The impact of alternative wetting and drying technique adoption on technical efficiency empirical evidence from rice production in mekong river delta, vietnam

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 ECO

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

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

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

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 Dr 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

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

LIST OF FIGURES v

LIST OF TABLES vi

ABSTRACT vii

ABBREVIATION viii

CHAPTER 1: INTRODUCTION 1

1.1 Problem Statements 1

1.2 Research Objectives 8

1.3 Scope of the study 9

1.4 Structure of the thesis 10

CHAPTER 2: LITERATURE REVIEW 11

2.1 Overview about the AWD technique 11

2.1.1 AWD definition 11

2.1.2 AWD guideline in Viet Nam 13

2.1.3 The AWD score 15

2.1.4 The impact of adopting AWD 16

2.2 Overview about technical efficiency of production function 19

2.2.1 Theory of frontiers production technical efficiency 19

2.2.2 Empirical Technical Efficiency Review 21

2.2.3 Review of Determinants on Technical Efficiency 22

2.3 Summary 23

CHAPTER 3: DATA AND METHODOLOGY 25

3.1 Methodology 25

3.1.1 Conducting the AWD Score 25

3.1.2 Analytical Framework 28

3.1.3 Econometrics Model 31

3.2 Data 34

CHAPTER 4: RESULTS AND DISCUSSION 37

4.1 Descriptive Statistics 37

4.1.1 Data Description 37

4.1.2 Correlation Matrix 40

4.2 Empirical Results 43

4.2.1 The AWD adoption degree and challenges for AWD adoption 44

4.2.2 Results of average technical efficiency of rice production in the MRD region 47

4.2.3 Results of determinants on the technical inefficiency 48

4.3 Discussion 51

CHAPTER 5: CONCLUSION 53

5.1 Main findings 53

5.2 Policy implications 54

5.3 Limitations 54

REFERENCES 56

APPENDIX 63

LIST OF FIGURES

Figure 2.1: The isoquant for technical efficiency estimation from the

input-oriented 20 Figure 2.2: The frontier for technical efficiency estimation from the output-

oriented 20

LIST OF TABLES

Table 3.1: The synthesis of signals that farmers use to observed water level on

the field during irrigation process 26

Table 4.1: Descriptive Statistics 38

Table 4.2: Correlation Matrix 41

Table 4.3: Variance inflation factor 42

Table 4.4: Correlation Matrix 43

Table 4.5: Percentage of different AWD adoption level 44

Table 4.6: AWD adoption score by provinces 45

Table 4.7: Challenges of AWD adoption in MRD province 46

Table 4.8: Estimated Average Technical Efficiency 47

Table 4.9: The technical inefficiency determinants model 48

Table 4.10: Akaike's information criterion and Bayesian information criterion 50 Table A1: Comparison between estimated results between half-normal and truncated distribution efficiency model 63

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

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

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

1.1 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 1998) 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

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

The first problem is the sea level When the sea level rises as predicted, a large area of low – lying lands, deltas and coastal areas in Asia will be submerged, leading to salinity throughout the region and making rice production become vulnerable For instances, in all of the hydrology system of the Mekong River Delta (MRD), one of the primary rice growing area in Vietnam will be damaged, sediment discharge and shoreline gradient will change Flooding is also caused by rising sea-level, rice cannot survive if they are submerged under water, and flooding makes it difficult for harvesting Currently, about 20 million hectares of the world’s rice growing areas is at risk of occasionally being flooded, particularly in major rice growing area as India and Bangladesh Generally, risen in sea-level would mainly reduce quality, size of cultivated land, and the amount of irrigated water

The second major problem in rice production is water scarcity Water is one

of the most important inputs for rice production, in fact, without water rice cannot grow Rice systems depend on their ecological resilience largely from intensive water use in order to control weed, soil salinity, pH, and to avoid heat Water for agriculture uses around the world are becoming increasingly scarce (Rijsberman 2006) Scarcity irrigated water source is mainly caused by reduction

of water resources and quality, malfunctioning of irrigation systems, and increased water use competition from other sectors such as urban and industrial users In conclusion, one of the most important issues in rice production nowadays is water scarcity

Asia, the world biggest rice production region, has been experienced long developing history of rice production, and for more three millennia, their irrigation system presents sustainable condition Nevertheless, recent rapid population growth that leads to a declining share of land, water, labor, energy resources and overuse of production inputs made more than 23 million hectares

of rice production areas in South and Southeast Asia facing water scarcity Tuong and Bouman (2003) estimated that by 2025, 2 million hectares of Asia's irrigated dry season rice and 13 million hectares of its irrigated wetland rice may experience “physical water scarcity” and the rest of the approximately 22 million

hectares of irrigated dry season rice in South and Southeast Asia may suffer from

“economic water scarcity”, which results from competing water uses and climate change Also, in northwestern India, declining groundwater levels will pose a serious threat to one of the world’s largest grain basket These challenges rise in rice production together with the increase demand in rice consumption require agriculturists to rethink about the current management paradigms and finding new solutions to prevent and address water scarcity condition

