Flood insurance market in Vietnam: Challenging but potentially profitable

portion of respondents still favor the status quo because they are influenced by the full-dike and cluster effect, endowment effect, wishful thinking, and moral hazard. Fourth, a young generation of 6 In the Mekong river delta, farms are protected by a semi-dike made of clay and trees. Besides the dike is an irrigation canal which connects to rivers. 17 household heads is averse to flood insurance schemes. Fifth, there is a potential for a profitable activity for the insurers if the market becomes available because the WTPs are much higher than necessary to reach the estimated break-even profit. Seventh, combined insurance policy and joint-stock company are more preferred to single flood insurance policy and other private companies. Finally, the prospect of a future insurance market is favorable because there is no evidence of adverse selection and charity hazard found in this study. We hope the findings can provide some guidance for policy making in Vietnam. First, for a successful implementation of a future flood insurance program it is important to enhance the understanding and awareness of purely agricultural communities, especially the younger population regarding the role and operation mechanism of insurance in reducing damages. Second, communication programs should clearly define the responsibility of each stakeholder in integrated flood management strategies, because a part of the households in high risk areas still blindly trust in the wonder of large-scale dikes and collective adaptation measures. To get reduce wishful thinking, awareness campaigns should target on how climate change affects the strength and frequency of floods, especially in the Greater Mekong Sub-region countries. The communication could focus on immediate reminders of exposure to flood risk. Finally, it is recommended that the government should not provide a generous subsidy because the average WTP for risk reduction is relatively high. Acknowledgements The financial support for this research was funded by Economy and Environment Program for Southeast Asia (EEPSEA). We would like to thank Dr Truong Dang Thuy, University of Economics, Ho Chi Minh City, Vietnam for his valuable instructions on the experimental designs and household survey implementation. We would like to thank Professor Le Anh Tuan, Institute of Climate Change, Can Tho University, Vietnam for his advice on the study sites. Especially, we would like to thank Professor Jack Knetsch, Simon Fraser University in Vancouver, British Columbia, Canada for his comments as an EEPSEA resource person. 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VIETFLOOD Working Paper. Scott, A., 2002. Identifying and analysing dominant preferences in discrete choice experiments: An application in health care. Journal of Economic Psychology. 23, 383- 398. Thanh Cong Nguyen, Robinson, J., Whitty, J.A., Keneko, S., 2015. Attribute non-attendance in choice experiments: A case study in a developing country. Economic Analysis and Policy. 47, 22-33. Zahzran, S., Weiler, S., Brody, S.D., Lindell, M.K., Highfield, W.E., 2009. Modeling national flood insurance policy holding at the county scale in Florida, 1999-2005. Ecological Economics. 68, 2627-2636. 21 APPENDIX A: GENERAL CARD AND EXAMPLE CARD 22 APPENDIX B: RISK ATTITUDE GAME Now, you have a short break before we go on asking you other information. During the break, we invite you to play a game with us. This game has five rounds (you have a right to stop the game at any round because the scenarios are independent to each other). Each scenario has two options. Suppose you choose ‘option A’, you then certainly receive a telephone card that is equivalent to the amount offered; and suppose you choose ‘option B’, you then have to draw a lottery from a bag with two possibilities: (1) If you draw the YELLOW ball from the bag, then you will win a telephone card that is equivalent to the amount VND; (2) If you draw the WHITE ball, then you get nothing. Note that, before playing the game, our enumerator will ask you to check the balls inside the bag to make sure that the game is fair. As the game is over, our enumerator will invite you to draw one of the five scenarios to decide which scenario you will really play. Scenario Option A Option B Which one you