baseline 2018 – 4,000 ha of mangrove friendly farming systems)

• Access to adequate finance is improved, allowing 100 farmers and enterprises to have access to adequate financing options. (Baseline 2018 – None)

According to Myanmar’s 2021 NDC, international assistance will be required to meet several aspects of the target, including but not limited to the development and implementation of sectoral and national plans that support mainstreaming activities within existing programs, including the Good Aquaculture Practices (GAqP). The GAqP is a key component of the NADP, which also recommends mangrove-friendly aquaculture and highlights the importance of taking measures to mitigate the impacts of climate change.

2.2. Project Background and Objectives

WWF started its programme in Myanmar in 2014 with a strong belief in the need to collectively protect Myanmar’s forests and rivers, ensuring a future for Myanmar’s precious wildlife. Currently, and within the context of its Sustainable Finance Programme, WWF Myanmar manages a project titled “Taking Deforestation out of Banks Portfolios in Emerging Markets”. The Project is funded through the International Climate Initiative (IKI) by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), Germany.

Under this Project, WWF Myanmar is developing the Ayeyarwady River Landscape as a priority area. The need to counter the rapid deforestation of mangroves in Myanmar led the Project to explore suitable initiatives related to mangroves in the Ayeyarwady Delta. In December 2020, WWF Myanmar, together with other partners, carried out the “Scoping study on mangrove restoration and increasing resilience in the Ayeyarwady Delta”. In July 2022, a study on Community-Based Sustainable Management of Mangroves was conducted with a local NGO partner.

Based on this proposal and WWF’s New Deal for Nature, which seeks to protect and restore nature for the benefits of the people and the planet, WWF-Myanmar is keen to explore avenues to conserve mangroves whilst providing sustainable livelihoods. Further, WWF-Myanmar sees the need to catalyze nature positive responsible investments from the private sector, to ensure the long-term viability of any initiatives.

In response to this, the University of Queensland (UQ) and the Global Green Growth Institute (GGGI) have prepared the following study presenting a detailed assessment of the ecosystem services enabled through the implementation of mangrove-friendly aquaculture with a scope in the production and input stages in the value chain.

The main goal of this study is to support mangrove restoration and increasing resilience in the Ayeyarwady Delta by providing evidence of the ecosystem services provided through implementation of mangrove-friendly aquaculture, as well as to support reaching sustainability in the value chain of key aquaculture products in the region. Under this overall goal, the specific objectives are:

• Objective 1: Identifying suitable sites for implementing mangrovefriendly aquaculture practices in the Ayeyarwady Delta;

• Objective 2: Comparing the impacts of BAU aquaculture pond management with mangrove-friendly pond management through a valuation and impact investment analysis that recognizes ecosystem service returns for coastal protection, carbon sequestration, and biodiversity improvement; and

• Objective 3: Identifying suitable sites for implementing crab hatcheries that can support a sustainable aquaculture production system in the Delta.

3. METHODOLOGY

The analyses conducted in this report follows the goals of the ‘3Returns Framework: A method for decision making towards sustainable landscapes’ and the report Aquaculture and Naturebased Solutions’. These guiding sources aim to promote sustainable development by mainstreaming natural capital in development planning while presenting the synergies between aquaculture and marine conservation through the emerging concept of NbS.

3.1. Valuation and Investment Analysis

The valuation and investment analysis at the production level (i.e., mangrovefriendly aquaculture) in this report follows the 3Returns Framework3. The analysis followed this Framework to facilitate decision-making, support the assessment of environmental and social impacts, identify the efficient allocation of resources, support the identification of best practices for sustainable landscape interventions, and establish clear foundations for bankability to drive project implementation.

The assessment of mangrove-friendly aquaculture implementation followed the 3Returns Framework considering ‘green’ interventions in a landscape as:

• Investments in Natural Capital: resources allocated to increase the stocks of natural assets;

• Investments in Social & Human Capital: resources allocated to increase cooperation within and among groups, individual and collective knowledge, skills, and competencies; while building/strengthening institutions for resource management, decision making, and social integration; and

• Investment in Financial Capital4: resources allocated to acquire or increase the assets needed in order to provide goods or services.

Figure

Framework Stages

The 3Returns Framework also contrasts a BAU scenario against green growth scenarios to understand changes in key capital indicators (natural, social & human, and financial capital) and the benefits derived from them. In this report, the development of a range of green growth scenarios was based on literature review, expert consultation, and a baseline survey in the study sites. The BAU scenario assumes continued mangrove degradation with limited mangrove restoration projects. The green growth scenarios are based on the implementation of mangrove-friendly aquaculture practices. One of the green growth scenarios also assesses the impact of monetizing carbon sequestration through the sale of carbon credits.

3.2. Nature-based Solutions

The report ‘Aquaculture and Nature-based Solutions – Identifying synergies between sustainable development of coastal communities, aquaculture, and marine and coastal conservation’5 examines the emerging concept of NbS and the IUCN Global Standard when applied to social-ecological systems that include aquaculture production.

According to IUCN, “Nature-based Solutions are actions to protect, sustainably manage and restore natural and modified ecosystems in ways that address societal challenges effectively and adaptively, to provide both human well-being and biodiversity benefits” [(IUCN, 2020) cited in (Gouvello, Brugere, & Simard, 2022)].

To design, evaluate and monitor NbS in the near future, the IUCN NbS Global Standard provides a defined framework with eight criteria to be met:

Table

NbS Global Standard Criterion

Criteria

Criteria

Criteria

Criteria

Criteria

Criteria

Criteria

Criteria

Source:

Design

address

In this report, the eight criteria have been taken into consideration during the valuation and investment analysis for mangrove-friendly aquaculture practices to frame it as a NbS. This report begins by understanding ‘mangrove aquaculture’ as a possible intervention for coastal erosion regulation (NbS) as defined by European Commission (2015) example No. 99 ‘Encourage increased use of mangroves within and around existing extensive tropical aquaculture ponds’ (European Commission, 2015). More extensive mangroves provide greater level of coastal protection. The report presents enough evidence to consider mangrove-friendly aquaculture in the Ayeyarwady Delta as a NbS.

3 The 3Returns Framework methodological description is publicly available and can be found in the Green Growth Knowledge Platform under the Expert Group on Natural Capital featured resources - https://www. greengrowthknowledge.org/working-group/ natural-capital.

4 Financial capital, or produced capital, is part of economic capital.

5 The report is available online through IUCN library - https://portals.iucn.org/ library/efiles/documents/2022-005-En.pdf

4. EXTENSIVE AQUACULTUREAYEYARWADY REGION

4.1. Geographic Distribution

Following a semi-supervised satellite image (Planet Earth images) classification, validated with Google Earth and Spot 5 images, the World Bank (WB), GGGI, and UQ estimated that by 2019 (WB, 2020) the total area of aquaculture ponds on mangrove land in the Ayeyarwady Delta was 38,296 ha. From this total, it was estimated that 20,751 ha of aquaculture ponds were located on ‘private land’6 and 17,545 ha were located in areas under government management7 (See Table 3).

Table 3. Aquaculture pond area and distribution in mangrove land in the Ayeyarwady Delta

Type of Ponds

Ponds with degraded mangrove

Ponds with regrowth mangrove

Ponds without

Aquaculture Pond Area on Mangrove Land (ha) BogaleLabutta NgapudawPatheinPyapon

below.

use status of mangrove land in the Ayeyarwady Delta has

Table 5. Land use status on mangrove land areas in the Ayeyarwady Region.

Mangrove land status (outside National Parks*) Area (ha)Ratio to total mangrove land (%)

Mangrove land (excluding National Parks) 80,166 49.1%

Degraded mangroves 20,217 12.4%

Secondary & regenerating mangroves 48,906 29.9%

Aquaculture ponds46421,065 15295 16,521 38,296

Aquaculture ponds on ‘private land’ 20,751 Aquaculture ponds in areas under government control 17,545

Source (WB, 2020).

Aquaculture ponds in mangrove land in the Ayeyarwady Delta can be divided in three main types, aquaculture ponds with degraded mangrove, aquaculture ponds with regrowth mangrove, and aquaculture ponds without mangrove (WB, 2020). These three types of ponds have been built on mangrove land by digging ditches and creating earthen banks that limit water flows. Some of them include flood gates (i.e., wood-based and/or concrete) that support manipulating water level within the pond. The different types of aquaculture ponds on mangrove land are differentiated by the state of the mangroves in them. Most often mangroves are located in the central shallower parts of the pond. Aquaculture ponds can include degraded mangrove, which have been continuously logged (cut) for fuelwood and timber purposes and that may be stressed due to limited tidal flows. Aquaculture ponds can also include regrowth mangrove, which are characterized by multispecies mangrove plantations and natural regeneration of mangroves that have been protected. These mangrove areas have a standing wood volume of 50 to 200 m3/ha and are the highest quality mangrove areas in the region. Finally, there are aquaculture ponds in mangrove land with no mangroves within or surrounding the ponds (WB, 2020). Table 4 present the distribution of these type of ponds on mangrove land in the Ayeyarwady Delta in 2019.

Established plantations 5,072 3.1%

Unvegetated saline land 5,970 3.7%

Pond areas on mangrove land (outside National Parks) 38,269 23.4%

Pond with degraded mangroves 2,678 1.6%

Pond with secondary and regrowth mangroves 10,479 6.4%

Pond without mangroves 25,112 15.4%

Nipa palm 44,930 27.5%

Group by mangrove status

Degraded mangroves 22,894 14.0%

Secondary & regenerating mangroves 59,386 36.4%

Established plantations 5,072 3.1%

Unvegetated saline land 31,082 19.0%

Nipa palm mixed with other mangrove species 44,930 27.5%

Total mangrove land 163,364 100.0%

Total mangrove land area within Reserve Forests (RFs) 73,370

Total pond areas in mangrove land within RFs 17,545

6 The Myanmar state is the ultimate owner of all lands and resources in Myanmar. Land under Form 7 allows the farmer to have selling and inheritance rights of the land, as well as the rights over the land for a loan deposit.

