Ebook The economics of environmental management in VietNam Ebook The economics of environmental management in VietNam

ECONOMY AND ENVIRONMENT PROGRAM FOR
SOUTHEAST ASIA (EEPSEA)

THE ECONOMICS OF ENVIRONMENTAL
MANAGEMENT IN VIETNAM
Edited By

BUI DUNG THE
HERMINIA FRANCISCO

SidaSida

SWEDISH INTERNATIONAL
SWEDISH INTERNATIONAL
DEVELOPMENT
DEVELOPMENT
COOPERATION
COOPERATION
AGENCYAGENCY

Canadian International
Development Agency

Agence Canadiene de
Development International



THE ECONOMICS OF ENVIRONMENTAL
MANAGEMENT IN VIETNAM

BUI DUNG THE AND HERMINIA FRANCISCO
EDITORS

ECONOMY AND ENVIRONMENT PROGRAM FOR SOUTHEAST ASIA
JANUARY, 2010


© 2010 EEPSEA
22 Cross Street, #02-55
South Bridge Court
Singapore 048421
ISBN: 978-981-08-3917-8
All rights reserved. This publication or part thereof may be reproduced or
translated as long as the editors, author/s, and EEPSEA are cited as the original
source.
The findings, interpretations, and conclusions expressed in the case studies in this
publication rests exclusively with the authors and should not be attributed in any
manner to EEPSEA, its partners, donors, members of its Advisory Body, and the
countries EEPSEA represents.
Front cover photograph: My Son World Heritage Site by Tran Huu Tuan
Cover and layout design: Rusyan Jill Mamiit-Coburn
Printed in Vietnam
First Printing January 2010
Suggested Citation:
Author’s surname, Author’s initials. Year of publication. Title of chapter or article.
Name/s of editor(s) (ed) In* title of book. Publisher, city and country of publication.
First page number of article to last page number of article.

WHAT IS EEPSEA?
The Economy and Environment Program for Southeast Asia was established

in May 1993 to support training and research in environmental and resource
economics. Its goal is to strengthen local capacity in the economic analysis
of environmental problems so that researchers can provide sound advice to
policy-makers. The program uses a networking approach to provide financial
support, meetings, resource persons, access to literature, publication avenues,
and opportunities for comparative research across its nine member countries.
These are Thailand, Malaysia, Indonesia, the Philippines, Vietnam, Cambodia,
Lao PDR, China, and Papua New Guinea.
EEPSEA’s structure consists of a Sponsors Group, comprising all donors
contributing at least USD 100,000 per year, an Advisory Committee of senior
scholars and policy-makers, and a small secretariat in Singapore. EEPSEA
is a project administered by the International Development Research Centre
(IDRC) on behalf of the Sponsors Group.


Table of Contents
List of Contributors ..................................................................................

i

Foreword ....................................................................................................

iii

Chapter 1

Overview of Economic Research on Environmental
Issues in Vietnam.............................................................

1

BUI DUNG THE AND HERMINIA FRANCISCO

Chapter 2

The On-Site Costs of Soil Erosion and Benefits of Soil
Conservation in the Mountainous Regions of Northern
Vietnam.............................................................................

23

TRAN DINH THAO

Chapter 3

The On-Site Costs of Soil Erosion and Choice of Land
Use Systems by Upland Farmers in Central Vietnam....

53

BUI DUNG THE

Chapter 4

Environmental Consequences of and Pollution Control
Options for Pond “Tra” Fish Production in the Mekong
Delta - A Case Study in Thotnot District, Cantho City...

79

VO THI LANG, KY QUANG VINH, AND NGO THI THANH TRUC

Chapter 5

The Development of Dairy Cattle Farming: Environmental
Consequences and Pollution Control Options in Hanoi
Province, North Vietnam.................................................

115

NGUYEN QUOC CHINH

Chapter 6

Incentives for Wastewater Management in Industrial
Estates in Vietnam...........................................................

