Thesis Public Defense | VNP30 - Phạm Quốc Học

Carbon pricing and agriculture in Vietnam: a taxing trade-off

Student: Phạm Quốc Học, VNP-30

Supervisor: Dr. Nguyễn Quang

Abstract:

This study evaluates the impacts of carbon pricing on Vietnam’s agricultural sector through a dual-level analytical framework combining a Computable General Equilibrium (CGE) model at the macro level and Ordinary Least Squares (OLS) and Levinsohn–Petrin (LP) estimations at the household level. The CGE results indicate that a marginal carbon price experiment implemented as a one percentage point increase in the ad-valorem tax on fossil-fuel extraction leads to an approximately 0.62% reduction in CO₂ emissions (≈ -1.806 MtCO₂ per year), accompanied by modest improvements in nitrogen and phosphorus boundaries. However, the associated changes in land use expansion (+0.0195%) and freshwater use (+0.0069%) are extremely small in magnitude and should be interpreted only as marginal directional responses rather than economically meaningful impacts. At the micro level, both the OLS and LP estimations show that agricultural land is the most influential input, with β = 0.61, indicating a statistical association such that a 1% increase in cultivated land is associated with roughly a 0.61% increase in farm income. Water (β = 0.029) also contributes positively, while labor, capital, and energy input remain statistically insignificant. Integrating both sets of findings reveals that carbon pricing affects households indirectly via land and water channels, influencing rural welfare. The study concludes that carbon pricing should be integrated with land and water management policies to achieve the dual objectives of emission reduction and sustainable rural livelihoods.

Keywords: carbon pricing, CGE model, Levinsohn–Petrin, agriculture, Vietnam.
JEL Classification: Q54, Q15.