7 Reserve Forests (RF) and National Parks (NP) are areas under direct government control. In RF areas, two type of community-based resource management are allowed: Community Forestry User Groups (CFUG) represent a group of community members that are allocated a certain amount of forest land (mangroves), which is collectively managed by the members; and Village Fuelwood Plantations (VFP), which are rehabilitated forest plantations (mangroves) established by the regional forestry department officials and of which all members of the village are granted with equal rights and responsibilities for its management.

Total mixed nipa palm areas within RFs 8,876

Nipa palm mixed with other mangrove species outside RFs36,054

Mixed nipa palm area suitable for shrimp 7,090

Mixed nipa palm area suitable for crab 19,282

*Note: National Parks in Myanmar are places that have been assigned to protect biodiversity and natural resources, as well as to protect historical and cultural values. The exploitation and use of resources in these areas is prohibited.

Aquaculture Pond Area on Mangrove Land (ha) BogaleLabutta NgapudawPatheinPyapon Total

Value Chain Analysis

Aquaculture and capture fisheries are a key pillar of the Myanmar’s economy, contributing to around 2% of the country’s gross domestic product (GDP), 50% of animal protein consumption, and up to 56% of state/regional government revenue in 2019 (Fodor & Ling, 2019). While capture fisheries have dominated for decades, sustainability concerns related to the over exploitation of fish stocks have led to a shifting focus on the development of aquaculture production (USAID, 2021). Prior to 2021, the government emphasized the development of aquaculture as a driver of economic growth, job creation, and inclusive and sustainable development. This emphasis was expressed through the Myanmar Sustainable Development Plan (2018-2030), the Agricultural Development Strategy and Investment Plan (2018-2023), the National Aquaculture Development Plan (2020-2022) and the National Export Strategy (2020-2025).

According to the NADP, the land area utilized for aquaculture was estimated at 197,299 ha in 2018-2019. Approximately 94% of aquaculture ponds in Myanmar are located in Yangon, Bago, Rakhine, and Ayeyarwady Regions. The greatest concentration of ponds (72%) are located in the Ayeyarwady Region and Rakhine State (DoF, 2020).

Aquaculture products in the Ayeyarwady Region and in Myanmar are important for domestic food security as they are the lead providers of animal protein and micronutrients relevant for the development of children. Nationally, the amount spent on fish products (14%) is almost as much as

Figure3. Aquaculture products value chain.

the amount spent on rice (19%) (WAVES, 2020a). Despite the importance of aquaculture products, there are significant concerns regarding the unsustainable exploitation of natural aquatic resources and the destruction of their natural habit.

To this, the non-recognition of aquaculture as a form of agriculture by local institutions and the onerous process to conduct aquaculture practices negatively impacts the growth and sustainable development of the value chain (WAVES, 2020a).

The value chain of aquaculture products in the Ayeyarwady Region is complex and involves multiple stakeholders in the input supply, production, and processing and distribution stages, as well as in markets. Among the main actors in the value chain, most roles are male-dominated. The importance of encouraging the participation of women within the value chain as a direct method for improving household nutrition and decision making has been highlighted. Female involvement provides women with the ability to obtain greater financial independence which leads to greater female involvement in household decision-making (WAVES, 2020a).

According to Fitzsimmons & Romatzki (2019), within the value chain of aquaculture products in the Ayeyarwady Region and Yangon, crabs (soft-shell and hard-shell) and shrimp (freshwater prawns) were the most valuable products. Figure 3 presents the value chain for aquaculture products in the Ayeyarwady Region. A brief explanation of each stage, as well as the main challenges faced by the main actors in each stage, are presented below.

Inputs

The main input suppliers include feed suppliers and larvae stock suppliers. Fishers use locally designed and manufactured tools to collect and catch larval stock from mangrove creeks and channels. The naturally available harvest is either sold to village-level traders and collectors, or to aquaculture farmers (WAVES, 2020a). In Myanmar there are 70 hatcheries8 in total, of which 27 are state-owned and operated by the DoF (USAID, 2021). Of these 27 hatcheries, only five are located within the Ayeyarwady Region (WAVES, 2020a). Challenges faced by suppliers include low availability of natural stock (from fishers) and operational difficulties (for hatcheries) including insufficient and unstable electricity supply, poor quality feed, and high energy requirements that translate to high production costs (WAVES, 2020a).

There are 17 feed suppliers in Myanmar according to the Myanmar Aqua-Feed Association (USAID, 2021). Unfortunately, all the feed mills are in and around Yangon with limited distribution in rural areas which represents a challenge for producers in the Ayeyarwady Region. The lack of access to feed (i.e., cost and distance) leads producers to use natural fish stocks and trash fish to feed stock in aquaculture ponds (WAVES, 2020a).

Production

There are two main types of aquaculture production: intensive and extensive farm production. Extensive aquaculture, practiced mainly by small-scale farmers, depends mostly on natural seed and feed supply. Products managed by small-scale farmers include mud-crab (Scylla spp.), tiger shrimp (Penaeus monodon), and sea bass (Lates sp.) (WAVES, 2020a). Intensive aquaculture has a specific focus, depending on the expertise of farmers (shrimp, crab, or fish). Regularly, intensive farms operate as enterprises and have integrated input supply operations, as well as post-harvest operations, depending on their target market (USAID, 2021).

After harvest, farmers that sell to domestic markets practice limited value-addition. Farmers targeting international markets, pre-process (clean, weigh, package) and send the products to cold storage facilities (USAID, 2021). Challenges faced by farmers at this stage depend on their production scale:

For small-scale farmers, the main challenges include (GGGI, 2019) (WAVES, 2020a) (USAID, 2021):

• Difficulty in obtaining land and necessary permits for operating their business;

• Limited access to formal finance;

• Financial constraints, meaning farmers are only able to pay hatcheries following the harvest which places financial strain on the hatcheries;

• Poor quality of products linked to poor access to supplies and equipment; and

• Prevalence of diseases due to a lack of effective pond and water management.

• For small and medium enterprises, the main challenges include (GGGI, 2019) (WAVES, 2020a) (USAID, 2021):

• Difficulty in obtaining land and necessary permits for operating their business;

• High operational costs decreasing their comparative advantage;

• Difficulty in finding available finance with banks as many banks do not accept land as security for loans; and

• Government hatchery programs being unable to meet demand.

Intermediary, Processing, and Markets

Village and township traders commercialize aquaculture products through local markets or through well-established wholesale markets located in Yangon and Labutta. Exporters, hotels, restaurants, and local retailers are the buyers at wholesale markets (WAVES, 2020a). Most of the time, aquaculture products arrive to wholesale markets packed only with ice, and are transported either using in-house trucks or by middlemen. Transportation from farms often takes place by multiple means, including by trailers, motorcycles, and boats. Cold chain logistic providers are limited in the region. Furthermore, to save fuel costs, no proper refrigeration is used, only ice layering (USAID, 2021) (WAVES, 2020a).

Processing in Myanmar includes basic processing within facilities that lack the technical and financial capacity to produce high-value processed items. Aquaculture products are exported in raw or semi-processed forms. Exporters take the products after they enter cold storage facilities and sell them directly to importers in end markets for further processing, distribution, and consumption (USAID, 2021

For traders, processors, and distributors, the main challenges include (USAID, 2021):

• Long term supply contracts and formal contracting are not common in Myanmar, jeopardizing the regular supply of raw materials;

• Inability to provide consistent quality in supplied products with a negative impact on their relationships with customers;

• Inadequate supply of potable fresh water at landing sites and ice production facilities which leads to contamination and the inability to meet international market requirements.

• Lack of reliable electricity supply making it difficult to ensure quality consistency along the supply chain; and

• Limited access to finance which constraints further investment to improve the supply chain.

8

In terms of end markets, according to USAID (2021), 50-60% of total fresh and 80% of total processed fishery products are sold in domestic markets. As identified above, wholesalers represent the most important sales channel for aquaculture products in the country. At wholesale markets, there is no price standardization, as well as no diligent application of food safety protocols9. Overall, statistics on domestic demand and the volume of sales of fish products at wholesale markets are unavailable. In addition, the lack of market information makes it difficult for producers to study and understand demand and price trends; the availability of which could lead them to make informed decisions in terms of production planning, harvest scheduling, and logistics planning, and which could ensure that production and operation activities are aligned with market demand (USAID, 2021).

In terms of international markets, Myanmar’s exports are dominated by selected species that have traditionally been produced, including mud-crabs. International

buyer requirements vary by country, but generally buyers require Good Aquaculture Practices (GAqP) certification for producers and Hazard Analysis and Critical Control Points (HACCP) certification for cold chain and processing facilities. Compared to neighboring countries, Myanmar’s competitiveness is relatively low with a limited percentage of produce meeting buyer requirements. Unfortunately, farmers have limited understanding and knowledge of how to qualify for GAqP certification and require hands-on guidance (USAID, 2021). Tables 6 and 7 present the countries importing aquaculture products from Myanmar and the value of the import markets for live and processed crabs (e.g., soft-shell) for the period of 2017-2021. It is important to highlight that most soft-shell crabs go to export markets, as domestic consumption is low compared to live crabs (USAID, 2021). Export potential for soft-shell crab is growing, with increasing demand and interest from countries like Thailand and Australia.

Importers

United States of America 8,407,00010,717,000 16,695,00015,984,000 14,738,000

Thailand 8,567,000 2,956,0003,180,0005,286,000 7,497,000

Hong Kong, China 2,265,0003,008,0004,392,000 2,728,000 4,199,000

China 19,019,0004,452,0001,616,000 2,867,000 3,926,000

Australia 956,000949,0002,046,0001,569,0002,559,000

Korea, Republic of 757,000 813,0001,335,0002,912,0001,924,000

Taipei, Chinese 1,746,000 1,588,000 3,766,0003,047,000 1,414,000

Japan 1,556,000 1,271,000 2,316,0001,852,000 967,000

United Kingdom 0 0 67,000 134,000 720,000

Singapore 1,014,000586,000942,000459,000641,000

Netherlands 0 0 042,000453,000

Malaysia 988,000 1,387,000 1,195,000463,000381,000

Viet Nam 632,000469,000636,000192,000295,000

United Arab Emirates 135,000220,000 475,000 164,000264,000

Norfolk Island

Belgium

Denmark

0 0 0 237,000

0 090,000132,000

0 099,000

New Zealand 87,000 140,000101,000145,000 78,000

Germany

Qatar

Sweden

Brunei

South

Türkiye

115,00064,000228,000

0114,00041,000

03,00015,000

Value Chain Ecosystem

Outside the value chain, key ecosystem actors play a crucial role in the functioning and development of the value chain. Government institutions (See Table 8) regulate the business activities in the sector by drafting and enforcing relevant regulatory frameworks. Government institutions support the value chain by operating state-owned facilities (e.g., hatcheries, laboratories, research centers) and by coordinating across agencies to promote the sector. In parallel, sectoral associations act as the businesses’ voices enabling public-private sector coordination and collaboration (See Table 8) (USAID, 2021).