143

LE QUANG THONG AND NGUYEN ANH NGOC

Chapter 7

Pollution Control Options for Handicraft Villages: The
Case of Duong Lieu Village in the Red River Delta,
Vietnam.............................................................................
NGUYEN MAU DUNG AND TRAN THI THU HA

173

Chapter 8

Compliance of Paper-Making Plants with Environmental
Regulations in Bac Ninh Province, Vietnam.................. .

207

NGUYEN MAU DUNG

Chapter 9

The Impact of Trade Liberalization on Industrial
Pollution: Empirical Evidence from Vietnam...................

239

PHAM THAI HUNG, BUI ANH TUAN, AND NGUYEN THE CHINH

Chapter 10

Household Demand for Improved Water Services in
Ho Chi Minh City.............................................................

277

PHAM KHANH NAM AND TRAN VO HUNG SON

Chapter 11

Valuing the Economic Benefits of Preserving Cultural
Heritage: The My Son World Heritage Site in Vietnam.
TRAN HUU TUAN

311


LIST OF CONTRIBUTORS
Dr. Herminia Francisco, Director, Economy and Environment Program
for Southeast Asia, IDRC Singapore. Email:
Dr. Bui Dung The, Chair, Department of Science and Technology,
International Cooperation, and Postgraduate Education, College of
Economics, Hue University, Vietnam. Email:
Dr. Tran Dinh Thao, Deputy Dean, Faculty of Agricultural Economics
and Rural Development, Hanoi University of Agriculture, Vietnam.
Email:
Ms. Vo Thi Lang (corresponding author), School of Economics and
Business Administration, Cantho University, Cantho City, Vietnam.
Email:
Mr. Ky Quang Vinh, Cantho Environmental Monitoring Center, Cantho
City, Vietnam. Email: ;
Ms. Ngo Thi Thanh Truc, School of Economics and Business
Administration, Cantho University, Cantho City, Vietnam. Email:

Dr. Nguyen Quoc Chinh, Chair, Department of Business Management,
Faculty of Accounting and Business Management, Hanoi University
of Agriculture, Vietnam. Email: ;
Dr. Le Quang Thong (corresponding author), Nong Lam University,
Thu Duc District, Ho Chi Minh City, Vietnam. Email: lqthong_kt@
hcmuaf.edu.vn

Mr. Nguyen Anh Ngoc, Vice-Director, Trade Promotion Center, Ho Chi
Minh City, Vietnam. Email:

i


Dr. Nguyen Mau Dung (corresponding author), Deputy Chair, Natural
Resources and Environmental Economics Department, Faculty of
Agricultural Economics and Rural Development, Hanoi University of
Agriculture, Vietnam. Email:
Dr. Tran Thi Thu Ha, Economics Department, Economics and Business
Management Faculty, Vietnam University of Forestry, Hanoi, Vietnam.
Email: ;
Dr. Pham Thai Hung (corresponding author), Faculty of Marketing,
National Economics University, Hanoi, Vietnam. Email: hungpt68@
gmail.com
Dr. Bui Anh Tuan, Vice-Rector, National Economics University,
Hanoi, Vietnam. Email:
Dr. Nguyen The Chinh, Vice-Director, Institute for Strategy and
Policy for Natural Resources and Environment (ISPONRE), Ministry
of Natural Resources and Environment (MONRE), Hanoi, Vietnam.
Email:
Mr. Pham Khanh Nam (corresponding author), Environmental
Economics Unit, School of Business, Economics and Law, Göteborg
University, Sweden. Email:
Mr. Tran Vo Hung Son, Faculty of Development Economics,
University of Economics, Ho Chi Minh City, Vietnam. Email:

Dr. Tran Huu Tuan, Faculty of Economics and Development
Studies, College of Economics, Hue University, Vietnam. Email:

