Evaluating the effectiveness of adaptation to climate change of aquaculture farmers in phu vang district, thua thien hue province

MINISTRY OF EDUCATION AND TRAINING NHA TRANG UNIVERSITY ---o0o--- NGUYEN THI MAI EVALUATING THE EFFECTIVENESS OF ADAPTATION TO CLIMATE CHANGE OF AQUACULTURE FARMERS IN PHU VANG DISTRI

MINISTRY OF EDUCATION AND TRAINING

NHA TRANG UNIVERSITY -o0o -

NGUYEN THI MAI

EVALUATING THE EFFECTIVENESS OF ADAPTATION

TO CLIMATE CHANGE OF AQUACULTURE FARMERS IN PHU VANG DISTRICT, THUA THIEN HUE PROVINCE

MASTER THESIS

KHANH HOA - 2018

MINISTRY OF EDUCATION AND TRAINING

NHA TRANG UNIVERSITY -o0o -

NGUYEN THI MAI

EVALUATING THE EFFECTIVENESS OF ADAPTATION

TO CLIMATE CHANGE OF AQUACULTURE FARMERS IN PHU VANG DISTRICT, THUA THIEN HUE PROVINCE

MASTER THESIS

and Climate Change Code:

Topic allocation Decision

Decision on establishing the

Committee:

Defense date:

Suppervisors:

Dr PHAM THI THANH THUY

Prof CLAIRE ARMSTRONG

Chairman:

Faculty of Graduate Studies:

KHANH HOA - 2018

Finally, I’m very grateful to my family: my parents, and to my brother, and husband for encouraged me and created favorable conditions for me during the time I was conducting this study

TABLE OF CONTENTS

Page

ACKNOWLEDGMENT iii

TABLE OF CONTENTS iv

LIST OF ABBREVIATIONS vi

LIST OF TABLES vii

LIST OF FIGURES viii

ABSTRACT ix

CHAPTER 1: INTRODUCTION 1

1.1 Research problems 1

1.2 Research Objectives 4

1.3 Research questions 4

1.4 Literature review 4

CHAPTER 2: BACKGROUND 7

2.1 Geographical location 7

2.2 Economic sectors 8

2.3 Overview of aquaculture in Phu Vang district 8

2.3.1 Prawn polyculture and prawn monoculture 8

2.3.2 Aquaculture labor 9

2.3.3 Area of aquaculture 10

2.3.4 Production of aquaculture 11

CHAPTER 3: METHODOLOGY 13

3.1 Research process 13

3.2 Measurement of efficiency 13

3.3 Data collection 14

3.3.1 Secondary data 14

3.3.2 Primary data 14

3.4 Sampling method 14

3.5 Method 16

3.5.1 Propensity Score Matching Method 16

3.5.2 Analyze the factors affecting the application of farming models adapted to climate change .17

CHAPTER 4: RESULT 23

4.1 Factors effects affecting adoption in adaptation models to climate change of farmers 23

4.2 Effects of the climate change adaptation model on economic efficiency 27

CHAPTER 5: DISCUSSION AND CONCLUSION 31

REFERENCES 34

APPENDICES 38

LIST OF ABBREVIATIONS

ATE : Average treatment effect

ATT : Average treatment effect for the treated

DEA : Data Warehouse Analysis

IC :Intermediate costs

IMOLA : Integrated Management of Lagoon Activities Program

MARD : Ministry of Agriculture and Rural Develoment

MONRE :Ministry of Natural Resources and Environment

NCHMF :National Centre for Hydro - Meteorological Forecasting hoặc

National Hydro - Meteorological Service OLS : Ordinary Least Squares

PSM : Propensity score matching

QĐ :Decision

SLM : Straight Line Method

TTH : Thua Thien Hue

UBND :People's Committee

LIST OF TABLES

Page

Table 2.1: Economic sectors in Phu Vang district 8

Table 2.2: Distribution of communes and labors in Phu Vang district 10

Table 3.1: Area of aquaculture by communes 15

Table 3.2: Definition of variables 20

Table 4.1: Descriptive Statistics of characteristics of households applying prawn monoculture model and prawn polyculture model 24

