Valuation Study

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Impacts of Pesticide Use in Rice Production on Aquaculture


Medium: Water

Country: Vietnam

Analytical Framework(s): Other

Study Date: 2001

Publication Date: 2002

Major Result(s)

Functional Transfer: Kindly refer to the main text in the bibliography link below for the full model.

Study Note: This study aimed to model and simulate dynamic economic relationships of rice and fish production for socially-optimal management of water and land resources and suggest changes in policy for pesticide use. The specific objectives are to set up a model of the dynamic relationship of price and output with water quality by which the shadow price of water quality is identified and the social welfare loss is measured, to simulate the model for different scenarios of optimal management in order to identify optimal time-paths of price and water quality and measure other benefits from the development of aquaculture and to suggest changes in policies for water and land resource use and policies for pesticide and chemical use in agricultural production.

Study Details

Reference: Dang Minh Phuong. 2002. The Impacts of Pesticide Use in Rice Production on Aquaculture in the Mekong Delta: A Dynamic Model. EEPSEA Research Report, No. 2002-TR.

Summary: Both rice production and fish culture in the Mekong Delta, Vietnam have a close mutual relationship with the use of water and land resources. First, they are competitive in the use of land and water. Second, rice production discharges pesticides into water bodies causing an external cost to fish culture, which, in turn, leads to an increase in fish cost and price. A dynamic model for maximizing the social surplus is developed for optimal management of resources as well as production. Its first-order conditions provide some important quantitative as well as qualitative interpretation that explains the dynamic relationships among prices, water quality, and shadow price. The time paths and phase diagrams of the model show the variations and the changes in prices, outputs, and water quality over time, and the initial position in regions leading to divergence or convergence. As a result, effective policies are set up to maximize social welfare. Data are collected and used in estimations of demand functions of rice and fish, the function of assimilative capacity, the fish cost function, and the parameter of pesticide discharge. The total loss of fish culture (total external cost in the year 2001) due to pesticide use is about $US 9 billion. Two cases of linear and nonlinear forms are simulated with scenarios of initial values for the year 2001. The simulation shows optimistic results with prices going down and water quality going up over time, meaning the social surplus will rise. The phase diagram shows that the social manager should look for policies to raise the initial value of water quality to get an optimal solution. A comparative analysis of the model simulation shows the directions of change in parameters leading to a change in the steady state values. How to change the parameter values is analyzed and the analysis suggests different policies such as a minimum tax on pesticide input about 123%, change in priority in industry development that aquaculture must be considerable, expansion of fish/rice or shrimp/rice pattern, changes in pesticide regulations, training and transfer of technology to the farmer how to raise fish efficiently, and policies for aquacultural development.

Site Characteristics: The Mekong is the largest river in Southeast Asia and it ranks 12th in the world in terms of length (4,800 km) and 8th in terms of run off (475 billion m3/ year). It originates from the Tibetian Plateau of China and crosses six countries namely, China, Myanmar, Thailand, Laos, Cambodia and Vietnam. The river ends in the Mekong Delta with an area of 49,520 km2, including 39,000 km2 (80%) located in Vietnam and often called Cuu Long Delta. The Mekong Delta has two sides bordering the sea so that a diversified coastal biological zone is formed which has the potential for aquaculture and mangrove forests. The Mekong Delta is a very fertile land for agricultural development: it occupies only 12% of the total cultivated area, but its annual food production accounts for nearly 50% of total national food production, since it is the dominant supplier of rice export in Vietnam. During the last two decades, agricultural production has registered an obvious advance- the cultivated area has been widening and the rice-cultivated area and production have been increasing due to cropping intensity and diversity.

Comments: This study has the following limitations: Aquaculture in the Mekong Delta is diversified such as raising fish in brackish water, in fresh water, in cage, and in rice field. However, this study focuses on fishpond and in three popular species only. The model ignores the pollution from fish culture. Negative impacts of pesticide to land environment, biodiversity and human health are ignored. The policy suggestions are only key points and are not discussed in details. The simulation does not show a particular increase in the social surplus, because the cost of raising water quality is not measured.