Ebook The economics of environmental management in VietNam Ebook The economics of environmental management in VietNam

Ebook The economics of Environmental Management in Vietnam is compiled with the content: Overview of economic research on environmental issues in Vietnam; the on site costs of soil erosion and benefi ts of soil conservation in the mountainous regions of northern Vietnam; the on site costs of soil erosion and choice of land use systems by upland farmers in central vietnam; environmental consequences of and pollution control options for pond “tra” fish production in the ...

Sida SWEDISH INTERNATIONAL

DEVELOPMENT COOPERATION AGENCY

Canadian International Development Agency

Agence Canadiene de Development International Sida SWEDISH INTERNATIONAL

DEVELOPMENT COOPERATION AGENCY

The fi ndings, interpretations, and conclusions expressed in the case studies in this publication rests exclusively with the authors and should not be attributed in any manner to EEPSEA, its partners, donors, members of its Advisory Body, and the countries EEPSEA represents.

Front cover photograph: My Son World Heritage Site by Tran Huu Tuan

Cover and layout design: Rusyan Jill Mamiit-Coburn

WHAT IS EEPSEA?

The Economy and Environment Program for Southeast Asia was established

in May 1993 to support training and research in environmental and resource economics Its goal is to strengthen local capacity in the economic analysis

of environmental problems so that researchers can provide sound advice to policy-makers The program uses a networking approach to provide fi nancial support, meetings, resource persons, access to literature, publication avenues, and opportunities for comparative research across its nine member countries These are Thailand, Malaysia, Indonesia, the Philippines, Vietnam, Cambodia, Lao PDR, China, and Papua New Guinea

EEPSEA’s structure consists of a Sponsors Group, comprising all donors contributing at least USD 100,000 per year, an Advisory Committee of senior scholars and policy-makers, and a small secretariat in Singapore EEPSEA

is a project administered by the International Development Research Centre (IDRC) on behalf of the Sponsors Group

List of Contributors iForeword iii

Issues in Vietnam 1

B UI D UNG T HE AND H ERMINIA F RANCISCO

Chapter 2 The On-Site Costs of Soil Erosion and Benefi ts of Soil

Conservation in the Mountainous Regions of Northern Vietnam 23

T RAN D INH T HAO

Chapter 3 The On-Site Costs of Soil Erosion and Choice of Land

B UI D UNG T HE

Options for Pond “Tra” Fish Production in the Mekong

V O T HI L ANG , K Y Q UANG V INH , AND N GO T HI T HANH T RUC

Consequences and Pollution Control Options in Hanoi Province, North Vietnam 115

N GUYEN Q UOC C HINH

Estates in Vietnam 143

L E Q UANG T HONG AND N GUYEN A NH N GOC

Chapter 7 Pollution Control Options for Handicraft Villages: The

Case of Duong Lieu Village in the Red River Delta, Vietnam 173

N GUYEN M AU D UNG AND T RAN T HI T HU H A

Chapter 8 Compliance of Paper-Making Plants with Environmental

Regulations in Bac Ninh Province, Vietnam 207

N GUYEN M AU D UNG

Chapter 9 The Impact of Trade Liberalization on Industrial

Pollution: Empirical Evidence from Vietnam 239

P HAM T HAI H UNG , B UI A NH T UAN , AND N GUYEN T HE C HINH

Chapter 10 Household Demand for Improved Water Services in

Ho Chi Minh City 277

P HAM K HANH N AM AND T RAN V O H UNG S ON

Chapter 11 Valuing the Economic Benefi ts of Preserving Cultural

Heritage: The My Son World Heritage Site in Vietnam 311

T RAN H UU T UAN

Dr Herminia Francisco, Director, Economy and Environment Program

for Southeast Asia, IDRC Singapore Email: Hfrancisco@idrc.org.sg

Dr Bui Dung The, Chair, Department of Science and Technology,

International Cooperation, and Postgraduate Education, College of

Economics, Hue University, Vietnam Email: buidungthe@dng.vnn.vn

Dr Tran Dinh Thao, Deputy Dean, Faculty of Agricultural Economics

and Rural Development, Hanoi University of Agriculture, Vietnam

Email: thaoktl@hua.edu.vn

Ms Vo Thi Lang (corresponding author), School of Economics and

Business Administration, Cantho University, Cantho City, Vietnam

Email: vtlang@ctu.edu.vn

Mr Ky Quang Vinh, Cantho Environmental Monitoring Center, Cantho

City, Vietnam Email: kqvinh@ctu.edu.vn; quangvinh@cantho.gov.vn

Ms Ngo Thi Thanh Truc, School of Economics and Business

Administration, Cantho University, Cantho City, Vietnam Email:

ntttruc@ctu.edu.vn

Dr Nguyen Quoc Chinh, Chair, Department of Business Management,

Faculty of Accounting and Business Management, Hanoi University

of Agriculture, Vietnam Email: nqchinh@yahoo.com; nqchinh@vnn.vn

Dr Le Quang Thong (corresponding author), Nong Lam University,

Thu Duc District, Ho Chi Minh City, Vietnam Email: lqthong_kt@

hcmuaf.edu.vn

Mr Nguyen Anh Ngoc, Vice-Director, Trade Promotion Center, Ho Chi

Minh City, Vietnam Email: anhngocitpc@gmail.com

i

Dr Nguyen Mau Dung (corresponding author), Deputy Chair, Natural Resources and Environmental Economics Department, Faculty of Agricultural Economics and Rural Development, Hanoi University of Agriculture, Vietnam Email: hau_2000@yahoo.com

Dr Tran Thi Thu Ha, Economics Department, Economics and Business Management Faculty, Vietnam University of Forestry, Hanoi, Vietnam Email: hafuv2001@yahoo.com; ha.tranthithu@wur.nl

Dr Pham Thai Hung (corresponding author), Faculty of Marketing, National Economics University, Hanoi, Vietnam Email: hungpt68@gmail.com

