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The environmental consequences of shrimp farming in Asia have caused widespread public concern. One of the main environmental impacts is the high nutrient load that is discharged from ponds, as part of the management routine aimed at maintaining pond water quality. In Australia, where there is a high level of community awareness of the problems associated with eutrophication, the Environmental Protection Agencies are faced with the difficult task of determining effluent control policies for the emerging prawn industry. According to the standard environmental economic arguments relating to the design of pollution control instruments, the choice of the best policy instrument depends upon the nature of the pollution problem, the costs of abatement, and the transactions costs associated with administering the policy. Thus, in order to assess the appropriateness of alternative pollution control instruments it is necessary to examine the nature of the pollution problem, the technologies available for abatement, the accuracy and cost of monitoring and enforcement. These practical aspects are examined from the perspective of the intensive prawn aquaculture industry. While there is insufficient data to conduct an empirical analysis of the relative effectiveness of alternative control measures, some of the key issues that need to be considered in designing such policies are highlighted. Because monitoring costs are significant, both direct and indirect (input based) controls are considered. In the context of this discussion, new legislation developed by NSW Environmental Protection Agency, which may soon be applied to the prawn farming industry, is examined.


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