choose, A or B? For enumerator 1 VND 25.000 VND 30.000 if you draw YELLOW ball; VND 0 if you draw WHITE ball. If the respondent chose A, enumerator goes to scenario 2. If chose B, enumerator lets the respondent draw the ball, and stop the game. 2 VND 20.000 VND 30.000 if you draw YELLOW ball; VND 0 if you draw WHITE ball. If the respondent chose A, enumerator goes to scenario 3. If chose B, enumerator lets the respondent draw the ball, and stop the game. 3 VND 15.000 VND 30.000 if you draw YELLOW ball; VND 0 if you draw WHITE ball. If the respondent chose A, enumerator goes to scenario 4. If chose B, enumerator lets the respondent draw the ball, and stop the game. 4 VND 10.000 VND 30.000 if you draw YELLOW ball; VND 0 if you draw WHITE ball. If the respondent chose A, enumerator goes to scenario 5. If chose B, enumerator lets the respondent draw the ball, and stop the game. 5 VND 5.000 VND 30.000 if you draw YELLOW ball; VND 0 if you draw WHITE ball. Enumerator takes note the final scenario. 23 APPENDIX C: STUDY SITES Tân Hồng Cao Lãnh Tân Châu Chợ Mới Vị Thủy 24 APPENDIX D: REGRESSION EQUATION The indirect utility equations (for Models 1-3) are specified as follows: Uinsurance = (B1+b1)Policy1 + (B2+b2)Policy2 + (B3+b3)Policy3 + (B4+b4)Joint-stock + (B5+b5)International + (B6+b6)Cover + (B7+b7)Deductible + (B8+b8)Premium + B9(Cover x Risk averse) + B10(Premium x Income per capita) + Hinsurance Uno insurance = B11ASC + B12ASCxTanChau + B13ASCxTanHong + B14ASCxCaoLanh + B15ASCxChoMoi + (B16+b16)ASCxUnprotected area + (B17+b17)ASCxInundation status + B18ASCxRisk perception + (B19+b19)ASCxWishful thinking + B20ASCxDisaster reief + (B21+b21)ASCxAge + B22ASCxHousehold size + B23ASCxIncome per capita + B24ASCxLand size + B25ASCxPurely agricultural households + (B26+b26)ASCxAgricultural cooperative + B27ASCxHealth insurance + Hno insurance The first equation for Model 4 is specified as follows: Uinsurance = (B1+b1)Policy1 + (B2+b2)Policy2 + (B3+b3)Policy3 + (B4+b4)Joint-stock + (B5+b5)International + (B6+b6)Cover + (B7+b7)Deductible + (B8+b8)Premium + B9(Cover x Risk averse) + B10(Premium x Income per capita) + D1Policy1xIgnored insurance policy + D2Policy2xIgnored insurance policy + D3Policy3xIgnored insurance policy + D4Joint-stockxIgnored insurance provider + D5InternationalxIgnored insurance provider + D6CoverxIgnored cover + D7DeductiblexIgnored deductible + D8PremiumxIgnored premium + Hinsurance where x Policy1: Flood plus waterlog insurance x Policy2: Flood plus whirlwind insurance x Policy3: Flood plus waterlog and whirlwind x ASC = 1 if the respondent chooses insurance alternative, = 0 if chose no insurance alternative. Therefore, positive B11 implies that the respondent favors insurance, and negative B11 implies that the respondent does not favour insurance. x Bk: mean coefficient of the variable k x bk: standard deviation of random parameter of the variable k 25 APPENDIX E: RANDOM PARAMETER LOGIT MODELS Table 9: Estimated flood insurance choice models Variables Model 1 Model 2 Model 3 Model 4 Mean fixed parameters ASC -3.86073* -7.41447*** -7.65509*** -7.17840*** Choice attributes Flood + waterlog 1.24509*** 0.18831** 0.23045** -0.00811 Flood + whirlwind 0.89443*** -0.13601 -0.10829 -0.25610 Flood + waterlog + whirlwind 2.13374*** 0.99340*** 1.03421*** 0.69037** Joint-stock company 1.14352*** 0.74452*** 0.92813*** 0.45881*** International company -0.02859 -0.38906*** -0.53891*** -0.20571** Insurance cover 0.20354** 0.48734*** 0.31922** 0.46362*** High deductible -0.29742* -0.26644** -0.32596** -0.23078** Insurance premium -0.01978** -0.01788*** -0.01783*** -0.01398*** Interactions with ASC ASC x Tan Chau district -4.41640* -2.00270*** -2.35322*** -1.87765*** ASC x Tan Hong district -4.85868* -2.18936*** -2.48737*** -2.04225*** ASC x Cao Lanh district -4.30930* -2.18936*** -2.26738*** -1.8347*** ASC x Cho Moi district -0.81863 -0.38122 -0.46948 -0.36457 ASC x Unprotected area 1.17582 0.47430* 0.52054** 0.41635** ASC x Inundation status 1.94177 0.84838** 0.86457** 0.75512** ASC x Flood perception 0.30087 0.26744* 0.28998* 0.27673** ASC x Wishful thinking -1.33796 -0.63147* -0.76654** -0.57854* ASC x Disaster relief 1.18247 1.03221*** 1.02002** 0.96722*** ASC x Age of household head 2.27315 0.93611** 1.01540*** 0.90145*** ASC x Household size 0.61132 0.56468** 0.58289*** 0.53864*** ASC x