UNIVERSITY OF ECONOMICS ERASMUS UNVERSITY ROTTERDAM HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES VIETNAM THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF ALTERNATIVE WETTING AND DRYING TECHNIQUE ADOPTION ON TECHNICAL EFFICIENCY: EMPIRICAL EVIDENCE FROM RICE PRODUCTION IN MEKONG RIVER DELTA, VIETNAM BY HUYNH NGOC SONG MINH MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, DECEMBER 2017 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF ALTERNATIVE WETTING AND DRYING TECHNIQUE ADOPTION ON TECHNICAL EFFICIENCY: EMPIRICAL EVIDENCE FROM RICE PRODUCTION IN MEKONG RIVER DELTA, VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By HUYNH NGOC SONG MINH Academic Supervisor: DR. LE THANH LOAN HO CHI MINH CITY, DECEMBER 2017 TIEU LUAN MOI download : skknchat@gmail.com DECLARATION I hereby declare that this thesis entitled “The impact of alternative wetting and drying technique adoption on technical efficiency: empirical evidence from rice production in Mekong River Delta, Vietnam” has been completely written by myself. The study is the result of my own work combined with supervision and guidance from Dr. Le Thanh Loan of University of Economics, Ho Chi Minh city, Vietnam.
I guarantee that the results with all suggestions in this study are fully based on my personal work and knowledge which are strictly followed the disciplines of Vietnam Netherlands Programme. This study, or any related documents of this dissertation, has certainly not been submitted for any previous qualifications or any other institutions and resources. I am also responsible for all the contents in this research. Date: 07 December 2017 Signature: _______________ Full name: Huynh Ngoc Song Minh i TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT The past two year with Vietnam – the Netherlands programme has been such a memorable and special experience in my life.
I feel truly thankful for all of the knowledge and skills that I have the chance to learn which are extremely important for me to complete this thesis successfully. First and foremost, I would like to express the deep gratitude to my supervisor, Dr. Le Thanh Loan. It has been an honor to be her only master student in Vietnam and the Netherlands programme 22nd course.
She has been sharing with me the integrant researching experience from collecting data to completing thesis. I appreciated all of her contributions of time, ideas, dedicated guidance and support during my thesis process. The enthusiasm that she has for this project was extremely motivational for me, even during tough times in this master journey. I am also thankful for the excellent example she has provided as a successful woman economist and professor.
Secondly, I would like to thank the funding from FAO and CGIAR for the project titled "Documenting Adoption of the AWD Water Management Technique in Vietnam" in the MRD, Vietnam in 2016. Furthermore, I also want express my appreciation to Prof. Nguyen Trong Hoai, Dr. Pham Khanh Nam and all the lecturers as well as the entire associates of Vietnam – the Netherlands Program for their dedication and willingness to support all students in my class.
Especially, I would like to thank Dr. Truong Dang Thuy and Dr. Le Van Chon for their valuable suggestions which help me to complete my thesis. In addition, I am extremely appreciative the valuable time with my classmates in course 22, particularly, all of the members in my study group, for their encouragement and cooperation during the course.
After all, I want to express how valuable it was to me for receiving the strongest encouragement and support from my beloved family, especially my mom. Because all of their sacrifices which generate the best conditions for me to finish this program and this thesis. ii TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS DECLARATION. ii TABLE OF CONTENTS.
iii LIST OF FIGURES. v LIST OF TABLES. viii CHAPTER 1: INTRODUCTION .3 Scope of the study .4 Structure of the thesis. 10 CHAPTER 2: LITERATURE REVIEW .1 Overview about the AWD technique .2 AWD guideline in Viet Nam .3 The AWD score .4 The impact of adopting AWD .2 Overview about technical efficiency of production function .1 Theory of frontiers production technical efficiency.2 Empirical Technical Efficiency Review .3 Review of Determinants on Technical Efficiency.
23 CHAPTER 3: DATA AND METHODOLOGY. 25 iii TIEU LUAN MOI download : skknchat@gmail.1 Conducting the AWD Score. 34 CHAPTER 4: RESULTS AND DISCUSSION .1 The AWD adoption degree and challenges for AWD adoption .2 Results of average technical efficiency of rice production in the MRD region .3 Results of determinants on the technical inefficiency. 63 iv TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2.1: The isoquant for technical efficiency estimation from the input- oriented .2: The frontier for technical efficiency estimation from the output- oriented.
20 v TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 3.1: The synthesis of signals that farmers use to observed water level on the field during irrigation process .3: Variance inflation factor .5: Percentage of different AWD adoption level .6: AWD adoption score by provinces .7: Challenges of AWD adoption in MRD province .8: Estimated Average Technical Efficiency .9: The technical inefficiency determinants model .10: Akaike's information criterion and Bayesian information criterion. 50 Table A1: Comparison between estimated results between half-normal and truncated distribution efficiency model. 63 vi TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT One of the most serious issues that potentially lead to total rice yield losses is climate change and its consequence, water scarcity. To counteract with this problem, the International Rice Research Institute has developed and promoted the alternate wetting and drying (AWD) water saving technique among rice growing countries to save irrigation water as well as enhance productive cropping.
