Water Pollution Spillovers or Peer Effects? Determinants of Disease Outbreak in Shrimp Farming in Vietnam

Disease outbreak is a major issue in aquaculture sector that may lead to a significant economic loss. While the source of disease is difficult to trace, understanding how it occurs is important in mitigating the problem. One important factor that has not received sufficient attention is the presence of spillover among fish farmers who are connected by waterways. In this paper, we examine the presence of spillover among shrimp farmers in Southern Vietnam based on the primary data. In particular, we quantify the effects of water pollution spillover of disease outbreak in one farm to another farm and the peer effects of farming practices among the neighbors. We solve the reflection problem posed by Manski (1993) by employing a method developed by Bramoulle et al. (2009) in social network analyses. Our findings indicate that neighbors' farming practices indeed positively affect a farmer's practices and the disease outbreak in neighbors' ponds affects the disease outbreak in a farmer's pond, even after controlling for contextual peer effects and correlated effects. The magnitude of negative effects from neighbors' ponds on disease outbreak may offset the positive effects from farmers' good farming practices, suggesting the importance of considering neighboring farmers as a group in addressing the issue of disease control.