In order to alert this future scenario, numerous efforts are made to develop new water saving technologies for rice production Different new technology suggestions are the alternate wetting and drying technique (AWD) (Bouman and Tuong 2001), continuous soil saturation (Borrell, Garside et al 1997), irrigation

at fixed soil moisture tensions varying from zero to 40 kPa (Sharma, Bhushan et

al 2002, Singh, Choudhury et al 2002), or irrigation at an interval of one to five days after disappearance of standing water (Chaudhary 1997) These water management practices are called partial aerobic rice systems These techniques not only bring hope for rice farmers suffered from water scarcity but also save water from rice production for other economic or environmental purposes The Integrated Rice Research Consortium has recapitulated, researched, and completed these water management practices, and launched these worldwide for all of the rice producing countries

Actually, keeping the farm non – continuously flooding practices have been used for several decades as a water saving method, but in many cases, farmers were following an uncontrolled or unplanned watering practice After the intervention of IRRI, from then, among all of the water saving techniques, the alternate wetting and drying technique (AWD) is one of the most significantly and widely adopted technique The definition of AWD is introduced by IRRI as follow, “Alternate Wetting and Drying (AWD) is a water-saving technology that farmers can apply to reduce their irrigation water for rice fields without decreasing its yield In AWD, irrigation water is applied a few days after the disappearance of the ponded water Hence, the field gets alternately flooded and non – flooded The number of days of non-flooded soil between irrigations can

vary from one to more than 10 days depending on the number of factors such as soil type, weather, and crop growth stage.”

At first, farmers practiced ‘forced’ AWD early in 2006 among the region of Angat Maasim River Irrigation System After that, some practices that keep non-flooded conditions in the rice field for short interval of growing days become commonly for about 40% of rice farmers in China and more than 80% of rice farmers in North Western India and Japan (Richards and Sander 2014) However, nowadays farmers follow a ‘safe’ AWD in which they maintain the threshold of

15 centimeters subsurface water level for the next time they pump water and flooding the field (Lampayan, Palis et al 2009) This method has also been recommended method for rice areas which faced scared irrigation water status in South and Southeast Asia In Philippines, safe AWD is firstly adopted at the Tarlac Province since 2002, with farmers who use deep – well pump irrigation systems (Lampayan, Palis et al 2009) Nowadays, the International Rice Research Institute (IRRI) has been promoting alternate wetting and drying as a smart water saving technology for rice cultivation through national agricultural research and extension its adoption mainly in Bangladesh, the Philippines, and Vietnam

After years of adoption, IRRI has worked in partnership with national research institutions to conduct researches studied about the impact of AWD in order to develop this technique Generally, in economical dimension, a vast majority of study showed that, certainly, AWD can reduce the amount of water input or water cost However, the impacts of AWD on the yield across regions and countries are inconsistent In some cases, researches stated that AWD technique adoption does not reduce the amount of total yield, while others suggested that this technique increases the amount of total yield and the remaining concluded that AWD technique can result in total yield losses The reason behind those vague impacts of adopting AWD technique on the yield is mainly because the famers apply AWD differently Nevertheless, under the new and simple practices of “safe AWD” suggested by IRRI, researchers hope that in general AWD could bring positive economic impacts for rice production

Another influence of AWD technique in cultivation is on environmental dimension, scientists reported that applying AWD could also reduce the greenhouse gases emissions and saving the water for the environment Overall, AWD and safe AWD has been field tested and validated by rice farmers in Bangladesh, Indonesia, Laos, Philippines, Myanmar and other countries The technique has also been proved to offer potential reducing yield gaps, increasing rice production, protecting the environment which finally can generate positive benefits for both rice farmers and society at large Consequently, AWD technique

is now centered in many extension efforts by formal institutes and non – governmental organizations across number of Southeast Asia countries Materials for training and extending purposes on AWD are also being widely added in numerous agricultural colleges, universities and opened certification plans

In Vietnam, Agriculture has always appeared as one of the key sector of the economy Over the past decade, Vietnam agriculture has significantly developed which helps Vietnam became the world top exporters in rice, rubber, coffee, pepper, cashew nuts and other agricultural products According to the Vietnam General Statistics Office, among all the agriculture products, paddy is the most important crop in Vietnam, occupying for almost 40% of gross output of agriculture sector Vietnam is also one of the top rice productions, the second biggest rice exporters worldwide only after Thailand Although Vietnam’s climate was said to be suitable for cultivation activities, the nation’s agricultural products are judged as low quality in comparison with other countries, especially Thailand The main reason is because Vietnam agricultural development is fundamentally based on exploiting the natural resources rather than based on technology The future perspective of rice production in Vietnam is not bright In the latest estimation of General Statistics Office Vietnam, the country’s total rice yield in 2016 is 43,6 million milled tons, reduce 4% compared with the amount

of 2015, which are mainly due to water scarcity, high level of salinity, serious storm and flooding If agriculturalist in Vietnam and the government does not making the best effort to improve this current state, Vietnam rice production will face many obstacles in the near future