Table 4.2:Descriptive Statistics of the Economic Performance of households 25

Table 4.3: Factors influencing adoption of prawn polyculture model 26

Table 4.4: Assessing the balancing of individual covariates before and after Matching 28

Table 4.5: Effects of climate change adaptation model on profit 29

LIST OF FIGURES

Figure 2.1: Map of Phu Vang district 7

Figure 2.2: Area of aquaculture (ha) in Phu Vang district 11

Figure 2.3: Production of aquaculture (tonnes) in Phu Vang district 11

Figure 3.1:Research steps 13

Figure 3.2: Map of Vinh An, Vinh Ha community 16

This paper uses a propensity score matching method (PSM) to examine the factors affecting the adoption of a polyculture model in prawn aquaculture, and compares the economic efficiency between the polyculture and the monoculture model used by farmers in the Phu Vang district, Thua Thien Hue province The results show that the aquaculturists’ age, education, production area, sainity, and participation in training courses have a positive influence on the application of polyculture When comparing the economic efficiency between the two models we show that the prawn polyculture model is more economically efficient than the prawn monoculture model Moreover, the prawn polyculture model is more efficient and more flexible in harvesting the species living in the same pond, and the environment is improved by species supporting each other in the food chain In addition, training more extension workers and conducting more aquaculture training courses is suggested in order to have the desired increase in productivity

CHAPTER 1 INTRODUCTION 1.1 Research problems

Climate change is a matter concerning all humanity It has direct impact on economic life, society and the global environment The temperature rise causes sea level rise and flooding, and an increase in the frequency and intensity of natural disasters affects the socio-economic development of many countries, especially developing countries (MONRE, 2008) Thus, climate change has become an issue of geography, economics and politics, and is a focus of mankind in the 21st century Over the years, many parts of the world have suffered a multitude of natural disasters such

as typhoons, floods, droughts and other extreme climatic events causing great damage

to human lives and materials (MONRE, 2008)

Vietnam is considered as one of the five countries most affected by climate change and natural disasters around the world, including storms, floods, flash floods, damaging cold, droughts, and storm surges The majority of these events relate to severe weather conditions, and frequency and intensity of disasters are dependent on the weather and climate in every season Climate change has the potential to make the above-mentioned types of natural disasters become even more dangerous, resulting in further impacts

Thua Thien Hue (TTH) is a coastal province in north-central Vietnam It covers 503,320.53 ha in area, and had a population of 1,127,905 in 2013 (Thien, 2013) According to statistics of the General Statistics Office, sandy coastal areas accounted for 18.2% of the natural area of the province In the region, the Tam Giang - Cau Hai lagoon located from north to south, divides the region into two sand areas The total area of Tam Giang - Cau Hai lagoon is approximately 21.600 ha It plays a crucial role

in the livelihoods of farmers living along the edge of the lagoon (Thien, 2013) An estimated 300.000 people in these areas have livelihoods tied to the extraction of resources from the lagoon (Xuan, 2005)

Phu Vang district is a coastal plain, including Tam Giang – Cau Hai lagoon Phu Vang is a coastal area which is directly affected by climate change such as floods, storms, droughts, storm surges (Thien, 2013) Especially, in recent years, Thua Thien

Hue on the whole and Phu Vang in particular is affected by climate change, the temperature rising from 2◦C to 4◦C and it being colder in the winter (temperature drops from 3-5◦C) Moreover the difference in temperature between day and night also seriously affects the extensive shrimp raising process of the farmers (NCHMF, 2016) Inhabitants’ livelihoods are based mainly on natural resources such as agriculture, fishing and aquaculture which are easily harmed by the many kinds of calamities of climate change (Tuan, 2012) In addition, knowledge and ability of inhabitants to adapt to these calamities is limited (Khoi, 2011)

