Shrimp is a high-value seafood product. Demand for shrimp has been increasing due to the general growth in the world’s population, as well as income growth and an increasing preference for healthy food. However, the increasing demand has not been met by the stagnant fisheries, which is why aquaculture plays a vital role in shrimp production, fulfilling the growing demand. This development is also seen in countries traditionally dominated by wild shrimp catches. The increasing supply of farmed shrimp seems to be preferred by some consumers, as revealed in recent studies on market integration between wild and farmed-shrimp in Europe (Ankamah-Yeboah et al. 2017) and earlier in the US (Asche et. 2012).

The rising demand for shrimp may increase production intensity in shrimp producing countries, which is predominantly developing countries. While there is a general need for economic development in these countries, a focus on sustainable production is needed if they are to continue to produce shrimp in the future. Focusing on more sustainable development for shrimp farming can help balance the goals in the three pillars of sustainability: economic, environmental, and social. On the pathway to sustainability, trade-offs can be made depending on each country's needs, which for many developing countries are food security and economic development. However, the overreaching goal is that all three dimensions of sustainable development are achieved.

Indonesia, which is the third largest shrimp producing country in the world (FAO Statistics 2020), is facing environmental degradation in connection with shrimp production. The need for economic growth has, in many cases, not taken the environment and social development into account. In the past, unsustainable shrimp production has led to environmental pollution and disease outbreaks resulting in the abandonment of coastal areas for shrimp production (Asche et al. 2020). Acknowledging that most of Indonesia's shrimp production comes from small-scale shrimp aquaculture, more effort should be made to promote the sustainable development of these farms. This is the aim of this thesis.

Sidoarjo is a central district for traditional shrimp farming, which has been practised here for over 300 years. The intensification of shrimp farming started in the 1980s, although the shift towards more intensive shrimp production was not as pronounced in Sidarjo as in other districts in Indonesia. In Sidoarjo, externality problems exist as a result of shrimp production, but also the activities of other users of the rivers. These rivers are still the primary source of water in traditional shrimp farming in Sidoarjo. The Indonesian government is currently focusing on small-scale aquaculture to promote more production. Many programs have been initiated to support small-scale aquaculture farmers in Sidoarjo. However, an evaluation of these programs has not been conducted. Thus, the complexity of issues faced by small-scale aquaculture farmers in order to become more sustainable is yet to be evaluated or analysed. Such an endeavour would increase knowledge about these group of farmers.

This thesis aims to evaluate and analyse how small-scale shrimp aquaculture farmers can achieve sustainable development, using Sidoarjo as a case study. The focus is on sustainable development, so that aquaculture can remain and improve in the long run environmentally, economically, and socially.

Chapter 3 aims to increase knowledge about the price of characteristics that make it possible to increase sales and prices for Indonesian shrimp farmers, thereby achieving economic development. In chapter 4, the objective is to identify farmers’ incentives for including sustainability considerations into their production decisions and demonstrate that sustainable practices increase efficiency, which supports the aim of more sustainable development. In chapter 5, the purpose is to analyze the effectiveness of co-management as a form of institutional economics aimed at reducing the environmental impact of shrimp farming itself, but also the environmental impact of other users of the rivers. Results show that co-management can improve efficiency and reduce unsustainable practices, promoting more sustainable development. Finally, chapter 6 aims to find cooperative solutions to upstream-downstream externalities between industrial plants and polyculture farmers. The result may contribute to more sustainable development of shared river systems. In all chapters, sustainable development elements are analyzed; the conclusion being that sustainable development in small-scale shrimp and polyculture farming is attainable if a proper framework exists and is enforced.