Managing Groundwater Access in the Central Highlands (Tay Nguyen), Viet Nam

Project summary

Download Project results summary (Vietnamese)

Before Viet Nam’s 1998 Law on Water Resources was legislated, national water policy concentrated on developing infrastructure to increase water supply. The Law on Water Resources ratified a policy shift from supply to demand side water management based on rationality, economy, efficiency, fairness and sustainability principles (Articles 4.1, 20.1). Integrated water resource planning is now required at the river basin scale and regional economic development plans must be developed accounting for a region’s ‘real (water) potential’ (Article 20.1). All water users must use water economically and efficiently (Article 23.1.b) and also make efforts to prevent and overcome droughts (Article 43.2). From a regional planner’s perspective, implementing the Law on Water Resources therefore requires a minimum understanding of: (1) waters’ economic value in competing uses; (2) how the planning region’s surface and groundwater systems interact and would probably respond to water re-allocations; and (3) the extent to which water use efficiency could be increased in a region via behavioural, technical or structural interventions.

Viet Nam is the world’s second largest coffee producer with exports in 2006 exceeding 900,000 tons worth USD1.1 billion. Approximately one-third of Viet Nam’s annual coffee output comes from the Dak Lak Plateau in the Central Highlands, mainly from private smallholdings totalling less than 1.5 hectares. Most coffee smallholders source irrigation water from the Plateau’s unconfined aquifer using private wells and pumps. The sustained and largely uncontrolled coffee smallholding expansion in the Plateau over the past three decades has catalysed regional growth but also strained natural resources. One growth consequence is that the Dak Lak Plateau’s water resources may now be over-allocated. In recent years sustained declines in the unconfined aquifer’s water table have been reported, potentially indicating groundwater mining. Drought conditions have caused widespread production losses on coffee smallholdings and household water shortages. The confluence of the Plateau’s hydrodynamics, the high incidence of private well and pump ownership, high well density and no real control over irrigation water extractions create the conditions for a classic open access resource dilemma.

Dak Lak’s economy is projected grow by nearly 9 percent per annum on average until 2010. The State faces the challenge of achieving Dak Lak’s growth objectives within the bounds of an already stretched regional water supply system. Viet Nam’s National Water Resources Strategy for 2006-2010 formally recognises this challenge, flagging achieving a sustainable water management regime in Dak Lak as a high national priority. While the Dak Lak Plateau’s water supply economy is in a mature phase with limited potential for more economically viable large-scale water infrastructure developments, demand side water management programs are limited. Developing demand side water management in the Plateau is hindered by (1) sparse information about water’s economic value in competing uses (2) at best a limited understanding of how the Plateau’s surface and groundwater systems would respond to water reallocations and (3) limited understanding about current water use efficiencies in the region’s main water using sectors.

Using an integrated water assessment approach, the project “Managing groundwater in the Central Highlands of Viet Nam” moves the Law on Water Resources from principles towards practice in the Dak Lak Plateau in four ways:

Using non-market valuation techniques, the project estimates water’s marginal economic value for in smallholder coffee production, wetland rice production and household use. These estimates provide a basis for evaluating allocation trade-offs as required by the Law on Water Resources.
The project estimates the extent that irrigation water efficiency can be increased in the short run on coffee and rice smallholdings. Irrigation water efficiency is defined and evaluated in terms of producers’ input specific technical and allocative efficiency in water use. Identifying technical and allocative inefficiencies defines opportunities to increase on-farm irrigation water efficiency, smallholders’ profits and also potentially reduce farm water demands.
By evaluating whether reallocating water in the Dak Lak Plateau can improve it’s inhabitants’ aggregate welfare. Specifically an integrated hydrologic-economic approach is developed to evaluate whether increasing irrigation water efficiency on the Plateau’s coffee and rice smallholdings increases aggregate welfare, evaluated by quantifying:
1. the change in profits to coffee and rice smallholders that results from increasing plot level irrigation water efficiency; and
2. changes in non-monetised regional water balances.
By investigating the extent to which households in the Plateau are willing to pay for a composite of uncertain agro-environmental benefits that could be realised by successfully implementing sustainable irrigation training programs with the Plateau’s coffee smallholders.

Research partners

Ministry of Natural Resources and Environment, Ho Chi Minh City University of Economics, Tay Nguyen University and The Australian National University.