Water conflicts related to management of multi purpose reservoirs in vu gia thu bon river basin

More particularly, this study aims to examine the strategic interactions among upstream water users hydropower and downstream water users irrigation and urban water supply, thereby sugge

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

NGUYEN THI NHAT ANH

WATER CONFLICTS RELATED TO MANAGEMENT

OF MULTI-PURPOSE RESERVOIRS

IN VU GIA - THU BON RIVER BASIN

MASTER'S THESIS

Hanoi, June 2019

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

NGUYEN THI NHAT ANH

WATER CONFLICTS RELATED TO MANAGEMENT

CONTENTS

Acknowledgments iii

Abstract iv

List of Abbreviation v

List of Tables vi

List of Figures viii

1 Introduction 1

1.1 General topic and research background 1

1.2 Research objectives 2

1.3 Research gap and research contribution 3

1.4 Research scope 4

1.5 Research methods and framework 4

2 Conceptual framework and Literature review 6

2.1 Conceptual framework of Water conflict and Reservoir 6

2.1.1 Water conflict 6

2.1.2 Water conflict resolution 8

2.1.3 Reservoirs 9

2.2 Research on Water conflicts 10

2.2.1 Research on Water conflicts in Vietnamese river basin 10

2.2.2 Research on water allocation (to find payoff function) 13

2.3 Research on Vu Gia – Thu Bon River Basin 16

2.3.1 Research on VGTB RB related to social or environmental aspects 16

2.3.2 Research on VGTB RB about main water users in VGTB RB 17

3 Methodology 19

3.1 Theoretical approach 19

3.1.1 Game theory 19

3.1.2 Game theoretical approach can solve conflict 19

3.2 Game theory model 21

3.2.1 Game Tree 21

3.2.2 Profit functions 23

4 Current situation of water conflict 25

4.1 Context of Vu Gia – Thu Bon River Basin 25

4.1.1 Natural conditions 25

4.1.2 Social-economic conditions 26

4.2 Water resources (supply side) 26

4.3 Water consumption (demand side) 28

4.3.1 Hydropower 28

4.3.2 Irrigation 30

4.3.3 Urban water supply 31

4.4 Water balance 33

4.5 Water resource management in VGTB RB 35

4.5.1 Water resource management at basin level in Vietnam 35

4.5.2 Water resource management in VGTB RB 36

4.5.3 Management of reservoir system in VGTB RB 37

4.5.4 Procedure for operation of inter-reservoir system in VGTB RB 38

4.6 Water conflict related to multi-purpose reservoir system 40

5 Discussion and Policy Recommendation 44

5.1 Finding 44

5.1.1 Game theoretical analysis 44

5.1.2 Analysis of practical model 50

5.1.3 Analysis of modified model 62

5.2 Discussion 67

5.3 Policy recommendation 69

5.4 Limitation and Future research 70

Conclusion 72

Reference 73

Appendix A Data 80

A1 Irrigated water level for paddy 80

A2 Planted area and yield of paddy 81

A3 Scenarios on sharing water from H (based on Procedure 1537) 82

Appendix B Specific examples for Practical model 85

B1 Example 1 85

B2 Example 2 86

B3 Example 3 87

ACKNOWLEDGMENTS

Conducting the research is a journey to discover yourself and to develop critical thinking

On that journey, supervisors and companions are indispensable

Firstly, I am particularly grateful for the assistance given by my supervisors for his valuable and constructive suggestions during the planning and development of this research work Assistance provided by Naka Shigeto Sensei, which gave me great inspiration and led me to the academic world, was greatly appreciated The knowledge I learned from Fukuzumi Masakazu Sensei in game theory gave me a great and attractive economic tool to build my original model Lastly, with his rich practical experience, Nguyen Ngoc Huy Sensei helped me understand a great deal more about the reality of the water sector in Vietnam

In this journey, I was also fortunate to be instructed by lecturers at Vietnam Japan University and to be able to discuss with other researchers from VACI 2019 I would like to offer my special thanks to Mr Yoshifumi Hino in the MBA program, Mr Koshi Yoshida and Mr Makoto Tamura in the MCCD program helped me gain a lot of knowledge about water, hydropower and game theory In addition, I am grateful for the assistance given by Mr Dao Trong Tu for helping me to understand the water resource management Moreover, I would like to thank the MPP program and VJU for creating what I think is the most favorable academic environment Here, I had opportunities to discuss with my colleagues, who were always willing to listen to even the vaguest ideas

of mine

Finally, I would like to express my sincere thanks to my lovely family and my enthusiastic friends, without whose endless motivations and support this work would have been impossible

RBO River basin organization

DAWACO Da Nang Water Supply Company

SPNE Subgame perfect Nash equilibrium

MONRE Ministry of Natural Resources and Environment MARD Ministry of Agriculture and Rural Development MOIT Ministry of Industry and Trade

LIST OF TABLES

Table 3.1: Similarities of water conflict and game theory 20

Table 4.1: Water flow of dry season and flood season in VGTB RB 27

Table 4.2: Irrigation system of VGTB RB 31

Table 4.3: Capacity of main water plants of DAWACO 33

Table 4.4: Water supply-demand gap index of VGTB RB 34

Table 4.5: Water exploitation index of VGTB RB 34

Table 4.6: River basin organisations in VGTB RB 37

Table 4.7: Main documents for procedure for operation of inter-reservoir system in VGTB 39

Table 4.8: Changes in water resources of Vu Gia River 43

Table 5.1: Matrix of Sub-game 1 in general model 44

Table 5.2: Matrix of Sub-game 2 in general model 45

Table 5.3: Outcomes of VGTB game’s example model 48

Table 5.4: The basis to calculate M-value of H (hydropower plants) 51

Table 5.5: Profit of hydropower plants in VGTB game’s practical model 51

Table 5.6: The basis to calculate M-value of I (irrigation system) 53

Table 5.7: Profit of Irrigation in VGTB game’s practical model 53

Table 5.8: M-value of H, I and C 54

Table 5.9: Guaranteed value for water demand of downstream 55

Table 5.10: Total sharing water from three hydropower reservoirs in three scenarios 56 Table 5.11: Outcomes of VGTB game’s practical model 58

