Aquaculture Production and Diversification: What Causes What?

Aquaculture, an important source of food supply, is expected to be the main sector to satisfy growing seafood demand in the future. Being the most diversified food product in the world, aquaculture diversification can add resilience to global food security, satisfy consumer preferences, and promote price stability. Understanding the relationships between aquaculture production and diversification and their causations is crucial for developing effective strategies to support long-term sustainability and resilience of aquaculture development. This study investigates the direction of causal relationships between aquaculture production and diversification using a panel vector autoregression (PVAR) model with three decades of aquaculture production data and the Effective Number of Species (ENS) values by country. Diversification is measured in terms of within-group diversity (ENSα) and between-group diversity (ENSβ); this approach provides deeper insights into diversification strategies. The model results show that between-group diversification is more conducive to production expansion globally, especially in the Americas and Asia, and the positive effects are long lasting. Within-group diversification also induces more production in Europe and, to a lesser extent, in Asia. Therefore, policies and market incentives that promote diversification across different species groups in the Americas and Asia, and diversification within the same species group in Europe and Asia, are potential strategies to expand aquaculture production. Other findings include production leading within-group diversification in Asia and Europe, but not in the Americas and Africa. A possible explanation is that production expansion would accumulate experience, develop scope economies and emerging technologies, and build up capacities. These factors generate spillover effects that facilitate species diversification, considering that Asia and Europe have a longer history of aquaculture development compared to the Americas and Africa. However, no significant relationship is found between production leading between-group diversification.