Economic analysis of technological innovations to improve sustainability of pangasius production in Vietnam

Abstract

In response to increasing concerns about sustainable production, a growing number of European customers expect seafood products to be certified, for example by the Aquaculture Stewardship Council (ASC) certification. Water purification technologies such as Recirculating Aquaculture Systems (RAS) could be a potential solution to reduce waste discharge and to improve water quality in fish ponds as a response to environmental regulations. In order to provide useful insights to consider investments in RAS, the overall objective of this thesis was to perform an economic analysis of technological innovations such as RAS to improve the sustainability of pangasius production in Vietnam. This thesis first uses Data Envelopment Analysis to measure input- and output-specific technical and scale inefficiency of pangasius farmers in the traditional system and uses a bootstrap truncated regression to assess the impact of farmers’ demographics and farm characteristics on these technical inefficiencies. Second, the economic feasibility of RAS in pangasius farming is analysed using a capital budgeting approach and stochastic simulation accounting for uncertainty in key parameters. Next, key determinants influencing the adoption of RAS by pangasius farmers are investigated using a choice experiment. Finally, price transmission along the international supply chain of pangasius, from the Vietnamese farm to the Polish retail stage is analysed using a vector autoregressive error correction model framework. The results show that inadequate management skills in using capital assets and improper methods for producing fish are the main challenges for enhancing the performance of Vietnamese pangasius production. Location of the farm in a saltwater intrusion area is positively associated with inefficiency of producing fish. The results suggest further that when shifting from the traditional system to RAS, the Net Present Value (NPV) of the investment in RAS is expected to substantially increase, for both medium (1-3 ha) and large (equal or greater than 3 ha) farms. Lack of trust in receiving a price premium, inadequate access to finance and uncertainty about the actual performance of RAS systems are constraints for the adoption of RAS. Finally, our study provides evidence that price signals at the Polish-Vietnamese retail stage were transmitted back to wholesale, export and Vietnamese pangasius farms stages.