Table 5.12: Outcomes of VGTB game’s practical model (example) 58

Table 5.13: M-value of three players with water right weight (γ) based on average profit 62Table 5.14: Outcomes of VGTB game’s modified model 64Table 5.15: Outcomes of VGTB game’s modified model (example) 64Table 5.16: Social payoff in general model, practical model and modified model (𝓥𝑺𝑾) 65

LIST OF FIGURES

Figure 1.1: Research framework based on the demand side and supply side 5

Figure 2.1: Four dimensions of resources scarcity 7

Figure 3.1: Game tree with three players 21

Figure 5.1: Irrigation planning map of Quang Nam province 46

Figure 5.2: Game tree with dominant strategies and value of payoffs of general model 47

Figure 5.3: Game tree with dominant strategies and value of payoffs of practical model 57

Figure 5.4: Payoffs of C - Urban water supply in VGTB game’s practical model 59

Figure 5.5: Payoffs of I - Irrigation in VGTB game’s practical model 60

Figure 5.6: Payoffs of H - Hydropower in VGTB game’s practical model 60

Figure 5.7: Game tree with dominant strategies and value of payoffs of modified model 63

Figure 5.8: Total payoffs of three players in VGTB game’s practical model 66

Figure 5.9: Total payoffs of three players in VGTB game’s modified model 66

1 INTRODUCTION

1.1 General topic and research background

Water resources in Vietnam are relatively abundant with an annual water withdrawal per capita around 9,560 m3/person, but water resources are unevenly distributed across space and time Vietnam has a strong and growing economy - the GDP growth rate in 2018 is 7.08%, which is the country’s highest level of growth since 2008 and a large population scale with about 97 billion people as of 2019, ranking 14th in the world in terms of population As a result, the demand for food, energy, and water has been on the increase Moreover, various international reports have stated that Vietnam belongs to a group of countries most affected by climate change and sea level rise According to The Global Climate Risk Index1 for 2016, Vietnam is the 5th most affected country by climate change Thus, the water availability is reduced, leading to the situation of exacerbating the food-energy-water nexus In this context, water resources are decreased in both quantity and quality, leading to a wide range of potential problems and becoming the source of water conflicts

Vu Gia – Thu Bon River Basin is one of Vietnam's biggest basins, which was not an exception from this trend of water conflict Water resources of Vu Gia - Thu Bon River Basin is quite abundant with the amount of inflow in the dry season reaching 4,280

m3/person/year, ranking 3rd in Vietnam (only lower than the Mekong and Sesan RB) This basin also has dramatic increases in economic growth and urbanization Most noticeably in this area is the coastal plain area of Da Nang City and Hoi An City, which have high population density and dynamic economic activities Therefore, water demand for development purposes is increasing especially rapidly in these downstream areas It

1 The Global Climate Risk Index (CRI), developed by Germanwatch, analyses the quantifiable impacts of

should be noted that this river basin also belongs to the Central of Vietnam, one of the areas in the country that are most vulnerable to impacts of climate change every year Therefore, it is understandable when conflict arises here

In comparison with other basins, VGTB RB has a great potential for hydropower exploitation, ranking 4th in Vietnam for total capacity can be exploited (2030 Water Resources Group, 2017) The rapid development of hydropower since the 2000s in the upstream areas has affected water resources throughout the basin, especially by changing the natural flow of rivers Therefore, conflicts over water related to hydropower reservoirs are noticeable in many basins, including VGTB RB Currently, VGTB RB has about 60 hydropower plants in the plan with a total design capacity of 1,502 MW (L A Tuan & Nga, 2016) Most large hydropower plants belong to the cascade hydropower systems which are constructed on Dak Mi River, Bung River, A Vuong River, Con River, and Tranh River

There have been so many studies from the social or environmental perspectives about the negative impacts of these reservoirs on the VGTB RB This study aims to achieve a similar purpose as that of these studies but is based on the economic viewpoint, with a focus on analysing the link between upstream and downstream’ use of limited water resources More particularly, this study aims to examine the strategic interactions among upstream water users (hydropower) and downstream water users (irrigation and urban water supply), thereby suggesting policy recommendations

Therefore, the topic of this study is “Water conflicts related to management of

multi-purpose reservoirs in Vu Gia - Thu Bon River Basin”

After understanding the current state of conflict, based on an analysis of the scenarios,

the next goal of the study is to suggest solutions to solve these water conflicts

To achieve the above objectives, this research will answer the following research questions:

✓ Which kind of water conflict is occurring in VGTB RB? Why water conflicts related to reservoirs are the highlight?