ii


Foreword
It is my great pleasure to introduce this book, “The Economics of
Environmental Management in Vietnam,” to you - students of economics,
scholars, policy-makers, and legislators who are dealing with environmental
protection in Vietnam. This book is a timely publication by the Economy
and Environment Program for Southeast Asia (EEPSEA) in light of the
Vietnamese Government’s forthcoming policy to incorporate economics into
the management of natural resources and the environment.
Indeed, Vietnam is a country that is blessed with rich natural
resources which our people depend on heavily. It is crucial that we protect and
conserve these resources for the welfare of present and future generations.
This publication will be an important contribution to the Government’s
efforts to improve environmental protection, balance economic growth and
environmental conservation, and build environmental management capacity.
It is my expectation that environmental policy-makers and managers will find
that it helps them to better evaluate environmental project proposals and
develop policies and regulations to protect the environment and govern the
use of natural resources more effectively.
I also trust that students and researchers interested in pursuing
environmental economics as a field of specialization will find the research
methodologies described in this book useful in analyzing and providing sound
solutions to environmental challenges in the country.
On behalf of the Ministry of the Natural Resources and Environment of
Vietnam, I commend the initiative, competence, and dedication of Vietnamese
researchers who carried out the studies reported herein. I would also like to

express my sincerest appreciation to EEPSEA for its support in building the
capacity of Vietnamese researchers in the field of environmental economics.
It is my earnest hope that the Vietnamese citizens who read this book
will use it for the betterment of the environment in the country.

PHAM KHOI NGUYEN
Minister of Natural Resources and Environment
Government of Vietnam

iii



CHAPTER 1

OVERVIEW OF ECONOMIC RESEARCH ON
ENVIRONMENTAL ISSUES IN VIETNAM

PHOTO: KAREN LOU FRANCISCO

BUI DUNG THE AND HERMINIA FRANCISCO



Overview of Economic Research on Environmental Issues

1.0

3

Introduction

For more than a decade now, the Vietnamese economy has been
experiencing a high growth rate of 6-8 per cent per annum. Like other
developing countries, this growth is highly dependent on the use of its
natural resources. Continuous growth brought about by global market
integration coupled with rapid urbanization has subjected Vietnam’s
natural resources to considerable stress. The main environmental
issues currently facing Vietnam are water and air pollution, the
degradation of land and forest resources, the loss of biodiversity, and
the high use of biomass fuels (MONRE 2004). These problems threaten
the sustainable development of Vietnam.
In an effort to address the environmental challenges facing the
country, the Government of Vietnam has established a legal framework
on environmental sustainability, which is showing some positive initial
results. In 2003, it established the Ministry of Natural Resources
(MoNRE) and approved the National Strategy for Environmental
Protection (NSEP). A number of laws and regulations on environmental
protection were amended/issued and brought into effect. The Law
on Environmental Protection was revised and approved in 2005, the
Law on Water Resources was approved in 1998, the Law on Land was
approved in 2003, and the Law on Biodiversity was approved in 2008.
These legislative documents are the legal foundation for the reform of
environmental protection policies, promoting the use of economic or
market-based instruments, and the “socialization1” (mainstreaming)
of environmental protection efforts.
During the last decade, the Environmental Protection Agency
of MoNRE has promoted the use of market-based instruments in
parallel with traditional administrative ones. Vietnam’s National
Environmental Protection Fund was established in 2002 and

similar funds are being established at the sectoral and provincial

Vietnam has initiated a policy of involving all sectors in environmental protection
efforts. This process is referred to as the “socialization” of environmental management
and is commonly used in government documents.

1


4

Economics of Environmental Management in Vietnam

levels. Several environment-oriented taxes or fees have recently been
adopted while subsidies on chemical fertilizers and pesticides have been
removed. Environmental protection charges for wastewater have been
adopted since January 2004. New clean air legislation and decrees
that focus on pollution charges for the industrial and transportation
sectors as well as economic incentives to encourage compliance with
environmental laws will soon come into effect.
This book is a collection of short reports of research studies
conducted by Vietnamese economists over the last ten years on some
of the most pressing environmental problems in Vietnam. All the
studies were supported by the Economy and Environment Program
for Southeast Asia (EEPSEA). The researchers have analyzed specific
environmental problems by estimating the costs they impose on society
and some of the studies have evaluated solutions to the problems using
either a cost-benefit or cost-effectiveness analysis. A few have looked
into the behavior of economic agents such as farmers, firms, and
consumers to understand what incentives determine the actions they

take in using environmental resources.
We have highlighted the methodologies used in the various
analyses in the hope that they will be of use to economics students
interested in pursuing environmental economics as a field of
specialization. We also expect that the findings of these studies will be
of value to natural resource managers and policy-makers.
This introductory chapter is divided into three parts. Part 1
gives a brief summary of the environmental problems faced by Vietnam,
Part 2 is a synthesis of the various studies and Part 3 concludes the
chapter.

