Impact of existing water fee policy in the Red River Basin, Vietnam

Impact of existing water fee policy in the Red River Basin, Vietnam

Impact of existing water fee policy in the Red River Basin, Vietnam

10:37 - 15/03/2018

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Globally, water used for agricultural production accounts for 70% of total freshwater with­drawals [Faurèsa et al., 2003]. In Vietnam, this figure is reported as 80%. Water consumption in agriculture sector is often considered the major factor relating to the water scarcity issue at different levels from on-farm to basin and national wide. To address water scarcity issue, water pricing mechanism is adopted as a primary mean

Impact of existing water fee policy in the Red River Basin, Vietnam

Globally, water used for agricultural production accounts for 70% of total freshwater with­drawals [Faurèsa et al., 2003]. In Vietnam, this figure is reported as 80%. Water consumption in agriculture sector is often considered the major factor relating to the water scarcity issue at different levels from on-farm to basin and national wide. To address water scarcity issue, water pricing mechanism is adopted as a primary mean many in many countries to manage water consumption in irrigated agriculture. As indicated by a number of studies, water pricing is an important tool for efficient water allocations and for better conservation. This study aims to identifying and quantifying the significance of water pricing in improving the water use efficiency in agriculture sector in the Red River Basin.

Context, objectives and method of the study

Context of the study

The Red River Basin (RRB) is a second largest basin of Vietnam, covering an area of 169.000 km2 and half in Vietnam (Fig.1) comprising 25 provinces with one-third population of Vietnam. The RRB plays an important role in providing water sources for socio-economic development, contributing to 25% GDP, and 25% of hydropower of the country [MARD, 2008]. Based on annual water balancing, the total annual water volume still meets water requirements in the area. However, because of temporally and spatially high variability of rainfall with about 70% rainfall in rainy season, water shortage often occurs in dry season in the RRB [Le and Jensen, 2014].

As agriculture sector especially rice production still plays a very important role in the RRB, many irrigation and drainage systems have been constructed in this area [MARD, 2014] with 30 large-scale schemes of more than 2.000 ha irrigated land each.

Water management and water fee in agriculture sector

In Vietnam, water fee (incl. irrigation service fee and non-irrigation service fee) was adopted since 1962 and farmers have to pay irrigation water fee, which consisting of 2 components: headwork and on-farm fees. Recently, the water fee policy has significantly changed by which the Government, instead of farmers, has paid the headwork irrigation fee as the subsidy and water users have only to pay for the on-farm irrigation fee.

This policy is intended to reduce the cost burden for farmers, whose income is still quite low. Thanks to the policy, annual fund for O&M has considerably increased five times in a period from 2008 to 2014. However, several issues related to the water fee policy have emerged. In fact, it presses an increasing burden of the state budget and leads to constraint of the service-oriented functions and incentives of irrigators in water management [MARD, 2014]. Also, farmers have less motivation for water saving and less participatory irrigation management [Tiep, 2009].

In the context of increasing water demand among water users and climate change impact, the improvement of water allocation efficiency in agriculture sector by adopting an appropriate water pricing regime is very necessary in this basin.

Objectives

The overall objective of this study is to contribute to the improved water management in the RRB through the improved knowledge of the water fee policy in irrigated agriculture. Specifically, the study is to evaluate the implementation and impacts of the current water fee policy in the RRB at different water management levels from the basin, provincial, scheme to on-farm and recommend the appropriate water fee mechanism and suitable measures to the region in practice.

Method of the study

Surveys at different levels of water management (national, provincial, system-wide and on-farm) for a period from 2012-2014 were conducted to collect data for the study. The impact evaluation method is applied to quantify the importance and impacts (economic, environmental and social) of the water fee policy in irrigated agriculture to different water management levels in the RRB.