The Mekong River Delta is one of the major rice production areas of Vietnam This area accounts for more than 50% of the total products during main cultivation season (Winter – Spring) However, this area is also suffering under the general threat of salinity and late, uncertain rainy season, which leads to water scarcity and reduces productivity In 2016, the water source cannot supply enough for irrigation system and high level of salinity pose a significant 10% reduction of the total rice output, making the productivity in main season falling back to 6.4 tons per hectares and the trend is projected to remain downwards in the following year Reduction in total yield also leads to high level of rice price

In order to address these problems in rice production for the whole country including MRD area, the Vietnam Plant Protection Department of the Ministry of Agriculture and Rural Development has partnered with the Irrigated Rice Research Consortium to adopt new water saving technology and orient the new strategy for rice production Through this partnership, alternate wetting and drying technique was introduced and implemented in Vietnam incorporated with various campaigns One of the most popular campaigns is “One Must Do, Five Reductions” (1M5R) program launched since 2009 After years of applying, each

of these contents belonged to the program has been successfully promoted and applied nationally to improve rice production including AWD water saving technique Recognizing the benefits that can be derived when AWD is widely adopted, in 2011, Vietnam’s Ministry of Agriculture and Rural Development again highlighted AWD as one of the improved cultivation techniques for rice production to be implemented broadly through 3.2 million hectares of rice cultivation areas by 2020 With this policy support, the adoption of AWD continues to be mainstreamed in different programs of Vietnam’s Ministry of Agriculture and Rural Development However, the current state of AWD adoption still contains three particular problems:

Firstly, there are no clear evidences about the impact of widely adopted AWD technique on rice production in Vietnam to convince the famers and policy makers in implementing this technique more resolutely In fact, although, it has been broadly applied and suggested from agricultural policy for years, Vietnam’s

rice production is still facing challenges of salinity and water scarcity, which leads to declined and erratic trend in total output

Secondly, there are many researches investigate the impact of AWD technique around the world, but the major was experimental field tests or descriptive studies instead of econometrical technique or model In fact, both experimental fields test and descriptive studies has some limitations For experimental field tests, scientists only study about the AWD impact under strictly adopted conditions While AWD in widely implement does not exactly follow the instruction, Yamaguchi, Luu et al (2016) observed that famers made some modifications which indicate that they have adapted AWD for their local farming conditions In addition, as analyses from descriptive studies cannot be that of persuasion compared to econometrical studies, then a regression model for determining AWD technique impact on rice production is required

Finally, AWD diversified adoption practices create the challenge in determining the adoption degree in each farm compared to original AWD instruction IRRI has documented a measurement to address this issue which is the AWD score suggest by Moya et al., 2004 Nevertheless, this measurement has not considered water drainage which is an important cultivated practice related to specified topography, hydrology characteristics in Vietnam

Therefore, in the attempt to fill these gaps, initially, this thesis suggested a modified score including water drainage effect to measure degree of AWD technique adoption at farm level in Vietnam After that, a regression model with AWD score is suggested to determine the impact of AWD technique and provide

a clear evident to support agricultural policy that enhance AWD adoption on a larger scale

1.2 Research Objectives

This research would use the data of 2016 main crop season from 250 interviewed farms in MRD, Vietnam The investigation center in answering the question of how changing from traditional continuous flooding into alternative wetting and drying irrigation would make contribution for rice producers in

MRD provinces economically In details, this paper aims to address three main objectives:

- Firstly, to evaluates the degree of AWD adoption in each farm using the modified AWD score and analyze the challenges for AWD adoption in different provinces of the MRD

- Secondly, to measures the average technical efficiency of the rice production in MRD provinces during main crop season in 2016 by using the production function approach

- Finally, to estimate the impact of AWD adoption and other determinants

on technical efficiency of rice production in MRD provinces

1.3 Scope of the study

Under the study topic of: “The impact of alternative wetting and drying technique adoption on technical efficiency: Empirical evidence from rice production in Mekong River Delta, Vietnam.” A cross-sectional survey dataset from a group of 250 rice producers from four main provinces in the MRD, Vietnam is analyzed to address the research problems The dataset includes information about the household characteristics, farming conditions, watering practices, inputs and outputs of each farms during main seasons (Winter-Spring)

of 2016 Initially, an adjusted AWD score is conducted base on the original AWD score by Moya et al., 2004, combined with AWD definition introduced by IRRI and water withdrawing practice from the famer This score reflects the extent of adoption for each farmer in MRD, Vietnam Subsequently, the Frontier Production Functions approach is applied to measure the Technical Efficiency of these farms Finally, AWD score and other key factors are examined to see their impact on rice farm’s technical inefficiency

Overall, this study is the first research that determines the impact of adopting AWD technique widely in Vietnam by using a econometrical model Moreover, an adjusted measurement for AWD technique which including water withdrawing practice is newly contributed for the literature review Finally, while numerous studies about AWD impacts are generated, this is also the first time that AWD adoption effect on rice production’s technical efficiency is evaluated