2.0

Environmental Problems in Vietnam

2.1

Water pollution

Pollution of surface and groundwater is becoming increasingly
serious in Vietnam. More and more, lakes, streams, and canals are


Overview of Economic Research on Environmental Issues

5

being used as waste sinks for domestic sewage and industrial waste.
In inner parts of big cities like Ha Noi, Ho Chi Minh and Hai Phong,
these water bodies have been found to have pollutions levels that are

five to ten times higher than the national standards for surface water
(Category B-TCVN 5942-1995). According to a World Bank Report
(2005), most of Vietnam’s city lakes are suffering from mutative
eutrophication and organic re-contamination. The same report cited
that the concentrations of organic content as measured by biological
oxygen demand in five days21(BOD5) and ammonium (N-NH4+) in the
country’s major rivers exceeded the standards by 1.5-3 times and that
of total suspended solids (TSS) in rivers, lakes and main canal systems
exceeded the permitted level by 1.5-2.5 times.
The major sources of water pollution are industries, agriculture,
urban residences, and handicraft villages . Almost all urban wastewater
is discharged into the environment without treatment. According
to primary statistics, only 4.26% of total industrial wastewater is
treated to meet Vietnamese environmental standards (MONRE 2004;
MONRE and World Bank 2005). Untreated industrial and domestic
wastewater and water leaching from waste dumping sites is a serious
cause of surface water and groundwater pollution due to the presence
of high levels of pollutants such as heavy metals, nitrates, and arsenic.
Currently, only a few waste dumping sites have operating wastewater
treatment systems.
In rural areas, the main source of water pollution is wastewater
from agricultural activities and handicraft villages3.2The residues
of chemical pesticides and synthetic fertilizers and waste from
animal husbandry (namely, dairy cattle and pig-raising) cause
eutrophication and water contamination. There are more than 1,450
handicraft villages in the country. These villages have limited, if any,

2 BOD5 (Biochemical Oxygen Demand in five days) is a measure of the organic content
of wastewater. It is the amount of dissolved oxygen consumed in five days by biological
processes breaking down organic matter in wastewater. The units of measurement are

in milligram per liter (mg/l).
3 “Handicraft villages” (or “craft villages”) is the term commonly used in Vietnam to
refer to villages engaged in cottage or home industry.


6

Economics of Environmental Management in Vietnam

pollution control facilities and therefore they discharge a huge volume
of waste into the environment (MONRE and World Bank 2005). In
many places, especially in paper production, slaughtering, and weaving
and dying villages, the problem of water pollution has become a major
concern for the local people and authorities.
In particular, water pollution directly and adversely impacts
human health. It is one of the causes of diarrhea, bacillary dysentery,
cholera, typhoid, hepatitis A, and parasitic diseases, among others.
These illnesses can lead to malnutrition, anemia, iron deficiency, the
under-development of children, and death, especially for children.

2.2

Air pollution

Vietnam’s ambient air environment in nearly all urban and
industrial areas is affected by various pollutants such as particulates,
lead and nitrous oxides, sulfur dioxide and carbon monoxide emitted
by vehicles, factories, power plants, and households, among others.
Dust pollution has been observed in most of the urban areas in the
country; in many places the pollution has reached alarming levels. For

instance, the dust concentration in the air in large cities like Hanoi, Ho
Chi Minh, Hai Phong, and Da Nang is two to three times higher than
the permitted standard (MONRE 2004; MONRE and World Bank
2005).
Industrial production activities remain one of the major sources
of air pollution. Almost none of the old industrial establishments and
small and medium enterprises have dust filters or toxic gas treatment
equipment. Old industrial facilities are scattered with many located
in the inner parts of cities. Coal and fuel oil are often used to power
old factories, which emit pollutants into the air. Moreover, many
large factories, such as thermal power stations, and cement and
construction material plants are located outside industrial zones,
thus not being subject to strict pollution control measures. Pollution
from the transportation sector is also a major problem in large cities.
The rapid increase in the number of cars in Ho Chi Minh City has
led to increased lead levels in the ambient environment (Khoa Hoc
Newspaper 2007).