Dr Bui Anh Tuan, Vice-Rector, National Economics University,

Hanoi, Vietnam Email: buianhtuan@neu.edu.vn

Dr Nguyen The Chinh, Vice-Director, Institute for Strategy and Policy for Natural Resources and Environment (ISPONRE), Ministry

of Natural Resources and Environment (MONRE), Hanoi, Vietnam Email: thechinh@fpt.vn

Mr Pham Khanh Nam (corresponding author), Environmental

Economics Unit, School of Business, Economics and Law, Göteborg University, Sweden Email: pham.khanh.nam@economics.gu.se

Mr Tran Vo Hung Son, Faculty of Development Economics,

University of Economics, Ho Chi Minh City, Vietnam Email:

sontran@ueh.edu.vn

Dr Tran Huu Tuan, Faculty of Economics and Development

Studies, College of Economics, Hue University, Vietnam Email: tuantranhuu@yahoo.com

ii

It is my great pleasure to introduce this book, “The Economics of

Environmental Management in Vietnam,” to you - students of economics,

scholars, policy-makers, and legislators who are dealing with environmental

protection in Vietnam This book is a timely publication by the Economy

and Environment Program for Southeast Asia (EEPSEA) in light of the

Vietnamese Government’s forthcoming policy to incorporate economics into

the management of natural resources and the environment

Indeed, Vietnam is a country that is blessed with rich natural

resources which our people depend on heavily It is crucial that we protect and

conserve these resources for the welfare of present and future generations

This publication will be an important contribution to the Government’s

efforts to improve environmental protection, balance economic growth and

environmental conservation, and build environmental management capacity

It is my expectation that environmental policy-makers and managers will fi nd

that it helps them to better evaluate environmental project proposals and

develop policies and regulations to protect the environment and govern the

use of natural resources more effectively

I also trust that students and researchers interested in pursuing

environmental economics as a fi eld of specialization will fi nd the research

methodologies described in this book useful in analyzing and providing sound

solutions to environmental challenges in the country

On behalf of the Ministry of the Natural Resources and Environment of

Vietnam, I commend the initiative, competence, and dedication of Vietnamese

researchers who carried out the studies reported herein I would also like to

express my sincerest appreciation to EEPSEA for its support in building the

capacity of Vietnamese researchers in the fi eld of environmental economics

It is my earnest hope that the Vietnamese citizens who read this book

will use it for the betterment of the environment in the country

PHAM KHOI NGUYENMinister of Natural Resources and Environment

Government of Vietnam

iii

O VERVIEW OF E CONOMIC R ESEARCH ON

P HOTO : K AREN L OU F RANCISCO

BUI DUNG THE AND HERMINIA FRANCISCO

1.0 Introduction

1.0 Introduction

For more than a decade now, the Vietnamese economy has been experiencing a high growth rate of 6-8 per cent per annum Like other developing countries, this growth is highly dependent on the use of its natural resources Continuous growth brought about by global market integration coupled with rapid urbanization has subjected Vietnam’s natural resources to considerable stress The main environmental issues currently facing Vietnam are water and air pollution, the degradation of land and forest resources, the loss of biodiversity, and the high use of biomass fuels (MONRE 2004) These problems threaten the sustainable development of Vietnam

In an effort to address the environmental challenges facing the country, the Government of Vietnam has established a legal framework

on environmental sustainability, which is showing some positive initial results In 2003, it established the Ministry of Natural Resources (MoNRE) and approved the National Strategy for Environmental Protection (NSEP) A number of laws and regulations on environmental protection were amended/issued and brought into effect The Law

on Environmental Protection was revised and approved in 2005, the Law on Water Resources was approved in 1998, the Law on Land was approved in 2003, and the Law on Biodiversity was approved in 2008 These legislative documents are the legal foundation for the reform of environmental protection policies, promoting the use of economic or

of environmental protection efforts

During the last decade, the Environmental Protection Agency

of MoNRE has promoted the use of market-based instruments in parallel with traditional administrative ones Vietnam’s National Environmental Protection Fund was established in 2002 and similar funds are being established at the sectoral and provincial

1 Vietnam has initiated a policy of involving all sectors in environmental protection efforts This process is referred to as the “socialization” of environmental management and is commonly used in government documents.

levels Several environment-oriented taxes or fees have recently been adopted while subsidies on chemical fertilizers and pesticides have been removed Environmental protection charges for wastewater have been adopted since January 2004 New clean air legislation and decrees that focus on pollution charges for the industrial and transportation sectors as well as economic incentives to encourage compliance with environmental laws will soon come into effect.

This book is a collection of short reports of research studies conducted by Vietnamese economists over the last ten years on some

of the most pressing environmental problems in Vietnam All the studies were supported by the Economy and Environment Program for Southeast Asia (EEPSEA) The researchers have analyzed specifi c environmental problems by estimating the costs they impose on society and some of the studies have evaluated solutions to the problems using either a cost-benefi t or cost-effectiveness analysis A few have looked into the behavior of economic agents such as farmers, fi rms, and consumers to understand what incentives determine the actions they take in using environmental resources

We have highlighted the methodologies used in the various analyses in the hope that they will be of use to economics students interested in pursuing environmental economics as a fi eld of specialization We also expect that the fi ndings of these studies will be

of value to natural resource managers and policy-makers

This introductory chapter is divided into three parts Part 1 gives a brief summary of the environmental problems faced by Vietnam, Part 2 is a synthesis of the various studies and Part 3 concludes the chapter

2.0 Environmental Problems in Vietnam

2.0 Environmental Problems in Vietnam

being used as waste sinks for domestic sewage and industrial waste

In inner parts of big cities like Ha Noi, Ho Chi Minh and Hai Phong, these water bodies have been found to have pollutions levels that are

fi ve to ten times higher than the national standards for surface water (Category B-TCVN 5942-1995) According to a World Bank Report (2005), most of Vietnam’s city lakes are suffering from mutative eutrophication and organic re-contamination The same report cited that the concentrations of organic content as measured by biological

country’s major rivers exceeded the standards by 1.5-3 times and that

of total suspended solids (TSS) in rivers, lakes and main canal systems exceeded the permitted level by 1.5-2.5 times

