Optimal rice land protection in a command economy

Long Chu, Hoa Nguyen (), Tom Kompas, Khoi Dang and Trinh Bui

Crawford School Research Papers from Crawford School of Public Policy, The Australian National University

Abstract: Agricultural land protection (ALP) is a standard policy response to growing food security concerns driven by urbanisation, population growth and uncertainty over climate change. However, if not supported by rigorous analysis, at least in terms of the correct scale of protection, ALP may result in a misallocation of resources, hampering economic efficiency and prosperity. Examining rice land policy in Vietnam, this paper aims to determine the optimal level of rice land protected against other crops and evaluates the impact of adopting the optimal policy. With a stochastic optimization model built on top of a computable general equilibrium framework and microsimulation techniques, applied to Vietnam's social accounting matrix and household survey data, we find that converting part of protected rice land into other crops enhances economic efficiency. While the efficiency gain could amount to billions of dollars, income inequality only improves slightly. Overall, the policy is relatively pro-rich, implying a trade-off between poverty reduction and economic efficiency for Vietnam, making some households in already poor areas worse off. Though calibrated to a specific case, our approach can be applied in land-use planning generally, highlighting the relevant tradeoffs and the search for needed optimal land-use policies.

Keywords: farmland preservation; general equilibrium; inequality; rice; Vietnam; welfare (search for similar items in EconPapers)
JEL-codes: Q15 Q18 Q24 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017-08
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-sea and nep-tra
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:een:crwfrp:1707

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