Income per capita 0.01491 0.01328* 0.01459** 0.01311** ASC x Agricultural land size -0.01347 -0.01240 -0.00911 -0.01232 ASC x Purely agricultural households -1.60984* -1.46734** -1.66774** -1.40963** ASC x Agricultural cooperative -1.72469 -0.83640** -1.08116 *** -0.74359** ASC x Health insurance 0.77629 0.33582 0.42499 0.33533 Interactions with attribute Insurance cover x Risk averse 0.59422* 0.28946** 0.06472 0.25397* Premium x Income per capita 0.000049 0.000046 0.00046* 0.000043* Ignored attribute Flood + waterlog -0.22160 Flood + whirlwind -0.13857 Flood + waterlog + whirlwind -0.23917 Joint-stock company -0.36203*** International ompany 0.27183*** Insurance cover 0.01436 High deductible 0.73894 Insurance premium 0.00301 St.dev. of random parameters Flood + waterlog 0.93382*** 0.14124** 0.17284*** 0.00340 Flood + whirlwind 0.67083*** 0.10201* 0.08122 0.19311 Flood + waterlog + whirlwind 1.60030*** 0.74505*** 0.77565*** 0.51094** Joint-stock company 0.85764*** 0.55839*** 0.69610*** 0.33819*** International company 0.02145 0.29179*** 0.40419*** 0.15125** Insurance cover 0.39864 0.38525 0.82920*** 0.21646 High deductible 0.22307* 0.19983** 0.24447** 0.17027** Insurance premium 0.03250 0.02748 0.02569 0.02231 ASC x Unprotected area 0.88186 0.35572* 0.39041** 0.31603** ASC x Agricultural cooperative 1.29352 0.62730** 0.81087*** 0.53672*** ASC x Inundation status 1.45633 0.63625** 0.64843** 0.54656** ASC x Wishful thinking 1.0035 0.47360* 0.57490** 0.42686** ASC x Age of household head 1.70486 0.70209** 0.76155*** 0.65889*** Significant levels: *10%, **5%, ***1%. 26 APPENDIX F: WILLINGNESS TO PAY FOR FLOOD INSURANCE Table 10: WTP/1000m2, joint-stock company and high deductible (1000 VND) Insurance cover (1000 VND /1000m2) Insurance policy Flood Flood plus waterlog Flood plus whirlwind Flood plus waterlog, and whirlwind M O D E L 1 2.000 63.36 *** (20.73) 126.31*** (34.00) 108.58*** (28.98) 171.24*** (42.05) 3.000 73.65 *** (24.94) 136.60*** (37.87) 118.87*** (32.82) 181.53*** (45.66) 4.000 83.94 *** (29.36) 146.89*** (41.96) 129.16*** (36.91) 191.82*** (49.49) M O D E L 2 2.000 22.77 (16.84) 91.81*** (26.25) 73.66*** (22.50) 136.85*** (33.73) 3.000 50.04 ** (24.69) 119.07*** (34.55) 100.93*** (30.88) 164.11*** (41.75) 4.000 77.30 ** (33.09) 146.33*** (43.09) 128.19*** (39.49) 191.37*** (50.07) M O D E L 3 2.000 4.73 (15.85) 82.53*** (24.10) 63.53*** (20.84) 127.62*** (32.53) 3.000 22.64 (21.23) 100.44*** (30.13) 81.44*** (27.05) 145.53*** (38.10) 4.000 40.55 (27.41) 118.35*** (36.56) 99.35*** (33.62) 163.44*** (44.13) Table 11: WTP/1000m2, international company and high deductible (1000 VND) Insurance cover (1000 VND/ 1000m2) Insurance policy Flood Flood plus waterlog Flood plus whirlwind Flood plus waterlog, and whirlwind M O D E L 1 2.000 4.10 (12.47) 67.05*** (22.05) 49.32*** (17.87) 111.98*** (29.48) 3.000 14.39 (16.29) 77.34*** (26.11) 59.61*** (21.77) 122.27*** (33.22) 4.000 24.68 (20.57) 87.63*** (30.42) 69.90*** (26.01) 132.56*** (37.222) M O D E L 2 2.000 -40.64 ** (17.88) 28.39* (17.07) 10.25 (15.82) 73.43*** (22.34) 3.000 -13.38 (21.95) 55.65** (25.13) 37.51* (23.09) 100.69*** (30.65) 4.000 13.88 (28.33) 82.92** (33.63) 64.77** (31.23) 127.96*** (39.23) M O D E L 3 2.000 -77.58 *** (26.10) 0.23 (15.47) -18.78 (17.29) 45.32** (17.96) 3.000 -59.67 ** (27.28) 18.14 (20.75) -0.87 (21.44) 63.23*** (24.09) 4.000 -41.76 (30.14) 36.04 (26.89) 17.04 (26.87) 81.14** (30.65) 27 Table 12: WTP/1000m2, private company and high deductible (1000 VND) Insurance cover (1000 VND/ 1000m2) Insurance policy Flood Flood plus waterlog Flood plus whirlwind Flood plus waterlog, and whirlwind M O D E L 1 2.000 5.54 (10.43) 68.49*** (21.71) 50.77*** (17.11) 113.42*** (29.19) 3.000 15.83 (14.77) 78.78*** (22.03) 61.06*** (21.14) 123.71*** (32.95) 4.000 26.13 (19.38) 89.07*** (30.17) 71.35*** (25.48) 134.00*** (36.98) M O D E L 2 2.000 -38.76 ** (17.01) 30.27* (17.80) 12.13 (15.93) 75.31*** (22.98) 3.000 -11.50 (21.47) 57.53** (25.82) 39.39* (23.38) 102.57*** (31.28) 4.000 15.76 (28.14) 84.80** (34.29) 66.65** (31.59) 129.84*** (39.84) M O D E L 3 2.000 -69.18 *** (23.67) 8.62 (16.16) -10.38 (16.49) 53.72*** (19.73) 3.000 -51.27 * (25.43) 26.53 (21.81) 7.53 (21.36) 71.63*** (25.90) 4.000 -33.36 (28.90) 44.44 (28.14) 25.44 (27.24) 89.54*** (32.45) 28 APPENDIX G: THE QUESTIONNAIRE CONTROL SECTION Questionnaire