UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS HOW MUCH DOES MANGROVE ECOSYSTEM CONTRIBUTE TO AQUACULTURE - AN EMPIRICAL STUDY FOR MEKONG RIVER DELTA by TRAN PHU HOA MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, December 2015 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS HOW MUCH DOES MANGROVE ECOSYSTEM CONTRIBUTE TO AQUACULTURE? - AN EMPIRICAL STUDY FOR MEKONG RIVER DELTA A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS by TRAN PHU HOA Academic Supervisor: DR PHAM KHANH NAM HO CHI MINH CITY, December 2015 CERTIFICATION “I confirm that the substance of the thesis has not already been submitted for any degree and is not currently submitted for any other degree I certify that to the best of my knowledge and help received in preparing the thesis and all sources used have been acknowledged in the thesis.” Signature Tran Phu Hoa Date: / / 2015 CERTIFICATION i ACKNOWLEDGEMENTS This thesis was the great stone that I had to move it, so that I could complete my Master degree in Development Economics at Vietnam-Netherlands program I was truly grateful to my supervisor, Dr Pham Khanh Nam, for his help and support over the period of my thesis Without his help in useful comments, I would not have finished this master thesis Moreover, I would like to thank his partners who had been helped me in the indirect way In the period of doing this study, there were things that brought me sadness and joy Those emotions had mixed together, and became the sticky creature crabbing my feet and thought I had been stuck However, someone had reminded me about the speech which was “Happiness is always defined by sadness” Thank you, my University You gave me the opportunity to challenge myself You had longed for my achievement, and you helped me to find out some of my missing parts in my journey of life Finally, I further wished to thank my family members, my friends and I, who have provided me food, shelter and love Their love and support gave me strength to open my eyes and worked out the problem that I had buried me deeply under the ground Finally, please remember that I owned all of you, and I will pay back ACKNOWLEDGEMENTS ii TABLE OF CONTENTS CERTIFICATION i ACKNOWLEDGEMENTS ii TABLE OF CONTENTS iii LIST OF FIGURES v LIST OF TABLES vi LIST OF ABBREVIATIONS vii ABSTRACT viii CHAPTER INTRODUCTION 1.1 Problem statement 1.2 Research Objectives 1.3 Research questions 1.4 Scope and Methodology of Research 1.5 Research structure CHAPTER LITERATURE REVIEW 2.1 Theoretical review 2.1.1 Wetland and Mangrove forest 2.1.2 Ecosystem services 2.1.3 Production function 11 2.2 Review of empirical studies 12 CHAPTER 15 RESEARCH METHODOLOGY 15 3.1 Analytical framework 15 3.2 Modeling specification 16 3.3 Variables 17 3.3.1 Environmental variables 18 TABLE OF CONTENTS iii 3.3.2 Unit cost 19 3.3.3 Aqua-farming output 19 3.3.4 Farming cost as dependent variable 21 3.3.5 Pond characteristics 23 3.3.6 Household characteristics 23 3.4 Methods of estimation 24 3.5 Endogeneity problem 25 3.6 Data sources 26 3.7 Conclusion 28 CHAPTER 29 EMPIRICAL RESULTS AND DISCUSSION 29 4.1 Descriptive statistics of dependent and independent variables 29 4.2 Correlation analysis: 31 4.3 Non parametric analysis 32 4.4 Empirical results: 33 4.4.1 Estimating the effect of mangrove forest on cost of aquaculture production using OLS regression 33 4.4.2 Estimating the effect of mangrove forest on cost of aquaculture production using IV estimation 36 4.5 Conclusion 39 CHAPTER 5: 40 CONCLUSION, LIMITATION AND RECOMMENDATION 40 5.1 Conclusion 40 5.2 Limitation 41 5.3 Policy Recommendation 41 REFERENCES 43 APPENDIX 48 TABLE OF CONTENTS iv LIST OF FIGURES Figure 1: Changes in world mangrove areas, 1980-2005 Figure 2: The link between seafood production and mangrove ecosystem services 15 Figure 3: The expected relationship between mangrove forest and aquaculture 16 Figure 4: Illustration of “Mangrove cover” variable 19 Figure 5: The graph illustrated the relationship of mangrove forest and total cost of aquaculture by using estimated valuation statistic 38 LIST OF FIGURES v LIST OF TABLES Table 1: Variables of household characteristics 30 Table 2: Correlation Coefficients of variables 31 Table 3: T-test results 33 Table 4: The VIF for coefficients in the non-restricted model 34 Table 5: Estimated results of three regression models 36 LIST OF TABLES vi LIST OF ABBREVIATIONS EPA The United States Environmental Protection Agency FAOs Food and Agriculture Organization of the United Nations GSO General Statistics Office of Vietnam IUCN International Union for Conservation of Nature MA Millennium Ecosystem Assessment OLS Ordinary Least Squared regression PFES Payment for Forest Environmental Services VND Vietnam Dong WWF World Wide Fund LIST OF ABBREVIATIONS vii ABSTRACT Mangrove forest exploitation had been one of the critical issues for developing countries in recent years Aquaculture expanding was believed to be the number one reason for the vanishing of mangrove forests Using the production function approach, the paper attempted to get insides about the