A COST-BENEFIT ANALYSIS ON THE

SMALL-SCALE AQUAPONICS FARMING:

A SUSTAINABLE FOOD SOURCE FOR
COMMUNITY DEVELOPMENT

Abella, Danielle May P.

Kaw, Airese Lynne T.
Palco, Nathaniel G.
Pica, Joseph C.
Introduction
Background of the Study

Majority of the people living in hunger and poverty belong to the

developing regions where 12.9% or an estimated number of 780
million people were undernourished in the year 2014.
Although hunger is a very complex problem with no single cause, for
most families in the poorest provinces in the Philippines, the problem
can be traced back to livelihood and the lack thereof.
Background of the Study

The United States Department of Agriculture (USDA) defines food

insecurity as a state in which “consistent access to adequate food is
limited by a lack of money and other resources at times during the
year.”
The UN has committed to end hunger by achieving food security,
improved nutrition, and promote sustainable agriculture by the end of
2030
Background of the Study

One common strategy to address food insecurity is through innovative

farming practices.
One common technology is the practice of aquaculture. The farming
of aquatic organisms and aquatic plants. Another strategy is
hydroponics, the most widely used method of soilless culture.
Background of the Study

Our research focuses on the combination of the two – aquaculture

and hydroponics, as a method for food production. Basically,
Aquaponics is a method of farming in a soilless medium where the
nutrients that the plants require are sourced from the water in a fish
tank that also adds the benefit of providing fish for harvest.
Aquaponics can both be used as a commercial venture and a way
to provide food most especially in developing countries.
Background of the Study

Majority of the literature found on aquaponics covers the

mechanical, chemical, and biological components of running an
aquaponics system and research on the financial feasibility of
aquaponics is rather limited.
Moreover, this research was conducted to determine the costs and
benefits of setting up a low-cost aquaponics setup and whether the
community is willing to adopt the setup.
Statement of the Problem

The study will address the general problem:

What are the costs and benefits of

constructing a small-scale aquaponics
farming system?
Statement of the Problem

The study answers the following specific questions:

1. What is the alternative design in creating a low-cost aquaponics farming
system?
2. What are the costs to be incurred for constructing a small-scale
aquaponics farming system?
3. What are the benefits to be accrued for constructing a small-scale
aquaponics farming system?
4. Are the households in Ridgeview Park, Barangay Cabalawan, Tacloban
City willing to adopt aquaponics farming given the costs and benefits?
Significance of the Study

 To add new knowledge to the scant body of literature on this

technology in the Philippines.
 This study can open new ways and ideas for communities on how
they can have additional sources of food and income
 This may serve as a model for many governmental and non-
governmental community projects
 This will provide valuable insights for future researchers on the
financial aspects of aquaponics.
Scope and Limitations

 This paper does not intend to provide details on how set up and on how
use aquaponics systems since it only focused on the financial aspects of
the system.
 The study only determined the costs and benefits of the setup, thus it
would be the initiative of the local community and household on whether
or not they will make the actual aquaponics system.
 The proposed low-cost aquaponics set-up only relied on the availability of
local resources.
 The research only provided results on the likelihood of the community to
adopt aquaponics farming.
Theoretical Framework
Theory of Cost-Benefit Analysis

Cost-benefit analysis (CBA) is a quantitative analytical tool used to

determine the worth of a proposed project, programme, or policy.
This type of tool helps decision makers come up with an efficient
allocation of resources by quantifying the costs and benefits of a
certain program. (Commonwealth of Australia, 2006)
Theory of Cost-Benefit Analysis

This study will follow the guidelines provided by the Department of Finance and
Administration (DFA) of the Commonwealth of Australia (2006)
1. Determine scope and objectives
2. Assess the constraints
3. Consider the alternatives
4. Identify, quantify and value the costs and benefits of each
alternative
Theory of Cost-Benefit Analysis

This study will follow the guidelines provided by the Department of Finance and
Administration (DFA) of the Commonwealth of Australia (2006)
5. Calculate the Net Present Value & Benefit-Cost Rati
6. Sensitivity analysis and dealing with uncertainty
7. Consider equity and distributional implications
8. Report the results and prepare a recommendation
Theory of Cost-Benefit Analysis

Three criteria is used to properly quantify the values used in this study.
1. Net Present Value (NPV)
2. Benefit-Cost Ratio (BCR)
3. Payback Period
 Table 3.1: List of all costs considered and their corresponding variables