For the in-depth study of the impact evaluation, a typical irrigation scheme - the Cau Son scheme covering 19.300 ha of irrigated land, and its on-farm irrigation areas in the RRB is selected as a case study for the detailed investigation. Results from theses in-depth studies are expected also to facilitate a scaling-up to system and basin level.


Fig. 1: Map of Red River Basin, Sources: [Le, 2012]

Impacts of the existing water policy (preliminary results of the study)

So far, the surveys and data collection including secondary data were finished. At the river basin, the  related water fee data of all provinces in the RRB are investigated. For the case study, the collected data processing is in progress. Preliminary results and findings are provided as bellows.

Positive impacts

According to the surveys, annually the irrigated area including rice and upland crops in the RRB is about 2.3 million ha (Fig. 2). Aquaculture area, which is served by irrigation schemes, is about 71.000 ha. Since water fee policy was applied, irrigated area has been gradually increased. For the period of 2012-2014, the annually cultivated area, which was served by the irrigation schemes, increased on the average of 63.800 ha, accounting for 3% of total cultivated area. The percentage of the irrigated area comparing to the cultivated area also increased from 85% to 91% in the region for the period from 2008-2014.


Fig.2 The irrigated area in the RRB, period from 2012-2014

Central budget subsidized for water fee exemption in  the RRB has risen significantly, about 5 times from 660 bill. VND in 2008 to 2,993 bill. VND. Under this increased budget, many water structures were repaired and maintained. According to the survey, about 5,200 structures have been annually repaired since the new policy on water fee was applied. For period of 2012-2014 about 4,300 km of canals were upgraded and/or maintained. Total cost for maintenance and repair of the irrigation structures is about 25% of total cost for operation and maintenance, doubling its figure before the implementation of the water fee exemption.

In addition, the water fee exemption policy has reduced agriculture cost for farmers. It is reported that farming cost has decreased 5-10% on average. This has contributed to increase income for farming households.

Negative impacts

There are still many irrigation structures in the degraded conditions because of insufficient budget for maintenance. The surveyed data shows that the current budget only meets 40% of the required cost for repairs of the structures, especially pumping stations and sluices in the coastal area in Thai Binh and Nam Dinh provinces.

Irrigated area by gravity is still low in the region. Furthermore, wasting water and low water use efficiency are reported in many irrigation schemes. Loose cooperation between farmers and irrigation companies in water management occurs in many irrigation schemes.

Conclusion and further work

Water use efficiency in agriculture sector and performance of irrigation schemes are affected by many factors. Water pricing is recognized as the effective tool to improve both the efficiency of water utilization and the performance of irrigation schemes. This study is to evaluate the impacts of the current water fee policy on agriculture sector in the RRB, Vietnam. Preliminary results indicate that the current water fee mechanism has considerable positive impacts at the basin and scheme levels. Negative effects caused by the policy are also identified. Further impacts at these levels and effects on the farming household levels are under analysis, and will be provided in the next blog.

 

References

 

Faurèsa, J. M., J. Hoogeveena and J. Bruinsmab (2003), The FAO irrigated area forcast for 2030, FAO, Rome.

Le, C. and J. Jensen (2014), Individual lift irrigation: a case study in the Cau Son irrigation and drainage area, Red River Basin, Vietnam, Paddy Water Environ, 12(1), 223-238.

Le, V. C. (2012), Return flow and reuse of drainage water in a rice-based irrigation and drainage area in the Red River Basin, Vietnam, PhD dissertation, 1-157. Department of Basic Sciences and Environment, University of Copenhagen, Denmark.

MARD (2008), Red River Basin Master Plan, Ministry of Agriculture and Rural Development, Hanoi.

MARD (2014), Protocol on improving the performance of exisiting irrigation and drainage systems, Water Resources Directorate, 784/QD-BNN-TL, Ministry of Agriculture and Rural Development, Hanoi, Vietnam. (in Vietnamese).

Tiep, N. X. (2009), New policy on irrigation fee and its concerns, Vietnam Academy for Water Resources, Hanoi, Vietnam.