code: ________ Group _______ Card ________ Date of interview: ___ - ___ - 2015 Full name of enumerator: __________________________________________________________ Full name of data entry person: _____________________________________________________ Location: Latitude N ____° ____’ ___._______” Longitude E ____° ____’ ___._______” Degree Minute Second Degree Minute Second Phone No: ____________________ Village _________________ Commune __________________ SECTION 1: GENERAL INFORMATION Question 1: How many members are there in your family? __________ members. Only including those who regularly live here at least 6 months out of the last twelve months. Question 2: General information about your family’s members: Member code a) Name b) Relationship with the respondent * c) Age d) Gender ** e) Years of schooling Occupation *** f) Main job g) Secondary job 1 Respondent 2 3 4 5 6 7 8 9 10 * 1 = Wife/husband; 2 = Son/daughter; 3 = Grandchild; 4 = Parent; 5 = Brother/sister; 6 = Other. ** 1 = Male; 0 = Female. *** 1 = Cultivation, 2 = Fish raising; 3 = Fish catching; 4 = Other agricultural jobs; 5 = Nonfarm self- employment; 6 = Wage laborer; 7 = Student; 8 = Unemployment 9 = Housewife; 0 = Out of labor forces. Question 3: Who is the household head? Please fill the member code in Question 2 here _________. Question 4: How long has your family lived here? _________ years. Fill 99 if ‘we have lived here for a long time’ and/or ‘don’t know exactly how many years’. Question 5: What are main agricultural activities that contribute main sources of income for your family now and about 10 years ago? Note 1 for the most important activity, 2 for the second, the third, 29 Activity 1) Now 2) Before * a. Paddy b. Vegetables c. Fruits d. Husbandry e. Aquaculture * About the last 10 years. Question 6: [if there is any change in the importance of these activities in the last 5 years as mentioned in the previous question] Why did the most important activity of your family change? Chose all relevant answers. a) Input price and suppliers b) Output price and buyers c) Improved dike system d) Increased mechanization e) Increased natural disasters f) Other reasons, in detail _______________ Question 7: What is the type of your house? Enumerator observes and takes note. (1) Concrete house (2) Concrete house on stilts (3) Wooden house (4) Wooden house on stilts (5) Temporary house Question 8: What is the main source of drinking water during the flooding season? Only one option. (1) Pipeline water (community/government) (2) Well water (3) River water (4) Rain water (5) Other, in detail _____________ Question 9: Where does your family discharge waste? Choose all relevant answers. (1) Public landfill (2) Discharge into nearby canal, river (3) Self-treatment (such as burning) (4) Other, in detail _____________ Question 10: Has your family joined in agricultural cooperative? a. No b. Yes SECTION 2: FLOOD EXPERIENCE AND PERCEPTIONS Question 11: Did you experience the following flood events? Select all relevant answers. 1961 1966 1978 1984 1991 1994 1996 2000 2001 2002 2011 Other 30 Total: ________ (enumerator takes note number of flood events experienced). Question 12: Was your farm inundated during the most recent catastrophic flood event? a) Yes b) No Question 13: How many days was your farm inundated? ______ days. Question 14: What are difficulties that your family often experiences during the flood season? a) Increase flood adaptation costs Yes No b) Reduce jobs of family’s members Yes No c) Cause damage to crops and/or properties Yes No d) Increase diseases (so, increase pesticide costs) Yes No e) Danger to children and elderly people Yes No f) Travel becomes more difficult Yes No g) Feeling of fear Yes No Question 15: Did your family adopt the following mitigation measures to cope with flood and other natural disasters? Mitigation measures a) last 10 years b) Now To protect houses, important house contents 1) Raise floor, reinforce houses 2) Rope and strenthen houses 3) Lift/protect house contents and properties Agricultural activities 4) Change cultivation calender 5) Diversification/crop changes 6) Prepare private water pumbing machince Nonfarm activities 7) Handicraft activities 8) Fishing and/or collecting natural vegetables 9) Temporary work elsewhere Health care 10) Buy health insurance 11) Prepare medicines chest 