Costs of Constructing an Aquaponics System

Benefits of Constructing an Aquaponics System
Empirical Framework

Initial Capitalization Cost

TC0 = CapCosts + LabCosts + OpCosts + ForgLeis + ForgLeisDM

Total Cost in succeeding months

TCi = OpCosts + ForgLeisDM

Total Benefits
TB = (FE/(1+r)i) + FoSec + NutBen
Empirical Framework

Net Present Value (NPV) where:

NPV = -TC0 +
𝑇𝐵−𝑇𝐶𝑖
+…+
𝑇𝐵−𝑇𝐶𝑖 TB= Estimated Total Benefits Monthly
(1+𝑟) (1+𝑟)12
TC0 = Estimated Initial Capitalization Cost
TCi = Estimated Total Monthly Cost in
Benefit-Cost Ratio (BCR) succeeding months
𝑇𝐵 i = number of months (the researchers will
(1 + 𝑟)𝑖
𝐵𝐶𝑅 = 12 months or 1 year)
TC0
(1 + 𝑟)𝑖 r = discount rate (10%)
Empirical Framework

Payback Period where:

𝑇𝑀𝐶0 + σ12
1 𝑇𝑀𝐶𝑖 TMC0= Total Initial Monetary
Payback Period = σ12
1 𝑇𝑀𝐵𝑖 Capitalization Costs (CapCost + OpCost)

1 𝑇𝑀𝐶𝑖 = Total Monetary Cost in

σ12
succeeding months (OpCost)
𝑇𝑀𝐵𝑖 = Total Monetary Benefits (FutuEarn)
i = number of months
Methodology
Research Locale

Key Respondents
1. Loreto Godoy – Baybay City, Leyte
2. Dr. Arturo Juanico Jr. – Tabontabon, Leyte
3. Nil del Valle – Tacloban City, Leyte

Survey Respondents
 Ridgeview Park, Brgy. Cabalawan, Tacloban City, Leyte
Data Requirements

Primary Data
1. Personal Interview with the Key Respondents
2. Record of local prices of materials, equipment, and other costs
3. Self-administered survey questionnaires

Secondary Data
1. Household population data from the National Housing Authority
(NHA)
Selection of Study Participants

Key Respondents
1. Loreto Godoy
2. Dr. Arturo Juanico Jr.
3. Nil del Valle
Selection of Study Participants

Survey Respondents
 Purposive Sampling
𝑁
Slovin’s Formula: n =
1+𝑁𝑒 2

where:
n = sample size
N = population size
e = margin of error (7%)
Selection of Study Participants
Method of Data Collection

1. Letter of Request
2. Interview
3. Self-Administered Questionnaire
Data Collection Instrument

1. Interview Schedule – for the personal interview with the key

respondents
2. Self-administered Questionnaire – for the survey on the willingness
of the study participants to practice aquaponics
Data Analysis

1. Cost-Benefit Analysis
a. Net Present Value
b. Benefit-Cost Ratio
c. Payback Period
Results and Discussion
Case Studies on Different Aquaponics
Practitioners in Leyte

1. Loreto Godoy, GOLD Farm, Baybay, Leyte

2. Dr. Arturo Juanico Jr., The Lebanon Farm, Tabontabon, Leyte
3. Nil del Valle (Hobbyist)
Godoy’s Organic Land Diversification
Farm, Baybay City, Leyte

 Loreto Godoy as an Organic Farmer

 GOLD Farm (4.6 hectares | Diversified Production of Organic
Vegetables)
 3 years into Aquaponics Farming
 Godoy’s Organic Land Diversification
Farm, Baybay City, Leyte
Type: NFT System
Godoy’s Organic Land Diversification
Farm, Baybay City, Leyte

Vegetable Production:
 3 to 5kg of Lettuce per week
 Sells for 50 pesos per bag (8 to 10 heads)
Godoy’s Organic Land Diversification
Farm, Baybay City, Leyte

Fish Production (Unquantified):

 A combination of guppies, catfish (hito), tilapia, and koi.
 Personal consumption and as pets.
 Diet: 70% tilapia feeds, 30% duckweed
The Lebanon Farm, Tabontabon, Leyte

 Mr. Arturo Juanico, Site Manager, FITS Center, Tabontabon, Leyte

 The Lebanon Farm (Approx. 500 sq mtrs | Diversified Production of
Organic Vegetables)
 2 years into Aquaponics Farming
 The Lebanon Farm, Tabontabon, Leyte
Type: Grow-bed
The Lebanon Farm, Tabontabon, Leyte

Vegetable Production (Unquantified):

 Lettuce
 Sells for 200 per kilo (3 to 6 heads)
The Lebanon Farm, Tabontabon, Leyte

Fish Production (Unquantified):