The findings of this study states that adopting AWD technique in large scale can improve the technique efficiency of rice production In specific, this means after applying the AWD technique, producing rice become more effective and with each level of input, famers can generate higher level of yield as the output

1.4 Structure of the thesis

The study is organized as following manners Chapter 1 is the introduction which provides general view of the study and suggests the main research problem, research objectives, the importance and structure of the research Chapter 2 presents general knowledge about AWD technique, from its definition review, to standard AWD practice guideline, and its impacts studies from previous researches Continuously, the theory of technical efficiency and some empirical studies measures technical efficiency in agriculture sector are introduced After that, review of technical efficiency determinants is given with a summary to suggest our study gaps Chapter 3 briefly describes the dataset, data collection process, the analytical framework and the final empirical estimation model Chapter 4 exhibits the estimation results and discussions The last chapter

is the conclusion

CHAPTER 2: LITERATURE REVIEW

In this chapter, initially, the overview about the AWD technique including the AWD definition, AWD standard guideline practices, AWD adoption measurement and AWD impact is provided The following part offered the literature review of technical efficiency, the indicator that is used to analyze AWD impact Firstly, a review about the theory of the technical efficiency, is mentioned and secondly, the estimation method, empirical studies and the

determinants of technical efficiency are described

2.1 Overview about the AWD technique

2.1.1 AWD definition

Analyses of IRRI suggested that, rice required flooding condition to grow since this type of plant absorbs more than twice of the water input amount compared to other crops at field level However, 60% to 80% of total water input for rice production is actually unproductive, because through seepage and percolation, the irrigated water can rejoin the groundwater or water downstream Therefore, reducing irrigation water to rice fields is reduction of unproductive seepage and percolation water losses (Saleh and Bhuiyan 1995, Bouman and Tuong 2001, Li and Li 2001, Tabbal, Bouman et al 2002) Based on this insight, several water management practices were created including the alternate wetting and drying

technique

The alternate wetting and drying (AWD) technique for rice production is one of the water management techniques that have been developed by IRRI over years The general idea behinds this technique is instead of keeping the field continuously flooded as traditional cultivation, famers could wait for the soil to dry out for one to several days after the disappearance of ponded water before it

is flooded again In fact, this idea was originally developed from an Indian term called “intermittent irrigation” (Sandhu, Khera et al 1980) However, Stoop, Uphoff et al (2002) and Uphoff, Felske et al (2001) suggested that a similar

discontinuous flooding irrigation method was included in the system of Rice Intensification, an integrated farm management technique developed by the Jesuit priest Father Henri de Laulanie in Madagascar since 1980 In detailed of the system of Rice Intensification guideline, during the growing period, the field should not be continually flooding, a moderate amount of water should be regularly provided to maintain an integrated condition of aerobic and anaerobic cultivation soil and before harvesting, lower level of pond water should be kept

on field surface

Even though, initial concept of AWD appeared in other regions, recently, AWD development has been centered in East and Southeast Asia In fact, a particular AWD guideline is conducted in each area, with a specific instruction about schedule, duration, and frequency of non-flooded periods For instance, Li and Barker (2004) mentioned that since irrigation water became increasingly scared in China as an effect of highly demand water for other uses, a form of AWD is widely practice in some area very early In this practice, water is refilled

in about a week for heavy soils and in about five days for light soils, the level of irrigated water is about five to six centimeters above the field surface, during the interval days between irrigations, water ponds disappear from field surface and naturally dries through seepage and percolation The implement instructions might be slightly different between sites in term of the cultivation conditions, habits, type of input (seed, water, land), and also the in term of expressions However, generally, these are usually very inflexible and complex, which is hard for farmers to strictly adopt the technology, especially when they think of potential yield loss In order to simplified the recommendations, some agriculturist express AWD definition as keeping the field non-flooded from one

to ten of days (Bouman, Humphreys et al 2007) Other scientists suggest famers

to irrigate when the tension of the soil water in the root zone reached a threshold value of 10 kPa (the index measured soil moisture level for the plant) Again, this instruction was inconsequential for farmers as they do not have appropriate equipment to soil measure level In conclusion, obsession about potential yield loss, unpractical and complicated instruction while the impact of water scarcity is not physically or economically visible are obstacles for AWD broadly adoption

Understand the limited of adopting and promoting AWD broadly In 2002, IRRI developed simpler instruction of AWD include with a practical tool to allow farmers to reduce irrigation water input while maintaining yield The definition of safe AWD suggested by IRRI is:

“Alternate Wetting and Drying (AWD) is an irrigation technique in which water is applied to the field a number of days after the disappearance of ponded water This is in contrast to the traditional irrigation practice of continuous flooding (meaning never let the ponded water disappear) This means that rice fields are not kept continuously submerged but are allowed to dry intermittently during the rice growing stage The number of days in which the field is allowed

to be “non-flooded” before irrigation is applied can vary from 1 day to more than

10 days.”