Overview of Economic Research on Environmental Issues

7

The air quality in rural areas, however, has generally remained
good, except in some handicraft villages and areas with high
concentrations of pig and dairy cattle farms. For example, many
residents in the Gia Lam District of Hanoi find the smell from pig and
dairy cattle farms a nuisance (Nguyen 2001). The air in handicraft
villages is polluted mainly with smoke from kilns which use coal
and wood as fuel and discharge dust and toxic gases such as carbon

monoxide, carbon dioxide and sulfur dioxide into the air. The air
pollution in some places is so serious that local residents find difficulty
in breathing. Like water pollution, air pollution is also linked closely to
health impacts. A World Health Organization study in 2001 reported
that 35.7% of cases of lower respiratory system infection and 22% of
chronic lung disease cases were caused by indoor air pollution (MONRE
and the World Bank 2005). The damage/cost caused by air pollution in
Hanoi has been estimated at one billion Vietnamese dongs per day
(Kieu 2005).

2.3

Land degradation and land pollution

Vietnam has nearly 25 million hectares of sloping land. It has
been estimated that 12.5% of Vietnam’s sloping land is poor, severely
degraded and prone to severe erosion, and has a very thin topsoil layer.
About 60% of this mountainous land is being continuously degraded
with 1.5 cm of the topsoil layer of agricultural land being lost every
year (Vo 2002).
Soil erosion and degradation in the uplands is caused both by man
and bio-geographical factors. Erosive farming practices such as slashand-burn cultivation with shortened fallow periods and mono-cropping
are often cited as the main causes of soil erosion. The inclement climate
with intense rainfall and sloping topography also make the uplands
susceptible to erosion. This loss of soil leads in turn to a decline in
agricultural productivity. It also exhausts the vegetative cover and
depletes the biodiversity; which results in a cycle of worsening land
erosion and degradation.
Land degradation is not only linked to the loss of productive
topsoil. In Vietnam, the use of chemical fertilizers in farming is a

8

Economics of Environmental Management in Vietnam

major source of land pollution. Vietnam’s use of fertilizers is increasing
both in quantity and type. At least 1,420 different types of fertilizers are
found in the market. Vietnam’s yearly imports of 1–1.4 million tonnes
of urea fertilizer meet only one third of the local demand (MONRE and
the World Bank 2005). Although the level of fertilizer utilization in
agriculture is relatively low, the total amount used is still a significant
source of pollution due to the low quality of the fertilizers and their
improper and imbalanced use (Le 2001). The use of insecticides,
fungicides, and herbicides in agriculture is another serious contributor
to soil pollution in Vietnam. From 1997, the total amount of imported
pesticides has been limited to 2,500 end-product-equivalent tonnes,
but the total amount of pesticides used (mainly in rice cultivation) has
increased by 1.2-1.5 times each year from the 1990 level (MONRE and
the World Bank 2005).
The high concentration of toxic elements and heavy metals in the
soil increases the amount of harmful substances absorbed by plants
and animals, leading to negative impacts on human health as well. The
extensive use of chemicals in agriculture has led to an increase in the
number of cases of poisoning. In 2004, there were 145 such cases—of
which 23% was through food and 13% from chemicals—affecting 3,580
people and causing 41 deaths (MONRE and the World Bank 2005).

3.0

The Application of Economics in the Analysis of
Environmental Problems in Vietnam: A Synthesis

The case studies in this book provide insights into the challenges
facing Vietnam in managing its environmental resources. The studies
cover three main themes, namely, agricultural and aquacultural
pollution, industrial pollution, and the demand for environmental
improvement and conservation. These case studies provide concrete
examples of how environmental economics tools and techniques can be
applied in addressing environmental problems.