It is generally the case that developing plans for adaptation to climate change in different sectors is necessary for all regions (TTH’s Agricultural Extension Center), especially coastal areas The Phu Vang farmers are no exception, and have applied some solutions for adaptation to climate change in aquaculture The local government has cooperated with the Agriculture and Fishery Extension Center to instruct the farmers to apply models of adaptation to climate change such as polyculture

aquaculture with many kind of species: prawn (Penaeus monodon), Crab (Brachyura) and Kinh (Siganus canaliculatus)

Besides, according to decision No 795/QĐ-UBND dated April 21, 2016 on the approval of restructuring the Thua Thien Hue province’ agricultural sector towards enhancing added value and sustainable development in the 2016-2020 period, the orientation of aquaculture development in Tam Giang – Cau Hai lagoon is suggested

to stabilize the existing aquaculture area (3,300 ha); maintain and develop the polyculture model in which prawn is the mainstay product; and gradually reduce the net-enclosure area (Thua Thien Hue Provincial people’s Committee 2016) However, there are several challenges encountered in the polyculture model namely consumer market, the ability to supply enough quantity of quality breeds, finding the suitable farming models representative of each eco-region, related to compatibility of the species (feeding habits and environmental requirements) (Thua Thien Hue Fisheries Branch, 2013)

The conversion of prawn monoculture into prawn polyculture has been implemented by TTH province’s Fisheries Branch and Integrated Management of Lagoon Activities Program (IMOLA) The pilot polyculture model of Seaweed,

the first time in Phu An commune, Phu Vang district since 2004 However, the model was not replicated because the profit of prawn monoculture model at that time was very high Prawn polyculture only started as a common practice among farmers in Tam Giang – Cau Hai lagoon in 2008 (TTH’s Agricultural Extension Center)

Currently, a prawn polyculture model is considered as one of the aquaculture adaptation models to climate change in Phu Vang (TTH’s Agricultural Extension Center) This is a model in which prawns are farmed together with other species such

as fishes and/or crabs The species kept in the same pond will assist one another in through the food chain The prawn polyculture model emphasizes an increase in the number of species but a decrease in density of every species Meanwhile, the prawn monoculture model focuses on one species, prawn, only, and the density per meter squared of prawn is high compared to the prawn polyculture model On the other hand,

in the summer, high temperature will lead to water stratification, which means keeping various types of animals in the same pond will encourage interaction between them For example, those living close to the surface, such as mullet, will with its active swimming behavior increase oxygen exchange (Chat, 2006) In this research, I focus

on a prawn poly-culture model because this is the most commonly used model in Phu Vang district, Hue This study uses the propensity score matching (PSM) method developed by Rosenbaum and Rubin (1983) to evaluate the treatment effect of the prawn polyculture model compared to the prawn monoculture model The PSM method has been designed to help researchers in drawing causal inferences in observational studies Evaluation of the economic efficiency of the prawn polyculture model in Phu Vang district has been carried out by many researches (Phuc et al 2009; Van 2010) However, in my knowledge, very few studies have used the PSM method

to assess the estimate average treatment effects (Heckman et al 1998; Dehejia et al 1999); some studies have used the PSM method in fishery sector (Thuy et al 2013;Andrew et al 2014; Duy et al 2016) To the best knowledge, no studies on the economic efficiency of the prawn polyculture has been conducted using the PSM method

The subject of my master thesis is therefore “Evaluating the effectiveness of adaptation to climate change of aquaculture farmers in Phu Vang district, Thua Thien Hue province”

+ What factors affect aquaculture models adapted to climate change?

+ How does economic efficiency differ between the aquaculture model adapted

to climate change and the traditional model?

