Economic analysis of development policies with reference to large-scale water control infrastructures and rural intensification in the Mekong River Delta

Submission note: A thesis submitted in total fulfilment of the requirements for the degree of Doctor of Philosophy to the Department of Economics and Finance, La Trobe Business School, La Trobe University, Bundoora.

This thesis examines the economic efficiency case for the intensification of agricultural and aquacultural activities in the Mekong River Delta (MD) accounting for effects on the marketed value of outputs sold and for effects on non-marketed fish outputs. It utilises comprehensive measures of input use including household-supplied labour and incorporates external environmental effects such as pesticide costs. The main means for intensification considered are flood control technologies using “high” rather than “low” dykes as well as other water control technologies. High dykes, by preventing flooding, provide the opportunity for cultivating three rather than two rice crops. Using a cost-benefit analysis (CBA), the study shows that dyke heightening does not seem to be a viable option for the MD from both social and private perspectives. Among four quantified costs, the CBA demonstrated the decrease in profit from the first and second crops was the main cost of dyke heightening. The second and third largest costs were the infrastructure cost of dykes and the forgone revenues from the floodplain fishery. The increase in pesticide-use external costs was the smallest cost and was not significant. The infrastructure costs which are straightforward and are well-recognised – are not, in fact, easy to determine. The other three costs are often ignored in official reports that discuss the case for high dykes. With regard to the perspectives of each local group, intensive cropping farmers receive only a very low positive net benefit from dyke heightening from cultivating the third crop. Meanwhile, fisher people, balanced crop farmers, and other local people are, in general, disadvantaged by dyke heightening. The disadvantages to these groups exceed the advantages to the intensive farmers. The CBA results hence create substantial doubts about the case for further heightening of dykes in the MD, a process that is, however, still in progress.