12) Use mosquito net and/or mosquito incense 13) Prepare food, water, and water treatment chemical Other measures 14) Prepare fuels/accumulators 15) Prepare shelter for livestock 16) Prepare evacuation means 17) Prepare awnings to to protect crops/properties 18) Search for weather information 19) Teach children swimming and basic living skills 20) Self-insurance measures Total 31 Question 16: Please rank the level of impacts of the following disasters on lives and properties at your place (in the last 10 years). Note 1 for the most dangerous disaster, 2 for the next, Rank a) Storm b) Flood c) Waterlog d) Whirlwind e) Drought Question 17: In your own judgement, what is the “flood return period” of a flood like the one in 2000 in your neighbourhood? __________ years/time. Fill number 99 if the answer is ‘I think catastrophic flood will never happen here again’. Question 18: How do you think of catastrophic floods in this area? (1) High probability, but low consequence. (2) High probability, and high consequence. (3) Low probability, and low consequence. (4) Low probability, but high consequence. Question 19: Do you think annually normal flood is good for local people ... a) Source of fish catching for local people Yes No Don’t know b) Supply silt and fertilizer for soil Yes No Don’t know c) Throw away toxic soil substances Yes No Don’t know d) Kill mice and insect that cause harm to crop Yes No Don’t know e) Create additional jobs for local people Yes No Don’t know Question 20: Do you agree with the following statement: “The dike systems here is too concrete to adopt private adaptation measures”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 21: Do you agree with the following statement: “Catastrophic flood is hard to happen here, so my family does not need to adopt private adaptation measures”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 22: Do you agree with the following statement: “Catastrophic flood is a natural disaster that men can not cope with”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 23: Do you agree with the following statement: “Catastrophic flood happened here long time ago, so my family does not need to cope with”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 24: Do you agree with the following statement: “My family used to adopt private adaptation measures, but flood never happenned, so we now do not want to adopt anymore”? 32 (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 25: Do you agree with the following statement: “We realize that the private adaptation measures of my family were not effective, so we do not want to adopt anymore”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree Question 26: Do you agree with the following statement: “The government is likely to provide a part of disaster relief for the victims of flood events”? (1) Completely disagree (2) Disagree (3) Agree (4) Completely agree SECTION 3: EVALUATION OF FLOOD CONTROL MANAGEMENT Question 27: Please evaluate the flood hazard in your place (in comparison with the past ten years) in terms of the following dimensions: Item Reduced/ Worse off Stayed the same Increased/ Better off Don’t know/ Not avalable 1) Inundation possibility 2) Depth and duration of inundation 3) Number of irrigation projects 4) Water velocity of canal system 5) Quality of dike system 6) Dike maintenance and upgrading 7) Dike breach possibility 8) Canal dredging activities 9) Drainage culvert system 10) Water pumping stations 11) Trees along the dike system Question 28: Please evaluate flood exposure in your place (in comparison with the past ten years) in terms of the following dimensions: Item 1) Reduced/ Worse off 2) Stayed the same 3) Increased/ Better off 99) Don’t know/ Not avalable 1) Land use density 2) Land use regulations 3) Asset value of local people 4) House building regulations 5) Population density 6) Flood dependent activities 7) Resettlement programs 8) Flood map 9) Cultivation regulations 10) Crop regulations 33 Question 29: Could you please evaluate the vulnerability with flooding of your place (comparison with 10 years ago) in terms of the following items: Item 1) Reduced/ Worse off 2) Stayed the same 3) Increased/ Better off 99) Don’t know/ Not avalable 1) Properties are prone to damages 2) Risk perceptions of people 3) Risk awareness campaigns 4) Private mitigation measures 