major external cost of shrimp ponds is theconsiderable amount of water pollution theygenerate. This consists of both the high salin-ity content of water released from the pondsand agrochemical runoff. In addition,thereis the problem of the highly degraded stateof abandoned shrimp ponds after the 5-year period of their productive life. Acrosssouthern Thailand those areas with aban-doned shrimp ponds degenerate rapidly intowasteland because the soil becomes veryacidic,compacted,and too poor in quality tobe used for any other productive use,suchas agriculture. In addition,without consid-erable additional investment in restoration,these areas do not regenerate into mangroveforests. Finally,many of the conventionalinputs used in shrimp pond operations aresubsidized,below–border equivalent prices,thus further increasing the private returns toshrimp farming.Table 5 summarizes the results of the eco-nomic CBA of the returns to commercialshrimp farming in southern Thailand,whichincludes accounting for the external costs ofwater pollution and rehabilitating the man-grove forest as well as the full economic(i.e.,border equivalent) costs of conventionalinputs. Two estimates of the net present valueof the economic returns are depicted in thetable. The first estimate does not include theadditional costs of restoring the mangroveforest from years 6 to 20,after the shrimpfarm has been abandoned. The second esti-mate does include mangrove rehabilitationcosts.The results indicate that,even if mangroverestoration does not take place,the economicreturns to commercial shrimp farming areconsiderably less than the financial returnsthat investors receive (see Tables 4 and 5).Depending on the discount rates used,theeconomic returns range from $194 to $209per ha. If the costs of regenerating the man-grove forest over the years 6–20 are included,then the economic returns to shrimp farmingare actually negative.C. Comparison with the EconomicBenefits of Mangrove ForestsAlthough the estimates in Table 4 con-firm that the conversion of mangrove forestsin southern Thailand into commercial shrimpfarms is financially attractive,it is clearthat once some of the external and for-eign exchange costs of shrimp farming areaccounted for,conversion of mangroves into