Overview of Economic Research on Environmental Issues

3.1

Agricultural and aquacultural pollution

3.1.1

Soil erosion and soil conservation

9

Soil erosion due to falling rain and water flowing over and
through the soil is a major environmental and socio-economic problem
in Vietnam’s sloping uplands. The amount of soil loss is also dependent
on how the farmers use the land. The loss of soil is an important concern
as it means the loss of organic matter and nutrients, reduction in the
soil’s water-holding capacity and a decrease in the depth of cultivable

soil. Ultimately, these result in a decline in farm productivity and
income, causing worsening poverty in the uplands.
Tran Dinh Thao measured the on-site costs of soil erosion and
estimated what the benefits of adopting soil conservation practices
would be to the farmers in the mountainous regions of northern
Vietnam (Chapter 2). In a seven-year period, soil loss in the of plots
without soil conservation was 2.2 times higher than the plots with
soil conservation. In monetary terms, this translated to a loss of 1,832
thousand VND (USD 108.43) per hectare in 1998 prices.
The study found that soil erosion significantly reduced
crop yields. Comparing farms with and without soil conservation
measures, he estimated that maize yields decreases slowly when the
farmer adopted soil conservation measures as compared to a 17.4%
yield loss in the case without soil conservation practices. The study
compared the net benefits of three soil conservation techniques using
cost-benefit analysis. These were: a) the use of tea hedgerows; b) the
use of Tephrosia candida hedgerows, and c) the use of tea and grass
hedgerows. Using Tephrosia candida as hedgerows was found to be
most economically efficient among the three practices.
The study further analyzed farmers’ behaviors toward soil
conservation investment. It found that expenditure on soil conservation
was affected by farm characteristics, farm incomes, labor resources, and
the education level of the head of the household as well as by rural credit


10 Economics of Environmental Management in Vietnam

availability. To promote soil conservation practices in the region,
policies should prioritize designing a master plan for land use, giving
land rights to farmers, providing training on crop production and soil

conservation technologies, providing technical support to farmers, and
developing diverse economic activities in the region.
A similar study on soil erosion in the uplands of Central Vietnam
is presented in Chapter 3 wherein Bui Dung The undertook an
economic analysis of soil erosion under four typical land use systems:
a) an upland rice-based system, b) an upland sugarcane system, c)
a fruit tree-based agroforestry system, and d) a eucalyptus-based
system. Using an erosion-productivity model, the study found that the
upland rice-based system was the most erosive, with a soil loss of 80
tonnes/hectare per year. Although less erosive than the upland ricebased system, the sugarcane system produced an annual soil loss of
53 tonnes/hectare per year, which was still high The fruit tree-based
agroforestry system was found to be the least erosive, with a soil loss
of 40 tonnes/hectare per year. Measured by the value of annualized
income loss, the on-site opportunity cost of soil erosion for each land
use system per hectare per year as compared to the fruit tree-based
agroforestry system were as follows (in increasing order): 635,000 VND
(USD 37.57) for the sugarcane system; 1,019,000 VND (USD 60.29) for
the eucalyptus-based system; and 1,022,000 VND (USD 60.47) for the
upland rice-based system.
To examine the determinants of the choice of land use systems,
The undertook a multinomial logit analysis. He found that the choice
of land use system was influenced by farmers’ attributes such as
education, age, landholding and income; by land plot characteristics
such as acreage, slope and distance from the farmer’s house; and
by policy-related variables such as land use incentives, extension
and credit. The set of policy-related variables in particular was very
important in explaining the land use choice by upland farmers. He
further discovered that interventions in the past were biased towards
reforestation and sugarcane production. Inadequate attention was
being paid to the agroforestry system. Moreover, it was also a great

Overview of Economic Research on Environmental Issues 11

challenge to persuade upland farmers to adopt sustainable land
use practices such as the agroforestry system because it required
high establishment costs plus the management of the system was
complicated both biologically and economically. In addition, upland
farmers in the area were poor, lowly educated, and lived in a fairly
isolated environment. Trapped in poverty, these farmers, especially
the ethnic minority, mined the soil using erosive land use systems to
meet their urgent needs.
3.1.2