Regarding service providers, in Myanmar there are no dedicated professional players providing business services and helping aquaculture players with support services. Training and capacity building in the sector is regularly provided by the DoF, NGOs and INGOs, and by foreign government experts. There are financial institutions (See Table 8) providing micro-finance and financial assistance to micro, small, and medium sized farms and enterprises. However, due to the limited reach of established institutions and the limited range of formal instruments, informal lending is the common source of finance in the sector (GGGI, 2019) (USAID, 2021).

Table 8. Key ecosystem actors in the value chain.

CategoryEcosystem Actors

Department of Fisheries (Ministry of Agriculture, Livestock and Irrigation)

Livestock Breeding and Veterinary Department (Ministry of Agriculture, Livestock and Irrigation)

juvenile crabs into the ponds to increase productivity. The farmers do not use fish feed in their operational practices. Crabs, shrimp and fish depend on natural food arriving in river water and from adjacent mangroves (GGKP, 2020).

Government

Food and Drug Administration Department (FDA) of the Ministry of Health and Sports

Department of Trade (Ministry of Commerce)

Fisheries and Aquaculture Department (Yangon University)

Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI)

Myanmar Fisheries Federation

Myanmar Shrimp Association

Myanmar Aqua-Feed Association

Associations

Myanmar Fish Farmers Association

Myanmar Crab Entrepreneurs Association

Myanmar Fisheries Producers Processors and Exporters Association

Myanmar Fish Paste, Dried Fish, Fish Sauce Entrepreneurs Association

BRAC Microfinance Institute

Financial Service Providers

Ar Yone Oo Microfinance Institute

Global Treasure Bank

Adapted from (USAID, 2021).

Since 2020 and throughout 2021, Myanmar and the aquaculture value chain have been affected by COVID-19 and political turmoil issues. COVID-19 has affected all stages of the value chain across the aquaculture sector (USAID, 2021). Especially at the beginning of the pandemic, the sudden drop in demand reduced sales in domestic markets (WAVES, 2020a); aquaculture exports started to get rejected and several orders were cancelled; the government enforced strict travel restrictions disrupting the supply chain; and storage costs increased due to reduced domestic and export demand (USAID, 2021). Operational challenges were faced by farms and processing plants, forcing them to cease operations. These operational challenges were further aggravated after February 2021, when political instability in the country resulted in almost all business and commercial operations being suspended (USDA, 2021).

New military-led authorities appointed the former Director General of the Ministry of Agriculture and advisor to a private company and the Myanmar Rice Federation as the new Minister of Agriculture, Livestock, and Irrigation. This provided assurance that major and unwanted changes will not occur (USDA, 2021). However, it is difficult to predict the policy changes and economic shifts of the current situation in the country, as well as the main impacts in the

development direction of the aquaculture sector. According to Reuters (2022), the United States has warned about the risks associated with doing business in Myanmar at this time and that utilizing supply chains could bring illicit finance, reputational, and legal risks (Reuters, 2022).

4.3. Current Production under Extensive Aquaculture Systems

Extensive mangrove aquaculture practices in Myanmar are similar to those in other Southeast Asian countries (e.g., Thailand, the Philippines, Indonesia, and Viet Nam). Farmers typically build low earthen walls around their mangrove area. The walls are constructed in the processes of digging ditches in the mangroves, which make shallow ponds for aquaculture. The farmers tend to keep mangroves on the remaining platform area within the pond walls, although the mangroves are often degraded or die due to the altered hydrology, as water levels are maintained at higher-than-normal levels for shrimp/fish, which reduces mangrove growth and can cause mortality. The ponds are periodically flushed with tidal water, which provides wild shrimp, crab, and fish larvae into the ponds. Many of the farmers also add shrimp fingerlings and

Extensive mangrove aquaculture systems provide multiple valuable products. In the typical mangrove aquaculture system, farmers use polyculture systems that include crab, shrimp, and other fish cultured together. Fuelwood collected from mangroves is the major energy source for domestic cooking in mangrove areas and buffer zones in the Delta. Mangrove fuelwood is also the main energy source used for drying fish on bamboo racks on the shore in the Pyapon township.

The coastal plain of the Ayeyarwady River is of relatively high elevation compared to the mean sea level (> 1.5 m – data determined from the Digital Elevation Model - CoastalDEM of Climate Central (Kulp & Strauss, 2019). Thus, the main farming season for extensive aquaculture farms in mangrove forests in the Region occurs from April to November every year, the period when there is significant rain and high tides to bring river water to the ponds. Most of the aquaculture ponds within mangrove areas are drained from January to March for cleaning and repairing the gates and pond walls for the next farming season. A few pond owners have dug deep ditches, which allows them to keep water all year round. However, from January to March aquaculture is not possible as river water cannot enter the ponds due to low tide levels and limited rainfall.

Figure 4. Mangrove aquaculture pond with mangroves.

Figure 5. Brackish water pond without mangroves.

Pond owners in neighboring countries, where economic conditions and infrastructure are better, often build inlet and outlet gates made of cement and steel to keep pond water levels stable and to retain water for longer periods. Pond owners in Myanmar, on the other hand, usually make

simple water gates using soil and wood. Therefore, ditches, and pond walls are prone to leaks and breaks, requiring major maintenance or annual repair. This has increased annual pond maintenance costs and reduced aquaculture productivity.

A major limitation for aquaculture in mangrove saltwater and brackish water areas in Myanmar is the lack of affordable and good quality shrimp and crab larvae. Mangrove aquaculture farms in Myanmar are completely dependent on wild larvae that enters the pond along with water, or are wild caught. According to data from the European Union and the German Ministry for Economic Cooperation and Development-funded

Myanmar Sustainable Aquaculture Programme (MYSAP), more than 134 million crabs are collected annually from the wild, with natural supply becoming limited over time (USAID, 2021).

Myanmar is a developing country with very limited infrastructure. Most of the coastal areas of the country do not have access to national electricity gridlines. Domestic cooking,

Figure 6. Concrete gate of brackish aquaculture pond.

Figure 7. Pond timber/wood gate, which is common in Myanmar.

Figure 8. Catching natural juvenile crabs for mangrove aquaculture ponds.

Figure 9. Catching natural shrimp fingerlings for mangrove aquaculture ponds.

especially in mangrove areas, mainly relies on fuelwood harvested from mangroves. Some fishing and seafood processing activities also use mangrove fuelwood as raw material for cooking, steaming, and drying. In addition, the construction of houses and coastal structures uses mangrove timber as the main raw material. As a result, the timber resources of mangrove forests have been depleted, while the demand for timber and firewood remains large.

In the Ayeyarwady Region, income from thinning and harvesting trees in mangrove ponds is an important source of income for pond owners. Survey results for the present analysis show that the average income from firewood is MMK 29,000 per acre per year (USD 13.76 per acre per year10). Despite their importance, mangroves in most of the aquaculture ponds are severely degraded, with scarce timber and firewood available for use. In the future, if the mangroves in these farms improve, the revenue from mangrove timber and firewood could increase significantly.

Results from the field survey also show that, in addition to extensive aquaculture systems (which are quite common in Pyapon), aquaculture households in the Labutta township have increased their farming in the direction of semiintensive farming. Typically, these households buy juvenile crabs to release them into their ponds, thereby exploiting a large number of wild and natural crabs continuously throughout the year. This practice is a common form of ‘natural crab fattening’. The following section presents the economic performance of multiple extensive aquaculture production models popular in the Region.

4.4. Cost-Benefit Analysis of Extensive Aquaculture Systems

4.4.1. Cost-benefit analysis for ponds without mangrove

The table below shows the benefits, operational costs, and capital expenditures for aquaculture practices in ponds without mangroves. Survey data on 133 aquaculture households in two townships, Labutta and Pyapon, shows that only eight households practice extensive aquaculture on ponds without mangroves (‘natural crab fattening’). For this type of aquaculture, the average area of aquaculture ponds was over 10 acres (4 ha) per household. For comparison purposes with other types of extensive aquaculture practices, the cost-benefit results are presented for 1 ha.

Table 9. Cost-benefit analysis for extensive aquaculture ponds without mangrove.

Item Value (USD/hectare/year)

Income 1,107.11

Operational Costs 649.13

Net Income 457.97

Capital Expenditures 982.79

Payback Period (years) 2.15 years

Note: Exchange rate applied: 1 USD = 2,107 MMK.

4.4.2. Cost-benefit analysis for ponds without mangrove (mangrove-friendly aquaculture)

Regarding extensive aquaculture ponds with mangroves, two main farming methods were identified based on the culture of aquatic species in ponds. The first type is polyculture, which is suitable for ponds with low altitude allowing to obtain and keep water at high level. The second type is crab-culture, which is suitable for both mangroves and crabs. The second type is usually conducted in areas of higher elevation, which makes land suitable only for crab farming and not for other species.

Of the 133 surveyed and interviewed households, 87 households practice crab-culture in ponds with mangroves. The remaining 56 households culture both shrimp and crabs in ponds with mangroves. The benefits, operational costs, and capital expenditures for the two types of farming are presented in the tables below.

Table 10. Cost-benefit analysis for polyculture aquaculture in ponds with mangroves.

Item Value (USD/hectare/year)

Income 1,079.83

Operational Costs 554.35

Net Income 525.48

Capital Expenditures 729.70

Payback Period (years) 1.39 years

Note: Exchange rate applied: 1 USD = 2,107 MMK.

