Assessing the impact of food policy research: rice trade policies in Viet Nam

Abstract

The economic impact of marketing and trade policy research in Viet Nam conducted by the International Food Policy Research Institute (IFPRI) is assessed using a novel benefit–cost framework. It measures the economic value of the time saved in hastening the policy responses of the Government of Vietnam. Extensive interviews with partners and stakeholders in the research clearly indicated that the time saving was a legitimate measure of the influence of IFPRI on decision-making. Linking a spatial equilibrium model with income distribution analysis based on national household surveys, allowed IFPRI to satisfy policymakers that relaxing rice export quotas and internal trade restrictions on rice would not adversely impact on regional disparities and food security, and would have beneficial effects on farm prices and poverty. These were major concerns of policymakers prior to the IFPRI research project. The research on these and other policy options gave a degree of confidence to policymakers that relaxing the controls would be in Viet Nam’s national interest. They made these decisions earlier than would have been the case without the IFPRI research. The policy assessment framework is used to measure the economic impact of the policy changes themselves, and in particular, the contribution of IFPRI’s work with Viet Nam on the policies from 1995 to 1997. The relaxation of rice export quotas and internal restrictions on rice trade made by the Government of Viet Nam in 1995–97 are estimated to have had a present (1995) value to Viet Nam using a 5% discount rate of $222 million by 2000, rising to $966 million by 2020. For an incremental research investment of less than US$1 million, a conservative estimate of the benefit to Viet Nam of the IFPRI contribution to the policy changes effected in Viet Nam from the reduction in the policy implementation lag indicates a present value in 1995 terms of US$45 million. This represents a benefit–cost ratio of 56. A more optimistic assessment is that the present value is US$91 million with a benefit–cost ratio of 114. In addition to the welfare gains to Viet Nam, there were sizeable gains to the rest of the world from IFPRI’s contribution. Inclusion of these benefits increases present value and benefit–cost estimates by 34 to 84%. Around 38% of the contribution of IFPRI is estimated to have accrued to the rest of the world, as Viet Nam is now a major player in world rice trade.