Optimal Cost Structure in Operation and Maintenance Management of the Irrigation Systems in the Red River Delta, Vietnam

Abstract

This study measured the cost efficiency and estimated the optimal cost structure in operating and maintaining the irrigation systems of eight provinces in the Red River Delta (RRD), Vietnam, from 2014 to 2016 using the input-oriented model of data envelopment analysis. The inputs included in the model were the costs of labor, materials, electric energy for irrigation, irrigation structure safety, maintenance, depreciation, administrative expenses, and overhead cost. The output was the irrigation area, which was converted to paddy areas. The findings of this study showed a large inefficiency in using the total input financial cost subsidized. The optimal technical efficiency scores under constant returns to scale (CRS) and variable returns to scale (VRS) were 0.86 and 0.98, respectively. The results implied that total input costs should be reduced by 14% under CRS and 2% under VRS to avoid cost inefficiency. The results also showed that scale efficiency occurred in the operation and maintenance (O&M) management of the irrigation systems. The O&M management in the irrigation systems in the RRD should allocate the major proportion of the costs to labor to be efficient. Application of the optimal input cost structure would improve irrigation management performance for the RRD region by 48.7% for the efficient input target (EIT) under CRS and by 5.03% for the EIT under VRS. These were the significant bases for recommending policy options for reviewing the irrigation tariff subsidy according to each input factor. And then it could create the incentives for private participation partnership in the irrigation sector.