5) Community-based mitigation efforts 6) Community flood management plans 7) Flood risk communication systems 8) Health care activities in flooding season 9) Post-flood recovery preparation 10) Preparing shelters for local people 11) Health risk warning activities 12) Mosquito and insect repellents 13) Provision of water purification chemicals Question 30: Do you often _____ to know information about the weather such as heavy rain, storm, or water level? (1) Never (2) Rare (3) Sometime (4) Often (5) Very much a) Watch television b) Listen radio c) Follow local weather announcement d) Attend group discussion/meeting e) Meet local officers f) Attend flood risk training Question 31: Please rank the usefulness and evaluate the current conditions of the following communication channels in your place: 1) Rank the usefulness (*) 2) Evaluate current condition (**) a) Television b) Radio c) Local weather announcement d) Group discussion/meeting e) Local officers f) Training (*) Only rank those channels that you have known. Note 1 for the most effective channel, 2 for the second, 3 for the third, (and you can rank them equally). (**) Only evaluate the channels that you have known. Note 1 for very bad, 2 for bad, 3 for normal, 4 for good, and 5 for very good. If the channel is not available, please note 1. 34 SECTION 4: RISK ATTITUDE Enumerator describe the risk attitude game and its rules. Question 32: What is the most preferred scenario? _________ (noted by enumerator). Amount of money paid: ___________ VND. SECTION 5: FLOOD INSURANCE EXPERIMENTS Introduction In future, according to flood management experts, the frequency of extreme flood events like the one in the year 2000 is expected to increase due to impact of climate change. Also the damage associated with flood events is more likely to be more serious under increased pressure of population growth and economic development. In order to find appropriate mitigation measures and risk transfer tools, economists and policy makers propose a flood insurance program. It is suggested that insurance against natural risks has recently been proposed as a means for adaptation to climate change in various countries. Flood insurance is likely to provide incentives for reducing risks and adapting to climate change because insurance policy can be designed to reward private self-protection behavior. This means that under the insurance arrangements, your family will commit to have certain precautionary measures, and this results in reducing the probability of getting losses in terms of financial aspect. In the context of flood disaster, this policy is considered as a complementary adaptation mechanism because structural flood protection measures by the government are likely to be insufficient to reduce risks under climate change. Research results from other countries indicate that purchasing flood insurance can benefit your family if a worse year of extreme flood occurs. Unfortunately, markets for such an insurance are not readily available in Vietnam; and your family is basically dependent on ad hoc compensation by the government for potential damages. Such ad hoc compensation can simply provide your family either basic needs or a small amount of money, and you are always put in a passive situation. The flood insurance program We would now like to ask you a number of questions related to the possible introduction of a flood insurance in Vietnam. Such an insurance would help your family to cover any future financial risks as a result of extreme flood events like the one in year 2000. The objective of the flood insurance program is to compensate your family for any possible future losses due to floods and other natural disasters such as waterlog and whirlwind. You can choose to insure yourself for damages your family may suffer during a disaster given the expected future situation. The principle is as follows: your family will pay a fixed amount of money per cong (i.e. 1000m2) per crop season – called an insurance premium – given the expected insurance alternative. It is noted that you are free to buy flood insurance for any season that you are mostly interested in. With this insurance premium you are paid off any financial damage (regarding the actual damage and bound in the insurance cover agreed under the insurance contract) that your family suffers if it is