The major sources of water pollution are industries, agriculture, urban residences, and handicraft villages Almost all urban wastewater

is discharged into the environment without treatment According

to primary statistics, only 4.26% of total industrial wastewater is treated to meet Vietnamese environmental standards (MONRE 2004; MONRE and World Bank 2005) Untreated industrial and domestic wastewater and water leaching from waste dumping sites is a serious cause of surface water and groundwater pollution due to the presence

of high levels of pollutants such as heavy metals, nitrates, and arsenic Currently, only a few waste dumping sites have operating wastewater treatment systems

In rural areas, the main source of water pollution is wastewater from agricultural activities and handicraft villages3.2The residues

of chemical pesticides and synthetic fertilizers and waste from animal husbandry (namely, dairy cattle and pig-raising) cause eutrophication and water contamination There are more than 1,450 handicraft villages in the country These villages have limited, if any,

2 BOD5 (Biochemical Oxygen Demand in fi ve days) is a measure of the organic content

of wastewater It is the amount of dissolved oxygen consumed in fi ve days by biological processes breaking down organic matter in wastewater The units of measurement are

in milligram per liter (mg/l).

3 “Handicraft villages” (or “craft villages”) is the term commonly used in Vietnam to refer to villages engaged in cottage or home industry.

pollution control facilities and therefore they discharge a huge volume

of waste into the environment (MONRE and World Bank 2005) In many places, especially in paper production, slaughtering, and weaving and dying villages, the problem of water pollution has become a major concern for the local people and authorities

In particular, water pollution directly and adversely impacts human health It is one of the causes of diarrhea, bacillary dysentery, cholera, typhoid, hepatitis A, and parasitic diseases, among others These illnesses can lead to malnutrition, anemia, iron defi ciency, the under-development of children, and death, especially for children

Vietnam’s ambient air environment in nearly all urban and industrial areas is affected by various pollutants such as particulates, lead and nitrous oxides, sulfur dioxide and carbon monoxide emitted

by vehicles, factories, power plants, and households, among others Dust pollution has been observed in most of the urban areas in the country; in many places the pollution has reached alarming levels For instance, the dust concentration in the air in large cities like Hanoi, Ho Chi Minh, Hai Phong, and Da Nang is two to three times higher than the permitted standard (MONRE 2004; MONRE and World Bank 2005)

Industrial production activities remain one of the major sources

of air pollution Almost none of the old industrial establishments and small and medium enterprises have dust fi lters or toxic gas treatment equipment Old industrial facilities are scattered with many located

in the inner parts of cities Coal and fuel oil are often used to power old factories, which emit pollutants into the air Moreover, many large factories, such as thermal power stations, and cement and construction material plants are located outside industrial zones, thus not being subject to strict pollution control measures Pollution from the transportation sector is also a major problem in large cities The rapid increase in the number of cars in Ho Chi Minh City has led to increased lead levels in the ambient environment (Khoa Hoc Newspaper 2007)

The air quality in rural areas, however, has generally remained good, except in some handicraft villages and areas with high concentrations of pig and dairy cattle farms For example, many residents in the Gia Lam District of Hanoi fi nd the smell from pig and dairy cattle farms a nuisance (Nguyen 2001) The air in handicraft villages is polluted mainly with smoke from kilns which use coal and wood as fuel and discharge dust and toxic gases such as carbon monoxide, carbon dioxide and sulfur dioxide into the air The air pollution in some places is so serious that local residents fi nd diffi culty

in breathing Like water pollution, air pollution is also linked closely to health impacts A World Health Organization study in 2001 reported that 35.7% of cases of lower respiratory system infection and 22% of chronic lung disease cases were caused by indoor air pollution (MONRE and the World Bank 2005) The damage/cost caused by air pollution in Hanoi has been estimated at one billion Vietnamese dongs per day (Kieu 2005)

Vietnam has nearly 25 million hectares of sloping land It has been estimated that 12.5% of Vietnam’s sloping land is poor, severely degraded and prone to severe erosion, and has a very thin topsoil layer About 60% of this mountainous land is being continuously degraded with 1.5 cm of the topsoil layer of agricultural land being lost every year (Vo 2002)

Soil erosion and degradation in the uplands is caused both by man and bio-geographical factors Erosive farming practices such as slash-and-burn cultivation with shortened fallow periods and mono-cropping are often cited as the main causes of soil erosion The inclement climate with intense rainfall and sloping topography also make the uplands susceptible to erosion This loss of soil leads in turn to a decline in agricultural productivity It also exhausts the vegetative cover and depletes the biodiversity; which results in a cycle of worsening land erosion and degradation

Land degradation is not only linked to the loss of productive topsoil In Vietnam, the use of chemical fertilizers in farming is a

major source of land pollution Vietnam’s use of fertilizers is increasing both in quantity and type At least 1,420 different types of fertilizers are found in the market Vietnam’s yearly imports of 1–1.4 million tonnes

of urea fertilizer meet only one third of the local demand (MONRE and the World Bank 2005) Although the level of fertilizer utilization in agriculture is relatively low, the total amount used is still a signifi cant source of pollution due to the low quality of the fertilizers and their improper and imbalanced use (Le 2001) The use of insecticides, fungicides, and herbicides in agriculture is another serious contributor

to soil pollution in Vietnam From 1997, the total amount of imported pesticides has been limited to 2,500 end-product-equivalent tonnes, but the total amount of pesticides used (mainly in rice cultivation) has increased by 1.2-1.5 times each year from the 1990 level (MONRE and the World Bank 2005)

The high concentration of toxic elements and heavy metals in the soil increases the amount of harmful substances absorbed by plants and animals, leading to negative impacts on human health as well The extensive use of chemicals in agriculture has led to an increase in the number of cases of poisoning In 2004, there were 145 such cases—of which 23% was through food and 13% from chemicals—affecting 3,580 people and causing 41 deaths (MONRE and the World Bank 2005)