✓ How to solve the negative consequence of these conflicts in the viewpoint

Therefore, this study uses an interdisciplinary approach (studying the correlation between three sectors of water use: hydropower, irrigation, urban water supply) from an economic point of view and using game theory as water conflict resolution

• Research contribution

First, the study brings a game theory approach to the field of water conflicts in Vietnam

to understand the interactions among water users Second, this study contributes to

resolving the conflicts related to hydropower reservoirs in VGTB RB Finally, the author provides practical suggestions for the operation of a river basin organisation

✓ Water resource: big reservoirs in upstream

✓ Off-stream demand: Water supply for Da Nang City and Irrigation system

in Quang Nam

✓ In-stream demand: Hydropower

1.5 Research methods and framework

This study uses qualitative methods and secondary data, which includes a variety of types: reports from international organizations in relevant sectors, legal documents of the central government of Vietnam as well as local governments in Quang Nam province and Da Nang City, scholarly articles on game theory and river basin, statistical materials from GSO, official websites of relevant companies and organization or state authorities Legal documents are helpful to contextualize existing policies and understand the price

of electricity, the price of water, the cost of agricultural production as well as standards related to usages of water Some online newspapers are used to get an initial observation

of the ongoing conflict Following, this information is compared with scholarly studies

to understand the current situation in VGTB RB Data to calculate payoff functions in game theory model is collected from reports, official websites and statistic organisations The research framework shown in Figure 1.1 indicates that analysis of water demand side (part 4.3) and water supply side (part 4.2) at basin level is useful to understand water balance (part 4.4) and then water scarcity which leading directly to water conflict (4.6)

Figure 1.1: Research framework based on the demand side and supply side

The dissertation is structured in the following chapters:

✓ Part 1 is introduction including research topic and objectives as well as explain briefly about studied areas and methods used

✓ Part 2 is the conceptual framework and literature review part

✓ Part 3 is the methodology part which explains why game theory can be considered as conflict resolutions

✓ Part 4 is about the current situation of conflicts happing in VGTB RB

✓ Last part is a discussion for results of game theory model as well as recommendation for policymakers

2 CONCEPTUAL FRAMEWORK AND LITERATURE REVIEW

2.1 Conceptual framework of Water conflict and Reservoir

2.1.1 Water conflict

Report of UNDP in 2008 cited a definition of Netherlands Organisation for Scientific Research that conflict is “a process that begins when an individual or group perceives differences and opposition between oneself and another individual or group about interests and resources, beliefs, values or practices that matter to them”

This view considered water conflict as social conflict is quite similar to the view considered water conflict as a disagreement of water users about water quantity at a given quality with distribution depends on space and time for a particular purpose (Esfahani, Kerachian, & Mortazavi-Naeini, 2006) The United Nations in the PCCP project (From Potential Conflict to Cooperation Potential)2 also identifies that water conflicts arise from contradicting interests of water consumers with differential purposes, whether agricultural, industrial or domestic, in both the public and private sectors

Water conflicts can be considered as one kind of environmental conflicts related to exploit, use and manage water resources According to Libiszewski (1992), resources scarcity has four dimensions as illustrated in Figure 2.1

Three first dimensions lead to traditional conflicts related to the distribution of natural resources The last dimension leads to environmental conflicts due to overuse or pollution issues Water is one kind of natural resources, and water scarcity also has four dimensions, leading to water conflicts from both the distribution side and environment side

2 http://www.unesco.org/new/en/pccp

Figure 2.1: Four dimensions of resources scarcity

Handbook of GWP & INBO for integrated river basin management published in 2009 indicates that the river basin is a practical hydrological unit for water resource management Islam in 2011 also claims that due to water conflicts over different sectors and various regions, the basin becomes the appropriate unit to solve the challenges of water resource management

Water conflicts at a river basin involve so many linkages Research of Nepal, Flügel, & Shrestha (2014) considers upstream-downstream linkages as unidirectional externalities because water use of the downstream mostly depends on the action of actors in upstream For instance, if upstream actors change the usage of the land, water availability in downstream will be impacted directly

From an economic perspective, Madani (2010) gave a distinctive view of “the conflicts over water issues” that these conflicts are not only related to cost-benefit analysis, but they also stem from social and political aspects of water projects such as the issues in operation and management

To be more detail, in 2000, WCD’s report shows that conflicts over “dams” have emphasized in the past due to managers ignore the social and environmental impacts of dams Another possible reason can be a failure to fulfill commitments of environmental protection in a report of environmental impact assessment of projects, or failures to obey the rules of the legal system and internal guidelines Moreover, past existence and inequalities have not been resolved, and experience with dispute resolution is still poor can lead to current conflicts

 In this study water conflicts among users arise from opposition interests in the context of lack of water and occur in relation to the operation and management of hydropower reservoirs in upstream

2.1.2 Water conflict resolution

According to the report of UNDP in 2008, there are some recommendations to solve water conflicts:

✓ Litigation based on the existing legal system with court participation to resolve the discord

✓ Alternative Dispute Resolution (ADR): seek consent of the parties by means of negotiation, mediation, and arbitration

✓ Preventing conflict by enticing participation of relevant stakeholders The approach of UNDP is in term of management In addition, there are other approaches

to solving water conflicts Water engineers consider water conflict due to unfair or unequal allocation of resources, so they use a hydrological model with simulation tools

to find the most efficient allocation In another way, economists focus on the rational water users who pursue individual or collective interests, so they use an economic model with optimisation functions based on benefits from water exploitation These approaches can be combined

In an economic approach, Madani (2010) compares game theoretical methods and conventional optimization methods in order to solve water conflict If conventional approach solves a single-decision-maker problem, game theoretical approach can be used to solve multi-decision-maker problems In order to research multi-objective, optimization will use a function which represents for the whole system or uses weights with binding conditions The basic assumption of game theory is that each player is self-interested, so they have a trend to optimize his own objective This is opposite to optimization in which each decision makers can cooperate completely to gain the optimal benefit for the whole system

Based on optimisation methods, decision makers (water users) will optimise the benefits for the whole system despite the possible losses to themselves Based on game theoretical methods, players (water users) only pursue self-interest without regarding whether their decisions will injure other players or the whole system

2.1.3 Reservoirs

According to Water Words Dictionary or definitions on the website of ICOLD (International Commission on Large Dams), the dam is built as a barrier to impound or divert the water flow, and the reservoir is a station to store water, which is created by building a dam The dam or reservoir can be used for many purposes such as irrigation, hydropower, water supply… Debate on hydropower reservoirs is controversy nowadays Reservoirs mentioned in this research are hydropower reservoirs A typical hydropower plant includes three components: a power plant to produce electricity, a dam to control the flow of water, and a reservoir to store water The water behind the dam runs through

an intake and causes a turbine to turn, then an electricity generator will be spun