struck by either a flood, a waterlog, or a whirlwind. It is worth noting that only in the case of an officially acknowledged disaster, you will get compensated for loss you suffer. It is important to point out that your family will only receive compensation for any damage if this is due to an officially acknowledged disaster event. The maximum amount of compensation depends upon your chosen insurance option. If there is a disaster (e.g. a flood, a waterlog, or a whirlwind) and you claim compensation, an independent surveyor will visit you and assess the extent of damage your family suffered. Based on the surveyor’s independent assessment your family will be compensated under the terms in the insurance contract with an insurance company. The terms and conditions of your insurance policy are protected by law. 35 Before going further, we want to emphasize that this insurance program is implemented in accordance with market and your family will, of course, not receive any subsidy for paying insurance premium. As the insurance program is implemented, you will mainly work with the insurance provider under a business contract, and the government just assures a fair policy from the insurance by laws. In addition, it is also noted that you are required to buy insurance for the whole agricultural land that you currently own. Suppose that we have an insurance program at the Mekong river delta, and your family is a potential client. We will now present you with an overview card first to explain to you what the situations represent. Following the example cards, we will show you seven other cards and for each of these cards, you will be asked to indicate which situation you prefer most. In each choice card, there are two proposed insurance alternatives, and please let’s know your most preferred alternative. If you do not prefer any alternative, you can choose “none of the two alternatives”. Here is an example card: 36 Question 33: Please consider the following choice sets, one after another, and let’s know which alternative you most prefer in each choice set? (Enumerator offers each choice set from 1 to 7 after the first two example choice sets.) . Alternative A Alternative B None of the two Example choice set 1 c c c Example choice set 2 c c c (1) Choice set 1 c c c (2) Choice set 2 c c c (3) Choice set 3 c c c (4) Choice set 4 c c c (5) Choice set 5 c c c (6) Choice set 6 c c c (7) Choice set 7 c c c Question 34: Did you realize that the final choice set is similar to the choice set _________? (Note: Enumerator check and notes the repeated choice set). (1) □ Yes (0) □ No (move Question 35) Question 35: If Yes in Question 34, did the respondent make the same choice as the pervious choice set? (Note: enumerator takes note this). (1) □ Yes (0) □ No Question 36: What attributes did you pay attention when making choice among alternatives in each choice set? If the respondent continuously chose “none of the two” move to Question 37. 37 Attribute 1) Yes/No 2) Most important attribute 3) Least important attribute a) Insurance policy □ □ □ b) Insurance provider □ □ □ c) Insurance cover □ □ □ d) Deductible □ □ □ e) Insurance premium □ □ □ Question 37: Please let’s know why you always chose “none of the two”? Choose all the relevant answers. a) □ I am not interested in buying flood insurance . b) □ I do not trust in insurance companies. c) □ My family’s conditions at present is good enough. d) □ My family is not able pay for insurance premium. e) □ Flood insurance is the responsibility of the government, not of my family. f) □ I have a belief that the government and other organizations will compensate the victims if catastrophic flood happens. Question 38: In your opinion, are the offered insurance choice sets credible? Only one answer. (1) □ Completely incredible (2) □ Incrediable (3) □ Crediable (4) □ Completely crediable Question 39: Please evaluate the level of difficulty of the choice sets that you have to consider when making decisions? (1) □ Very difficult to understand (2) □ Difficult to understand (3) □ Normal (4) □ Easy to understand (5) □ Very easy to understand Question 40: Time to complete the description of choice experiment scenario and insurance choice sets? ______ minutes. Starting time___________ and ending time ___________. (Note: enumerator takes notes). SECTION 6: FAMILY BUSINESS ACTIVITIES (during