The mentioned practical tool is a 30 centimeters length water pipe Under safe AWD adoption a maximum irrigated water level of five centimeters above the field surface and a threshold of 15 centimeters water dropped level below the surface is empathized

2.1.2 AWD guideline in Viet Nam

In Vietnam the standard AWD technique, is introduced in a guide book published by the Sub – Department of Plant Protection in 2011 Actually, this book provide instruction for all components in “one must do and five reduction (1M5R)” national agriculture campaign In 1M5R program, famers practice “one must” is to use certificated seeds instead of poor quality seeds and “five reductions” are to reduce the amount of sowed seed, agrichemicals, fertilizers, irrigation water, and postharvest loss According to Dinh, Chung et al (2013), this program was an effort of policy makers to increase net returns by removing inefficiencies in rice production 1M5R campaign suggests famers applying AWD technique, specific instructions were provided to explain how to implement AWD in Vietnam AWD standard guideline in Vietnam stated that farmers control their irrigation water level at a height of five centimeters above the field surface and wait until the water drop to maximum level of 15

centimeters below the field surface for the next irrigation In details, the irrigation schedule to apply safe AWD for rice production is described as follow Firstly, farmers are recommended to use a water tube to observe the water level and irrigate adequately This water tube can be made of cheap and popular material in Vietnam, for instance plastic water tube or bamboo The water tube is about 30 centimeters height with the diameter of around 10 to 15 centimeters so that water level can be easily noticed from inside the tube On the side of the water tube, there are some 0.5 centimeters holes and scale marks The farmers can place more than four pipes over their fields to observe the water level Placement position should be careful while choosing to help the farmers conveniently observed water level and control the irrigation A recommendation

is that the position should be representative of the average water depth in the field Famer should put the pipe at the depth of 20 centimeters under the ground then remove the soil inside it so water level can be observed The water level inside the pipe is the same as the level of water on the field

Secondly, AWD technique’s implement schedule is instructed base on the growing process of the rice During the first seven days, the soil needs to be moistened after sowing but also needs to avoid flooding Fertilization should be conducted at seven to ten days after sowing (DAS), the paddy should be flooded

to a depth of one to three centimeters of water level about the field in this period Water height should be continuously maintained at three to five centimeter level during 10 to 20 DAS because flooded irrigation is necessary for rice growth during this period and it also controls weeds The second fertilization should be conducted in 18 to 20 DAS Rice is in vegetative growth during 25 to 40 DAS, about 60% soil moisture is sufficient for prosperous growth Thus, AWD should

be conducted during this period as in drying condition, the roots would go further under the field surface to find water sources and the rice plants can grow stronger with longer root which also help to avoid harvest losses Additionally, rice is prone to sheath blight disease during this period, shortening of the flooded conditions by AWD restricts spreading of the pathogenic fungus (Rhizoctonia solani) Third fertilization should be conducted during forty to forty – five DAS

and the water depth should be maintained at one to three centimeters this time Nothing significant is noted during forty – five to sixty DAS The period of sixty

to seventy – five DAS corresponds to the flowering stage; rice requires large volumes of water in this stage, thus, water depth should be continuously kept at five centimeters Farmers should drain the water from the paddy fields ten to fifteen days before harvest Draining the water before harvesting promotes rice ripening and facilitates the machine harvesting operation

2.1.3 The AWD score

As the definition of AWD is relatively general while the practices of AWD are differently conducted among rice producing areas, people could hardly define AWD technique adoption Furthermore, when AWD is widely adopted, local famers also do not strictly follow the guidelines but adjust the practice differently

in their own ways For instance, Satyanarayana, Thiyagarajan et al (2007) indicated that some farmers found it possible to applied alternate wetting and drying irrigation for the whole cultivation season and this practice could even generate some benefit Consequently, a measurement of AWD adoption is required to determine the degree of AWD adoption for each farm

Among the previous studies, there are two approaches to proxy AWD adoption The first one is using a dummy variable which equals to zero when the farmers apply continuous flooding irrigation and equals to one when the famer use AWD irrigation (Rejesus et al., 2011) Nevertheless, it is hard to distinguish between AWD non-adopters and AWD adopters Additionally, a dummy variable could not be able to reflect the diversified adoption level among famers The second appropriate is the AWD score which is originally introduced by Moya, Hong et al (2004) This score formulates AWD adoption mainly based on the irrigation times and irrigation water level AWD score has been documented by IRRI as an approach to measure AWD adoption at farm level and also has been used by several researchers to investigate the AWD impacts (Moya, Hong et al

2004, Mushtaq, Dawe et al 2006, Li and Li 2010)

However, the degree of AWD adoption might not only depend on water irrigation but also on water drainage First of all, drainage helps to save water

because the amount of water drained could be reused downstream which is similar to the case of water losses due to seepage and percolation in the study of Hafeez et al (2007) Moreover, drainage is strongly affected AWD adoption level in the rainy season as the field is usually flooded due to rainwater while AWD technique encourages famers to use less water and allow the disappearance

of ponded water on paddy surface a few days between irrigation times (Yamaguchi et al., 2016) Withdrawing water is also useful in reducing CH4 emissions of rice production (Leon et al., 2015) Overall, these argument shows that water drainage should also be added in estimation of the AWD adoption degree