Table 11. Cost-benefit analysis for crab aquaculture in ponds with mangroves.

Item Value (USD/hectare/year)

Income 1,415.10

Operational Costs 707.84

Net Income 707.27

Capital Expenditures 938.81

Payback Period (years) 1.33 years

Note: Exchange rate applied: 1 USD = 2,107 MMK.

Based on the economic performance of ponds without and with mangroves (Tables 9, 10 and 11), extensive aquaculture in ponds with mangroves provides greater monetary benefits than farming in ponds without mangroves. Considering that this cost-benefit analysis has not considered or presented additional information in terms of additional ecosystem services, such as carbon sequestration and biodiversity benefits, among others, the recommendation of mangrovefriendly aquaculture practices at this point is based on its monetary benefits. In addition, it is also highlighted that crab aquaculture in ponds with mangroves is more ‘mangrovefriendly’, as there is no need to dig a deep pond and make ponds larger in proportion of the landscape (in comparative terms).

5. MANGROVE FRIENDLY AQUACULTURE PRODUCTION

5.1. Site Suitability Identification

This study has used three variables for determining suitable areas for mangrove-friendly aquaculture: 1) the land must be mangrove land; 2) the height above sea level must be suitable for the pond to be supplied with necessary water; and 3) the farming site must be located outside national parks and/or protected areas (natural reserves).

Regarding variable 1) ‘mangrove habitat’, maps of mangrove land, including nipa palm, were used and updated with the current mangrove status according to recent satellite images of mangrove land in the Ayeyarwady Delta (2022).

Regarding variable 3), national parks in Myanmar are places that have been assigned to protect biodiversity and natural resources, as well as to protect historical and cultural values. The exploitation and use of resources in these areas is prohibited. Consequently, national parks have been excluded for identifying suitable areas for mangrove-friendly aquaculture.

Finally, regarding variable 2) ‘elevation above sea level’, extensive aquaculture on mangrove land is completely dependent on tidal water. Therefore, elevation is one of the most important parameters in determining suitability for aquaculture on mangrove land. Tides, combined with increased river discharge due to rainfall, can enter the pond if the tidal height is greater than the height of the floor of the aquaculture pond. For this study, Climate Central’s Digital Elevation Model (DEM) CoastalDEM (Kulp &

Strauss, 2019) was used to determine the elevation of mangrove land in the Ayeyarwady Region, Myanmar. This model provides an accurate digital elevation model for coastal areas (mean vertical error is less than -0.03 m). The DEM limited version of the model has a resolution of 90 x 90 m (0.81 ha). Therefore, the study set a limit of minimum 1 ha for determining suitable areas in addition to the other selected criteria.

To determine suitable mangrove-based aquaculture farm’s using elevation above sea level, the study relied on tidal patterns in the coastal area of the Ayeyarwady Region. A suitable mangrove aquaculture zone should be an area where, for several months of the year, high tides can bring water into the pond. This selection of suitable aquaculture areas is consistent with the fact that the existing mangrove aquaculture ponds are located in this area. The tidal range in the Ayeyarwady estuary is 2-4 m (Ramaswamy & et al., 2004). The mean tidal range is 2.7 m at the Ayeyarwady River mouth (Kravtosa & et al., 2009). As a result, the study chose to assess land in three elevation classes: <2 m, <2.5 m, and <3 m above sea level for extensive shrimp and crab ponds (polyculture). The results of the analysis show that land <2.5 m above sea level is the most suitable land for shrimp/polyculture areas plus crab farming. The existing mangrove-based aquaculture ponds are also located within the suitability zone determined having an elevation of <2.5 m above sea level.

Unlike shrimp/polyculture farming, which needs ponds with extensive water surface and depth, mud crabs can develop in ponds with shallow trenches and limited cover of open water.

It is important to note that crab food mainly comes from mangroves. This ecological feature of mud crabs allows crab ponds to be located in mangrove land with less frequent tidal inflows than required for shrimp/polyculture aquaculture.

As a result, the elevation of land for crab ponds was higher by 0.5 m above sea level compared to land suitable for aquaculture of other species. Land suitable for extensive polyculture aquaculture should be less than 2.5 m above sea

level. On the other hand, suitable extensive crab aquaculture area can be from 2.5 m - 3.0 m above sea level.

A map of potentially suitable mangrove-friendly aquaculture areas is presented below. Table 12 presents detailed information about suitable areas for mangrove-friendly aquaculture for polyculture and crab-culture in the coastal delta of the Ayeyarwady River.

Figure 10. Map of potentially suitable areas for mangrove-friendly aquaculture in the Ayeyarwady Delta.

Township Mangrove land areas suitable for crab-culture (ha) Mangrove land areas suitable for shrimp and polyculture (ha)

Bogale 8,263 11,770

Dedaye 116 351

Labutta 31,719 26,277

Mawlamyinegyun 230 716

Myaungmya 2,107 101

Ngapudaw 5,718 2,283

Pathein 3,581 2,318

Pyapon 6,110 28,624

Thabaung 470 3,213

Wakema 89 283

Sum (ha) 58,403 75,935

Total area (ha) 134,338

The results of the table above show that suitable mangrovefriendly aquaculture areas on mangrove land are mainly concentrated in Labutta, Pyapon, and Bogale. Mangrove land, which is mostly concentrated in these three townships, falls, mostly, under ‘degraded mangrove’ type which correspond to mangrove areas that have been continuously exploited for fuelwood and timber.

The suitable areas for mangrove-friendly polyculture aquaculture in Labutta, Bogale, and Pyapon totals 26,277 ha, 11,770 ha, and 28,624 ha respectively. For crab-culture, the area in the three townships is as follows: Labutta –31,719 ha, Pyapon – 6,110 ha, and Bogale – 8,263 ha. The selection of suitable areas correspond to the criteria mentioned above; however, when selecting potential areas for the implementation of mangrove-friendly aquaculture, local social, economic, and political conditions should be carefully assessed as well as the value of intact mangroves for wild caught fisheries, biodiversity and coastal protection. Tradeoffs among aquaculture and the ecosystem services provided by extensive mangroves (in good condition) should be assessed and appropriate landscape planning, particularly for coastal protection and the maintenance of wild caught fisheries, should be implemented.

5.2. Investment Requirements for Mangrove Friendly Aquaculture Practices

The key investment needed for implementing mangrovefriendly aquaculture practices in the Ayeyarwady Region falls under three main categories:

1. Pond establishment: investment is needed for building ponds (digging and making pond walls) and concrete gates. The ponds should be designed and built to secure long-term (at least 5 years of useful life) and stable pond conditions for aquaculture. For this, it is also necessary to invest in fencing, as well

as acquiring proper tools and supplies for product management (e.g., baskets).

2. Mangrove plantations: mangrove rehabilitation is needed when establishing mangrove-friendly aquaculture practices. For maintaining mangrove cover in pond landscapes, environmental conditions need to be similar to that of natural mangrove habitats, which are dependent on intermittent inundation (rather than extended floodings). Mixed plantings could enhance diversity and productivity by keeping multiple species and canopy layers in ponds.

3. Capacity development: for implementing mangrove-friendly aquaculture practices in the Ayeyarwady Region, it is essential to teach, train, and support local farmers with technical requirements, design, and management of proper aquaculture and mangrove maintenance practices. Besides managing the pond from a technical perspective, farmers can increase their knowledge of value chains, finance and new technologies (e.g., solar drying of products) which can increase the sustainability of their businesses (GGGI, 2019).

5.3. Landscape Impact – Business as Usual vs. Mangrove Friendly Aquaculture

Mangrove-friendly aquaculture provides multiple landscape benefits, such as contributing to increasing mangrove health, biodiversity, the creation of green jobs, and livelihood improvement. In addition, healthy mangroves can play a significant role in coastal landscapes by mitigating climatic and environmental pressures such as storms, tsunamis, and sea level rise, while at the same time acting as powerful carbon sinks.

Table 12. Suitable areas for mangrove-friendly aquaculture in different townships in the Ayeyarwady Delta.

Baseline

To determine the landscape impact of mangrove-friendly aquaculture in the Ayeyarwady Delta, this study has followed the 3Returns Framework. Following this framework, to assess the impacts of implementing mangrove-friendly practices (green growth interventions), it is necessary to clearly define a starting point, or benchmark, that will allow to analyze the potential changes in capitals based on the investment requirements defined above. Table 13 presents the results of the baseline valuation, upon which the implementation

of mangrove-friendly aquaculture practices in ‘pond areas on mangrove land’ (See Table 5) have been modeled. It is important to notice that for the baseline, some non-monetary benefits and capitals’ output indicators are valued as ‘zero’. This does not mean that there are no existing benefits or already existing stock in place. Instead, they have been valued at ‘zero’ to analyze the changes in capitals and benefits attributed to these categories based on the implementation of mangrove-friendly aquaculture practices. The baseline was built considering the current land use areas within the boundaries of mangrove land in the Ayeyarwady Region.

Aquaculture

Relevant Actions BAU Green Growth Scenario 1 Green Growth Scenario 2

Remain in the same condition

Implementation of mangrovefriendly aquaculture practices in suitable mangrove areas

Implementation of mangrove-friendly aquaculture practices in suitable mangrove areas and monetization of carbon sequestration

Benefit (monetary) (million USD)

Value of aquaculture

mangrove*)

Value of fuelwood cutting in degraded mangrove

Value

Operational expenditure (OPEX)

Non-Monetary Benefits (Unit)

5.3.2. Scenarios

To assess the impacts of implementing mangrove-friendly aquaculture in suitable mangrove areas and in ‘pond areas on mangrove land’ in the Ayeyarwady Delta, three scenarios have been analyzed.

The first scenario is a BAU scenario, which reflects what would happen if no mangrove-friendly aquaculture practices are implemented and mangrove areas continue to be used as in the current situation. In addition to this, two green growth scenarios are analyzed. The two green growth scenarios (Green Growth Scenario 1 and Green Growth Scenario 2) consider the implementation of mangrove-friendly aquaculture practices for polyculture and crab-culture in suitable ‘pond areas on mangrove land’ – 38,269 ha identified. Green Growth Scenario 2 also considers the potential monetary impact of prioritizing more ‘mangrove friendly’ aquaculture (crab culture) and from monetizing carbon sequestration through carbon credits. Key considerations and assumptions for modelling the three scenarios are presented in Annex 1.