However, after widely adopted, farmers have adjusted the technique differently in term of irrigating schedule and practice. These realities lead to a problem in measuring the degree of AWD technique adoption at farm level and investigating its impact on rice production. From the original AWD score, this study suggests a modified AWD score including water drainage practice to represent for the adoption degree of each farm, based on that AWD application impact on the rice production technical efficiency is also evaluated. Using the sample of 250 farms surveyed in Mekong River Delta provinces, the adjusted AWD score is calculated for each farm.
Subsequently, a Stochastic Frontiers Cobb-Douglas production function is regressed using maximum log likelihood method to measure the technical inefficiency, after which, a function of technical inefficiency determinants is investigated, where AWD score was included as a main factor. Results indicate that higher AWD application degree can improve technical efficiency of the production. Thus, AWD technique should be continually promoted on large scale adoption and strictly followed IRRI instructions to improve rice production technical efficiency. Key words: Alternative wetting and drying technique (AWD), Technical efficiency, Mekong River Delta, Vietnam.
JEL: Q12, Q15 vii TIEU LUAN MOI download : skknchat@gmail.com ABBREVIATION PH – Power of hydrogen AWD – The Alternate Wetting and Drying Technique IRRI – The International Rice Research Institute CH4 – Methane MRD – Mekong River Delta 1M5R – One must do and five reduction campaign KPA – Kilopascal KG – Kilogram DAS – Days after sowing FGDS – Focus groups discussions KIIS – Key informant interviews VIF – Variance inflation factor BIC – Bayesian information criterion AIC – Akaike information criterion CM – Centimeters viii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION In this chapter, firstly, a brief overview of the problem setting is provided and based on that, the research problem of this study is given. Also, the research questions and main objectives are described together with a short introduction of the data and methodology used for this study. Finally, the structure of the research is included.1 Problem Statements According to the Food and Agriculture Organization of the United Nation, nature provides us more than 50,000 edible plants, however, only three of them, which are rice, maize and wheat are considered as the world leading staple food. The main reason is because these three directly provide over 60% of energy and 42% of calories intake for the entire human population.
Out of these three, rice is of the most important role. Rice feeds almost half of the human being, especially in low and middle – income countries. People depend mostly on rice in their daily meals. As the world population is growing rapidly, it would lead to the increasing food demand in the near future (Easter, Rosegrant et al.
The major supply for food comes from agricultural products, especially rice as proved, and the total rice consumption, in the coming year, is also expected to increase. In fact, the Food and Agricultural Policy Research Institute has projected that the global demand for rice consumption will arise from 439 million tons in 2010 to 496 million tons in 2020 and reach 555 million tons by 2035. The predicted upward trend in the global rice consumption can be observed through actual data around the world. Firstly, rice is mainly consumed in Asia.
This region accounted for 90% of the total world rice consumption. Although per capita consumption in China and India declines continuously because of increased income and a rapid urbanization, Asia also contributes 67% of the total increase. The Asia rice consumption of 388 million tons in 2010 will level up to 465 million tons in 2035. Secondly, outside Asia, where rice has not become a 1 TIEU LUAN MOI download : skknchat@gmail.com staple food yet, per capita consumption shows the same increasing trend.
Particularly, in Africa, rice is the fastest growing food, both urban and rural residents here used to eat rice only in their special occasion, but recently, rice has become their daily food. As a consequence, an arising demand of 30 million tons more will be needed by Africa. Rice consumption will surge 130% from 2010 and remain growing onwards. There is a gap between demand and supply of rice in Africa, moreover, this continent accounted for 32% of global rice trade in 2015, importing 14.3 million tons of the total 44.6 million tons traded worldwide.
In the Americas, total rice consumption is also projected to rise by 33% over the next 25 years as a result of steadily increasing incomes, as well as continued population growth. Even in the Middle East and developed European Countries, a significant increase of rice consumption was observed. This partly causes by migrants from countries where rice is more often consumed, along with wider globalization of food availability and tastes. Generally, the demand for rice continues to rise, and for every one billion people added to the world’s population, 100 million more tons of rice is needed to be produced annually.
While rice consumption is increasing around the world, most of its production only centers in Asian countries. According to Food and Agriculture Organization of the United Nation, the top 10 rice producing countries in the world today are India, China, Indonesia, Bangladesh, Thailand, Vietnam, Burma, the Philippines, Cambodia, and Pakistan. To meet the increasing demand, global rice yields now must rise faster than the past to keep the world market prices stable at affordable levels for the billions of rice consumers. However, with the current state of slow productivity growth, inefficiency production and unsustainable management of natural resources, expansion of the rice production would be limited.
Furthermore, the International Food Policy Research Institute forecasts that by 2050 rice prices will increase about 32% to 37% and the yield losses in rice could be 10% to 15% as a result of climate change. Phenomenon as sea-level rise causing flooding, salinity, and water scarcity will be negatively affected rice production. 2 TIEU LUAN MOI download : skknchat@gmail.com The first problem is the sea level.