According to OECD & IEA (2012), a hydropower plant (HPP) has three types: (1) of-river plants generate energy based on natural river flow, depending on the variability

Run-of inflows; (2) Reservoir (or storage) plants store water in a reservoir so it can provide

electricity on demand; and (3) Pumped storage plants pump water from a lower reservoir into an upper reservoir when electricity supply exceeds demand

Run-of-river plants and reservoir plants can be combined in cascade hydropower systems

A vast reservoir in the upper position can generally discharge water for several river plants in a lower position And pumped storage plants can utilise the water storage

run-of-of reservoir HPPs

Water resource management has changed from sectoral to integrated management, and from administrative to hydrological management (means river basin) Reservoirs are an important part of the river basin Therefore, management of reservoirs has also shifted from single-purpose management to multi-purpose management in order to effectively exploit water resources According to OECD & IEA (2012), incorporation of multi-purpose had been emphasised from the report of WCD (2000) After that, other organisations also mention this multi-purpose approach for hydropower reservoirs such as: Electricité de France and World Water Council with the term “Multipurpose Water Uses of Hydropower Reservoirs” in report of Branche in 2015, ICOLD with the term

“Multipurpose Water Storage Dams” and International Energy Agency with the term

“Hydropower Services” in a report in 2017

2.2 Research on Water conflicts

2.2.1 Research on Water conflicts in Vietnamese river basin

• Ba River Basin

The Ba River Basin is one of the largest river systems in Vietnam, located in the Central Highlands The Ba River basin has very typical characteristics that are directly related to the exploitation of water resources by reservoir systems (N D Tuan, Dung, & Sy, 2015) The main features of this system are the combination of reservoirs in main rivers and tributaries, between hydropower and irrigation, and even water transfer to another basin

In this system, there is An Khe-Ka Nak hydroelectric reservoir, which accumulates water

in upstream of the Ba river for electricity generation, and then releases water to the Con river, causing the changing of flow scheme in the Ba river

Research of Tam, Hung, and Le in 2012 has applied the system analysis theory in combination with the WEAP model to assess the Ba River Basin's water resources according to 3 scenarios taking into account the operation of the hydropower system: 2 scenarios for period 2000-2010 and 1 scenario for the period 2011-2020 The results show that the water demand in the later period is so high that the current system cannot meet The authors also point out that the procedure for the inter-lake operation is more efficiency by increasing the amount of water stored in the whole reservoir system Regarding Ankhe hydroelectricity, the study confirmed that it is impossible to satisfy both two purposes that are water demand in downstream and high-power efficiency in upstream

Giang and his co-workers3 have published two scientific papers on the impact of the reservoir system in the Ba River Basin based on the use of 32 hydrological parameters

of the Hydrologic Indicators of Alteration (IHA) The first punishment in 2016 evaluated this impact on the hydrological regime, results in that this reservoir system plays an important role in diminishing the maximum flow but has a negative effect in the hydrological regime in the dry season at Cung Son station The second pubishment in

2017 focused on the change of sediment regime, results in that reservoirs contribute to sand mud imbalance leading to consequences such as erosion, river banks in lowland delta and sedimentation, erosion in the estuary area

3 Based on “Research on a scientific foundation to determine the mechanism of sedimentation and landslide as well as solutions to stabilise the estuaries of Da Dien and Da Nong in Phu Yen province for sustainable

Nga (2017) used the hydrological-economic model to provide optimal water allocation

in the Ba river basin This model examines the water balance according to the hydrological point of view and the effect of water use from an economic point of view with an optimal approach The initial conclusions of this study relate to hydropower, irrigation and urban water supply such as: (1) Total net profit from water users has a nonlinear relationship with the total volume of runoff in the basin; (2) The increase in the price of agricultural products or the cost of producing electricity only has an effect

on the total net profit of each sector, without affecting the allocation of water; (3) Irrigation efficiency has a significant effect on the optimal irrigated area for each crop and does not significantly affect power production in power factories; and (4) Even in the case of high urbanization with the rapidly increasing demand for living and industry, water demand for hydropower and agriculture is not affected

• Srepok river basin

The Srepok river basin is located in the west of the Truong Son mountain range, in the Central Highlands, and is one of the basins with the largest hydroelectric potential in Vietnam The whole Srepok basin has cascade hydropower systems up to 10 ladders Only 20% of the flood season's water must be spilled is not used for electricity generation Research of Duong (2015) has systematized a series of environmental conflicts in the exploitation of surface water resources in the Srepok river basin, many of which are related to hydropower The author states that hydropower is the most predominant sector, creating both positive and negative impacts on the basin; and the environmental conflict between hydropower and other stakeholders is the most complex The author also pointed out that the procedure of operating the reservoir approved by the state agencies

on electricity but the inter-reservoir operation procedure at the basin level approved by Ministry of Natural Resources and Environment (MONRE) results in the certain conflicts during the operation of these reservoirs

Khoi (2013) used the hydrological model and climate change scenario to determine the change of flow in the Srepok river basin The results prove that under the influence of climate change scenarios, the flow in this basin will decrease sharply during the dry season, leading to the concerns about water scarcity

Le in 2017 has applied MIKE BASIN model to calculate water balance for Srepok's 10 sub-basins Although the Srepok river basin is not a lack of water basin, 8/10 sub-basins lack water with an increasing risk of drought The reasons are that the deep differentiation between the wet and dry seasons; the increasing demand for irrigation water (mainly for coffee and rice) more in the dry season; and the inefficient and insufficient irrigation systems Although the activities of reservoirs for both irrigation and hydropower are mentioned, the study shows the positive impact of large hydropower reservoirs to regulate the flow during both flood and dry seasons without considering the negative externalities

