Social effects of energy subsidies and taxes on CO2 emissions: The case of Mexican aquaculture public policies

Aquaculture generates diverse externalities depending on factors such as the production system and the facility’s location. Most negative externalities correspond to environmental deterioration, such as high nitrogen and phosphorous concentrations in effluent discharge or greenhouse gas emissions from energy production. This paper proposes a marginal approach to analyze the effect of public policies aimed at controlling the negative externalities of aquaculture on social utility. First, the theoretical model is described. Second, Mexican public policies that impact aquaculture production, which consist of two contradictory tools that affect CO2 emissions, a general emissions tax applied nationwide imbibed in the price of fuel to discourage its use, and a subsidy, applied to agriculture and aquaculture, on fuel and energy consumption, are analyzed. Third, a hypothetical model is applied to the shrimp larvae production industry that evaluates the impact of Mexican policies and the introduction of new technologies on social utility. Finally, the results observed are discussed alongside recommendations on the application of subsides to promote public policies that encourage sustainable aquaculture.