3.0 The Application of Economics in the Analysis of

3.0 The Application of Economics in the Analysis of

Environmental Problems in Vietnam: A Synthesis

Environmental Problems in Vietnam: A Synthesis

The case studies in this book provide insights into the challenges facing Vietnam in managing its environmental resources The studies cover three main themes, namely, agricultural and aquacultural pollution, industrial pollution, and the demand for environmental improvement and conservation These case studies provide concrete examples of how environmental economics tools and techniques can be applied in addressing environmental problems

3.1 Agricultural and aquacultural pollution

3.1.1 Soil erosion and soil conservation

Soil erosion due to falling rain and water fl owing over and through the soil is a major environmental and socio-economic problem

in Vietnam’s sloping uplands The amount of soil loss is also dependent

on how the farmers use the land The loss of soil is an important concern

as it means the loss of organic matter and nutrients, reduction in the soil’s water-holding capacity and a decrease in the depth of cultivable soil Ultimately, these result in a decline in farm productivity and income, causing worsening poverty in the uplands

Tran Dinh Thao measured the on-site costs of soil erosion and estimated what the benefi ts of adopting soil conservation practices would be to the farmers in the mountainous regions of northern Vietnam (Chapter 2) In a seven-year period, soil loss in the of plots without soil conservation was 2.2 times higher than the plots with soil conservation In monetary terms, this translated to a loss of 1,832 thousand VND (USD 108.43) per hectare in 1998 prices

The study found that soil erosion signifi cantly reduced crop yields Comparing farms with and without soil conservation measures, he estimated that maize yields decreases slowly when the farmer adopted soil conservation measures as compared to a 17.4% yield loss in the case without soil conservation practices The study compared the net benefi ts of three soil conservation techniques using cost-benefi t analysis These were: a) the use of tea hedgerows; b) the use of Tephrosia candida hedgerows, and c) the use of tea and grass hedgerows Using Tephrosia candida as hedgerows was found to be most economically effi cient among the three practices

The study further analyzed farmers’ behaviors toward soil conservation investment It found that expenditure on soil conservation was affected by farm characteristics, farm incomes, labor resources, and the education level of the head of the household as well as by rural credit

availability To promote soil conservation practices in the region, policies should prioritize designing a master plan for land use, giving land rights to farmers, providing training on crop production and soil conservation technologies, providing technical support to farmers, and developing diverse economic activities in the region.

A similar study on soil erosion in the uplands of Central Vietnam

is presented in Chapter 3 wherein Bui Dung The undertook an economic analysis of soil erosion under four typical land use systems: a) an upland rice-based system, b) an upland sugarcane system, c)

a fruit tree-based agroforestry system, and d) a eucalyptus-based system Using an erosion-productivity model, the study found that the upland rice-based system was the most erosive, with a soil loss of 80 tonnes/hectare per year Although less erosive than the upland rice-based system, the sugarcane system produced an annual soil loss of

53 tonnes/hectare per year, which was still high The fruit tree-based agroforestry system was found to be the least erosive, with a soil loss

of 40 tonnes/hectare per year Measured by the value of annualized income loss, the on-site opportunity cost of soil erosion for each land use system per hectare per year as compared to the fruit tree-based agroforestry system were as follows (in increasing order): 635,000 VND (USD 37.57) for the sugarcane system; 1,019,000 VND (USD 60.29) for the eucalyptus-based system; and 1,022,000 VND (USD 60.47) for the upland rice-based system

To examine the determinants of the choice of land use systems, The undertook a multinomial logit analysis He found that the choice

of land use system was infl uenced by farmers’ attributes such as education, age, landholding and income; by land plot characteristics such as acreage, slope and distance from the farmer’s house; and

by policy-related variables such as land use incentives, extension and credit The set of policy-related variables in particular was very important in explaining the land use choice by upland farmers He further discovered that interventions in the past were biased towards reforestation and sugarcane production Inadequate attention was being paid to the agroforestry system Moreover, it was also a great

challenge to persuade upland farmers to adopt sustainable land use practices such as the agroforestry system because it required high establishment costs plus the management of the system was complicated both biologically and economically In addition, upland farmers in the area were poor, lowly educated, and lived in a fairly isolated environment Trapped in poverty, these farmers, especially the ethnic minority, mined the soil using erosive land use systems to meet their urgent needs.

3.1.2 Water pollution from aquaculture

Aquaculture production is a thriving industry in the Mekong Delta (MD) of Vietnam and has been growing rapidly in the last two decades “Tra fi sh” (Pangasius hypoththalmus) is one popular catfi sh species bred in the MD Chapter 4 features a study by Vo Thi Lang,

Ky Quang Vinh and Ngo Thi Thanh Truc on the pollution caused by the dumping of wastewater from Tra fi shponds into canals, creeks and rivers in the Thotnot District of Cantho City

This study examined the environmental consequences arising from pond Tra fi sh breeding and explored technically and economically feasible wastewater treatment options for bringing the water pollution down to an acceptable level in accordance with Vietnamese environmental standards It found that the chemical oxygen demand (COD) concentration in effl uents in Tra pond water was 34 mg per liter, exceeding the allowable limit of COD in surface water (less than

10 mg per liter) according to Vietnam’s surface water quality standards (TCVN 5942-1995, Class A) The pollution load rate (PLR) in Tra fi sh production was 0.098 kg of COD per kilogram of fi sh produced

The authors also compared the cost-effectiveness of three technical options that were available to Tra fi sh farmers to treat the wastewater from their ponds These were: a) the aeration system, b) the trickling fi lter system, and c) the use of constructed wetlands Trickling fi lters were found to be the most cost-effective option with an

estimated treatment cost of 1.51 thousand VND (USD 0.09) per kilogram

of COD This was, however, much higher than the environmental protection fee of 0.3 thousand VND per kilogram of COD

The social acceptability of the three options was also assessed through focus group discussions The major objections raised by the

fi sh farmers centered around the fact that all three options needed extra land, adequate power supply, and considerable investment, which were all signifi cant constraints to fi sh producers When asked

to rank the three options, on the condition that the government would strictly enforce environmental regulations, 50% of the farmers chose the use of trickling fi lters with 36% choosing the aeration system

