Isda-an sa Lusaran: A Cost and Benefit Analysis of the

Governments Upland Fish Culture Project at Barangay

Lusaran, Cebu City

In Partial Fulfillment
Of the Requirement for the course
ECON 135: Public Economics

By:
Codilla, Aneni
Rallos, Giossephe Karl

MW1: 30 3:00 PM
AD420MC

Introduction:
Aquaculture is defined as the farming of aquatic organisms including fish, molluscs,
crustaceans and aquatic plants (Food and Agriculture Organization, 2011). The fish
aquaculture industry has been reported to be the main source of the worlds fish
consumption. (OECD, n.d). In the Philippines, aquaculture contributed to roughly 49.9 %
to the countrys fisheries output last 2014 (1.6 % to nominal GDP), which amounted to P
93,949,009.98 in based on 2000 price base (Bureau of Fisheries and Aquatic Resources,
2015). Fresh water aquaculture is the main thrust of the industrys output. It started in
1972 when the Nile tilapia was introduced to the Philippines, and since then was
popularized by the backyard pond craze in the country. Currently, fresh water
aquacultures includes the production: tilapia, carps, milkfish, penaeid shrimps and mud
crabs (Yap, 1999). A fish culture cycle usually lasts at around 4-8 months before its
subsequent harvest. This means that in a year there could be as much as two-three
harvests. This is also the reason why such is considered to be a lucrative business. Apart
from its economic contribution, aquaculture is seen to have generated employment
(Bureau of Fisheries and Aquatic Resources, 2015) and at the same time provides a
substantial amount of protein and food security for upland dwelling individuals (Adriano,
2009).
In the context of Cebu City, the city government has approved a project, which
seeks to implement an aquaculture project, to alleviate the standards of living of the
senior citizens of Barangay Lusaran. This project calls for the construction of fishponds
for the said beneficiaries, who shall be trained by the government, through the Bureau of
Fisheries and Aquatic Resources (BFAR), and after which shall receive starter kits. The
city government chose to implement such at Barangay Lusuran, because of the said
location has been identified to have an abundant of water supply, as affirmed by (David,
Inocencio, Largo, & Walag, 1998).
This paper will analyze the cost and benefit of the upland fish culture project of
Barangay Lusaran, Cebu City. The first portion of the paper will talk on the costs that the
project has and will incur, in lieu with the projects implement. The second portion talks
on the benefits enjoyed by the beneficiaries in the implementation of the project. The
later parts of the paper will talk on the analogy and processing of available data to
generate a conclusive finding that will attain the papers intent.

Project Briefer
The Upland Fish Culture project is a composed of different stages. These stages are the
training, construction, distribution and implementation. The training phase is when the
government conducts the skills training of the beneficiaries through workshops facilitated
by the Bureau of Fisheries and Aquatic Resources (BFAR), Department of Agriculture
(Cebu Province) and the Cebu City Agricultural Department. The second stage is the
construction phase, wherein the city government constructs the fishponds to be used by
the beneficiaries. Thirdly is the
distribution phase, wherein the
government
provides
Figure 1: Project Phases
beneficiaries with fish culture
starter packs, which shall
continue for 2 cycles (8 months).
Finally, the implementation
Implementati
Implementati
Training
Construction
Distribution
Training
Construction
Distribution
on
on
phase, is where the government
fully implements the project.
However, this phase is divided
into the pilot implementation
Source: Approved Project Plan;
and
the
supplemental
Cebu City Agriculture Department
implementation. The former talks
of the opening of fishponds near
the river, which is believed to be of lower cost, while the later talks of the opening of the
ponds far from the river, which shall use pumps to supply water into it, thus is considered
to be more expensive. The project involves the construction of 28 ponds, which is divided
into two stages. The first (pilot project) composes of 16 ponds, while the second
(supplemental project) composes of 12 ponds.
Costs:
For the purpose of determining the overall cost of the project, the researchers will
relay on the formula Marginal Social Cost= Project Cost+ Operating and Administrative
Cost+ Private Cost+ External Cost. Marginal Social Cost refers to the overall cost that
will be incurred by the project in its implementation. Under this overarching
quantification of cost, is its division into three compartments. First is the Project Cost
(PC) , this refers to the amount the city government spends on the implementation of the
project. The governments spending in the construction of the fishponds and as well the
aid it initially provides the beneficiaries may manifest these costs. Next is the Operating
and Administrative Cost (OAC) , which pertains to the maintenance costs incurred by the
individual in the operation of the project. Thirdly is the Private Cost (PRC) , this refers to
the cost incurred by the individual in the form of tilapia fingerlings and feeds when the
government stops providing aid. Finally, external costs (EC) , refers to the depreciation
cost of the project. It is important to note that this formula serves as the overarching
formula over the two-faced project implantation phases, namely the pilot project Phase 1
and
the
supplemental
project,
Phase
II.

