Impact of the existing policy on irrigation service fee on on-farm irrigation management, agriculture productivity and household economy in Red River Basin, Vietnam
13:47 - 15/03/2018
Irrigation Service Fee (ISF) has been adopted worldwide as an effective tool to improve water use efficiency in irrigated agriculture for a major water user especially in the context of climate and water scarcity. ISF has been applied across Vietnam for decades, but the policy on ISF has changed to subsidize for farmers since 2008. The study has investigated both negative and positive impacts at different levels from on-farm to irrigatio
Context, objectives and method of the study
Irrigation Service Fee (ISF) has been adopted worldwide as an effective tool to improve water use efficiency in irrigated agriculture for a major water user especially in the context of climate and water scarcity. ISF has been applied across Vietnam for decades, but the policy on ISF has changed to subsidize for farmers since 2008. The study has investigated both negative and positive impacts at different levels from on-farm to irrigation system and river basin level. In my first blog, impacts made by the policy on ISF exemption have been pointed out at the irrigation system and Red River Basin levels. Thus, this second blog identifies and analyze impacts of this policy at on-farm irrigation management and household economy level.
Using the impact evaluation method, which is difference in difference [Khandker et al., 2010], this study investigates the effects of the current ISF policy at on-farm water management, agriculture productivity and household economy in a site and across the 44,600 ha of Cau Son irrigation and drainage system in the Red River Basin (RRB) in Vietnam (Fig.1). This study area is located about 70 km north-east Hanoi in Cau river sub-catchment in the mid-land of the RRB. The Cau Son irrigation scheme was constructed in 1907-1909, first rehabilitated in period of 1966-1973 [Nippon, 2003] and has been upgraded under the a project funded by the World Bank including.
Source: [Le and Jensen, 2014]
Fig. 1. Study area (Lang Son - LS) in Cau Son irrigation and drainage area with sub-catchments in the Red River Basin, Viet Nam
This study utilizes data available in recent research conducted by Chinh and Jensen  and additional information on on-farm irrigation performance was collected by additional survey in 2015. The investigation was conducted in LS area covering about 733 ha irrigated by 3 pump stations, including Lang Son, Non Tuong and Dau Nui. Surveys focused on status of the on-farm irrigation management and household economy before and after the implementation of the policy on ISF exemption. The study period for in-depth analysis was composed of 2 years 2008 and 2009, which year 2008 presented for baseline period (before implementation of the ISF exemption) and year 2009 presented for the follow-up period. The household economy survey also was undertaken in the LS area coinciding with samples in the on-farm irrigation management survey.
About 100 households were sampled in all hamlets of the site with the number of samples in each hamlet proportional to its irrigated area of the site. The households were then selected randomly from the hamlet’s list of households. These samples provide a confidence interval of about 10% at a confidence level of 95% [Le and Jensen, 2014]. In this study, out of total 100 surveyed households, the treatment group consisted 60 households, which were benefited from the policy on ISF exemption. The control group composed of 40 households, which were still not subsidized ISF in the year of 2009.
Impacts of the existing ISF policy
On-farm irrigation performance
The performance of on-farm irrigation management was presented in terms of flexibility, reliability and equity indictors as defined by MASSCOTE approach [Renault et al., 2007]. These indicators were surveyed in LS area and measured with the scale range from 0 to 4.
According to results of the impact evaluation method (Table 1), the performance of on-farm irrigation management was adversely affected by the ISF exemption policy. All features including flexibility, reliability and equity were very significant (p<0.01) and negative. It was shown that in the control group, mean value of these 3 indicators was reduced about 5%, however, in the treated group, these values was quite considerably decreased by 16%, below the average level (2). This indicated that the ISF exemption has made lower water use efficiency at on-farm level since the ISF exemption was applied. This confirmed with other studies [Cook et al., 2013; OECD, 2015] that water losses and low irrigation efficiency were reported in many irrigation schemes.