Some (14%) of the participants refused to rank the options, indicating their objection to any proposal to make them comply with environmental standards All of them suggested that the State install the preferred technologies as a pilot project fi rst to demonstrate their performance

3.1.3 Dairy farming

Vietnam’s dairy cattle husbandry has rapidly expanded in recent years, particularly in the suburban areas in the north Dairy cattle are raised mainly by small farm households which do not have enough resources for environmental protection Therefore, dairy cattle husbandry causes a number of environmental problems, especially air and water pollution Air pollution due to cattle manure is a serious problem since cowsheds are located near or connected to the farmers’ houses The wastewater from cattle farms is often not treated and discharged into gardens, ponds, and rivers directly, polluting these water resources This imposes a huge health cost on people living in the area

Nguyen Quoc Chinh assessed the pollution control technologies available to cattle farmers in the Gia Lam District in suburban Hanoi, Vietnam (Chapter 5) The options assessed were: a) the traditional option of loading manure into a settling tank or a hole in the garden

near the cowshed, b) the installation of small or large-scale fi dome biogas digesters, and c) waste removal by middlemen Through

xed-a process of rxed-anking using xed-a combinxed-ation of economic, environmentxed-al, and practical feasibility indicators, the small biogas digester was found to be the best pollution control option for the suburban areas

of Hanoi However, the promotion of this technology was constrained

by factors such as its technical design, high initial investment costs, inadequate construction skills of rural workers, and traditional cooking practices that used other forms of fuel The study recommended that the Vietnamese government provide technical and fi nancial support, backed up by education and awareness campaigns, to encourage the adoption of biogas digesters

3.2.1 Water pollution and industrial estates

The establishment of industrial estates or zones in Vietnam has been an important step in its industrialization Numerous industrial zones have been constructed since 1993 throughout the country This implies an increasing need to keep industries compliant with wastewater management regulations Although concerned authorities have improved the environmental management of industrial estates over recent years, effective pollution control measures remain limited Many industrial estates have not implemented centralized wastewater treatment plants and represent a great threat to the quality of the water in the environment The lack of wastewater treatment facilities, especially common wastewater treatment (WWT) plants, together with inappropriate monitoring procedures, has led to large amounts

of untreated wastewater being discharged into rivers Serious water pollution has been observed in Dong Nai River (Dong Nai Province), Sai Gon River (HCMC), and Thi Vai River (Ba Ria-Vung Tau Province) This raises the questions of what factors are causing this situation and what would be an appropriate approach to address the problem

It also suggests a need for more effective regulation, enforcement, and supporting services

A study by Le Quang Thong and Nguyen Anh Ngoc (Chapter 6) provides an analytical analysis of wastewater management in key industrial estates located in Ho Chi Minh City, and Binh Duong, Dong Nai and Ba Ria-Vung Tau Provinces It was found that the levels of wastewater treatment in many industrial estates were low; many estates and the factories that operated inside them had not invested

in WWT plants, and many companies (even those connected to WWT plants) chose not to comply with wastewater treatment legislation Among the reasons for this were lack of investment capital, poor law enforcement, low penalties for non-compliance, and an inappropriate fee structure for wastewater treatment

The study found that there were a number of constraints

or disincentives to the construction of common WWT plants in an industrial estate, namely the lack of fi nancial resources, limited land area, and low occupancy rates Without pressure from the government, such estates were likely to place low priority on building the plants The research further revealed that there were various factors affecting the effectiveness of pollution control measures in industrial zones, including how the infrastructure companies conducted their business, the type of industries located within the estate, and the type of investors The industrial estates in the four study sites faced problems in water pollution control due to insuffi cient and ineffi cient common WWT plants as well as diffi culties in quantifying appropriate treatment fees and monitoring the compliance of investors In addition, the authorities in certain areas gave priority to attracting investors to industrial zones over adherence to water pollution control regulations The study concluded that water pollution control policies for industrial estates in Vietnam defi nitely needed to be reformed

3.2.2 Handicraft villages

Handicraft villages are a typical feature of rural Vietnam Such villages have a high concentration of households (typically over 30%) involved in one type of enterprise Since the renovation in 1986, handi-craft village development has been encouraged by the government As

a result, handicraft villages have been rehabilitated and developed,

especially in the Red River Delta region where cropland per capita is very small compared with other regions of Vietnam Without pollution control facilities, handicraft villages discharge a huge volume of waste into the environment.

In Chapter 7, Nguyen Mau Dung and Tran Thi Thu Ha provide

an analysis of the environmental consequences of cassava processing and the cost-effectiveness of pollution control options in the handicraft village of Duong Lieu in the Red River Delta In their study, they found that the wastewater from cassava processing caused serious pollution

in the village, leading to a high incidence of ailments such as headaches, backaches, respiratory diseases, skin irritation, stomachaches, sore eyes, and cancer

To mitigate the environmental pollution in Duong Lieu Village, three pollution control options were designed and evaluated: a) a small treatment plant for every processing household (Option 1); b) a treatment plant for a group of processing households (Option 2); and c)

a treatment plant for the whole village (Option 3)

A cost-effectiveness analysis found Option 1 to be the most cost-effective, followed by Options 3 and 2 This option was quite sensitive to increased construction costs When the construction cost was increased by 10%, Option 3 became the most cost-effective If equipment or reagent costs increased, there would be no change in the original ranking of the average treatment cost among systems So if only the treatment costs were to be considered, wastewater treatment

at the individual household level should be selected, but if construction costs were to rise, then the establishment of a treatment system for the whole village would be the most cost-effective option

An analysis of the social acceptability of the three options was also done through focus group discussions Option 1, which entailed

quite diffi cult for most households due to limited space Option 3 was the most widely accepted; it had the lowest treatment costs per cubic

meter of wastewater and there was available space for treatment plant establishment It was also perceived to be the most likely to get

fi nancial support and completely solve the water pollution problem in the village