Water pollution from aquaculture

Aquaculture production is a thriving industry in the Mekong
Delta (MD) of Vietnam and has been growing rapidly in the last two
decades. “Tra fish” (Pangasius hypoththalmus) is one popular catfish
species bred in the MD. Chapter 4 features a study by Vo Thi Lang,
Ky Quang Vinh and Ngo Thi Thanh Truc on the pollution caused by
the dumping of wastewater from Tra fishponds into canals, creeks and
rivers in the Thotnot District of Cantho City.
This study examined the environmental consequences arising
from pond Tra fish breeding and explored technically and economically
feasible wastewater treatment options for bringing the water
pollution down to an acceptable level in accordance with Vietnamese
environmental standards. It found that the chemical oxygen demand
(COD) concentration in effluents in Tra pond water was 34 mg per
liter, exceeding the allowable limit of COD in surface water (less than

10 mg per liter) according to Vietnam’s surface water quality standards
(TCVN 5942-1995, Class A). The pollution load rate (PLR) in Tra fish
production was 0.098 kg of COD per kilogram of fish produced.
The authors also compared the cost-effectiveness of three
technical options that were available to Tra fish farmers to treat the
wastewater from their ponds. These were: a) the aeration system, b)
the trickling filter system, and c) the use of constructed wetlands.
Trickling filters were found to be the most cost-effective option with an


12 Economics of Environmental Management in Vietnam

estimated treatment cost of 1.51 thousand VND (USD 0.09) per kilogram
of COD. This was, however, much higher than the environmental
protection fee of 0.3 thousand VND per kilogram of COD.
The social acceptability of the three options was also assessed
through focus group discussions. The major objections raised by the
fish farmers centered around the fact that all three options needed
extra land, adequate power supply, and considerable investment,
which were all significant constraints to fish producers. When asked
to rank the three options, on the condition that the government would
strictly enforce environmental regulations, 50% of the farmers chose
the use of trickling filters with 36% choosing the aeration system.
Some (14%) of the participants refused to rank the options,
indicating their objection to any proposal to make them comply with
environmental standards. All of them suggested that the State install
the preferred technologies as a pilot project first to demonstrate their
performance.
3.1.3

Dairy farming

Vietnam’s dairy cattle husbandry has rapidly expanded in
recent years, particularly in the suburban areas in the north. Dairy
cattle are raised mainly by small farm households which do not have
enough resources for environmental protection. Therefore, dairy cattle
husbandry causes a number of environmental problems, especially air
and water pollution. Air pollution due to cattle manure is a serious
problem since cowsheds are located near or connected to the farmers’
houses. The wastewater from cattle farms is often not treated and
discharged into gardens, ponds, and rivers directly, polluting these
water resources. This imposes a huge health cost on people living in
the area.
Nguyen Quoc Chinh assessed the pollution control technologies
available to cattle farmers in the Gia Lam District in suburban Hanoi,
Vietnam (Chapter 5). The options assessed were: a) the traditional
option of loading manure into a settling tank or a hole in the garden


Overview of Economic Research on Environmental Issues 13

near the cowshed, b) the installation of small or large-scale fixeddome biogas digesters, and c) waste removal by middlemen. Through
a process of ranking using a combination of economic, environmental,
and practical feasibility indicators, the small biogas digester was
found to be the best pollution control option for the suburban areas
of Hanoi. However, the promotion of this technology was constrained
by factors such as its technical design, high initial investment costs,
inadequate construction skills of rural workers, and traditional cooking
practices that used other forms of fuel. The study recommended that
the Vietnamese government provide technical and financial support,

backed up by education and awareness campaigns, to encourage the
adoption of biogas digesters.