1.4 Literature review

A number of economists have carried out research on economic benefits of aquaculture using various methods Some studies have shown that the economic efficiency of the polyculture model is high such as Deshang et al (2000); Phuc et al (2009); Chi et al (2014); Gam et al (2014); Long (2014) Summary of studies on closed-polyculture of penaeid shrimp with fishes and mollusks by Deshang et al (2000) has shown that polyculture was superior to monoculture regarding economic and ecological efficiency, and the polyculture raised the production by 28% Chi et al (2014) analyse prawn polyculture development and local livelihoods in Tam Giang - Cau Hai lagoon, Vietnam The experimental results after applying the Data Warehouse Analysis (DEA) method showed that the economic efficiency of the polyculture model was 55.32% Another study conducted by Phuc et al (2009)comparing the economic efficiency of aquaculture models in the lagoon area of Quang Dien district, Thua Thien Hue province, has shown using the economic indicators (Gross Output – GO, Intermediate Costs – IC, Added Value – VA, VA/GO, VA/IC) to compare the economic efficiency of two aquaculture models, that the added value of shrimp polyculture model versus monoculture is higher than 36% Long (2014) shows the profitability of the polyculture model is 551 ± 342 million VND / ha / cropand also indicates that the gender of the head of the household, education level, the number of training courses affects the economic efficiency of farms

In order to account for the increased economic efficiency of the polyculture model, some studies have shown that the reduction in variable costs (eg food, seeds, fuel, chemicals ) are the most cited explanation (Shang et al 1998; Zhenxiong 2001; Phuc et al 2009; Kam et al 2012; Long 2014) Some studies have concluded that in aquaculture, the cost of food accounts for a large proportion of the cost (Shang et al

1998, Long 2014) Among variable costs, the costs of spawners, feed and supplemental feeds are the most important items comprising about 47%, 46% and 43%

of total cost, respectively, for small, medium and large-scale hatcheries (Shang et al 1998) According to Long (2014), low variable costs lead to higher profit In which, feed cost was the highest variable cost of 259 ± 125 million VND / ha / crop, accounting for 55.9% of the total variable cost, followed by the cost of chemical with 89.7 ± VND 87.2 million / ha / crop, accounting for 19.3% of the total variable cost Third in variable costs is the cost of electricity for production

Characteristics of household heads are an important factor influencing selection

of polyculture models (Chi et al 2014; Long 2016) Farmer’s personal characteristics, the farm’s ability to access institutions, and the water environment have a significant effect on the efficiency of farms (Chi et al 2014) Another study by Long (2016) showed that gender, age, experience, and attendance were the factors influencing the choice of polyculture

In general, the results regarding the economic efficiency of polyculture model are found in other countries, each study applying different methods (Deshang et al 2000; Phuc et al 2009; Long 2014; Chi et al 2014) Chi et al (2014) applied Data Envelopment Analysis (DEA) approach, while Phuc et al 2009 used economic indicators (Gross Output – GO, Intermediate Costs – IC, Added Value – VA, VA/GO, VA/IC) This study uses the PSM method to find the economic efficiency of the polyculture model

Organization of the study

The remainder of the dissertation is organized as follows:

Chapter 2 is gives the background for the study, with an overview of the geographic location, the socioeconomic situation, and an introduction to prawn aquaculture in the Phu Vang district

Chapter 3 includes the method and the approach applied, defining economic efficiency, presenting the data collected, the sampling mode, the method and how the data is analyzed

Chapter 4 is the presentation of analysis results regarding economic efficiency and the factors affected

Chapter 5 is gives discussions and conclusions about the results Finally, recommendations are given to improve the economic efficiency of the aquaculture farmers in Phu Vang district

CHAPTER 2 BACKGROUND 2.1 Geographical location

Phu Vang district is the coastal plain of Thua Thien Hue province The north borders the East Sea, the west borders Hue City, and Huong Tra district, the south borders Huong Thuy district, and the east borders Phu Loc district The area covers 280.83 km2, of which 10,829.44 hectares of agricultural land, non-agricultural land 13932.94 hectares

Phu Vang district has a coastline of 35km, including Thuan An estuary and lagoons such as Sam lagoon, Chuồn lagoon, Thanh Lam lagoon, Ha Trung lagoon, Thuy Tu lagoon, Phu Vang has great potential to develop fisheries and aquaculture (Binh, 2014) This is a key economic sector, with comparative advantages for economic development for the society in the province

Figure 2.1: Map of Phu Vang district

(Source: vinhthai.thuathienhue.gov.vn)

2.2 Economic sectors

In Phu Vang district, agriculture and fisheries are the two most important economic sectors They contribute to Phu Vang’s gross domestic product by 24.7% and 34.4% in 2015, respectively (Phu Vang district statics office)