Another study by Nguyen Mau Dung (Chapter 8) investigated why many paper-making plants in the Phong Khe Commune of Bac Ninh Province did not comply with environmental regulations It was found that due to the low level of environmental compliance, the actual costs of compliance by paper-making plants in the commune were much lower than the costs of full compliance Only a few violators paid the non-compliance fi nes Signifi cant determinants of environmental compliance included the type of plant, location of the plant, and education level of the plant owners The plants located inside the industrial zone were found to comply better with the regulations than those outside it The main reasons why the plants did not comply with the regulations were the plant owners’ inadequate understanding

of environmental regulations, their lack of fi nancial resources, limited space for treatment system installation, small fi nes, and the limited capacity of the local environmental authorities to enforce the regulations

The study also undertook an analysis of the social acceptability of two wastewater treatment options: a) establishing individual treatment systems (Option 1) and b) establishing a treatment system for a group

of plants located close to one another (Option 2) The analysis was done through focus group discussions using several criteria such as physical feasibility, fi nancing feasibility, economic effi ciency, cultural acceptability, and operational or administrative practicality In terms

of economic effi ciency, Option 2 was found to be more cost-effective than

available space for system establishment, high cultural acceptability, and greater ease in getting and managing fi nancial support Thus, the majority of the respondents (91.67%) were more keen on Option

2 However, the implementation of the option required the collective action of the various stakeholders, namely the local environmental

management unit, the commune’s People’s Committee, and the making plant owners themselves.

paper-3.2.3 Trade liberalization

The trade policy reform as one pillar of the reform package since the early 1990s has transformed Vietnam from an import-substituting economy into a highly liberalized one Vietnam’s economy has become increasingly open to international market forces with an impressive growth of exports and imports over the past two decades The export growth in the fi rst half of the 1990s was largely led by agricultural products, which accounted for an average of 45% From 1997–2004, light manufacturing exports surpassed agricultural export turnover due to the rapid growth of garment, footwear, and seafood industries, and the collapse of world prices for Vietnam’s major agricultural exports (World Bank 2006) Along with the high export growth, imports expanded by an average of 21% per year in the period 1990–2004 Raw materials, fuel, equipment, and machinery for domestic production dominated import transactions, accounting for an average of 90% of the total imports

A study by Pham Thai Hung et al (Chapter 9) found that trade liberalization had exacerbated industrial pollution at both the fi rm and industry levels Industrial pollution was found to be heavily concentrated in the southeast region and the Red River Delta in the north Paper products, chemicals, fertilizers, iron and steel, textiles and garments, and food and beverages were among the top polluting industries The central-level state-owned enterprises (SOEs) were identifi ed as the major contributors to industrial pollution On average and ceteris paribus (all other things being equal), a reduction of 10%

in the weighted average tariff produced an increase in pollution levels

by 0.21%–0.33% The trade effect appeared strongest in relation to air pollution, but was lesser in the case of toxic pollution

The trade-off between trade liberalization and industrial pollution

is worrying given that Vietnam has recently become a World Trade Organization (WTO) member and further trade liberalization measures are imminent The study suggests that more explicit awareness of the

trade-off between trade liberalization and pollution is necessary, particularly in pursuing the recently mandated strategic environmental assessments at the sectoral level Further trade reforms should be fully considered in a broad context and the potential negative effects

on the environment need to be addressed by appropriate policy measures Enforcing environmental regulations and ensuring that IT applications are environmentally friendly are particularly important

3.3.1 Clean water supply

It is estimated that about 80 per cent of Vietnam’s population has access to clean drinking water Urbanization is proceeding at a rapid rate and signifi cant investments in urban infrastructure and environmental services are required to keep up A large and growing proportion of the urban population lives in poorly serviced slum areas with inadequate water, sanitation, drainage, and paved access In Ho Chi Minh City alone, 300,000 people live in such slums (World Bank 2007) In Vietnam, frequent failures with respect to urban water improvement projects have been costly experiences due to a lack of understanding on the part of the providers of household demand for water, household demographics, fi nancial status, and household water use behaviour The fi nal result is that the people’s demand for reliable water services has not been met (WSC 2002) Households in Ho Chi Minh City are using unreliable, poor quality piped water and paying relatively cheap monthly water bills Many households also use non-piped water for example, from tube-wells, for their daily domestic needs

A study by Pham Khanh Nam and Tran Vo Hung Son (Chapter 10) was carried out in response to the growing number of water supply problems in the city, highlighting the need for consumer demands

to be given priority in water supply planning This study estimated household preferences for improved water services in Ho Chi Minh

City using the discrete choice Contingent Valuation (CV) Model and Choice Modeling (CM) The study found that many of the households were already spending a lot of money to cope with the current unreliable, poor quality public water supply However, they were still willing to pay between 148,000 VND (or USD 9.61) and 175,000 VND (or USD 11.36) per month on average for improvements in their water supply, about 35% higher to more than double their existing water costs Piped households were willing to pay 3.5% of their monthly income for improved water services while the rate for the non-piped households ranged from 4.1% to 4.6%, depending on whether it was the CV or CM analysis The welfare estimates obtained from the two measures (CV and CM) were not signifi cantly different.

3.3.2 Conservation of cultural heritage

A large number of the United Nation’s World Heritage Sites (WHSs) is found in developing countries Unfortunately, many of these are in bad condition and desperately in need of repair through restoration and preservation programs The My Son Sanctuary, a UNESCO World Cultural Heritage Site in the province of Quangnam, Vietnam, is severely threatened with degradation The questions that beg to be answered are whether society values these WHSs, which are global public goods, and whether the benefi ts that they offer justify the costs of conserving them

A study by Tran Huu Tuan (Chapter 11) attempted to answer these questions using the My Son temple complex as a case study The author used two complementary approaches—Contingent Valuation (CV) and Choice Experiment (CE)—to derive the values that foreign and local visitors placed on the temple’s preservation The mean willingness to pay (as entrance fees) for preserving My Son in the CV survey was found to be USD 7.97, USD 1.67, USD 2.53, and USD 2.11 for foreign visitors to My Son, Vietnamese visitors to My Son, Vietnamese visitors

to the area, and local residents, respectively Meanwhile, the CE results showed that an adult foreign visitor to My Son was willing to pay an entrance fee of USD 6.21 for a change from the status quo brought about

by the implementation of the preservation plan The study also found

that a local household in Quangnam Province was willing to pay USD 2.14 for a similar change The two methods, CV and CE, produced very similar results and this can be interpreted as evidence of convergence validity A pooled analysis of the fi ndings further showed that the CV and CE data had the same underlying preference structures.