(A. PROJECT
COST

Phase 1
( Pilot Project) 16 ponds

Meals and Food

Allowance
Training Supplies
Equipment
Fishponds
(Excavation &
Installation)
B. PRIVATE
COST
Tilapia
Fry

118,800.00

Phase 2
(Supplemental Project) 12
ponds
-

17,384.00
-

100,000.00

1,877,312.00
(16 Ponds)

1,407,984.00
(12 Ponds)

6,000.00
2,400.00
(8,000pcs*.25*3cycles)
(3,200pcs*.25*3cycles)
MSC= PC+ OAC+ PRC+ EC
Tilapia
102,000.00
40,800.00
Figure 1.2 shows the MSC equation
utilized by the researchers, where:
Marginal Social Cost is equal to
Crumble
(40bags*P850*3cycles)
(16bags*P850*3cycles)
Project Cost, Private Cost, Operating and Administrative Cost and External Cost
Floater
Tilapia
101,400.00
Grower
252,000.00
(40bags*P845*3cycles)
Floater
(100bags*P845*3cycles)
Tilapia
60,480.00
Finisher
239,400.00
(24bags*P840*3cycles)
Floater
(95bags*P840*3cycles)
C. OPERATING AND
ADMINISTRATIVE
COST
Light
and Water
6,000.00
(500/month*4*3cycles)
Business
1,500.00
Permit
(500/cycle*3)
Ponds
15,000.00
Disinfectant
(5,000/month*3)
& Supplies
Marketing &
15,000.00
Transportation
(5,000/month*3)
Expenses
D. EXTERNAL
COST
Depreciation
Cost
52,668.00
(4,389/month*4*3cycles)

Figure 1.3 illustrates the costs incurred in the project. These are divided into
themes, namely: Project Cost, Private Cost, Operating and Administrative Cost
and External Cost

The table is divided into the components of the projects Marginal Social Cost (MSC).
Moreover, cost also divided between Phases 1 and Phase 2, which resembles the 2 types
of the projects implementation namely: the pilot projects cost and the supplemental
projects implementation cost.
The first sets of cost, reflect those of the project cost, these refers to the cost
incurred by the government through its training and the construction of fishponds. The
data was retrieved from the approved project plan obtained by the researchers from the
City Agriculture Office.
The second components are the sets of costs that reflect those of private cost. This
refers to the cost incurred by individuals in the operation of the fishponds; this are the
cost of tilapia fry and other related goods. Although, the data provided for the
computation on a cycle-basis, the researchers were able to determine its cost per year by
multiplying the cycle costs by the 3 times. This is because a single cycle takes around 4
months; where a year is composed of 3 cycles (12/4= 3 cycles). More so, it is important
to note that, the governments aid with regards to this cost, is only limited to the first year
or 2 cycles of the projects implementation. It is important to note that these types of cost
arise at each year the pond operates.
Thirdly, when we speak of the operating and administrative cost, this refers to the
constant cost incurred by the individual in the operation of the fishponds. These are the
independent costs of the project, incurred by the individual regardless of the amount
being harvested and sold. In this paper, this is assumed to be constant all throughout the
duration of the project. Again these costs were initial manifested in the documents as cost
per cycle, because of such, the researchers multiplied it by 3 to generate a cost for an
entire year.
Lastly, we shift our focus to the external cost which refers to the depreciation cost
of the project. The approved project plan values depreciation cost at P 4,389.00 per
month. Because of such, the researchers multiplied the same by four to create a cycles
depreciation cost. Afterwards, the sum was multiplied by 3 as this represents the number
of cycles per year. The answer yielded the depreciation of the ponds per year. For further
understanding of the projects cost through the span of the projects lifetime, it is best to
view such in the appendices.

Benefit:

Discussion and Analysis:

Phase 1: Implementation Phase 2: Implementation
Total MSC

Present Value of
Costs

2,703,064.00 Pesos

2,457,331.00

1,803,232.00
Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos

689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
2,492,800.00 Pesos

569,891.00
518,083.00
470,984.00
428,167.00
1,407,121.00

984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
984,816 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos
295,248.00 Pesos

505,366.00
459,424.00
417,658.00
379,689.00
345,172.00
313,793.00
285,266.00
259,333.00
235,757.00
214,325.00
194,840.00
177,128.00
161,025.00
146,387.00
133,079.00
120,981.00
109,982.00
99,984.00
90,895.00
24,773.00
22,524.00
20,473.00
18,612.00
16,920.00

Year

MSC1

Year

MSC2

2,703,064.00
Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos

689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
689,568.00 Pesos
-

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

The table above talks of the marginal social cost of the project,
which is classified according to the phase of implementation it belongs.
In the first year the total cost amounted to 2,703,064.00 1. This is
1 MSC= PC+PRC+ OAC+ EC
MSC= P 2,013,496+ 599,400+ 37,500 + 52,668.00 MSC1 = 2,703,064.00

because spending was only conducted on Phase I of the project. The

huge spending may be attributed to the construction of the fishponds
and other government initiated spending. From the second year until
the fifth, spending decreased as it is was only sustained by the
personal costs and administrative costs. Moreover, the surge in total
Marginal Social Cost to 2,492,800.00 in the 6 th year may be attributed
to the implementation of the second phase (supplemental project) of
the project, which called for the construction of additional ponds. This
spending together with the existing costs was the reason behind the
big shift in the total marginal social cost. Then, total marginal social
cost on the 7th year plummeted as it is composed of personal and
operating cost, however, this value is seem to have been consistent
until the 25th year of the projects implementation. Finally, the cost
dropped on the 26th until 30th year of the project, this is because the
personal cost and administrative cost of the project was the sole
reason behind the said cost.
From the table above, we noticed that the projects cost fluctuated as
the years of the project matured. This is attributed to the