In summary, the Ba river basin and Srepok river basin in the Central Highlands have many similarities in geography and natural conditions with VGTB RB Thu Bon River's upstream branch also originates from this area Moreover, water conflicts arising in these three basins are strongly related to hydropower reservoirs and inter-reservoir operation procedures In particular, the case of diversion of Ankhe hydropower in Ba River Basin

is similar to Dak Mi 4 hydropower in VGTB RB

2.2.2 Research on water allocation (to find payoff function)

There are many causes of conflict over water in which water allocation is unfair and effective To solve the water allocation problem, the researchers often use hydrological models or hydrological-economic models

Hydrological models often consider water demand as a determined value Water engineers will rely on the results of these models to provide technical suggestions In the

hydrological-economic model, water is comprehended as a commodity and has an economic value which changes according to space, time and purpose

The hydrological model provides a static allocation scheme while water allocation according to the hydrological-economic model is dynamic The studies using hydrological-economic models all use the objective function of economic profits obtained from the exploitation of water for different purposes

In Vietnam, there are some studies on water allocation using hydrological and economic models to solve the optimal water allocation problem such as: study of Ringler & Nguyen

Vu (2004) research the optimal water balance of the Dong Nai river system, taking into account the regulation of reservoirs and study off Nga (2017) researches on water allocation for sectors to support the management of Ba river basin

These studies use the general objective function:

𝑀𝑎𝑥𝑓(𝑥) = (∑ 𝑉𝐴𝑛𝑛

𝑛𝑛

+ ∑ 𝑉𝑃𝑡𝑑𝑡𝑑

+ ∑ 𝑉𝑀𝑠ℎ𝑠ℎ

+ ∑ 𝑉𝐼𝑐𝑛𝑐𝑛

VA: water value for agriculture

VM: water value for domestic demand

VI: water value for industrial demand

VP: water value for hydropower

1 − 1 𝜃⁄ × {(𝑄𝑐𝑛𝑖,𝑡 × ∆𝑡)

1−1 𝜃 ⁄ − (𝑄𝑐𝑛∗× ∆𝑡)(1−1 𝜃 ⁄ )}12

This objective function shows benefits from water extraction for different water users

In these studies, the main water users are agricultural (cultivation, livestock), hydropower, household, and industry For each water user, there is an equation to calculate the benefit in term of the economics of water extraction Hence, these benefit functions can be applied in other models such as game theory to indicate payoff functions

2.3 Research on Vu Gia – Thu Bon River Basin

2.3.1 Research on VGTB RB related to social or environmental aspects

Report of UNDP & GreenID in 2013 concentrated on costs of social-environment and dam safety risks (in part 1) to demonstrate that the statement that hydropower is cheaper than other types of energy is inconsequential because hydropower projects do not comprehensively count costs of deforestation, biodiversity loss, resettlement, and dam safety

From 2013 - 2014, CSRD supported 5 communities (including 3 communities in Quang Nam) to conduct research based on indigenous knowledge to assess the impact of hydropower on the environment and life of surrounding regions Report of CSRD in

2014 summarises the results of this research Research in 2 resettlement areas of Village

2, Phuoc Hoa commune (affected by Dak Mi 4C) and Nuoc Lang village, Phuoc Xuan commune (affected by Dak Mi 4)4 have shown life in the new place is more difficult Research in Dai Hong commune5, Dai Loc district, Quang Nam - located in midstream

of Vu Gia River indicate the direct results of hydropower in upstream Vu Gia River to flow over time

Dung (2018) develops a methodology to determine MF for the river system, apply for downstream of VGTB RB With the holistic approach from the “bottom up”, this thesis considers the minimum flow consists three elements: (1) the maintenance flow to avoid the dead river; (2) the ecological flow for the aquatic ecosystem; (3) the exploitation flow to supply water for human demand

4 These 2 communes belong to Phuoc Son district, Quang Nam province

5 This research conducted in Dong Phuoc village and Duc Tich village, Dai Hong commune

2.3.2 Research on VGTB RB about main water users in VGTB RB

Firstly, about irrgation in Quang Nam, Chau et al (2015) does an assessment of the impact of the flood on agricultural production results in the damage converted into money in Quang Nam The authors assert that the benefit-cost rate is already low for farmers, and in years of extreme floods, the problem becomes more serious with a net loss for many farms Pedroso et al (2017) indicates that rice is still the main crop in this basin Despite the low net profit, water scarcity and the tendency to convert agricultural land, farmers do not diversify fruit and vegetable production because of food security and consideration of risks with new crops Viet et al (2018) investigates the technical efficiency (TE) of rice production in VGTB RB to indicate that TE affected by the scale and fragmentation in rice production as well as by the salinity intrusion The saline intrusion issue here is related to the inherent irrigation management and is proved by TE distribution unevenly in space

Secondly, about urban water supply for Da Nang City, the report “Preparatory Survey for Da Nang City Hoa Lien Water Supply Project” of JICA in 2016 in part 3.2, illustrates the current situation of water supply in Da Nang City JICA’s report along with a research of Tuan and Hung in 2016 has provided the most overview of the water supply system of this rapidly developed city

Lastly, there are so many studies in hydropower At the national level, there are some good researches provided an overview of development of hydropower in Vietnam such

as Ty (2015), L A Tuan & Nga (2016), Nguyen-Tien, Elliott, & Strobl (2018) and some projects from international organisations assess the strategic environmental assessment

in the hydropower sector such as a pilot assessment of ICEM (2007) on biodiversity loss’s risk and an official analysis of World Bank (2009) on master plan of hydropower development in context of electricity planning VI In case of hydropower in Quang Nam, the strategic environmental assessment (SEA) was researched by ICEM & ADB (2008)

as a pilot evaluation of the fish fauna in the river and ICEM (2008) as an official report

of SEA In addition, there are some studies that focus on the negative impact of hydropower in the Central of Vietnam such as CSRD (2014a) based on indigenous knowledge, My & Hanh (2018) based on gender perspectives…