Consequently, this study suggests an adjusted AWD score which also includes the effect of water drainage practice After that the modified AWD score

is calculated to represent the adoption level of AWD technique for each farm

2.1.4 The impact of adopting AWD

From the original definition and suggestion of IRRI, AWD technique is suggested to reduce an amount of irrigation water without affecting the yield The explanation for this impact is that rice still be able to absorb enough water through its roots in some growing period due to the previous flooding stage However, other researcher reported that AWD technique can even increase grain yield because this held the root to grow stronger (Tuong, BAM et al 2005, Yang, Liu et al 2007, Zhang, Zhang et al 2008) and AWD also help the soil become drier and more stable, which enhanced harvesting if famer uses harvesting machines (Richards and Sander 2014)

Studies about the AWD impacts have been conducted in many different rice growing countries, but mostly these are field experimental analyses In India, Singh, Aujla et al (1996) had conduct a field experimental research and reported that AWD technique reduced the water uses by 40 to 70 percent compared to traditional continuously flooding associated with no yield loss In China, Rui-Zhong, Wen-Chao et al (2002) reported a reduction of irrigation water for 7 to

25 percent also with field experimental method In Bangladesh, Palis, Lampayan

et al (2012) reported that AWD reduces the number of irrigations by 28%,

irrigation costs by 20%, and increase in yield by 0.4 to 0.5 ton per hectare In China, (Pan, Liu et al 2017) analyzed through field experiment method and suggest that compared to traditional irrigation, the AWD adoption reduces 24%–71% of irrigation water without resulting in yield loss In Philippines, AWD can reduce the amount of water input, up to 38% of the total initial water irrigated

without adversely affecting rice yields (Rejesus, Palis et al 2011) Other regions

report that, this method increases water productivity by 16.9% compared with continuously flood irrigation (Tan, Shao et al 2013) High – yielding rice varieties developed for continuously flood irrigation rice system still produce

high yield under safe AWD (Yao, Huang et al 2012) This method can even

increase grain yield because of enhancement in grain – filling rate, root growth and remobilization of carbon reserves from vegetative tissues to grains (Tuong,

BAM et al 2005, Yang, Liu et al 2007, Zhang, Zhang et al 2008) AWD can

reduce the cost of irrigation by reducing pumping costs and fuel consumption (Lampayan, Rejesus et al 2015) According to the practice brief report of Food and Agriculture Organization of the United Nation about the AWD technique, this method can also reduce the labor costs by improving field conditions at harvest, allowing mechanical harvest AWD leads to firmer soil conditions at harvest, which is suitable to operate machines in the field (Richards and Sander

2014) Therefore, AWD increases net return for farmers

Since the definition of AWD adoption was not clearly defined in an official way and AWD technique is only broadly adopted for a few recent years, number

of studies about AWD impact in large sample is relatively less than field experiment method Noticeably, in 2004, Moya et al conducted the AWD score

to measure the general adoption of each farm He also found that AWD can reduce the water irrigation and imposed no impact on production profit for famers in China Rejesus, Palis et al (2011) conducted a broadly study about AWD in large scale, however, this paper is not clearly determined the AWD adopter and the regression results is not able to control potential bias from the unobservable selection Findings of this research also suggest that AWD leads to reduction in irrigation hours associated with no significant yield loss

In Vietnam, studies about AWD have also not been widely conducted Overall, Bouman and Tuong (2001) suggested that AWD can reduce water use for irrigation in Vietnam Another study from Yamaguchi, Luu et al (2016) provided a general description of AWD adoption in An Giang Province, Vietnam and reported that the practice in general is differently adjusted from standardized AWD

There are also other studies which investigate the environment impact of AWD technique For instance, AWD can reduce CH4 emissions (山口哲由, 南川和則 et al 2016) CH4 is produced by the anaerobic decomposition of the organic material in the flooded paddy field Since the water level is allowed to drop below the soil surface, it removes the anaerobic condition for some time until the next irrigation and stops the production of CH4 from the rice field In general, AWD reduces the total amount of CH4 released during the rice growing season This method has been assumed to reduce CH4 emissions by an average

of 48% compared to continuous flooding by the 2006 Intergovernmental Panel

on Climate Change methodology Alternate wetting and moderate soil drying lessen cadmium accumulation in rice grains (Yang, Liu et al 2007) and AWD technique can dramatically reduce the concentration of arsenic in harvested rice (Price, Norton et al 2013) All of these results can generate positive impact on rice consumer health This method can also reduce insect pests and diseases (Palis, Hossain et al 2005) Beside these advantages, IRRI also suggests that as water is important for growing rice, uncontrolled practices of non-trained farmers can reduce productivity AWD might also enhance more weed growth in the crop field

