Valuation Study

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Impact of Dykes on Wetlands


Medium: Water

Country: Vietnam

Analytical Framework(s): Contingent Valuation, Other

Unit(s): Marginal WTP

Study Date: 2006

Publication Date: 2007

Major Result(s)

Resource/Environmental Good VND
Forgone rice profit per tonne from a 10-day flood duration increase per year 980,000.00 1,756,022.80 82.20
Total annual loss in rice income 1,470,000,000.00 2,634,034,200.00 123,300.04
Reduction in income from converting high to low dykes (per household per year) 440,000.00 788,418.40 36.91
Accompanying loss of income from livestock (per household per year) 15,000,000.00 26,877,900.00 1,258.16
Income loss of dyke conversion per household (growing rice and owning livestock) per year 15,440,000.00 27,666,318.40 1,295.07
Marginal WTP for a 1% increase in healthy vegetation 920.00 1,648.51 0.08
Marginal WTP for an additional 10 Sarus cranes 900.00 1,612.67 0.08

About the Inflation Adjustment: Prices in Vietnam (VND) changed by 79.19% from 2006 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.79 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2022) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.

Functional Transfer: Changes to park dykes are predicted to increase flood durations in adjacent areas. The following equation was used for calculating impacts of this change on rice productivity:

Ln (rice) = 1.37 + 0.06 * ln(labor) - 0.0006 * flood + 0.12 * soil -0.05 * disaster + 0.003 * experience + 0.16 * location

Study Note: The author noted that the willingness to pay (WTP) for wetland improvement through dyke conversion depends on several factors. Older, more educated and wealthier respondents have a higher WTP. Those living further away from the wetland site, having knowledge about the wetland, and having option and bequest values about the wetland also show a higher WTP. However, respondents have a lower WTP if they have visited the site. The WTP is also reduced by a short, neutral "cheap talk" script that explicitly tells the respondents about hypothetical bias problems and reminds them about their budget constraints and other wetlands in the region that would provide similar values for the respondents. Although cheap talk was found to reduce WTP, its effect was only observed in respondents living far from the site. More specifically, cheap talk made respondents more concerned about the negative impacts on local farmers. It was also found that there was no significant difference between the WTP of farming respondents and non-farming respondents.

Study Details

Reference: Thang Nam Do. 2007. Impacts Of Dykes On Wetland Values in Vietnam's Mekong River Delta: A Case Study in the Plain of Reeds. EEPSEA Research Report, No. 2007-RR1.

Summary: This research predicts the impacts of the proposed dyke conversion on both market and non-market values in a case study of the Tram Chim Wetlands in the Plain of Reeds in the Mekong River Delta. For market values, it estimates the costs of the dyke conversion in the form of local farmers' reduced income from rice production, using a production function approach. For the non-market values, it estimates the benefits of the dyke conversion in the form of improved wetland biodiversity, using an environmental choice modelling technique. Although the park dykes of Tram Chim are the main focus of this study, the impacts of converting farm dykes in other areas in the Plain of Reeds are also examined here. The impacts of farm dyke conversion on farmers' incomes and wetland biodiversity benefits are examined using the same techniques as in the case of the Tram Chim park dyke conversion. The ultimate goal is to provide policy-makers with estimates of costs and benefits of the dyke conversion so that the right decisions in terms of social welfare can be made.

Site Characteristics: The largest area of wetlands in Vietnam is found in the Mekong River Delta (MRD). Under the Ramsar definition, about 90% of Vietnam's MRD or about 4.9 million hectares are wetlands. These wetlands can be broadly divided into two categories: inland and coastal wetlands. Inland wetlands are dominated by floodplain paddy fields, seasonally flooded grasses and melaleuca forest, while coastal wetlands are generally dominated by mangrove forest. The wetlands have experienced serious loss and degradation over the past few decades. The case study reported here was carried out in the Tram Chim National Park and its adjacent areas in the Plain of Reeds in the Mekong River Delta. Established as a national park in 1994, Tram Chim is a 9,000 ha wetland located in the Tam Nong District of Dong Thap Province. Tram Chim is a habitat for 127 plant species. It supports a large number of herons, egrets, storks, ibises, and some rare species such as black-necked storks, lesser adjutants and greater adjutants. Most notably, Tram Chim provides a habitat for the Sarus cranes, the endangered bird species listed in the World Conservation Union (IUCN) Red Book . Due to its biodiversity value, it was the first wetland national park declared in Vietnam and has been nominated by the Vietnamese government to be a Ramsar wetland site. Tram Chim is enclosed by a 53-km dyke built in 1985 to retain water in the national park during the dry season. This helped restore the wetland ecological systems damaged during the Vietnam war. Evidence of ecological restoration came with the return of the Sarus crane. However, in 1996, to prevent fire, the local authorities raised the height of the dyke so much so the water level is now constantly higher than the ecological optimal level of 0.5m. The current park dyke system has affected Tram Chim's ecological system. While the long inundation supports some deepwater aquatic species, overall, it has negative impacts on the ecological system. Native plants have been replaced by invasive mimosa pigra while eleocharis or 'nang' grasses, the favourite food of the Sarus crane, have been destroyed. The latter has led to reduced numbers of this endangered bird species visiting the park. The dyke has also hindered fish migration and hence reduced the number of fish species living in the wetlands.

Comments: This research has shed some light on the impacts of the proposed dyke conversion on wetland market and non-market values. Although further research is needed to provide more insights into the costs and benefits of these changes, the findings of the partial costbenefit analysis conducted in this research suggest that wetland improvement resulting from the dyke changes can generate net benefits to society. In addition, this study contributes to research on the application of choice modelling in wetland non-market valuation in Vietnam which in turn can help policy-makers understand the non-market values of wetlands and make better decisions in terms of wetland management and sustainable development.