4.3. Assessment of policy options
The analysis summarised in Table 1 assumes that the property rights regime is unchanged and that the policy
instruments are imposed by regulators on farmers who have private access to the lagoon bed and open access to
lagoon water. The rankings assigned to instruments on each of the assessment criteria are subjective, reflecting the
perceptions of key informants in local and provincial government authorities, and insights drawn from the
literature. Pollution quotas and taxes were ranked above the other instruments in terms of environmental
effectiveness, but were viewed as too costly to administer owing largely to measurement problems. Quota
restrictions on shrimp outputs and seed inputs were ranked above output and input taxes owing to their superior cost
efficiency, political acceptability and flexibility. Output quotas, unlike input quotas, allow farmers to respond freely
to relative changes in input prices. However, seed quotas were considered superior on the first-order administrative
criterion because shrimp seed is supplied by a small number of hatcheries. Individually transferable quotas (ITQs)
for shrimp seed were therefore selected as the preferred instrument