Assessing the costs of GHG emissions of multi-product agricultural systems in Vietnam

Abstract

Besides a vital sector of the economy, agriculture is a primary source of greenhouse gas (GHG) emissions. The present paper investigates the impact of carbon tax policy on Vietnamese agriculture by focusing on multi-product systems such as rice, livestock, and aquaculture, traditionally called the Vuon (Garden)-Ao (Pond)-Chuong (livestock pen) system (VAC). In it, farmers use garden, pond, and pen by-products as fertilizer and feed. We use shadow prices and Morishima substitution elasticities as greenhouse gas emissions indicators, estimated with directional output distance function. Farmers in the Mekong Delta region are found to be technologically less efficient than in other regions of Vietnam, though the shadow prices of GHG emissions are lower there too. This indicates that farmers in the Mekong Delta, generally concentrating either on livestock or aquaculture, have greater potential for reducing GHG emissions by way of improvements in technical efficiency than do those in other regions. However, Morishima elasticity estimates show that policy impacts diminish more quickly in the Mekong than elswhere. We suggest the Vietnamese government encourage Mekong Delta farmers to employ technologically more efficient methods or shift to more balanced farming to reduce the shadow price of GHG emissions, encouraging more efficient emissions reduction.