5.3.3. Return on Investment Analysis

Following the 3Returns Framework and considering the key investment requirements described in subsection 5.2., investment for ‘pond establishment’ has been analyzed as investment in ‘Financial Capital’ for the three scenarios. For the two green growth scenarios, investment in ‘mangrove plantations’ was analyzed as investment in ‘Natural Capital’ while investment in ‘capacity development’ was analyzed as investment in ‘Social & Human Capital’. Benefits from these investments were modeled and are reflected through the monetary benefits and operational costs, as well as through non-monetary benefits (i.e., carbon sequestration, green jobs, and species diversity), and capital output indicators (i.e., area of mangrove-friendly aquaculture, people provided with training, and the value of production assets). Changes in capitals and benefits have been modelled for each scenario based on the conditions, considerations, and assumptions described in Annex 1. To be conservative, the analysis has considered an analytical period of 20 years 2022-2042. Table 14 presents the investment analysis results in USD.

Financial Analysis

Benefit (monetary - PV) (million USD)

BAUGGS1 GGS2

Value of aquaculture (unimproved mangrove) 477.47 0.00 0.00

Value of aquaculture in mangrove-friendly ponds (polyculture) 0.00 354.10 151.76

Value of aquaculture in mangrove-friendly ponds (crab-culture) 0.00 198.88 464.06

Value of fuelwood cutting 32.27 38.94 42.99

Value of biomass carbon sequestration 0.00 0.00 32.12

Value of coastal protection 242.17 419.71 588.79

Operational expenditure (OPEX - PV) (million USD)

Aquaculture pond operational costs (non-mangrove) 326.66 0.00 0.00

Aquaculture pond operational costs (polyculture) 0.00 181.40 77.74

Aquaculture pond operational costs (crab culture) 0.00 82.00 191.34

Fuelwood cutting operational costs 5.16 6.23 6.88

Operational costs for carbon credits 0.00 0.00 1.61

Capital expenditure (CAPEX - PV) (million USD)

Mangrove plantations 11.11 22.22 33.33

Capacity development (training - mangrove-friendly practices) 0.00 1.54 1.54

Aquaculture pond establishment 3.93 27.09 27.04

Net Benefits (monetary - NPV) (million USD) 405.04 691.15 940.23

Financial Analysis (indicators)

Benefit-Cost Ratio (BCR) 2.17 3.16 3.77

Return on Investment (ROI) 27.92 14.59 16.19

Non-Monetary Benefits (Unit)

Total carbon sequestration (MtCO2e) 2,779,439 3,340,416 3,887,804

Number of 'green jobs' (# of FTE people by 2042) 1,233 2,667 4,000

Species diversity (Shannon index for mangrove-friendly ponds) 0.195 0.250 0.250

Status of Capitals (Output Indicators - Unit)

Natural Capital (total mangrove-friendly aquaculture area - ha) 33,997 50,169 50,169

Social & Human Capital (number of people provided with training) 0 8,265 8,265

Financial Capital (production assets - PV million USD 2022) 3.93 27.09 27.04

Note: PC – Present Value. NPV – Net Present Value. FTE – Full-Time Equivalent. Ha – hectare Avg. – average. *Monetary results presented in the table have considered a discount rate of 7% -interbank interest rate (Central Bank of Myanmar, 2022). *Exchange rate applied: 1 USD = 2,107 MMK.

Based on the results of the three scenarios under analysis, the estimated present value of capital expenditures for the period 2022-2042 totaled USD 15.04 million in the BAU, USD 50.85 million in GGS1, and USD 61.92 million in GGS2. For the green growth scenarios, the investment needed for ‘mangrove plantations’ is significant and represents around 50% of the total investment needed for implementing mangrove friendlyaquaculture practices in suitable ponds in the Ayeyarwady Delta. On the other hand, investment in ‘capacity development’ may not seem significant as it only represents around 3% of the total investment needed for implementing mangrove-friendly

aquaculture practices. However, the proper implementation and sustainable management by farmers depends directly on this investment.

The net monetary benefits, expressed through the net present value (NPV)11 and which expresses the profitability of economic practices, is positive for the three scenarios. This indicates that the projected benefits exceed the anticipated expenditures in present monetary terms, which at the same time reflect profitability of the current production and extractive practices as well as from implementing mangrovefriendly aquaculture practices. To facilitate the comparison and impact assessment of the three scenarios,

Figure 11. Net Present Value (NPV) for the 3 scenarios and for multiple periods of time.

the NPV was calculated for multiple periods – 2022-2027 (short-term), 2022-2032 (medium-term), 2022-2037 (medium-long-term), and 2022-2042 (long-term). The same multi-period calculation approach was conducted for the Return on Investment (ROI)12 to complement and help explain the findings expressed through the NPV. Figures 11 and 12 present the results of this approach. In addition to the NPV and ROI, the Benefit-to-Cost ratio (BCR) was calculated for the three scenarios to summarize the overall relationship between expenditures and benefits. In terms of profitability, scenarios with a BCR greater than one are preferred.

Figure 12. Return on Investment (ROI) for the 3 scenarios and for multiple periods of

The results of the NPV through multiple periods of time allows for the observation of the profitability of current practices presented through the BAU from the short-term to the long-term. For the green growth scenarios, profitability is higher than the BAU, but simultaneously, the investment required is also higher.

For GGS1 and in PV terms, the implementation of mangrove-friendly aquaculture practices requires an additional investment of USD 35.81 million. On the other hand, for GGS2 and in PV terms, the implementation of mangrove-friendly aquaculture practices requires an additional investment USD 46.87 million. The slow and minimum adoption and implementation of mangrove-friendly aquaculture practices despite their greater benefits can be explained by the socio-economic conditions of the Region and the lack of resources for investment. The shift from economic activities dependent on extractive actions to sustainable production models that require significant investment for their implementation is constrained by the high opportunity cost in the short-term, which is reflected by a higher ROI in the BAU when compared to the green growth scenarios. The greater benefits from

implementing mangrove-friendly aquaculture practices in the long-term are not only attractive in monetary terms, but also unquestionably significant in terms of non-monetary benefits (i.e., carbon sequestration, green jobs, and species diversity).

At the same time, implementation of mangrove-friendly aquaculture practices will improve the status of natural capital in the Region, as well as the number of people provided with capacity development for conducting sustainable economic activities directly linked with an increase in their adaptive capacity.

Observing the NPV and ROI over multiple periods, the economic monetary benefits in the BAU increases through the years. However, the slower growth over multiple terms is associated with the lack of enough re-investment in capitals that can potentially provide long-term returns. In terms of efficiency and investment in key capitals, the growth of the ROI of the green growth scenarios is greater than the BAU due to the higher investment in natural capital. As observed in the ROI for green growth scenarios vs. the BAU, returns from natural capital investment are growing greater when compared to the BAU from the short- to the long-term,

considering the long-term returns from ecosystem services.

Finally, it is important to highlight the highest NPV and ROI from GGS2 compared to GGS1. Results provide evidence that any efforts for monetizing ecosystem services, for instance carbon sequestration through carbon credits, can increase the returns from implementing mangrove-friendly aquaculture practices, decreasing the significant opportunity cost of moving from traditional practices to improved production practices.

5.3.4. Sensitivity Analysis

Considering the complexity of the model, a sensitivity analysis for the NPV of the investment analysis has been conducted for multiple discount rates. Four discount rates have been applied: 1) an impact discount rate of 4% (WB, 2020); 2) an interbank interest rate of 7% (Central Bank of Myanmar, 2022); 3) a lending commercial rate of 14.5% (Central Bank of Myanmar, 2022); and 4) an informal lending interest rate of ~30% which was reported by farmers through the surveys collected. The results of this analysis are presented in the table below.

Net

Discount

Impact Investment Discount Rate - 4% (WB, 2020). 537.38974.031,331.70

Central Bank Rate - 7% (Central Bank of Myanmar, 2022). 405.04691.15940.23

Lending Rate - Commercial Rate - 14.5% (Central Bank of Myanmar, 2022).230.37335.66451.21

Lending Rate - Informal Rate - ~30% (Reported by farmers). 110.10117.91155.95

Based on the sensitivity analysis, the following conclusions can be drawn:

• The recognition of ecosystem services and the social consequences from mangrove-friendly aquaculture practices becomes critical when evaluating these types of projects. For this, the discount rate applied for the analysis should reflect the rate at which people are willing to sacrifice present and future benefits and costs (GGKP, 2020). Higher discount rates favor the BAU as the benefits accrue earlier than for the green growth scenarios, which have higher costs at the early stage while benefits arise in the long-term.

• Considering the farmers’ local conditions, the highest the interest rate the farmers face, the lower the motivation and interest will be for changing their current economic activities to more productive and sustainable practices.

• For supporting the implementation of mangrovefriendly aquaculture practices in the Ayeyarwady Delta, the government and financial institutions can play a key role for incentivizing the transformation of degraded

mangrove ponds into more productive and sustainable uses. Combining the results from the sensitivity analysis and the observations of the NPV over multiple periods of time, access to low interest rates and grace periods can be part of the mechanisms and channels to mobilize the needed resources for moving into mangrovefriendly aquaculture practices in the Region. If these incentives or accessible resources are not available for the local population, international development assistance through grants can be a mechanism for supporting the transformation into more productive and sustainable practices in the Ayeyarwady Delta.

5.4. Mangrove-friendly Aquaculture and NbS

Following the analysis conducted in previous sections, the implementation of mangrove-friendly aquaculture in the Ayeyarwady Region has been assessed through the lenses of the NbS Global Standard Criteria. Impact results are presented considering Green Growth Scenario 1 and the period 2022-2042.

Table 16. Criterion 1: Key societal challenges relevant to aquaculture.