However, in this study we mainly focus on the economic effect of AWD technique adoption Following the previous studies, AWD can affect the input (reduce the water irrigation), because as long as the famers adopted AWD technique, they reduce the irrigation time compare to the traditional continuous flooding practices As a result, studies about the impact of AWD on the amount

of irrigation water show a consistent reduction among different regions and study

methods applied However, the impacts of adopting AWD technique on yield or other output measurements (profit, income, net return) are relatively vague The reason is because when each famer applies this technique differently the result on yield would be different In this research, an adjusted AWD score is conducted to determine degree of adoption of each famer, and the impact of AWD technique

on the technical efficiency of rice production after widely adopted is also investigated for rice producers in the MRD province of Vietnam

2.2 Overview about technical efficiency of production function

2.2.1 Theory of frontiers production technical efficiency

There are different ways to measure the performance of a production, which represents the ability of a producer to covert inputs into outputs A commonly

apporoach is “productivity” which represents the ratio between the amount of

outputs over inputs Another concepts which is also widely used in production analysises is “efficiency” As these two concepts is closely related, if a productive unit increase their productivity its production is more efficient, confusion between these two concepts has always existed, however, productivity and efficiency are not precisely the same

The fundemental idea behind efficiency production, as explained by Farrell (1957), is approached in two ways: Input-orientated and Output-orientated The input perspective measures the minimum amount of inputs that each productive unit requires to produce a certain set of outputs Figure 2.1 demonstrates a productive unit (A) using two inputs (X1 and X2) to produce output (Y) The II’ line is called the isoquant which represents all of the minimum set of inputs that is used to generate a given level of output This means on II’ the amount of inputs (X1, X2) is most efficient used to produce output (Y) Farrell (1957) determined that the deviation of a practical production point (A) from the isoquant relates to technical inefficiency of the production As

a consequence, the ratio OB/OA is defined as technical efficiency of the firm with the efficiency input per unit of output values determined at point B

Figure 2.1: The isoquant for technical efficiency estimation from the

input-oriented

Source: Author

From the output perspective, Farrell presents the production frontier which determines the possible maximum output level that is achievable from a certain level of inputs, with a given existing technology Figure 1.2 illustrates a productive unit (A) produces an amount of output (Y) from vector of inputs (X) The production frontiers f(X) curve shows all the maximum level of output (Y*) that can be obtained by using each vector of inputs X Farrell also suggested that

a productive unit is considered as technical efficiency when it operates on this frontier and technical efficiency associated with each level of input is measured

by the ratio of Y/Y*

Figure 2.2: The frontier for technical efficiency estimation from the

output-oriented

Source: Author

Generally, the output-oriented and input oriented provides the same production frontier and determines the same set of efficient firms, only measured

efficiencies of the inefficient firms are may be different between two approaches (Coelli, Rao et al 1998) In some industries, where firms have a requested level

of output demand to supply, researchers often apply the input-oriented to estimate the minimum level of input By contrast, in those industries that have a fixed level of resources, for instance, in agriculture, each farm only has a certain area of cultivation land, the output-oriented is commonly adopted

Base on the concept of technical efficiency, a vast body of literature review has been conducted to evaluate agricultural production efficiency with different approaches The result of technical efficiency measurement shows the ability of each farm site to produce the maximum amount of output from a give level of input and resources In addition, another relevant aspect which researchers are highly interested about is to define the determinants of the inefficiency When these determinants are learned, these factors also show their impacts on efficiency and their roles in the production

2.2.2 Empirical Technical Efficiency Review

The Farrell efficiency theory has provided a strong foundation for researchers to develop different empirical frontiers model and practical ways to measure production efficiency Generally, classification of efficiency can be approached by different angles For instance, based on the functional form criteria, there are two types: Parametric and non-parametric estimation The parametric method applies a standard production function form such as Cobb-Douglas, Translog, Quadratic and Normalized quadratic function Among these type, Cobb-Douglas (Hannesson 1983), and Translog (Squires 1987, Pascoe and Robinson 1998) has been most widely used In fact, Translog is a general form of Cobb-Douglas The remaining non-parametric method does not depend on any specific functional form

Form another perspective technical efficiency generally can also be distinguished into deterministic estimation or stochastic frontiers estimation Specifically, deterministic model assumes all the errors term in the function or the deviation from the frontier visually presented technical inefficiency, while stochastic frontiers assumed the errors term is a sum of two component: an

idiosyncratic error term which is normally distributed and a technical inefficiency with different distribution assumptions The empirical review of studies using the mentioned approach to measure technical efficiency in agriculture will be specified in each following part

Firstly, the deterministic production frontiers method can be divided into two groups, studies using non-parametric estimations called the data envelopment analysis (Wadud and White 2000, McDonald 2009) and parametric estimation (Ali and Chaudhry 1990, Huang and Kalirajan 1997)

Secondly, another approach is the stochastic frontier This method, recently, compared to the deterministic production approach, is more widely applied However, particular empirical model for each study is depended on the type of data In this study, the dataset is cross-sectional type and our review in this part is mainly about studies measured technical efficiency for cross-sectional data type

In order to measure technical efficiency using stochastic frontier approach a type

of parametric production function should be appropriately chosen The two most

common functional types are Cobb-Douglas (Kalirajan 1981, Ekanayake Taylor and Shonkwiler, Phillips and Marble) and Translog Cost function (Huang and