Quang Nam Province has around 60 hydropower plants in the provincial plan including 4 biggest hydropower reservoirs: Song Tranh 2 in Thu Bon River; and Dak Mi 4, Song Bung

4, A Vuong in Vu Gia River There is much debate around the operation of these hydropower reservoirs UNDP and GreenID (2013) do the research on costs and risks on the operation of Song Tranh 2 reservoir, especially related to dam safety in an earthquake area CSRD has research on A Vuong hydropower plant with a new point of view from gender in 2018 mainly related to resettlement to women Environmental impact assessment report of the Song Bung 4 plant conducted by ADB in 2007 provides a positive outlook on the impact of this hydropower plant The most disreputable hydropower in VGTB RB since its inception is Dak Mi 4 hydropower plant CSRD and RLS in 2014 pointed out deviations

in the implementation of environmental protection commitments in the environmental impact assessment and also assessed the negative impact of this hydropower on the flow scheme and aquatic flora and fauna of the Dak Mi and Vu Gia rivers

"prisoner's dilemma" was researched in a mathematical model in 1950 Then, in 1951 John Nash developed Nash equilibrium as a criterion for a stable situation of players' strategies Cooperative game theory gives predictions of coalitions, the joint actions, and collective payoffs by using solution concepts In contrast, the non-cooperative game theory gives predictions of individual options by investigating equilibria Therefore, the terms of non-cooperative game theory can be used to interpret the cooperative game

3.1.2 Game theoretical approach can solve conflict

According to Dinar & Hogarth (2015) research on application of game theory in the water sector have increased rapidly since the 1990s because of water scarcity and necessary of efficient allocation of water or of joint costs of water projects Parrachino, Zara, & Patrone (2006), Madani (2010) and Dinar & Hogarth (2015) review a lot of research using cooperative or non-cooperative game models to give solutions for many water issues from single discipline to multi-discipline at differential levels The behaviors of relevant people in water issues can be explained by game theory because their self-interests result in non-cooperative behaviors (Madani, 2010) Jhawar et al (2018) considers game theory as a realistic simulation of this kind of interest-based

behavior, too In conclusion, this research mainly uses the game theoretical approach as

a resolution for water conflict based on similarities of water conflict and game theory as

in Table 3.1

Table 3.1: Similarities of water conflict and game theory

Water conflict Non-cooperative Game theory

Water users have self-optimizing

behaviours

Players in the game are rational and interests

self-Water users compete to use increasingly

scarce water resources

The action of one player may be detrimental to others

Each water user has a group of actions or

reactions in order to maximise the amount

of water

Each player has a set of strategies

Benefits of water users from exploiting

water are in the form of profit functions

Payoffs show benefits of players in the game

3.2 Game theory model

3.2.1 Game Tree

Figure 3.1: Game tree with three players Player: (1) H: hydropower plants in upstream; (2) C: urban water supply in downstream; and (3) I: irrigation system in downstream

Strategies: S{H} = {C1, D1}; S{C} & S{I} = {C2, D2} if H choose {C1}; S{C} & S{I}

= {C3, D3} if H choose {D1}

• C1, C2, C3: cooperative strategies with C1 “to share”; C2 “to refund”; C3 “not to sue”

• D1, D2, D3: non-cooperative strategies with D1 “not to share”; D2 “not to refund”;

D3 “to sue”

Payoff function in general: 𝒱 = 𝒫 ± µ ± 𝜎

𝒫 = profit of each player

µ = punishment

σ = refund

σ & µ are transferable from one player to another

In this game model, H has two strategies "to share water" means that H in upstream do not use water to run hydropower plants, so C and I in downstream can receive the natural flow (flow without dams' operation) or "not to share water" means that H uses all water

to run hydropower plants, so others only receive the minimum flow based on the procedure of inter-reservoir operation (flow with dams' operation)

If H chooses "to share water" (sub-game 1), C and I receive flow without dams then C and I have two strategies to "to refund" or "not to refund" amount of money (σ) for H

Under the water rights of Vietnam (stipulated in the Law on Water Resources or the Decree on River Basin) the need for domestic and agricultural use in downstream is prioritized However, in reality, the entities using upstream water have great power, because their actions in upper land will impact on lower land, and even if they break the law, it is difficult to identify the type of law violation and penalty for this violation So,

it can be understood that the fact that water rights in Vietnam belong to users in upstream The strategies "to refund" and "not to refund" are possible in reality

If H chooses "not to share water" (sub-game 2), C and I receive flow with dams then C and I have two strategies "to sue" or "not to sue" This model temporarily ignores the litigation costs of both parties If C or I sue H in court, with reasonable evidence such as violations of H when compared with the Environmental Impact Assessment, reservoir

operation process, the process of inter-reservoir operation This model also ignores the

natural effects such as climate change on using water in this river basin Therefore,

follow these conditions if C or I sue H, they will prevail, and H will suffer a penalty µ

In case C or I do not sue H in court, H will not be punished too µ

3.2.2 Profit functions

This study uses the following functions to determine profit functions for each player However, within the scope of this study, players are identified as water users for agriculture (cultivation only), hydropower and city water supply (including domestic and public needs) Therefore, the payoff functions of each player will be modified from functions in part 2.2

Profit function of H (modified from equation 2.7)

𝑄𝐸: electricity power output (kWh per year)

𝑃𝐻: price of electricity (VND/kWh)

𝐶𝐻: cost of electricity production (VND/kWh)

Profit function of I (modified from equation 2.3):