 Tilapia
 Personal Consumption
 Diet: 100% tilapia feeds
Mr. Nil del Valle

 Career as a computer technician

 Background on farming
 1 year into Aquaponics Farming
 Mr. Nil del Valle
Type: Grow-bed
Mr. Nil del Valle

Vegetable Production (Unquantified):

 Lettuce, Kangkong, Eggplant, Ampalaya
 Personal Consumption
Mr. Nil del Valle

Fish Production (Unquantified):

 Tilapia
 Personal Consumption
 Diet: 100% Duckweed
Proposed Design

 Suitable for the communities that are susceptible to food insecurity

 Locally available materials
 Minimum costs
Proposed Design

1. Household-based
2. Community-based
Proposed Design

 Type of System: NFT Type System

 Major components: Pipes, Fish Tanks, Frame
 Production: Lettuce and Tilapia
Proposed Design
Household-based
 Proposed Design
Community-based
Proposed Design
Cost of setting up an Aquaponics System
Cost of setting up an Aquaponics System
Household-based

Initial Capitalization Cost

Cost of setting up an Aquaponics System
Community-based

Initial Capitalization Cost

Cost of setting up an Aquaponics System
Household-based

Labor Cost
Cost of setting up an Aquaponics System
Community-based

Labor Cost
Cost of setting up an Aquaponics System
Household-based

Operating Cost
Cost of setting up an Aquaponics System
Community-based

Operating Cost
Cost of setting up an Aquaponics System
Household-based

Cost of Forgone Time for Leisure

Cost of setting up an Aquaponics System
Community-based

Cost of Forgone Time for Leisure

Benefits of setting up an Aquaponics System
Benefits of setting up an Aquaponics System
Household-based

Future Earning Benefits

Benefits of setting up an Aquaponics System
Community-based

Future Earning Benefits

 Benefits of setting up an Aquaponics System

Food Security:
According to a study of Gail Ann Langellotto of Oregon State University in 2014, she stated that an
individual can actually save up to approximately per year P33, 850 if such household has a
vegetable garden at home per year.

Nutritional Benefits:
According to a study conducted by Emily Main in 2010, eating healthy food can actually save
money. Furthermore, in her study, she concluded that an individual could actually save up to
approximately P41,500 per year which is basically on the reduced risk in several diseases and other
medications.
Benefits of setting up an Aquaponics System

For Household Based Setup:

Total Food Security = 4.4 (average household size in the Philippinesas of 2015) *
(P33,850 / 12 months)
Total Nutritional benefits = 4.4 (average household size in the Philippines as of 2015) *
(P41,500 / 12 months)

For Community Based Setup:

Total Food Security = 4.4 (average household size in the Philippines as of 2015) *
10 (approximate number of household in community based setup) * (P33,850 / 12 months)
Total Nutritional benefits = 4.4 (average household size in the Philippines as of 2015) *
10 (approximate number of household in community based setup) * (P41,500 / 12 months)
Benefits of setting up an Aquaponics System

Total Benefits
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup

Total Initial Capitalization Cost

TC0=CapCost + LabCost + OpCost + ForgLeisC + ForgLeisDM

For the Household-based setup:

TC0= P1,723.75 + P570.00 + P542.081+ P570.00 + P534.375

For the Community-based setup:

TC0= P4,200 + P2,850.00 + P1,555.943 + P2,850.00 + P801.5625
Cost and Benefit Analysis of Aquaponics Setup

Total Cost in succeeding months

TCn= OpCost + ForgLeisDM

For the Household-based setup:

TCn= P542.081 + P534.375

For the Community-based setup:

TC n= P1,555.943 + P801.5625
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup

Total Benefits
For Household Setup:
TB= (FE/((1+r) i)) + FoSec + NutBen
TB = (P1,495.94/ ((1+0.10)10)) + P12,411.67 + P15,216
For CommunityBased Setup:
TB = (FE/((1+r) i)) + FoSec + NutBen + EducBen
TB = (P1,495.94/ ((1+0.10)10)) + P124,116.70 + P152,160
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup
Cost and Benefit Analysis of Aquaponics Setup

Net Present Value (NPV) where:

NPV = -TC0 +
𝑇𝐵−𝑇𝐶𝑖
+…+
𝑇𝐵−𝑇𝐶𝑖 TB= Estimated Total Benefits Monthly
(1+𝑟) (1+𝑟)12
TC0 = Estimated Initial Capitalization Cost
TCi = Estimated Total Monthly Cost in
Benefit-Cost Ratio (BCR) succeeding months
𝑇𝐵 i = number of months (the researchers will
(1 + 𝑟)𝑖
𝐵𝐶𝑅 = 12 months or 1 year)
TC0
(1 + 𝑟)𝑖 r = discount rate (10%)
Cost and Benefit Analysis of Aquaponics Setup