Agriculture productivity and household economy
Based on impact analysis, the agriculture production and the economy of the sample households have not robust significant difference. In terms of agriculture productivity, the ISF policy did not influence on rice yield (p>0.1, Table 2). Any impact on productivity of the ISF policy could also be expected to be difficult to identify given the very small variability of rice yields at household level within and between years and sites. Thus, in a somewhat similar application of the impact evaluation method, Rejesus et al. , Le and Jensen  found no impact of adoption of irrigation technology on rice yields.
The impact on cultivation labor was not significant implying that farmers did not change their labor on farming practice under the context of the ISF exemption. Given the fact of similar conditions for farming practice including soil, weather and irrigation technology during study period, this means that farmers to some extent spent similar labor on farming practice. It seems contradictory that farmers could use more labor for on-farm irrigation management in the treatment group because of lower field irrigation performance as discussed above. However, it also could be explained by the fact that in the study area, labor for cultivation was aggregated from many activity components including field irrigation, land preparation, weeding, fertilizing, harvesting, transplanting.
Except the net income from cultivation, other outcome variables (cultivation income, cultivation cost, total income and total net income) had the p value > 0.1 (Table 1.) This study found that the total amount of ISF of the household accounted for 1-2% of total annual income, which was quite similar to the findings by Cook et al., . This amount of ISF seemed quite small compared with the total income of the household and thus have no impact on the household economy.
Impact analysis demonstrated that the implementation of ISF exemption was unsuccessful in improving the on-farm irrigation performance by reducing flexibility, reliability and equity but without compromising rice yields. Under the implementation of ISF exemption, farmers in 109 dynamic irrigation schemes covering an area of 26% of the total irrigated area in Cau Son irrigation system was likely faced with a considerable effect at on-farm irrigation performance.
In the existence of the ISF exemption, labor for cultivation activity was not demanded though low on-farm irrigation performance was illustrated. The ISF exemption enhances net income from cultivation activity by reducing partly input costs for irrigated agriculture production. However, because reduced ISF accounted for small part of the total household income, no effect of the ISF exemption on the household economy was found. The complexity of the household economy’s structure, in which the share of cultivation business accounted for smaller part (34-42%) of total income, may affect the robustness of this impact analysis on the household economy.
The disadvantage of the policy on ISF exemption on field irrigation performance just one year of the policy enforcement as indicated by this study implied that the ISF exemption has been likely sensitive to the quality of irrigation service in the Red River Basin. This somehow follows the on-going trend that, the application of water pricing or ISF mechanism in irrigation service has been considered as an effective mean in improving water use efficiency. In the context of climate change and increasing water conflict among water users in the RRB, improving the water efficiency in irrigated agriculture becomes very essential in this region. Thus, the current policy on ISF exemption should be revised and follows the manner of service-oriented management where, service providers and water users should be linked via service contract under the direct payment mechanism as previously. Also, form of subsidy for farmers by the Government should be changed accordingly.
Cook, J. R., D. Ellingson, T. E. McGrath, D. T. Tu and J. J. V. Gijn (2013), The Irrigatin Service Fee Waiver in Viet Nam, Asian Development Bank,
Khandker, S. R., G. B. Koolwal and H. A. Samad (2010), Handbook on impact evaluation: Quantitative methods and practices, The World Bank, Washington D.C.
Le, C. V. and J. R. Jensen (2014), Individual lift irrigation: a case study in the Cau Son irrigation and drainage area, Red River Basin, Vietnam, Paddy and Water Environment, 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.
Nippon (2003), Modernization of Cam Son - Cau Son irrigation project: Feasibility study report, Nippon Koei Co., Ltd (Nippon), Tokyo, Japan.
OECD (2015), Agricultural Policies in Viet Nam 2015, OECD Publishing.
Rejesus, R. M., F. G. Palis, D. G. R. Rodriguez, R. M. Lamayan and B. A. M. Bouman (2011), Impact of the alternate wetting and drying (AWD) water-saving irrigation technique: Evidence from rice producers in the Philippines, Food Policy, 36(2), 280-288.
Renault, R., T. Facon and R. Wahaj (2007), Modernizing irrigation management - the MASSCOTE approach, FAO irrigation and drainage, Paper 63, Food and Agriculture Organization of the United Nations, Rome.