The study suggested that a larger difference in the entrance fees for foreign and Vietnamese visitors to My Son would increase revenues and possibly secure greater social equity Such an optimal entrance fee structure would also reduce congestion at the site and so achieve the twin goals of revenue generation and heritage preservation However, this pricing regime would not reduce the congestion created

by Vietnamese visitors The idea of imposing a pricing structure with seasonal differentiations to reduce the number of Vietnamese visitors

in the peak season was offered by the author as a feasible option The results also showed that if the justifi cation for investment were

to be based only on entrance fees, then this would lead to a level of preservation for My Son that would not be optimal for the site or society

4.0 Conclusions

4.0 Conclusions

Vietnam is making some headway from the implementation of its National Plan on Environmental and Sustainable Development 1991-2000 A system of environmental protection within a fairly robust legal framework has been instituted and initial achievements are quite promising For example, pollution and environmental degradation in some areas have been somewhat stemmed, the quality

of the environment has noticeably improved in certain locations, and pressing environmental problems such as deforestation are being addressed Environmental protection is becoming more “socialized”

or mainstreamed with more businesses/enterprises investing in the adoption of environmentally friendly technologies and the construction

of waste treatment facilities

Nevertheless, as acknowledged in the country’s National Strategy for Environmental Protection until 2010 and Vision Towards

2020, there are intimidating environmental challenges Vietnam has

to contend with in the years to come for example, in terms of the trade-offs between economic growth and environmental conservation, obsolete technical infrastructure, and inadequate environmental management capacity (MONRE 2004)

As illustrated by the studies contained in this publication, environmental economics research can help ensure wise trade-offs and improve the effi cient use of resources in environmental protection by providing an understanding of the costs and benefi ts of conservation activities as well as the behavior of fi rms and individuals in respect of meeting their environmental responsibilities

The importance of the role of environmental economics has been recognized in Vietnam as evidenced by the stipulation in its National Strategy for Environmental Protection that research must

be carried out for the effective application of environmental protection instruments such as taxes and fees; emission quotas and transfers; environmental credits, environmental franchising and other fi nancial incentives/disincentives It is hoped that this book will spur further research in the fi eld of environmental economics to support and provide practical solutions to Vietnam’s environmental problems

References

Khoa Hoc Newspaper 2007 Ho Chi Minh City: Air Polluted with Lead http://www.khoahoc.com.vn/doisong/moi-truong/tham-hoa/17153_TP_HCM_Khong_khi_bi_o_nhiem_chi.aspx (In Vietnamese)

Kieu, M 2005 Hanoi Loses One Billion Dong per Day due to Air Pollution Khoa Hoc Newspaper http://vietnamnet.vn/khoahoc/moitruong/2005/07/472581/ (In Vietnamese)

Le V K 2001 Agriculture and Environment Agriculture Publishing House

MONRE (Ministry of Environment and Natural Resources) and World Bank 2005 The State of Environment Report of Vietnam: Overview http://www.nea.gov.vn/HTMT_Tongquan05.htm

MONRE (Ministry of Environment and Natural Resources) 2004 National Strategy for Environmental Protection until 210 and Vision toward 2020 National Political Publisher Hanoi Vietnam

Nguyen M C 2001 Dairy Cattle Development in Phu Dong Commune Annual Community Report Gia Lam, Hanoi Vietnam

Vo Q 2002 “Environmental Overview of Vietnam Uplands in the Last Ten Years: Current Status and Arising Issues.” In Le Trong Cuc and Chu Huu Quy (eds) Sustainable Development in Vietnam Upland Areas: A Look at the Last 10 Years and Arising Issues Agricultural Publishing House Hanoi

World Bank 2006 Accelerating Vietnam’s Rural Development: Growth, Equity and Diversifi cation Volume 1: Overviews World Bank Vietnam Offi ce Hanoi

World Bank 2007 Vietnam Environment http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/EXTEAPREGTOPENVIRONMENT/0,,contentMDK:20266331~menuPK:3558292~pagePK:34004173~piPK:34003707~theSitePK:502886,00.html

WSC (Water Supply Company) 2002 Water Pricing in Ho Chi Minh City: Present Situation and Solutions Report of the WSC Conference Proceedings September 20, 2002 Ho Chi Minh City Vietnam 96 pages

T HE O N -S ITE C OSTS OF S OIL E ROSION

P HOTO : K AREN L OU F RANCISCO

TRAN DINH THAO

This study measured the on-site costs of soil erosion and the benefi ts of soil conservation practices in the mountainous regions of northern Vietnam, using time series experimental data and cross-sectional data from a farm survey The study found a signifi cant difference in crop yields between farming practices with and without soil conservation measures The soil conservation technology using Tephrosia candida as hedgerows yielded a high net present value, proving to be a suitable technique for farmers to use The results

of the production function analysis showed that soil conservation practices facilitated intensive and improved crop productivity For maize production, a 1% increase in material input and labour costs for soil conservation practices would increase the yield of maize by 0.04% and 0.0512% respectively For cassava production, the yield would increase by 0.0035% and 0.0064% respectively Meanwhile, expenditure on soil conservation was affected by farm characteristics, farm incomes, labour resources, and the education level of the head of the household as well as by rural credit availability To promote soil conservation practices in the region, the top priority policies should focus on training in and technical support for the adoption of improved crop production and soil conservation technologies, fi nancial support

to enable farmers to invest in soil conservation measures, and the development of alternative economic activities in the region