Table 2.1: Economic sectors in Phu Vang district

(Source: People's Committee of phu vang district, 2015)

2.3 Overview of aquaculture in Phu Vang district

Aquaculture has long traditions as an industry in Phu Vang district However,

in recent years, the impact of diseases and climate change has caused many problems for the aquaculture activity (pers comm Nhan, 2016) After increased understanding of the situation for aquaculture in the area from research, a prawn polyculture model has been implemented in Phu Vang district, including crab, fish and prawn (pers comm Nhan, 2016) This model is capable of improving the environment in the ponds because the food spectrum of the different species support each other (NCHMF, 2016) and ensure sustained economic efficiency, and less risks than specialized prawn farming Environmental parameters in polyculture systems are improved compared with monoculture and are within the permitted limits for water quality in aquaculture

2.3.1 Prawn polyculture and prawn monoculture

Prawn monoculture is a model in which prawns are the sole cultured species in

applied in 1987 (Mien, 2002) Each household was handed over to a pond for prawn farming by local authorities Initially, all farming households received high profits from prawn farming Especially after the historic flood in 1999, after the floods passed, the environment was improved, the water was completely changed resulting in the prawn farming is effective (pers comm Nhan, 2016) However, by 2001, the prawn farming system had developed rapidly, without control by the local authority, resulting

in inadequate seed supply, unsatisfactory quality, unplanned and with the water being heavily polluted.In 2003, a disease outbreak lead to 90% of the prawn farming area of Thua Thien Hue province being affected.By early 2007, the epidemic still continued

to occur on a large scale, as the cost of improving ponds was high, so households often did not improve the pond after a harvest, but rather continued to raise the next crop In

2009, the center of agriculture and forestry extension has researched and introduced the model of the prawn polyculture This model is regarded as an aquaculture adaptation model to climate change With this model, other species are/culture together with prawn in the same pond to to secure the food chain When local residents started raising marine animals, they all applied prawn mono - culture model, so initially, the local Agriculture and Fishery Extension Center in association with the

Department of Agriculture Rural Development organized a seminar explaining how to raise various types of marine animals in a pond, how to feed the breeders properly, the right time to start raising the breeders, the right time to collect, as well as teaching about common diseases that might occur to the breeders (TTH’s Agricultural Extension Center)

In Phu Vang district, the aquaculture adaptation model to climate change mainly combines prawns, crabs and fishes After 4 years, this model has brought about

a great income boost to most local residents, and benefiting more than the shrimp extensive raising model (pers comm Nhan, 2016)

2.3.2 Aquaculture labor

Phu Vang district comprises 14 communes and towns Phu Vang district has a population of more than 188,000 (Phu Vang district statics office)

Table 2.2: Distribution of communes and labors in Phu Vang district

(Source: People's Committee of phu vang district, 2016)

Of this, more than 30,500 people live on the margins of the lagoon (table 2.2).Looking at table 2.2 we can see that there are 9,758 people who depend on aquaculture Especially people in Thuan An, Vinh Ha, Phu Xuan and Phu An, contribute 69.7 percent to the labor force in aquaculture (table 2.2)

2.3.3 Area of aquaculture

The line graph below describes the area of aquaculture in Phu Vang district from 2010 to 2015 of prawn, fish, and other aquatic species As can be seen clearly from the graph, in 2010, prawn encompassed the largest area of the three sectors with

1114 ha, followed by fish area at 763 ha, and 286 ha was the area of other aquatic species (crab, seaweed, etc) However, after 2 years, the area of cultured fish skyrocketed to 1476 ha in 2013, reaching a record high among the three sectors Especially, it is worth noting, after a short period of time with a levelling off, the area

of prawn decreased sharply in 2013 to 938 ha Then, this area rose slightly but was

Figure 2.2: Area of aquaculture (ha) in Phu Vang district

(Source: People's Committee of phu vang district, 2016)

