I didn't imply this in particular is water inefficient, just that it's probably inefficient in some way.

I suppose this system really amounts to scrap food recycling. You're feeding the fish various waste organic material that was already grown on a real farm.

The real question is probably: why not just feed it to pigs or goats, the traditional solution? Older folks tell me it was common for there to be residential garbage pickup, separate from trash. The garbage would be taken to farms.