𝐶𝑎𝑝𝑝: yield of paddy (kg/ha)

𝐶𝑝: cost of paddy cultivation (VND/ha)

A: planted area of paddy (ha)

𝑃𝑊: price of water (VND)

𝑄𝐴𝑡: average water flow for planted area A in period t (m3/s/ha)

Profit function of C:

𝑝𝐷𝐴𝑊𝐴𝐶𝑂: profit of Da Nang Water Supply Company (DAWACO)

The determination of parameters in the equation (2.5) and (2.6) to calculate the economic value of water for domestic and industrial purposes is complicated and requires a lot of information Moreover, the demand for domestic and industrial water is mainly for urban areas, and in this study, it is Da Nang City whose water has been provided by DAWACO Therefore, in this thesis, the profit of DAWACO is used to replace the above values This model is a static model, based on extreme cases to calculate the value of payoff If

H chooses “to share”, H will share all water without generating electricity And then, C and I receives water from H with an assumption that this volume of water can meet the

demand of these players

 𝑝𝐻 = 𝑝𝐻−𝑚 = 0 (m-value) and 𝑝𝐶 = 𝑝𝐶−𝑀; 𝑝𝐼 = 𝑝𝐼−𝑀 (M-value)

If H chooses “not to share”, H will maximise using water for electricity generation (still complying with the law, particularly the 1537 procedure), hence, H will produce the expected annual average value of electricity output And then, C and I only receive the amount of water that H discharges based on Procedure 1537, comparing this amount

with the monthly guaranteed level in the dry season, if it does not meet the demand, it is necessary to consider this game model

 𝑝𝐻 = 𝑝𝐻−𝑀 (M-value) and 𝑝𝐶 = 𝑝𝐶−𝑚; 𝑝𝐼 = 𝑝𝐼−𝑚 (m-value = 0)

For all three players, M-value is higher than m-value

4 CURRENT SITUATION OF WATER CONFLICT

4.1 Context of Vu Gia – Thu Bon River Basin

4.1.1 Natural conditions

VGTB RB stretches across 5 provinces, but most are located in Quang Nam Province and Da Nang City VGTB RB covers 65% of Da Nang City and 88.8% of Quang Nam Province and includes a few small provincial catchments with negligible areas Therefore,

it is only necessary to analyze conditions for Quang Nam and Da Nang

Quang Nam stretches over an area of 10,438 km2 and is the upstream portion of the basin, therefore, this province will decide the characteristics of natural conditions for the whole basin In contrast, Da Nang has a small area with only 1,285 km2 and is mostly in the downstream portion of the coastal plain However, Da Nang is one of five municipalities which are the highest-ranked cities in Vietnam and is the economic development hub of the whole of Central Vietnam Hence, social-economic conditions in Da Nang are more developed than in Quang Nam

According to Decision No 1989/QD-TTg in 2010 on List of inter-provincial river basins; VGTB RB includes two rivers: (1) Vu Gia River in Kon Tum, Thua Thien Hue, Quang Nam, and Da Nang has a length of 209 km and a catchment area of 5,425 km2; and (2) Thu Bon River in Quang Ngai, Quang Nam has a length of 206 km and a catchment area of 4,610 km2 Moreover, according to Decision No 341/QD-BTNMT in

2012 on List of intra-provincial river basins, Da Nang has Cu De Catchment and Quang Nam has Tam Ky Catchment and Trau Catchment as intra-provincial basins

VGTB RB is located in a tropical monsoon area with a hot and dry west wind leading to high evaporation and risk of droughts This basin has an average temperature of 25.40C with a small thermal amplitude and average humidity of 84% with 90-170 rainy days annually Mountainous areas have short, steep rivers, concentrating high rainfall with a

total annual rainfall up to 4,000 mm The coastal plains have shallow rivers with flat terrain and a higher average temperature

Water resources include rainwater, surface water, and underground water This research focuses on surface water Rivers and streams in this basin are mainly steep and short, draining quickly into the basin and leading to a poor capacity to hold water in the basin

as well as in the riverbed Therefore, the capability to regulate water at the basin level is low as river flow depends entirely on the rainfall (Dan, Ky, and Lan, 2012)

4.1.2 Social-economic conditions

In 2017, Da Nang City has GRDP at current prices reaching VND 76,635 billion, and GRDP per capita reached VND 72.02 million The service sector accounted for 56.2%, followed by the industry and construction sectors accounting for 29.32% The proportion for the agricultural sector is negligible with only 1.68% The population of Da Nang City

in 2017 was 1.064 million, with an urban population of 87.63% Industry in Da Nang City is more developed than Quang Nam and water demand for this city is mainly for domestic and industrial purposes

In contrast, Quang Nam is an agricultural province with the proportion of forestry-fishery relatively high at 12% in 2018 In 2014, the population of Quang Nam was 1.471 million with 81.46% being a rural population and a half of that are laborers working in agriculture Agricultural work in Quang Nam has shifted to other sectors but slower than general economic restructuring Water demand for agricultural in general and irrigation, in particular, is very important

agriculture-4.2 Water resources (supply side)

Water resources of Vu Gia - Thu Bon River Basin is quite abundant compared to other river basins in Vietnam The amount of incoming water in this river basin in the dry season reaches 4,280 m3/person/year, just smaller than the Se San River Basin (8,090

m3) and the Mekong river basin (6,292 m3) The total area of Vu Gia - Thu Bon River

Basin is 10,350 km2 and the total water withdrawals are about 20.22 billion m3 per year Due to terrain and monsoon mode, the average annual rainfall has a gradual decrease from West to East, and irregular distribution by season This distribution also affects flow regime: flood flow in rainy season and dry flow in dry season