The area of aquaculture has changed for prawns and fish because in 2006, Phu Vang district started to apply a prawn polyculture model, though many people still applied a prawn monoculture model After 6 years they saw that the prawn polyculture model was more efficient than the prawn monoculture model and involved less risk than the prawn monoculture (pers comm Nhan, 2016)

2.3.4 Production of aquaculture

Above we focused on the area, in the following we present the aquaculture production quantities Phu Vang district has applied an aquaculture adaptation model

to climate change since 2006 Since then, the production of prawns has been less than

the production of fish

Figure 2.3: Production of aquaculture (tonnes) in Phu Vang district

(Source: People's Committee of phu vang district, 2016)

0 200 400 600 800 1000 1200 1400 1600

Prawn Fish Other

0 5000 10000 15000 20000 25000 30000

ton

year

Other Fish Prawn

We can see from figure 2.3, from 2010 to 2015, production of prawns shows a declining trend, while fish production has increased significantly Specifically, prawn production decreased by 3094 tons (from 4792 to 1698) in 5 years, while fish production increased 4907 tons (from 16195 ton) Production has changed because nowadays, more and more people apply the new model With extreme weather conditions (more sun, higher temperatures, unusual floods, colder winter) prawn monoculture has proven to give lower efficiency, many people uses prawn polyculture model lead to aquaculture production higher efficiency, less rick than prawn monoculture (pers comm Phi, 2016)

CHAPTER 3 METHODOLOGY

In this chapter, I will give reasons why I choose to study Phu Vang district In addition, I also present the specific method, PSM, which I use to analyze the data

Profit margin = profit/gross revenue

where gross revenue is the total income of a household from prawn aquaculture farming

Profit is calculated as follows:

Profit = Income – fixed cost

Income = gross revenue – variable cost

documents provide secondary data, in addition to annual reports and project reports 3.3.2 Primary data

Primary data were collected from a survey of farmers who use either the model adapted to climate change or the traditional model (about 100 farmers in total) in Phu Vang district, Thua Thien Hue province

3.4 Sampling method

Phu Vang district has 18 communities and 2 towns, in which there are 14 communities where many people are involved in aquaculture Specifically, there are 5 communities that apply both models, prawn monoculture and prawn polyculture models (namely Phu Xuan, Vinh An, Vinh Ha, Vinh Phu, Vinh Xuan, see Table 3.1) Due to time constraints, this research could not go as far as including all the villages in Phu Vang district, and instead it focuses on those which are representative for the whole district The choice of villages was based on the discussions with some local experts (pers comm Nhan, 2016) Two villages were chosen to represent those located along the shore (Vinh An, Vinh Ha) The reason for this option is because the majority

of people living in these villages practice aquaculture Through the stratified sampling method, in Phu Vang district, the communes with the same aquaculture size were selected, including polyculture model and monoculture model Here, I choose 2 communes (Vinh An, Vinh Ha) Then, in each group (polyculture model and monoculture model), a simple random sample was selected for the survey In table 3.1

we can see that these are the two villages that have large prawn monoculture raising areas suitable for the comparison between the two aquaculture models

Table 3.1: Area of aquaculture by communes

No

Prawn

Total area (ha)

Breed (1000)

Total area (ha)

Breed(1000) Carp fish prawn

Figure 3.2: Map of Vinh An, Vinh Ha community

(Source: phuvang.thuathienhue.gov.vn)

The sample size is 100 aquaculture households, of which 60 apply prawn monoculture model and 40 households apply prawn polyculture The questionnaire is designed to gather the following information: gender, age, education, experience, number of labor, total working days, total working hours, stocking density and revenues and costs of all kind of seeds that are cultured, the amount and cost of industrial and fresh feed used in prawn polyculture and prawn monoculture

3.5 Method

3.5.1 Propensity Score Matching Method

Propensity score method (PSM) is a method in which two groups of statistical analysis are created based on a joint probability model involving all observed statistics In this method, we select two groups to compare: a participating group which is prawn polyculture and a non-participating group which is prawn monoculture (Rosenbaum and Rubin, 1983) There have been many studies that apply this method to research For instance, Hudson et al (2014) evaluated effectiveness of

1: Vinh An community

2: Vinh Ha community

2

1