1.0 Introduction

1.0 Introduction

The mountainous regions of northern Vietnam are spread out over 16 provinces covering a land area of 102,961 km2 with a population of more than 12 million people The region is made up of mountains, hills, and small valleys Soil erosion due to bad farming practices on sloping lands, without soil conservation, has been known

as a serious problem in the northern mountainous areas, affecting not only the people, natural species and biological environments there, but also a large area of the Red River Delta

Soil erosion causes loss of productivity in the region At the farm level, declines in crop yields due to soil erosion result in low income This particularly affects the poor and leads to increased unchecked migration to urban areas and other regions The off-site consequences

of soil erosion place pressure on the environment in terms of sedimentation and silt that clog up irrigation channels and lower the water storage capacity of dams In Vietnam, soil conservation has recently been given attention, but little is known about the economic costs of soil erosion and the benefi ts of soil conservation

This study is therefore to measure the on-site costs of soil erosion and productivity gains from soil conservation at the farm level in the mountainous areas of northern Vietnam It also deals with factors that infl uence a farmer’s investment in soil conservation practices The importance of this study lies in identifying ways to enhance soil conservation practices and assist policy-makers in selecting soil conservation strategies for mountainous areas The objectives of the study are given below

• To estimate the on-site costs of soil erosion using a production function analysis

• To measure the impact of soil conservation practices on crop ductivity

• To undertake a cost-benefi t analysis of soil conservation sures for maize and cassava farming systems

• To assess the extent of the adoption of soil conservation practices

by farmers and analyse the determinants of soil conservation expenditure

• To offer policy recommendations on soil conservation practices in the mountainous regions of northern Vietnam

2.0 Methodology

2.1 Measurement of On-Site Costs Using Experimental Data

To measure the on-site costs of soil erosion, one must estimate the value of crops lost due to soil erosion (Barbier 1995) To do this, we used yield and soil loss functions and conducted a cost-benefi t analysis (CBA)

The CBA method has been used in more recent studies to analyse the costs of soil erosion and the benefi ts of controlling it (Enters 1998; Current and Scherr 1995) It compares the costs and benefi ts over the lifespan of the project and then computes the present value of the net benefi t stream at the prevailing discount rate (Francisco 1998)

2.1.1 Experimental data

decline over time following soil loss Data used for the analysis came from soil erosion experiments by the National Institute of Soil and Fertilizers on two crops (maize and cassava) in three villages (Hoason, Dongdang and Ngocphai) in the period 1992 to 1998 The experiments included four treatments for each of the two crops as follows:

• Baseline treatment (T1): Growing maize and cassava without soil conservation practices

• Alley-cropping treatment (T2): Tea as hedgerows in addition to growing maize and cassava

• Hedgerow treatment (T3): Tephrosia candida as hedgerows on the boundaries in addition to growing maize and cassava

• Hedgerow treatment (T4): Tea and grass as hedgerows in addition

to growing maize and cassava

individual plot for the experiment was 30m*7m, making an area

of 210 m2 Data from each treatment included soil loss, crop yields, inputs used, and the market prices of inputs and outputs during the study period It should be noted that fertilizer application for maize production was unchanged over time with N: 60 kg/ha, P2O5: 60 kg/ha, and K2O: 60 kg/ha For cassava production, the fertilizer application rates were also kept constant over time with N: 60 kg/ha, P2O5: 60 kg/

ha, and K2O: 20 kg/ha

2.1.2 Regression analysis

crop yield and soil loss The function was estimated for two crops, maize and cassava

Yn is the crop yield under the baseline treatment;

Xiw is the cumulative soil loss in treatments with soil conservation;

Xin is the cumulative soil loss in the baseline treatment

treatments with and without soil conservation depends on the reduction in soil loss

2.1.3 Financial analysis

methods of soil erosion control is very important in fi nding the best method for application in practice In this study, a fi nancial analysis was done to compare the costs and benefi ts between different treatments of soil erosion control

alternative investments or actions These include the internal rate of return (IRR), the benefi t-cost ratio (BCR), the net present value (NPV), and the net benefi t-investment rate (Gittinger 1982) In this study, NPV and BCR were used to compare the benefi ts of soil conservation between different treatments

2.2.1 Farm survey data

in Hoason, 82 in Dongdang, and 95 in Ngocphai Primary data was collected through personal interviews with the farmers The interviews were conducted using a questionnaire seeking information on farm characteristics, farm resources, inputs and outputs of crop production, and farmers’ knowledge and practices of soil conservation

2.2.2 Measurement of productivity gain

how the level of investment in soil conservation practices infl uenced crop productivity The Cobb-Douglas production function was chosen as

it is an appropriate function when many input variables are included The production function form used was as follows:

Y = A X11 X22 X33 X44 X55 X66 X77 eDi +ui (Equation 3)

where

Y is the crop yield;

A is the intercept;

X1 is the organic manure for crop cultivation (in tonnes);

X2 is nitrogen for crop cultivation (in kg);

X3 is phosphorus for crop cultivation (in kg);

X4 is potassium for crop cultivation (in kg);

X5 is the labour used for crop cultivation (in man-days);

X6 is the material expenditure for soil conservation

X7 is the labour required for soil conservation practices

Di is the location dummy (= 1 if the village is located in the

From the Cobb-Douglas production function, the value of marginal products with respect to expenditure on soil conservation was derived This refl ected the productivity gains from the soil conservation practices used

2.2.3 Soil conservation adoption investment

conservation and how economic incentives affect soil erosion control are helpful in forming environment-friendly agricultural policies There are many factors that affect soil conservation To analyse the impact of these factors on soil conservation investment, the following function was estimated:

Ln (Y) = 0 + 1 Ln (X1) + 2 Ln (X2) + 3Ln (X3) + 4Ln (X4) + 5Ln(X5) + 1D1 + 2D2 + 3D3 + 4D4 + ui (Equation 4)where

X1 is the farm size (in hectares);