Economies of scale and scope in integrated aquaculture systems: Evidence from prawn gher farming in coastal Bangladesh

Diversification and specialization represent two strategic pathways, with differing implications for economic performance, risk management, and resilience. Using survey data from 417 prawn farms in Bangladesh, this study examines the economic effects of joint production in integrated extensive gher systems combining prawn, carp, rice, and vegetables. An output-oriented stochastic distance function with a translog (TL) specification is used estimate technical efficiency, elasticities, and economies of scale and scope. Results indicate an average technical efficiency score of 0.70, indicating a 30% potential output gap. We find decreasing returns to scale (scale elasticity ≈0.52), with seed cost exhibiting strong negative efficiency effects and feed cost showing significant positive contributions. Among income sources, aquaculture income has the largest positive effect on efficiency, followed by other on-farm income. Off-farm income, while important for household resilience, shows no positive efficiency effect and may compete with farmers’ managerial focus. Scope economies are strongest when aquaculture is combined with other on-farm activities (e.g. rice and vegetables), highlighting the benefits of targeted diversification within this setting. Our findings suggest that while on-farm diversification can enhance cost efficiency and resilience, specialization remains relevant for optimizing certain inputs and managing operational scale.