A Stochastic Framework for Economic Risk Assessment in Ornamental Aquaculture: Evidence from Betta splendens Production

Abstract

Ornamental aquaculture represents a high-value segment of global aquaculture and plays an important role in income diversification for small-scale producers. Despite its economic relevance, investment decisions in ornamental fish farming are often supported by limited economic information and rarely incorporate risk and uncertainty into economic assessments. This study developed and applied a stochastic framework to evaluate the economic performance and investment risk of intensive ornamental aquaculture using Betta splendens production as a representative case study. A representative production system was developed from technical and economic surveys conducted on 20 commercial family operated farms located in one of Brazil’s major ornamental fish production clusters. The production system comprised three greenhouse units with an estimated annual output of 162,288 marketable fish. Production costs were estimated using conventional cost-accounting procedures, whereas economic risk was assessed through Monte Carlo simulation incorporating uncertainty in biological, productive, and market variables. The estimated total production cost was US$0.14 fish−1, while the weighted average selling price reached US$0.18 fish−1, resulting in a benefit–cost ratio of 1.33, a profitability of 25.09%, and an annual return on invested capital (ROIC) of 23.90% under the deterministic baseline scenario. Monte Carlo simulation estimated a mean annual ROIC of 22.46%, with a 98.53% probability of positive economic returns. Sensitivity analysis identified labor demand, the selling price of premium males, and reproductive productivity as the principal drivers of economic risk. The results indicate that economic returns in B. splendens farming are primarily influenced by managerial efficiency, labor requirements, and market conditions rather than production volume alone. The proposed framework provides a robust tool for evaluating economic viability and investment risk in ornamental fish farming under uncertainty and may support decision-making in small-scale aquaculture systems.

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