Bagi, Kalirajan 1984)

2.2.3 Review of Determinants on Technical Efficiency

Another dimension of technical efficiency analysis is determined factors that affect the technical efficiency According to Bravo-Ureta and Pinheiro (1993), a meta-analysis about a set of 30 studies estimate the technical efficiency and the impact of determinants on technical efficiency suggested that the group

of these determinants can be demographic, geographic and other economics characteristics of the farming household For instance, age, gender, education, experience and other information of the famer can affect their production efficiency Furthermore, variable relates to operating the production such as management policy, information, modernization or technique adoption is also considered as determinants of technical efficiency Specifically, under the topic about impact of new technique adoption on technical efficiency, Kalirajan (1984) had already conducted the study about how adopting new technology

social-could affect the paddy production However, as the results showed insignificant influence of the new technique on technical efficiency, Kalirajan concluded that the famers is not adequately adopted the technology In 1990, Kalirajan again studied about the impact of different established cropping methods on technical efficiency and found a significantly positive relation In fact, to generate an overview on deciding the determinants of technique efficiency, Belotti, Daidone

et al (2012) indicated that these determinants of technical efficiency are factors that can affect the production, but are not output or input

In considering about the AWD score, firstly, AWD technique adoption has showed its impacts on the production as reducing water input and potentially affecting the output but AWD score is neither input nor output Secondly, AWD score measure the degree of new technique adoption which is similar to other technique adoption variables in the literature review about factors that influence production technique efficiency Consequently, according to these arguments, the AWD score represents for AWD technique degree of adoption is examined as a determinant on technical efficiency in this study

2.3 Summary

Following the literature review pathway, in this study, firstly, an adjusted AWD score, based on the original score formula, combined with the AWD technique definition of IRRI and drainage practices of famers in the MRD provinces, is conducted and measured for each farm This adjusted AWD score presents the degree of AWD technique adoption for each rice production Continually, the stochastic frontiers Cobb-Douglas production function is applied

to measure technical efficiency Finally, the AWD score is examined as a determinant of technical efficiency on the rice production to determine the impact of AWD technique after widely adopted in the MRD provinces of Vietnam This study is expected to provide another contribution in the vast empirical work of investigation about the impact of AWD technique after widely adopted, specifically, in the MRD provinces, Vietnam This is also the initial paper examines the impact of AWD adoption on technical efficiency of rice production Under results of this study, another evident is provided as foundation

for agricultural policy which promotes widely adoption of AWD technique throughout rice production in Vietnam

CHAPTER 3: DATA AND METHODOLOGY

This chapter describes about the data and methodology applied in this study The former part provides the analytical framework and the empirical model of the

research The latter part illustrates the data collecting process and the dataset

3.1 Methodology

3.1.1 Conducting the AWD Score

As previously discussed, when AWD technique is adopted on a large scale, practices among farmers are various in term of watering schedules and observation methods Therefore, a general approach to distinguish between adopters and non-adopters or a measurement of AWD technique’s adoption degree is required to go further in analyzing AWD impacts However, to create this approach a clear definition about AWD adoption should be determined Base

on the mentioned IRRI definition of AWD technique, for this project, AWD

adoption is defined as “An irrigated rice production using non-continuous flooding when water is readily available.” Referred from this AWD adoption

definition, whenever the field is watered at the non-flooded, AWD technique is adopted As the consequences, an new adjusted AWD score is developed base on this definition and the original AWD score formula for China suggested by Moya, Hong et al (2004) Since the AWD practices is differently adopted from site to site, including Vietnam, the formula of AWD score is modified based on Vietnam farmers cultivated practices The adjusted AWD score formula for measure degree of AWD adoption at farm level is suggested as follow:

Where 𝐴𝑊𝐷 𝑠𝑐𝑜𝑟𝑒𝑖 proxies for the AWD technique‘s degree of adoption

score in the i – th farming household, Z𝑖, Y𝑖, X𝑖 are the total irrigation times that

the i – th farming household irrigates when the paddy surface was in the status

one (dry or broken field), two (wet or saturated field) and three (flooded with standing water field), respectively D𝑖 is the number of draining times, which

means the total times that the i – th farming household withdraw the water out of

the paddy

Table 3.1: The synthesis of signals that farmers use to observed water level

on the field during irrigation process

Paddy surface status Signals

Water levels (cm under the ground)

3 Dry or broken (c and d,

or iii and iv)

c Cannot make a footprint on the paddy surface iii From 6 to 10 cm

d Small cracks on the paddy

Source: Author synthetic

In order to explain for this modified score, firstly, AWD adoption is defined

as when there are alternate appearances of flooded and non-flooded conditions on the field This means when water is refilled in non-flooded second and third paddy surface statuses in Table 3.1, AWD technique is adopted Thus, if the farmer irrigates when they can make foot-print and see bird crack (or the field is too dry to leave foot-print), they are adopting AWD Nevertheless, as IRRI instructed that for safe AWD practices, famer can leave the paddy non-flooded for a number of days until the water level reaches the threshold of 15 centimeters