3.2

Industrial pollution

3.2.1

Water pollution and industrial estates

The establishment of industrial estates or zones in Vietnam has
been an important step in its industrialization. Numerous industrial
zones have been constructed since 1993 throughout the country.
This implies an increasing need to keep industries compliant with
wastewater management regulations. Although concerned authorities
have improved the environmental management of industrial estates
over recent years, effective pollution control measures remain limited.
Many industrial estates have not implemented centralized wastewater
treatment plants and represent a great threat to the quality of the
water in the environment. The lack of wastewater treatment facilities,
especially common wastewater treatment (WWT) plants, together
with inappropriate monitoring procedures, has led to large amounts
of untreated wastewater being discharged into rivers. Serious water
pollution has been observed in Dong Nai River (Dong Nai Province),
Sai Gon River (HCMC), and Thi Vai River (Ba Ria-Vung Tau Province).
This raises the questions of what factors are causing this situation
and what would be an appropriate approach to address the problem.
It also suggests a need for more effective regulation, enforcement, and
supporting services.

14 Economics of Environmental Management in Vietnam

A study by Le Quang Thong and Nguyen Anh Ngoc (Chapter 6)
provides an analytical analysis of wastewater management in key
industrial estates located in Ho Chi Minh City, and Binh Duong, Dong
Nai and Ba Ria-Vung Tau Provinces. It was found that the levels of
wastewater treatment in many industrial estates were low; many
estates and the factories that operated inside them had not invested
in WWT plants, and many companies (even those connected to WWT
plants) chose not to comply with wastewater treatment legislation.
Among the reasons for this were lack of investment capital, poor law
enforcement, low penalties for non-compliance, and an inappropriate
fee structure for wastewater treatment.
The study found that there were a number of constraints
or disincentives to the construction of common WWT plants in an
industrial estate, namely the lack of financial resources, limited land
area, and low occupancy rates. Without pressure from the government,
such estates were likely to place low priority on building the plants.
The research further revealed that there were various factors
affecting the effectiveness of pollution control measures in industrial
zones, including how the infrastructure companies conducted their
business, the type of industries located within the estate, and the
type of investors. The industrial estates in the four study sites faced
problems in water pollution control due to insufficient and inefficient
common WWT plants as well as difficulties in quantifying appropriate
treatment fees and monitoring the compliance of investors. In addition,
the authorities in certain areas gave priority to attracting investors to
industrial zones over adherence to water pollution control regulations.

The study concluded that water pollution control policies for industrial
estates in Vietnam definitely needed to be reformed.
3.2.2

Handicraft villages

Handicraft villages are a typical feature of rural Vietnam. Such
villages have a high concentration of households (typically over 30%)
involved in one type of enterprise. Since the renovation in 1986, handicraft village development has been encouraged by the government. As
a result, handicraft villages have been rehabilitated and developed,


Overview of Economic Research on Environmental Issues 15

especially in the Red River Delta region where cropland per capita is
very small compared with other regions of Vietnam. Without pollution
control facilities, handicraft villages discharge a huge volume of waste
into the environment.
In Chapter 7, Nguyen Mau Dung and Tran Thi Thu Ha provide
an analysis of the environmental consequences of cassava processing
and the cost-effectiveness of pollution control options in the handicraft
village of Duong Lieu in the Red River Delta. In their study, they found
that the wastewater from cassava processing caused serious pollution
in the village, leading to a high incidence of ailments such as headaches,
backaches, respiratory diseases, skin irritation, stomachaches, sore
eyes, and cancer.
To mitigate the environmental pollution in Duong Lieu Village,
three pollution control options were designed and evaluated: a) a
small treatment plant for every processing household (Option 1); b) a
treatment plant for a group of processing households (Option 2); and c)

a treatment plant for the whole village (Option 3).
A cost-effectiveness analysis found Option 1 to be the most
cost-effective, followed by Options 3 and 2. This option was quite
sensitive to increased construction costs. When the construction cost
was increased by 10%, Option 3 became the most cost-effective. If
equipment or reagent costs increased, there would be no change in the
original ranking of the average treatment cost among systems. So if
only the treatment costs were to be considered, wastewater treatment
at the individual household level should be selected, but if construction
costs were to rise, then the establishment of a treatment system for the
whole village would be the most cost-effective option.
An analysis of the social acceptability of the three options was
also done through focus group discussions. Option 1, which entailed
the construction of a 45 m3 underground tank by each household, was
quite difficult for most households due to limited space. Option 3 was
the most widely accepted; it had the lowest treatment costs per cubic