This study investigates the economic value of groundwater as an input to small householder's agricultural production in Vietnam. Groundwater is used for irrigation and household consumption in many part of Vietnam, as a main source of water, as a supplement for piped water, and as a backup resource during shortages. Having access to groundwater irrigation provides households with an alternative water source rather than relying on state-provided irrigation such as canals, or natural irrigation such as spring/river or rain water. Groundwater is also used to provide relief when the water level is too low during droughts or natural disasters. Excessive use has been a major concern due to a lowering water table, contaminated underground aquifers, and land subsidence as a potential consequence of over withdrawal. Using a plot-level data set, we estimate the capitalized value of irrigation and groundwater irrigation to the value of production on each farm, farmland values, and farmland rents. For groundwater, the most accurate estimate puts the value of groundwater irrigation at VND6.32 million/hectare/year, and almost doubling this amount for coffee plantations using groundwater. Comparing to the value of irrigation, we also obtained a consistent result of approximately VND10 million per hectare of irrigated land for paddies, and VND3.2 million/hectare/year for maize. Despite irrigation services collection being unpopular and eventually waived in Vietnam in 2008, the emerging water crisis in the Lower Mekong Basin countries and especially in the Mekong River Delta demands a comprehensive water policy for the long-term sustainability of water resources, among which groundwater management is a critical component.
Working Paper Series
Dec 01, 2017