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This study investigates the economic and environmental value of the use of technologies that convert pollution and waste in one production process to an input in another production process. The study focuses on an aquaponics case study to show that the negative externalities borne from intensive fish farming can be internalized without regulatory intervention through a combination of fish farming and hydroponics. The introduction of aquaponics diversified the farmers’ sources of income, yielded savings in the cost of water purification and the cost of fertilizer for the plants’ growth, and resulted in more fish and plant output compared to the unregulated scenario. While deriving these results, we also derive a separation rule for managing live aquatic inventory, which separates expenses (which are affected by the biology of fish) and income.

The Synergy between Aquaculture and Hydroponics Technologies: The Case of Lettuce and Tilapia