Farmer heterogeneity and water pricing reform: a case study from Vietnam

Abstract

Water pricing has been recognized as an important policy instrument for improving the efficiency of irrigation and underpinning the sustainability of related services. However, establishing and charging the ‘right’ price is no simple task. This paper uses an exploratory factor analysis to isolate farmers’ motivations towards farming. A binary logit regression is then used to examine the relationship between motivation, household, and farmer characteristics and willingness to pay for improved irrigation services. Findings from this study suggest that a ‘one size fits all’ approach faces remote prospects of success and better targeting of reform effort is warranted.

Keywords:

• water pricing
• irrigation
• new institutional economics
• property rights
• policy reform
• Vietnam

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplemental data

Supplemental data for this article can be accessed at http://dx.doi.org/10.1080/07900627.2015.1085368.

Notes

1. In developed countries like Australia pricing reforms were sometimes accompanied by commitments from the state to bring existing infrastructure up to a particular level with public funds used to deal with any ‘deferred maintenance’ (McLeod & Warne, 2008).

2. The Land Law 1988 (No. 03/LCT/HDNN8) was approved by the National Assembly of Vietnam at Session 2 of the Legislature VIII on 29 December 1987. The Land Law 2013 (No. 45/2013/QH13) was approved by the National Assembly at Session 6 of the Legislature XIII on 29 November 2013 and took effect from 1 July 2014. These laws can be accessed online via the government website at: http://vanban.chinhphu.vn/portal/page/portal/chinhphu/hethongvanban/.

3. The Water Resources Law 1998 (No. 08/1998/QH) was approved by the National Assembly of Vietnam at Session 3 of the Legislature X on 20 May 1998. The Water Resources Law 2012 (No. 17/2012/QH13) was approved by the National Assembly at Session 3 of the Legislature XIII on 21 June 2012 and took effect from 1 January 2013. These laws can be accessed online via the government website at: http://vanban.chinhphu.vn/portal/page/portal/chinhphu/hethongvanban/.

4. Sao is an area unit in Northern Vietnam that is equal to 360 m². In addition, the money value given in this hypothesized case was about three times higher than the level that the farmers were currently paying.

5. Whilst this approach is parsimonious for the context of Vietnam we acknowledge the prospect of introducing some bias to the results.

6. This was calculated by the authors from the Vietnam Household Living Standard Survey 2010.

7. This may indicate endogeneity between TIA and WTP, although an investigation of this is beyond the scope of this paper.