Societal Challenges Mangrove land areas suitable for shrimp and polyculture (ha)

Climate change mitigation and adaptation

Disaster risk reduction

Economic and social development

Mitigation: total carbon sequestration 2022-2042: 3,340,416 MtCO2e Adaptation: number of people supported to cope with the effects of climate change : 8,265

Increase in value of coastal protection: USD 177.54 million

Net Present Value (2022-2042, disc. Rate – 7%): USD 552.98 million

Return on Investment: 14.49 (ratio) Benefit-Cost ratio: 3.16 (ratio) Green Jobs: 2,667 (FTE green jobs created and maintained)

Human health Anticipated health benefits from improved nutrition (protein consumption)

Food securityIncrease in aquaculture production (value in PV – 2022-2042): USD 75.51 million

Water security No impacts in water quality if following Good Aquaculture Practices (GAqP) or the technical guidelines (Annex 1)

Ecosystem degradation and biodiversity loss Improvement in biodiversity (Shannon Index): 0.25

Source: Icons taken from (Gouvello, Brugere, & Simard, 2022).

Criterion 2: Addressing NbS multi-scalar approach in aquaculture.

According to criterion 2, NbS should be defined with respect to one scale, but potentially integrating a broader spatial and temporal scales. For this, and following the 3Returns Framework, the assessment has been conducted from a landscape approach (Ayeyarwady Delta) with multiple scenarios modelled in a timeframe from 2022 to 2042. In addition, key spatial planning criteria has been considered in this assessment, including governance elements (land tenure) and geographical elements (distance to sea/river, mangrove fragmentation index, and land elevation).

Criterion 3: Aquaculture to provide a net gain to biodiversity and ecosystem integrity.

According to criterion 3, aquaculture systems need to clearly demonstrate a net benefit on the overall biodiversity. Using the Shannon Index there is a clear improvement in terms of mangrove tree species diversity within aquaculture ponds from 0.195 to 0.25.

Criterion 4: Looking for NbS economic viability in aquaculture.

It is crucial to advocate for a more inclusive, equitable, and community-oriented economic model for aquaculture development. Following the 3Returns Framework, the investment analysis provides evidence about the profitability and investment efficiency of implementing mangrovefriendly aquaculture practices. Results are presented in Table 14 together with conclusions in subsection 5.3.3.

Criterion 5: A relevant governance system for aquaculture. A challenge that needs to be addressed is related to the capacity of aquaculture producers to be integrated into local communities and for appropriate planning for ecosystem services from natural mangroves for communities (coastal protection and wild caught fisheries). If the aquaculturerelated value chain stakeholders are operating only within a small number of actors, disconnected from communities, such a situation may create the conditions for a rejection of the aquaculture system (Gouvello, Brugere, & Simard, 2022). To address this issue, the assessment has strongly considered the investment needed in social & human capital which aims not only to increase the technical knowledge for implementing mangrove-friendly aquaculture practices but also to encourage collective action from the communities. Besides encouraging collective action, this study recommends a model for private sector engagement that encourages the inclusion of the community at the input stage of the value chain as well as a community-based production system. Details of this model are presented in Section 7.

Criteria 6-8: Trade-offs, adaptive management and mainstreamed aquaculture.

Criteria 6, 7 and 8 are particularly interconnected and can be associated or considered as a result of a good governance system being in place (Gouvello, Brugere, & Simard, 2022).

For this, the analysis and its findings have followed spatial planning, identification of suitable zones for mangrovefriendly aquaculture, as well as for the establishment of hatcheries (See Section below). An integrated landscape impact assessment has been conducted, which is also aligned with current environmental strategies and policies set by the government of Myanmar.

6. SUSTAINABLE INPUT SOURCING - CRAB HATCHERIES

6.2. Site Suitability Identification

Two of the most challenging obstacles to ensuring a successful implementation and operation of hatcheries in the Ayeyarwady Region are access to adequate saline water and access to electricity.

To operate a successful hatchery, water must have a salinity of 22 – 32 ppt13 (Quinitio & et al., 2008). Due to the massive flow of freshwater into the sea from the Ayeyarwady River, the mangroves in the Ayeyarwady Delta only have about three months (late January to early April every year) with salinity > 22 ppt. At the same time, winter and spring occurs during these three months in Myanmar, with the temperature of the day marking sometimes below 27°C, which is not suitable for nursery crabs.

As part of this study, two long-term solutions are proposed for establishing a hatchery for crab production in the Ayeyarwady Delta in Myanmar. These suggestions are based on a limited-scoping survey and analysis of suitable conditions for crab larvae production. However, when developing detailed investment plans for establishing a crab hatchery, it is recommended to invite suitable experts to conduct a detailed analysis and select specific locations.

1. Build a crab hatchery in Chaung Thar town area, in the west of the Ayeyarwady Region, far from the mouth of the Ayeyarwady River and its freshwater influence. This will facilitate access to water with salinity > 20 ppt year round. This town has access to the national electricity grid, which makes it convenient for operating a crab hatchery. In addition, Pathein University has a fishery and mangrove experimental station near the town of Chaung Thar, which is a very suitable place to set up a medium to large scale crab hatchery. The disadvantage of this location is that it is far from the crab farming area on mangrove land in the Pyapon, Bogale and Labutta townships, so transportation costs are high. The survival rate of the crabs may be jeopardized as they are easily shocked by the sudden change in the environment when moving from the hatchery to ponds.

6.1. Current Situation of Crab Hatcheries in the Region

Currently in Myanmar, there is only one crab hatchery, which is operated by the Malaysian company ‘TEXCHEM’ and which has successfully tested the hatchery. With the support of the GIZ project ‘Myanmar Sustainable Aquaculture Programme – MYSAP’, the company has successfully incubated more than 200,000 crablets to distribute for free to aquaculture farms on mangrove land in Labutta in 2019. Unfortunately, after two trial cycles, the company did not continue to produce crablets.

On the other hand, a UQ project funded by the AsiaPacific Network for Sustainable Forest Management and

Rehabilitation (APFNet) built a mini-scale hatchery in Pyapon and sent people from Myanmar to Ca Mau, Viet Nam, to study technical procedures twice in 2018 and 2020. However, the project’s first larval production trial was unsuccessful. The reasons for the unsuccessful testing included lack of extended technical training, limited budget for running the operations of the hatchery, and the location of the hatchery in a remote area which made it difficult to operate it effectively.

Added to this, the unstable political situation in Myanmar and the COVID-19 pandemic have discouraged any efforts for setting up and operating a hatchery in the region. As of today, there are no hatcheries operating in the Ayeyarwady Region.

2. The second option proposed is to build crab hatcheries in the following locations: Labutta town, Labutta township, and in Myogon village, Pyapon township. These two locations have access to an electricity grid and are easily accessible by road and river streams. Based on the results of the survey conducted these two locations are close to salt fields, from which farmers can buy and transport water with high salinity. High salinity brine can be mixed with low salinity river water to achieve the required salinity for hatchery production. In addition, these two locations are close to the main mangrove aquaculture areas in the Ayeyarwady Delta, making it possible to transport crab larvae to the ponds quickly and conveniently.

An additional technical aspect that needs to be carefully considered for implementing a successful hatchery is the availability of technical staff or farmers who can apply specific techniques for hatching crab larvae and who have hands-on experience.

13 ppt - parts per thousand

PRIVATE SECTOR ENGAGEMENT MODEL

A private sector engagement model (See Figure 13) is suggested to support bankability ambitions and develop sustainable business models than can be implemented and scaled up in the Region for achieving the aimed positive impact. The model responds to the experience of private companies supporting sustainable production models in Myanmar, as well as the need for a governance system that can maintain operations in the long-term considering Myanmar’s political and economic conditions.

Figure 13. Recommended private sector engagement model.

8. RISKS

The risk analysis and risk inventory presented in this section aims to provide insights into the potential institutional, social, and environmental risks that interventions like mangrovefriendly aquaculture practices are exposed to and could face considering the specific conditions of the aquaculture sector in Myanmar. Information for the risk analysis and risk inventory has been taken from the CSR Risk Check tool, developed and managed by MVO Nederland (MVO, 2022).

8.1. Fair Business Practices

Corruption

Corruption occurs frequently in land ownership as authorities associated with registration of agricultural land, in settlements of disputes, or in enforcement of regulation, allegedly claim bribes. In addition, farmers are sentenced to imprisonment if they work without the permission of the authorities.

Corruption is a large problem in the country, particularly in the judiciary system. According to the Corruption Perception Index, the corruption score of Myanmar is 28, on a scale of 0 (highly corrupt) to 100 (very clean), meaning that risk of corruption in Myanmar is very high. The civilian population is often required to pay substantial bribes for criminal investigations and are routinely extorted for money by the police.

Market Distortion & Competition

In local markets, the financialization of commodity markets (through speculation) is thought to be a major cause of price volatility. It causes farmers not to receive a fair price for their produce based on supply and demand, but rather facing a price based on speculations.

On the other hand, the power of supermarket chains from developed countries is increasing and they are demanding high environmental and social standards but are not always

willing to pay a higher price for these standards. This demand puts profit margins in the aquaculture sector under pressure and favors the concentration of the export trade into large firms that can meet the requirements. However, smallholder farmers with few economies of scale, limited market knowledge and investment access, cannot compete with the large firms.

8.2. Human Rights & Ethics

Government Influence

Myanmar is classified as a ‘high risk’ country (level 5 on a 1-to-6 scale) in terms of political risks on the Aon political risk map. Myanmar is also considered to be “not free” according to the Freedom House Country List, meaning there are limited civil liberties.

Myanmar performs poorly in the areas of corruption, openness of government and enforcement of regulations around rights, order, security, and civil and criminal law. The country has a score of 0.42 on a scale from 0 (worst possible score) and 1 (best possible score) ranking 112th out of 128 countries in the Rule of Law Index.

Conflicts & Security

Political instability, originating in February 2021, has led to widespread conflict in the country, accompanied by major economic downturn and an increasingly restrictive environment.

Myanmar scores poorly in areas of (inter) national conflict, societal security and militarization with a rank of 2.457 out of 5 on the Global Peace Index. Myanmar is currently the least peaceful country in the Asia Pacific region. Myanmar is marked as a “very high” risk country for terrorism attacks and political violence on the Aon Terrorism & Political Violence Risk Map.