Net Present Value (NPV) where:

NPV = -TC0 +
𝑇𝐵−𝑇𝐶𝑖
+…+
𝑇𝐵−𝑇𝐶𝑖 TB= Estimated Total Benefits Monthly
(1+𝑟) (1+𝑟)12
TC0 = Estimated Initial Capitalization Cost
TCi = Estimated Total Monthly Cost in
Benefit-Cost Ratio (BCR) succeeding months
𝑇𝐵 i = number of months (the researchers will
(1 + 𝑟)𝑖
𝐵𝐶𝑅 = 12 months or 1 year)
TC0
(1 + 𝑟)𝑖 r = discount rate (10%)
 Cost and Benefit Analysis of Aquaponics Setup

Net Present Value (NPV) where:

TB= Estimated Total Benefits Monthly
𝑇𝐵−𝑇𝐶𝑖 𝑇𝐵−𝑇𝐶𝑖
NPV = -TC0 + +…+ TC0 = Estimated Initial Capitalization
(1+𝑟) (1+𝑟)12
Cost
For the Household Based Setup:
𝑃29,123.61− 𝑃1,076.456 𝑃29,123.61−𝑃1,076.456 TCi = Estimated Total Monthly Cost in
𝑁𝑃𝑉 = −𝑃3,940.21 + +…+
(1+0.10)1 (1+0.10)12 succeeding months
NPV = P187,164.45 i = number of months (12 months or 1
year)
For the Community Based Setup: r = discount rate (10%)
𝑃283,128.836− 𝑃2,357.5055 𝑃283,128.836−𝑃2,357.5055
𝑁𝑃𝑉 − 𝑃12,257.5055 + …+
(1+0.10)1 (1+0.10)12

NPV = P1,900,831.81
 Cost and Benefit Analysis of Aquaponics Setup

Net Present Value (NPV) where:

TB= Estimated Total Benefits Monthly
𝑇𝐵−𝑇𝐶𝑖 𝑇𝐵−𝑇𝐶𝑖
NPV = -TC0 + +…+ TC0 = Estimated Initial Capitalization
(1+𝑟) (1+𝑟)60
Cost
For the Household Based Setup:
𝑃29,123.61− 𝑃1,076.456 𝑃29,123.61−𝑃1,076.456 TCi = Estimated Total Monthly Cost in
𝑁𝑃𝑉 = −𝑃3,940.21 + +…+
(1+0.10)1 1+0.10 60 succeeding months
NPV = P275,610.19 i = number of months (60 months or 5
years)
For the Community Based Setup: r = discount rate (10%)
𝑃283,128.836− 𝑃2,357.5055 𝑃283,128.836−𝑃2,357.5055
𝑁𝑃𝑉 − 𝑃12,257.5055 + …+
(1+0.10)1 1+0.10 60

NPV = P2,786,234.57
Cost and Benefit Analysis of Aquaponics Setup

Benefit-Cost Ratio (BCR) where:

𝑇𝐵
(1 + 𝑟)𝑖 TB= Estimated Total Benefits Monthly
𝐵𝐶𝑅 =
TC0 TC0 = Estimated Initial Capitalization Cost
(1 + 𝑟)𝑖
 For the Household Based Setup: TCi = Estimated Total Monthly Cost in
𝑃29,123.61 succeeding months
(1+0.10)12
 𝐵𝐶𝑅 = = 7.54
𝑃3,865.00
(1+0.10)12
i = number of months (60 months or 5
 For the Community Based Setup: years)
𝑃283,128.836
(1+0.10)12
r = discount rate (10%)
 𝐵𝐶𝑅 = 𝑃12,032.5055 = 23.53
(1+0.10)12
Cost and Benefit Analysis of Aquaponics Setup

Benefit-Cost Ratio (BCR) where:

𝑇𝐵
(1 + 𝑟)𝑖 TB= Estimated Total Benefits Monthly
𝐵𝐶𝑅 =
TC0 TC0 = Estimated Initial Capitalization Cost
(1 + 𝑟)𝑖
 For the Household Based Setup: TCi = Estimated Total Monthly Cost in
𝑃29,123.61 succeeding months
(1+0.10)12
 𝐵𝐶𝑅 = = 7.57
𝑃3,865.00
(1+0.10)12
i = number of months (60 months or 5
 For the Community Based Setup: years)
𝑃283,128.836
(1+0.10)12
r = discount rate (10%)
 𝐵𝐶𝑅 = 𝑃12,032.5055 = 23.54
(1+0.10)12
Cost and Benefit Analysis of Aquaponics Setup