contribution of mangrove forest to aquaculture, particularly Mekong Delta in Vietnam The result found out that mangrove forest had connected with aquaculture in the non-linear relationship It concluded that mangrove forest could help farmers to reduce their cost of production In addition, the rate of reduction was declining as there was more mangrove forest acreage adding to the surrounding of a particular pond Key word: mangrove forest, aquaculture, cost of production ABSTRACT viii REFERENCES Baltagi, B H (2011) Econometrics Retrieved from http://books.google.com/books?id=ORd0PE5BrHYC&pgis=1 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Question 2: Who is the decision maker in practicing aquaculture production? Question 3: Had your pond been covered by mangrove forest? Question 4: Do you have to cross the mangrove forest while you visit your aqua-ponds? Question 5: Do waste water coming from the pond go directly to the mangrove forest? Question 6: How does different locating of mangrove forests effect your current aquaculture production? □ Good □ Good a Inside the pond b Outside the pond □ No effect □ No effect □ Bad □ Bad Question 7: Do you face any difficulty in aquaculture production? a b c d e □ Yes □ Yes □ Yes □ Yes □ Yes Lack of farming area Low productivity Price of inputs and distributors Price of outputs and the buyers Others: □ No □ No □ No □ No □ No Question 8: How many ponds you farm? _ (pond) ABOUT THE POND Pond Total area Mangrove area Mangrove density Farming type (a) Owning type (b) Age of the pond Total rental cost Fan system (power, discounted year, price to buy a motor, number of fans and price of those fans) Pond Pond m m2 trees/100m2 m m2 trees/100m2 m2 m2 trees/100m2 year đ Power: _horse Usage: _year Motor: đ No fan: Fan price: _đ year đ Power: _horse Usage: _year Motor: đ No fan: Fan price: _đ year đ Power: _horse Usage: _year Motor: đ No fan: Fan price: _đ (a) =intensive; = semi intensive; = extensive; = other (b) = owner; = rent; = public; =other Question 9: Could you find any mangrove forests within 100m around your pond? Pond Pond □ Yes □ Yes □ No □ No APPENDIX 49 Question 10: Pond Species (B) Month (Start-End) Farming area Pest treatment Lime Other chemical cost Family labor Hiring labor Type Type Type Type Total chemical cost Family labor Hiring labor Weight Price Family labor Hiring labor Total cost (exclude lalor cost) Family labor Hiring labor Hiring engineer Electricity / fuel cost Other cost No crop Transportation cost Average output in a crop Crop Type 1: _ Type 2: _ Type 3: _ Type 4: _ Crop Type 1: _ Type 2: _ Type 3: _ Type 4: _ _ – _ _ – _ m2 m A Preparation cost _kg/ đ/kg _kg/ đ/kg đ day day / _đ/ day B Seeding cost _unit/ _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit C Chemical cost đ day day / _đ/ day D Feeding cost kg đ/kg day day / _đ/ day E Water treatment cost đ day day / _đ/ day F Other cost đ đ đ G Harvesting đ/round Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg _kg/ đ/kg _kg/ đ/kg đ day day / _đ/ day _unit/ _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit đ day day / _đ/ day kg đ/kg day day / _đ/ day đ day day / _đ/ day đ đ đ đ/ round Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg APPENDIX 50 Question 11: Pond Species (B) Month (Start-End) Farming area Pest treatment Lime Other chemical cost Family labor Hiring labor Type Type Type Type Total chemical cost Family labor Hiring labor Weight Price Family labor Hiring labor Total cost (exclude lalor cost) Family labor Hiring labor Hiring engineer Electricity / fuel cost Other cost No crop Transportation cost Average output in a crop Crop Type 1: _ Type 2: _ Type 3: _ Type 4: _ _ – _ 2 Crop Type 1: _ Type 2: _ Type 3: _ Type 4: _ _ – _ m2 A Preparation cost _kg/ đ/kg _kg/ đ/kg đ day day / _đ/ day B Seeding cost _unit/ _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit C Chemical cost đ day day / _đ/ day D Feeding cost kg đ/kg day day / _đ/ day E Water treatment cost đ day day / _đ/ day F Other cost đ đ đ G Harvesting đ/round Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg m2 _kg/ đ/kg _kg/ đ/kg đ day day / _đ/ day _unit/ _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit _ unit / _đ/ unit đ day day / _đ/ day kg đ/kg day day / _đ/ day đ day day / _đ/ day đ đ đ đ/ round Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg Type 1: : _ kg / đ/kg APPENDIX 51 Appendix 3: Stata results The T-test APPENDIX 52 APPENDIX 53 OLS regression results APPENDIX 54 APPENDIX 55 APPENDIX 56 IV regression results APPENDIX 57 ... THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS HOW MUCH DOES MANGROVE ECOSYSTEM CONTRIBUTE TO AQUACULTURE? - AN EMPIRICAL STUDY FOR MEKONG RIVER DELTA A thesis... respect to mangrove forest cover, the research got the result below dTotalcost / dMangrove cover = -12.513 + 0.756 Mangrove cover It showed that total cost would change respecting to mangrove. .. believed to be not easy to answer For example, how many time and how long a land had to be flooded, in order to pronounce it was the wetland In fact, the existence of water in a land changed its