Land Use & Property Rights

In Myanmar, disputes over land remain one of the key challenges in the country’s evolving reform process. Countless rural families have struggled because of land confiscations and forced evictions from decades of military rule and internal armed conflicts. Land rights advocates, who try to assist small farmers to peacefully resist land confiscations and land grabbing, are increasingly harassed in Myanmar. An increase in the arrest and prosecution of protesters and activities have been observed due to protests against land grabbing by powerful elites.

Community Impact

The Children’s Rights and Business Atlas scores Myanmar poorly regarding the state’s encouragement for the responsible extraction and use of natural resources, for setting the limits to avoid damaging the environment, and for protecting children from forced displacement. In Myanmar overfishing threatens long-term food security, particularly for coastal communities that highly depend on fishery resources as an important source of protein.

Animal Welfare

In Myanmar, aquaculture and capture fisheries are serious competitors with wild fish in terms of space in coastal areas. Even more, poor resource management, lack of capacity and access to technical knowledge, and irresponsible practices have led to large-scale disease outbreaks affecting the whole aquaculture and fishery sector in the country.

Consumer Interests & Product Safety

It is estimated that approximately 45% of the fishery products intended for human consumption are sold live in Myanmar. However, there is a lack of infrastructure in the country with low refrigerated transport capacity available. This causes that around 27% of fresh products are wasted, affecting in general the food quality available for consumers and causing health problems among them.

8.3. Labor Rights

Freedom of Association

Myanmar is evaluated extremely poorly with a score of 5+ on the ITUC Global Rights Index (scale 1-5) for freedom of association and workers’ rights, which represents no guarantee of rights due to the breakdown of the rule of law. The government and/or companies severely limit the ability of workers to act and bargain collectively, keeping workers’ rights under continuous threat. Moreover, countries with a 5+ rating are characterized by dysfunctional institutions as a result of internal conflict and/or military occupation.

Labor Conditions (Contracts, Working Hours)

In the aquaculture sector, it is common that employees are contracted as seasonal workers to perform seasonal and labor-intensive work. Seasonal workers have worse salaries, working hours and facilities than regular employees. Around 75% of the workforce in Myanmar is employed in the informal sector, facing long working hours and poor working and living conditions.

In April 2014 the Social Security Law came into force in the country. The law aims to provide several kinds of health and social care insurance systems; however, the Social Security Board has highlighted a low registration rate among the population in the social security system since 2014.

Forced Labor & Human Trafficking

Approximately one quarter of the population in Myanmar does not have access to citizenship or identification documents. This has generated trafficking vulnerabilities that affect ethnic minority groups, particularly in Kachin, Shan, and Rakhine States. In addition, there are reasons to believe that forced labor occurs in the production of shrimp in the country.

Child Labor

Myanmar scores poorly in terms of the state regulation of child labor and the provision of decent work for young workers, parents, and caregivers according to the Children’s Rights and Business Atlas. According to the latest ILO report, it is estimated that 24.3 million children are employed in child labor in East and Southeast Asia, including Myanmar.

Discrimination & Gender

In the aquaculture sector in Myanmar, women are particularly prominent participants in product processing; however, their labor is often not equitably compensated and working conditions do not meet basic standards. In addition, high illiteracy rates among women (up to 80% in remote mountain border areas), often result in difficulties accessing employment or in women being employed in low salary positions. Pregnant women often do not enjoy their rights in practice. Typically, women are not paid during maternity leave and are not reintegrated in the same positions and have to start as ‘new staff’. Furthermore, according to research done by Thomson Reuters Foundation, women in Myanmar are in danger of human trafficking including forced labor.

In Myanmar, people with disabilities report stigma, discrimination, and abuse from civilian and government officials. According to research, about 85% of persons with disabilities are unemployed in the country. People with disabilities such as hearing impairments often do not receive tools to ease their integration at the workplace, and cannot fully participate in workplace activities such as meetings.

The COVID-19 pandemic has increased psychological distress drastically. Yet, women have been more affected by the pandemic impact than men due to their social responsibilities.

Health & Safety at Work

The working conditions of small farmers often do not meet safety standards or are harmful to the health of employees.

The ILO considers the agriculture sector (including aquaculture) as one of the three most dangerous sectors in terms of lethal (and non-fatal) accidents at work, and occupational diseases.

8.4. Environment

Climate & Energy

Myanmar scores 4 out of 5 in the Ecological Threat Report. This means that in the country there is a high risk of ecological threats related to rapid population growth, water risk, food risk, temperature anomalies, and natural disasters.

It has been estimated that freshwater aquaculture ponds create 0 to 450g of the greenhouse gas methane per kg of fish. The high variation is partially explained by variation in temperature that accelerates the formation of methane as well as fish growth. CO2 emissions occur from soils from excavations of ponds. Mangrove harvest for fuel wood also contributes to greenhouse gas emissions.

Environment, Biodiversity & Deforestation

The Environmental Performance Index puts Myanmar in the top 10 worst scoring countries in terms of tackling sustainability (score of 25.1 on a scale of 0-100). The Environmental Performance Index covers 11 themes, such as air pollution, biodiversity, water availability and waste management.

According to a study published in Science, the production of meat, aquaculture, eggs, and dairy uses around 83% of the world’s farmland and contributes to c.a. 57% of food’s different emissions, while providing only 37% of all protein and 18% all of calories. This makes the animal husbandry sector one of the most significant contributors to environmental problems, both on a local and global scale.

Inland aquaculture can lead to the spread of diseases, antibiotics, and excreta of the farmed fish, polluting water and its surrounding ecosystems. In addition, aquaculture can lead to the conversion of land and aquatic areas for fish grounds, the introduction of invasive species, and the overexploitation of fishery resources for feed.

The Greater Mekong, which includes Myanmar, has one of the highest levels of biodiversity in the world. However, it is threatened by deforestation caused by industrial agriculture, illegal logging, and the construction of infrastructure projects such as roads and dams.

Air Pollution

Myanmar lacks regulatory enforcement on pollutants that reduce air quality. According to the 2014 Environmental Performance Index, Myanmar ranks 164th out of 178 countries, with vehicle emissions contributing heavily to air pollution.

Soil & Water Contamination

In 2012, high levels of phosphate, nitrate, and the presence of the E. coli bacteria in surface waters were reported in Myanmar due to fertilizers and discharge of untreated waste. Municipal wastewater and industrial agrochemical solid and liquid waste represented the main source of pollution. Local communities in the country suffer from industrial activities as wastewater pollutes surrounding land and rivers. For instance, factories in the Mandalay industrial zone allegedly polluted drinking water by releasing toxins in the Dokhtawaddy river, which resulted in the end of fish breeding activities and negative impacts on the economy of the villagers.

9. CONCLUSIONS AND RECOMMENDATIONS

9.1. Conclusions

Aquaculture is a key pillar of the Myanmar’s economy. Prior to 2021, the government emphasized the development of aquaculture as a driver of economic growth, job creation, and inclusive and sustainable development. This emphasis was expressed through the Myanmar Sustainable Development Plan (2018-2030), the Agricultural Development Strategy and Investment Plan (2018-2023), the National Aquaculture Development Plan (2020-2022) and the National Export Strategy (2020-2025).

Approximately 94% of aquaculture ponds in Myanmar are located in Yangon, Bago, Rakhine, and Ayeyarwady Regions. The greatest concentration of ponds (72%) are located in the Ayeyarwady Region and Rakhine State. Aquaculture products in the Ayeyarwady Region and in Myanmar are important for domestic food security as they are the leading providers of animal protein and micronutrients required for the development of children. Nationally, the amount spent on fish products (14%) is almost as much as the amount spent on rice (19%). Despite the importance of aquaculture products, there are significant concerns regarding the unsustainable exploitation of natural aquatic resources and the destruction of their natural habitat. Added to this, the non-recognition of aquaculture as a form of agriculture by local institutions and the onerous process to conduct aquaculture practices negatively impacts the growth and sustainable development of the sector and the aquaculture products’ value chain.

Along the value chain of aquaculture products in the Ayeyarwady Region and Yangon, crabs (soft-shell and hardshell) and shrimp (freshwater prawns) are the most valuable products. These products are produced under extensive aquaculture practices on mangrove land, where farmers typically build low earthen walls around their mangrove area. The walls are constructed in the process of digging ditches in the mangroves, which make shallow ponds for aquaculture. The farmers tend to keep mangroves on the remaining platform area within the pond walls, although the mangroves are often degraded or die due to the altered hydrology, as water levels are maintained at higher-than-normal levels for the culture of shrimp/fish, which leads to mangrove mortality.

Extensive mangrove aquaculture systems provide multiple valuable products. In the current typical mangrove aquaculture system, farmers use polyculture systems that include crab, shrimp and other fish cultured together. Fuelwood collected from mangroves is a major energy source for domestic cooking in mangrove areas and buffer zones

in the Delta. Mangrove fuelwood is also the main energy source used for drying fishes on bamboo racks on the shore in Pyapon township.

A cost-benefit analysis for extensive aquaculture ponds without mangroves and with mangroves provided evidence of higher benefits from aquaculture practices with mangroves in the ponds. Furthermore, results from an investment analysis from a landscape perspective found that the greater benefits from implementing mangrove-friendly aquaculture practices in the long-term are not only attractive in monetary terms, but also significant in terms of non-monetary benefits (i.e., carbon sequestration, green jobs, and species diversity). At the same time, implementation of mangrovefriendly aquaculture practices will improve the status of natural capital in the Region, as well as the number of people provided with capacity development for conducting sustainable economic activities directly linked with an increase in their adaptive capacity.

The implementation of mangrove-friendly aquaculture practices in suitable pond areas in mangrove land in the Delta has been estimated at a present value of capital expenditures from USD 50.83 million to USD 61.92 million for a period of 20 years (2022-2042), depending on the relative emphasis on carbon sequestration potential and crab culture. It is estimated that around 50% of the total investment needed is for planting and rehabilitating mangroves within aquaculture ponds for establishing mangrove-friendly practices.