Payback Period where:

𝑇𝑀𝐶0 + σ12
1 𝑇𝑀𝐶𝑖 TMC0= Total Initial Monetary
Payback Period = σ12
1 𝑇𝑀𝐵𝑖 Capitalization Costs (CapCost + OpCost)

1 𝑇𝑀𝐶𝑖 = Total Monetary Cost in

σ12
succeeding months (OpCost)
𝑇𝑀𝐵𝑖 = Total Monetary Benefits (FutuEarn)
i = number of months
Cost and Benefit Analysis of Aquaponics Setup

The payback period for the household-based aquaponics setup is 0.55 of a yearor approximately
6.6 months
Cost and Benefit Analysis of Aquaponics Setup

The payback period for the community based aquaponics setup is 0.37 of a month or approximately
4.44 months.
Cost and Benefit Analysis of Aquaponics Setup

Sensitivity Analysis
1. Size of the aquaponics setup
2. Inflation
Assuming that in the next year, the overall prices of goods and services will increase by 5%.

P186,866.49 - NPV for Household Based Setup in a year (with inflation rate of 5%)
P187,164.45 - - NPV for Household Based Setup in a year (based on current market prices)

P1,900,013 .00 – NPV for Community Based Setup in a year (with inflation rate of 5%)
P1,900,831.81 - NPV for Community Based Setup in a year (based on current market prices)
Cost and Benefit Analysis of Aquaponics Setup

Equity and Distributional Impact

1. Encourages other communities to adopt this type of farming
2. Free-Rider Problem
Willingness of the Respondents in setting up an
Aquaponics System

Socio-demographic Profile
o Most of the respondents aged from 31-40 (31.87%)
o Male Respondents 52.20%: Female Respondents 47.80%
o Most of the respondents falls under the high school level, 27.47%
o Occupation: Construction (23.08%), Driver (18.68%), Vendor (16.48%)
o Most of the respondents households had an estimated annual income
of Php50, 000 – Php100, 000 (36.81%)
o 57.47% are 4PS beneficiaries
o Majority doesn’t have any other sources of income (52.20%)
Willingness of the Respondents in setting up an
Aquaponics System

Household Information
o 49.95% of the respondent have a 5-7 family members
o 75.82% has only 1 working member in their family
o Most of the households spends P100-250 per day (42.31%)
o 80.22% doesn’t have a sustainable food source
o Only 53.85% have past experience on farming
o 81.32% indicated that they do not have a knowledge on aquaponics
Willingness of the Respondents in setting up an
Aquaponics System
Willingness of the Respondents in setting up an
Aquaponics System
Conclusion
Conclusion

 Based on the results from the NPV and BCR analyses, this research
concludes that it is beneficial for a household or a community to
have an aquaponics system, since the cost-benefit analysis
produced a result that shows that the total benefits outweigh the
total costs incurred.
Conclusion

 With regards to the willingness of the household respondents the

results shows that, should there be government funding, majority of
the respondents (88.46%) indicate a willingness to adapt
aquaponics. because of the perceived benefits and the availability
of government funding.
Recommendation
Recommendation

 For the policy implications, local government units concerned, such as the
Department of Agriculture, should utilize its funds to conduct researches
and case studies on this, in the context of the Philippines, unfamiliar
technology, and apply it in their project proposals for community
development if results are desirable.
 For future researchers, the researchers suggest to focus more on the
financial aspect of aquaponics conduct case studies on aquaponics
experts and do more elaborate cost-benefit analyses on the systems
used. The case study should also focus on the financial projections of the
systems and to determine if the systems will eventually attain positive cash
flows.
Recommendation

 The researchers also recommend to increase the sample size and

number of communities studied for future researches. This will aid to
increase the credibility of the research.
 Further, the researchers suggest to involve appropriate local
government units in the study in order to incorporate a wider range
of perspectives and provide a deeper analysis of the research.
References
References

Commonwealth of Australia (2006). Introduction to Cost-Benefit Analysis and

Alternative Evaluation Methodologies

FAO. (2003). Trade reforms and food security: conceptualizing the linkages

FAO (2014). Small-scale Aquaponic Food Production. Retrieved 20

November 2017 from: http://medicinefarms.com/wp-
content/uploads/2015/11/aquaponic.pdf
References

FAO, IFAD, UNICEF, WFP and WHO (2017). The State of Food Security
and Nutrition in the World 2017. Building resilience for peace and food
security. Rome, FAO.

World Food Programme (n.d.). Zero Hunger. Retrieved 28 April 2018

from: http://www1.wfp.org/zero-hunger