Published in Marine Policy, 2015, 61, 273–283 1 Shrimp aquaculture as a vehicle for Climate Compatible Development in Sri Lanka. The case of Puttalam Lagoon. I.H.T. Harkes 1 , Asbjørn Drengstig 2 , M.P. Kumara 3 , J.M.P.K. Jayasinghe 4 , M. Huxham 1 1 Edinburgh Napier University, Sighthill Court, Room 2B22, Edinburgh, EH11 4BN, United Kingdom. Tel: +44 (0)131 4552514; E-mail: m.huxham@napier.ac.uk (corresponding author)  2 Aqvisor AS, P.O. box 391, 4067 Stavanger, Norway. Tel: +47 90196731; E-mail: asbjorn@aqvisor.no 3 Ocean University of Sri Lanka, Mahawela Road, Tangalle, Sri Lanka. Tel: +94 (0)71 6035682; E-mail: kumarampp@yahoo.com 4 Wayamba University of Sri Lanka, Makandura, Gonawila, Sri Lanka. E-mail: jmpkjaya@gmail.com Abstract At present, aquaculture of black tiger shrimp (Penaeus monodon) in the Puttalam district of Sri Lanka is unsustainable with more than 90% of the former shrimp ponds laying abandoned as a result of shrimp disease and improper management. Between 1992-1998, over 50% of the mangrove cover was removed in order to establish shrimp aquaculture. This severely affected the functioning of coastal ecosystems, reducing their provision of useful services and increasing coastal vulnerability to climate change. Changes in the hydrology and polluted residual matter make the soil unsuitable for other agricultural purposes without costly restoration. The root of the problem was inappropriate management and a focus on short term economic gains. Despite this previous failure, the national development plan, Mahinda Chinthana, now promotes aquaculture as an avenue for development. This will only be possible if aquaculture is regulated in a sustainable and well-managed manner, and does not increase local vulnerability to climate change effects. The current paper discusses the possible costs and benefits in applying the concept of Climate Compatible Development (CCD) to shrimp aquaculture in Puttalam, Sri Lanka. It suggests how the sector can support mitigation of Green House Gas (GHG) emissions and adaptation to climate change effects, whilst stimulating development that will also benefit rural societies. Mechanisms that could enable this change include subsidies, insurance and bank loans which will also facilitate investment by foreign private enterprises and subsequent export. The development of a specific aquaculture policy and master plan would facilitate the process further. Keywords Shrimp aquaculture, Climate Compatible Development, Mitigation, Adaptation, Puttalam Lagoon, Sri Lanka.  Present address: WWF-NL, Postbus 7, 3700 AA, Zeist, the Netherlands, Tel: +31(0)612556767; e-mail: iharkes@wwf.nl.