Efficiency Analysis and Experimental Study of Cooperative Behaviour of Shrimp Farmers Facing Wastewater Pollution in the Mekong River Delta

Abstract

Shrimp farming is important to the Vietnamese economy in terms of national income, job creation and poverty alleviation. However, shrimp farming is generally technically inefficient and probably generates too much pollution. To encourage the sustainable development of the Vietnamese shrimp industry, there is a need to improve the productivity of shrimp farms and at the same time to reduce the wastewater pollution generated by shrimp farming. The thesis has two aims: (1) to estimate the efficiency of shrimp farms in the Mekong Delta of Vietnam, with a particular focus on the productivity effects of pollution, and (2) to use experimental economics to investigate policies that could be used to mitigate the wastewater pollution impacting shrimp farms. Overall farmers are found to be inefficient, suggesting farmers are using more inputs than necessary to produce a given output level. Surprisingly, the average extensive (i.e., less capital-intensive) farm is found to be more efficient than the average intensive and semi- intensive (i.e., more capital-intensive) farms. Furthermore, downstream farms are found to be less efficient than upstream farms, suggesting that wastewater pollution influences shrimp farming productivity and results in a negative externality. Evidence from lab-based experiments suggests that the incentives provided by a monitoring and certification agency are not sufficient to promote the full cooperation of shrimp farmers to solve the wastewater pollution problem. However, full cooperation was achieved by providing farmers with an opportunity to communicate. In both cases, self-governance of shrimp farmers was found to be highly effective. The results suggest that community-based management is worthy of further investigation as a possible solution to sustainable development of the shrimp industry in Vietnam. "What we have ignored is what citizens can do and the importance of real involvement of the people involved – versus just having somebody in Washington ... make a rule." Elinor Ostrom (1933-2012)