The Vu Gia-Thu Bon system consists of two sub-systems of Vu Gia River and Thu Bon River The sub-system in Vu Gia River includes the Dak Mi, Bung, A Vuong and Con rivers Vu Gia River has an average flow of 410 m3/s This river has the confluence with the Tuy Loan river downstream in Da Nang The sub-system in Thu Bon River originates from Ngoc Linh mountain of more than 2,000 m Thu Bon River has an average flow of

232 m3/s This river has confluence with the Ly Ly river downstream in Quang Nam This river network is narrow, steep in the mountains and shallow in the plains The alluvial content in the rivers is mostly coarse sediment with poor nutrients The network

of rivers is shaped like a fan, so the concentration of heavy rain both in quantity and intensity is in a wide range

The flow regime in VGTB RB has fluctuated over the years due to weather disturbances However, the flow fluctuation within one year is more remarkable The flow is highest

in the flood season with a huge rainfall in a short time and causing flash floods In the dry season, the river faces a lack of water resulting in the river being almost depleted

Table 4.1: Water flow of dry season and flood season in VGTB RB

In comparison with other basins, the flow of flood water in the VGTB RB appears late and occurs most severely The flood season lasts for three months from October to December and accounts for 60-75% of the total annual flow with the average flood flow module of 150-200 l/s.km2 November is the month with the largest flow, accounting for 25-32% of the total annual flow

At the end of the flood season, the water level of rivers and streams in the basin decreases gradually to start the dry season The dry season lasts up to 9 months with an average modulus of 15-35 l/s.km2 The driest three months have only about 9% of the annual flow, and the driest month is usually April (in the mountains) or July (on the plains) accounting for 2-3% of the annual flow In comparison to other river systems, the dry flow is relatively abundant, due to the source of rainfall from the monsoon wind Moreover, when the southeast monsoon reaches a peak in May or June, the area also appears to have a minor flood which helps reduce the level of drought

The exchange of water flow in Vu Gia – Thu Bon River Basin is quite complicated In downstream, Quang Hue River and Vinh Dien River are two channels which make the connection between two sub-basins Quang Hue River transfers water into the Thu Bon, and Vinh Dien River delivers part of the water come back to the Vu Gia In upstream, Dak Mi 4 HPP diverts a lot of water from Dak Mi River in Vu Gia system to Ngon Thu Bon River in Thu Bon system without returning Therefore, the operation of Dak Mi 4 HPP in upstream impacts on water resources of the whole basin

4.3 Water consumption (demand side)

4.3.1 Hydropower

Hydropower is “the generation of power by the transformation of hydraulic energy into mechanical energy to activate a turbine” (Branche, 2015) Hydropower plants in Vietnam are mainly reservoir hydropower schemes, so they can store water behind the dam in order to decouple power generation from river inflows They also use a

hydropeaking scheme which exploits water at maximum level in peak hours and moderate operation or not during off-peak hours, resulting in immense fluctuations in downstream flows

According to WCD in 2000, The decision to construct a dam as a development choice is influenced by technical considerations as well as the interests of politicians, central government, etc It is similar to the current situation in Vietnam as demonstrated in research of L A Tuan & Nga (2016) that hydropower development has been seen as achievements of the political system and economic development all around Vietnam since 1954

The Vu Gia - Thu Bon River Basin is ranked fourth in Viet Nam for potential hydropower generation capacity after the Da, Dong Nai and Se San river systems Research of 2030 Water Resources Group in 2017 shows that VGTB RB has a total power capacity of 1,059.60 MW (accounting for 6 % of Vietnam’s capacity), and reservoir capacity of 2,661.65 mn m3 (accounting for 5 % of Vietnam’s capacity)

In the 1990s period, the electricity output produced was not enough to meet the demand, leading to the Master Plans on hydropower development for large river basins being approved By the early 2000s, the master power plan for 10 major river basins was completed through Decision No 110/2007/QD-TTg approving the National Power Development Plan for the period 2006-2015 with consideration to 2025 (stand by

“Electricity Planning VI”)

Not beyond the trend of development, the planning of large hydropower development in VGTB RB is also approved

MOIT approved the planning of the Vu Gia – Thu Bon River Basin on the development

of cascade hydropower system, through Decision No 875/QÐ-KHDT in 2003 This plan was revised by Decision No 528/QĐ-NLDK in 2005, so cascading system in VGTB RB

consists of 8 large projects with a capacity of upper 30 MW Moreover, Quang Nam People’s Committee approved Decision No 2056/QD-UBND in 2010 about medium and small hydropower planning, to add 38 of hydroelectric plants After that, the Provincial People’s Committee has added around 11 projects into the plan (ICEM, 2008) Therefore, in total, Quang Nam has around 60 hydropower plants

According to IWARP in 2017, VGTB RB has a total capacity of 1,150 MW, currently, 8/10 hydropower plants have come into operation Moreover, L A Tuan et al (2014) indicates that there are 8 small hydropower plants in operation and 4 other ones in construction in VGTB RB

Huy et al (2013) explains some general characteristics of large hydropower reservoirs

in VGTB RB:

✓ All large reservoirs use channels to transfer water from the reservoir to the hydropower plant

✓ Almost all reservoirs are unable to store flood volumes

✓ Most large reservoirs divert natural flows to tributaries for electricity generation

• Song Bung 4 reservoir diverts the flow from Bung River to Giang River

• A Vuong reservoir diverts the flow of A Vuong River to Bung River

• Dak Mi 4 reservoir diverts the flow of Vu Gia River to Thu Bon River

✓ Cascade hydropower system: the highest reservoir has a large capacity; the lower reservoirs are dams or dams combined with a reservoir with a small capacity

4.3.2 Irrigation

Irrigation is the way humans use water for supporting cultivation even in water shortage conditions of space-time (Branche, 2015) Most of the large dams in the World have been built for an irrigation purpose and irrigation is linked to food production and food security In developing countries like Vietnam, while agriculture still plays an important