How Expectations, Information, and Subsidies Influence Farmers’ Use of Alternate Wetting and Drying in Vietnam’s River Deltas

Abstract

This study aims to better understand factors that may influence a farmers’ decision to use the irrigation practice known as alternate wetting and drying (AWD). This study is novel because it is the first of its kind to use expectations of AWD use to estimate whether or not farmers use the practice of AWD. Perceptions have not been previously used as predictors in the use of new agricultural technologies / practices and certainly not for AWD specifically. Furthermore, this study investigates whether or not those expectations match reality by looking at the production data of farmers using AWD as compared to farmers not using AWD. At the Paris Climate Agreement in 2015, Vietnam committed to an eight percent reduction in greenhouse gas (GHG) emissions by 2030. These reductions will come in part from the agricultural sector and specifically rice production. One promising GHG mitigating technology used in rice production is AWD, which can reduce GHG emission by as much as 48% (Sander, Wassmann, & Siopongco, 2015). This study uses primary data collected in Vietnam’s Mekong River Delta and Red River Delta to compare yield, cost, and returns of farmers who currently use AWD to farmers who use the conventional production method of continuously flooded (CF) rice. Furthermore, this study employs McFadden’s conditional logit model to model factors that may influence the farmers’ decision to use AWD or not. This study looks specifically at expectations of farm inputs (e.g. will water use increase or decrease with AWD use?) and yield for AWD use, sources of agricultural information, and irrigation subsidy perceptions. This is the first study of its kind to use expectations as an explanatory variable for the outcome, namely, expectations of AWD as a determinant of AWD use. Results indicate that the respondents’ expectations of AWD use, where respondents receive agricultural information, and whether or not they perceive that they receive a subsidy for irrigation are all significant factors in whether or not they use AWD. Furthermore, farmers have rational expectations of AWD as their expectations largely match the reality with respect to certain costs and production. The Vietnamese government can use AWD to abate GHG emissions and move closer to achieving their GHG abatement commitments without burdening themselves or Vietnamese farmers with additional costs to production. AWD use can be increased by changing expectations of AWD through proper channels of agricultural information in Vietnam.