Eco-efficiency analysis of sustainability-certified coffee production in Vietnam

There is a belief that sustainability-certified coffee production helps increase economic benefits to farmers and reduces negative environmental impacts. However, the international empirical evidence is not conclusive. Also, there is a lack of empirical evidence for Vietnam - the world's second-largest coffee producing country. This paper provides the first empirical examination of the differences in eco-efficiency between conventional and sustainability-certified coffee-growing farms in Vietnam. Data of 726 farms in Vietnam over three crop years from 2012/13 to 2014/15 are analysed. Environmental pressures measured by the level of consumption of nitrogen, phosphorus, irrigation water, pesticides, herbicides, fungicides, and land are investigated in relation to the value-added of coffee production. Empirical results show that in each crop year, coffee farms could reduce environmental pressures by more than 50% while holding the value-added of outputs constant. On average, sustainability-certified farms are found to be more eco-efficient than conventional farms, but efficiency differences appear to converge over time. This convergence may be due to positive externalities of certification, less compliance to certification standards or the combination of these effects. Higher eco-efficiency levels are also correlated with farms located in higher elevation locations, having wind-break trees, and using drip or spray irrigation systems. These should be taken into account as policy options to sustain and improve the positive effects of certification in regard to both economic and environmental aspects, rather than rapid expansion of certified production. Further, one could incorporate ecological and environmental dimensions and welfare into eco-efficiency models and a stochastic production environment may be a useful modeling approach.