An analysis of the Net Present Value and the Return on Investment during multiple periods of time for current practices versus the implementation of mangrove-friendly aquaculture practices shows profitability and positive returns of current practices as well as from implementing mangrovefriendly aquaculture practices. Under mangrove-friendly practices, profitability is higher than the current practices but at the same time, the investment needed is also higher. The slow and minimum adoption and implementation of mangrove-friendly aquaculture practices despite their greater benefits can be explained by the socio-economic conditions of the Region and the lack of resources for investment. The shift from economic activities dependent on extractive actions and low investment to sustainable production models that require significant investment for their implementation is constrained by the high opportunity cost in the short-term.

In addition to this high opportunity cost for implementing sustainable aquaculture production practices in the Ayeyarwady Delta, a major limitation for aquaculture in mangrove saltwater and brackish water areas is the lack

of affordable and good quality shrimp and crab inputs (i.e., larvae). Mangrove aquaculture farms in Myanmar are now completely dependent on natural larvae that enters ponds along with tidal water, or from wild catch. Therefore, efforts to increase aquaculture productivity are limited in the Region. Currently, there are no operational hatcheries in the Ayeyarwady Region that can sustainably supply the necessary stocks for a responsible production system, even after implementing mangrove-friendly aquaculture practices. Challenges regarding a sustainable supply include the low availability of natural stocks and multiple barriers for establishing a hatchery. For the latter, two of the most challenging obstacles to ensuring a successful implementation and operation of hatcheries in the Ayeyarwady Region are access to adequate saline water and access to electricity.

9.2. Recommendations

Overall, it is recommended to implement mangrove-friendly aquaculture practices in suitable pond areas in mangrove land in the Ayeyarwady Delta. Among mangrove-friendly aquaculture practices suitable for mangrove areas in the Ayeyarwady Region, including crab-culture and polyculture (shrimp + crab), crab-culture is the most ‘mangrove-friendly’ as there is no need to dig a deep pond and make ponds larger in proportion of the landscape (in comparative terms). In addition, mangroves in good conditions within the pond have a direct benefit on crab health and overall productivity, while for polyculture, higher ratios of closed canopy cover can lower shrimp productivity due to lower temperatures of the water under tree shade.

Local communities and private companies should be involved in the transformation of degraded mangrove land into more productive and sustainable use of land. For this, the key investment needed for implementing mangrove-friendly aquaculture practices in the Ayeyarwady Region includes:

1. Investment in pond establishment - investment is needed for building ponds (digging and making the pond walls) as well as for establishing concrete gates. The ponds should be designed and built in order to secure long-term life and stable pond conditions for aquaculture.

2. Mangrove rehabilitation is needed when establishing mangrove-friendly aquaculture practices. For maintaining mangrove cover in pond landscapes, environmental conditions need to be similar to that of natural mangrove habitats which are dependent on intermittent inundation (rather than extended flooding). Mixed plantings could enhance diversity and productivity by keeping multiple species and canopy layers in ponds.

3. Capacity development - for implementing mangrovefriendly aquaculture practices in the Ayeyarwady Region, it is essential to teach, train, and support local farmers with technical requirements, design, and management of proper aquaculture practices. Besides managing the pond from a technical perspective, responsibility in terms of environmental impacts such as sourcing inputs from natural resources rather than hatcheries, or the importance of avoiding certain inputs that may jeopardize

produce quality, need to be acknowledged by the farmers.

For investing in mangrove-friendly aquaculture in the Ayeyarwady Region, it is crucial to consider environmental and social safeguards. This means, increasing and promoting investment in aquaculture should be done in a way that protects and expands mangroves for the provision of ecosystem services (coastal protection and support of wild caught fisheries) and which is sensitive to risks of potential injustices (see Risk section).

Considering the potential institutional, social, and environmental risks that the implementation of mangrove-friendly aquaculture practices can face in the Ayeyarwady Region, the access to low interest rates and grace periods for loans could be components of mechanisms to mobilize the resources needed for moving into mangrove-friendly aquaculture practices in the region. If accessible financial resources and incentives are not available for the local population, international development assistance through grants can be a mechanism for supporting the transformation into more productive and sustainable practices in the Ayeyarwady Delta.

Furthermore, in order to support a sustainable production model, it is fundamental to establish hatcheries. For this, two solutions are recommended:

1. Build a crab hatchery in Chaung Thar town area, in the west of the Ayeyarwady Region, far from the mouth of the Ayeyarwady River and its freshwater influence. This will facilitate access to water with salinity > 20 ppt year round. This town has access to the national electricity grid, which makes it convenient for operating a crab hatchery. In addition, Pathein University has a fishery and mangrove experimental station near the town of Chaung Thar, which is a very suitable place to set up a medium to large-scale crab hatchery. The disadvantage of this location is that it is far from the crab farming area on mangrove land in Pyapon, Bogale and Labutta townships, so transportation costs are high. The survival rate of the crabs may be jeopardized as they are easily shocked by the sudden change in the environment when moving from the hatchery to ponds.

2. The second option proposed is to build crab hatcheries in the following locations: Labutta town, Labutta township, and in Myogon village, Pyapon township. These two locations have access to an electricity grid and are easily accessible by road and river streams. Based on the results of the survey conducted these two locations are close to salt fields from where farmers can buy and transport water with high salinity. High salinity brine can be mixed with low salinity river water to achieve the required salinity for hatchery production. In addition, these two locations are close to the main mangrove aquaculture areas in the Ayeyarwady Delta, making it possible to transport crab larvae to the ponds quickly and conveniently.

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WB. (2020). Investment Analysis for Mangrove Ecosystems in the Ayeyarwady Region. Washington DC: World Bank.

11. ANNEX 1 - CONSIDERATIONS & ASSUMPTIONS

Parameters/Variables

BAU

Maximum mangrove pond area within reserve forests (Assumption - keep 50% of mangrove areas within reserve forests to be allocated to local communities as common village's woodlots14)

Maximum pond areas in suitable sites within nipa palm mixed with other mangrove species (nipa palm along river banks should be kept for bank protection purpose)

Average income from aquaculture pond (Assumption - mean income of non-mangrove ponds + polyculture/shrimp ponds + crab ponds) - no increase over time

50.0%36,685

Increase rate per year

Additionally, the following considerations and assumptions have been applied for modeling the scenarios over the baseline valuation:

Mangrove-friendly aquaculture: Monetary benefits from mangrove-friendly aquaculture practices also include income from selling mangrove fuelwood harvested under sustainable practices. Farmers implementing and managing mangrovefriendly aquaculture practices have been identified as being employed in ‘green jobs’ following GGGI’s criteria15

Ecosystem Services: For coastal protection ecosystem service, the monetary value considered for this service corresponds to USD 1,369 per ha per year according to World Bank (2020). For carbon sequestration services, the monetary value considered for this service corresponds to USD 20 per ton of CO2 according to local market conditions. Costs for carbon credits including marketing and other relevant costs have been estimated at 5% of the carbon credits’ value.

Inflation rates and discount rates: An annual increase in operational prices due to inflation has been considered (WB, 2020). However, for conservative reasons, the model does not consider any increase in the prices of fishery products nor fuelwood during the period of analysis. As for discount rates, the modelling has considered four discount rates: 1) an impact discount rate of 4% (WB, 2020); 2) an interbank interest rate of 7% (Central Bank of Myanmar, 2022); 3) a lending commercial rate of 14.5% (Central Bank of Myanmar, 2022); and 4) an informal lending interest rate of ~30% which was reported by farmers through the surveys collected. The impact of these multiple discount rates is presented in the sensitivity analysis. The investment analysis results presented in this section have applied a discount rate of 7%.

30.0%13,479 595

14 Village’s woodlots are established mangrove plantations allocated to communities for management and utilization under agreement with forest department. All community members are allowed to go to these woodlots for non-timber product collection.

Annual natural mangrove increase (mangrove changes 2019 - 2022) 280

Annual increase of established mangrove plantations (mangrove changes 2019 - 2022 and Myanmar forest department plan) 1,000

Annual increase of regrowth mangrove (mangrove changes 2019 - 2022) 280

Green Investment Scenario 1

Maximum pond area within reserve forests (as above) 50.0%36,685

Maximum pond areas in suitable sites within nipa palm mixed with other mangrove species (as above) 30.0%13,479 595

Ratio of shrimp and polyculture (%cover) 70.0%

Ratio of crab culture (%cover) 30.0%

Income from mangrove crab culture (increase 1% per year due to improved techniques) 1%

Income from polyculture/shrimp culture (increase 1% per year due to improved techniques) 1%

Annual good natural mangrove increase (mangrove changes 2019 - 2022) 1,500

Annual increase of established mangrove plantations (mangrove changes 2019 - 2022 and Myanmar forest department plan) 1,500

Annual increase of regrowth mangrove (mangrove changes 2019 - 2022) 1,500

Green Investment Scenario 2

Maximum pond area within reserve forests (as above) 50.0%36,685

Maximum pond areas in suitable sites within nipa palm mixed with other mangrove species (as above) 30.0%13,479 595

Ratio of mangrove shrimp and polyculture (%cover) 30.0%

Ratio of mangrove crab culture (in green investment scenario 2, more aquaculture pond area is used for crab culture because it is more mangrove-friendly than shrimp. Crab culture requires much lower water levels in the pond than shrimp/polyculture. Thus, it has less negative impacts on mangroves (%cover)

70.0%

Annual good natural mangrove increase (mangrove changes 2019 - 2022) 3,000

Annual increase of established mangrove plantations (mangrove changes 2019 - 2022 and Myanmar forest department plan) 3,000

Annual increase of regrowth mangrove (mangrove changes 2019 - 2022) 3,000

15 For GGGI, green jobs refer to the employment created from green growth interventions, including sustainable agricultural practices and climate-smart practices, and include employments in the environmental services and goods industry. Green jobs should follow the ‘decent job’s criteria’, which include one or more of the following: a) adequately monthly wage, b) work stability and security, c) occupational hazard level involved, c) decent working hours, and d) availability of social protection schemes (e.g., social security). Work that uses child labor and bounded labor do not qualify as decent jobs (GGKP, 2020).