last 12 months) A. CULTIVATION ACTIVITIES Question 41: Is your agricultural cultivation area protected by August dike? (1) □ Yes (0) □ No Question 42: How does the August dike affect your agricultural cultivation activities? (1) □ Bad (2) □ No effect (3) □ Good Question 43: What are the difficulties of your agricultural cultivation activities? a) Lack of land □ Yes □ No 38 1 b) lack of capital □ Yes □ No c) Lack of labor □ Yes □ No d) Input prices and suppliers □ Yes □ No e) Output prices and buyers □ Yes □ No f) Flood, waterlog, and whirlwind □ Yes □ No g) Disease □ Yes □ No Question 44: How many lots of land did you cultivate in year 2015? _____________ lots. Question 45: PLOT 1 Season 1 (Winter – Spring) Season 2 (Summer – Autumn) Season 3 (Autumn – Winter) (01) Crop/fruit (02) Actual area m2 m2 m2 COSTS 1/ Soil preparation (11) Plough VND VND VND (12) Family labor ____ days ____ days ____ days (13) Hired labor VND VND VND (14) Initial fertilizers VND VND VND (15) Other materials VND VND VND 2/ Seeding/Breeding (21) Cost of seeding/breeding VND VND VND (22) Family labor ____ days ____ days ____ days (23) Hired labor VND VND VND 3/ Irrigation (including pumbing water out if farm was inundated) (31) Family labor ____ days ____ days ____ days (32) Hired labor VND VND VND (33) Cost of irrigation VND VND VND (34) Depreciation of irr. system VND VND VND (35) Cost of maintenance VND VND VND 4/ Fertilizers (excluding initial fertilizer) (41) Cost of fertilizers VND VND VND (42) Family labor ____ days ____ days ____ days (43) Hired labor VND VND VND 5/ Pesticides (51) Cost of insecticide/herbicide VND VND VND (52) Family labor ____ days ____ days ____ days (53) Hired labor VND VND VND 6/ Other labor costs 39 2 (61) Family labor ____ days ____ days ____ days (62) Hired labor VND VND VND 7/ Other farm equipments/costs (71) Depreciation VND VND VND (72) Maintenance/Repair VND VND VND (73) Other costs (rent) VND VND VND HARVEST (81) Total harvest (kg) (82) Sold quantity (kg) (83) Price (VND/kg) VND VND VND (84) Transport cost VND VND VND (85) Harvest cost VND VND VND Question 46: PLOT 2 Season 1 (Winter – Spring) Season 2 (Summer – Autumn) Season 3 (Autumn – Winter) (01) Crop/fruit (02) Actual area m2 m2 m2 COSTS 1/ Soil preparation (11) Plough VND VND VND (12) Family labor ____ days ____ days ____ days (13) Hired labor VND VND VND (14) Initial fertilizers VND VND VND (15) Other materials VND VND VND 2/ Seeding/Breeding (21) Cost of seeding/breeding VND VND VND (22) Family labor ____ days ____ days ____ days (23) Hired labor VND VND VND 3/ Irrigation (including pumping water out if farm was inundated) (31) Family labor ____ days ____ days ____ days (32) Hired labor VND VND VND (33) Cost of irrigation VND VND VND (34) Depreciation of irr. system VND VND VND (35) Cost of maintenance VND VND VND 4/ Fertilizers (excluding initial fertilizer) 40 1 2 (41) Cost of fertilizers VND VND VND (42) Family labor ____ days ____ days ____ days (43) Hired labor VND VND VND 5/ Pesticides (51) Cost of insecticide/herbicide VND VND VND (52) Family labor ____ days ____ days ____ days (53) Hired labor VND VND VND 6/ Other labor costs (61) Family labor ____ days ____ days ____ days (62) Hired labor VND VND VND 7/ Other farm equipments/costs (71) Depreciation VND VND VND (72) Maintenance/Repair VND VND VND (73) Other costs (rent) VND VND VND HARVEST (81) Total harvest (kg) (82) Sold quantity (kg) (83) Price (VND/kg) VND VND VND (84) Transport cost VND VND VND (85) Harvest cost VND VND VND B. AQUACULTURE ACTIVITIES Question 47: Is your aquaculture area protected by August dike? (1) □ Yes (0) □ No Question 48: How does the August dike affect your aquaculture activities? (1) □ Bad (2) □ No effect (3) □ Good Question 49: What are the difficulties of your aquaculture activities? a) Lack of land □ Yes □ No b) lack of capital □ Yes □ No c) Lack of labor □ Yes □ No d) Input prices and suppliers □ Yes □ No e) Output prices and buyers □ Yes □ No f) Flood, waterlog, and whirlwind □ Yes □ No g) Disease □ Yes □ No Question 50: POND 1 Season 1 Season 2 (01) Kind of fish (02) Actual area m2 m2 COSTS 41 2 2 1/ Pond preparation (excluding costs of digging pond) (11) Clean pond (pumb mud out) VND VND (12) Fish medicine VND VND (13) Lime VND VND (14) Other chemical costs VND VND (15) Family labor ____ days ____ days (16) Hired labor VND VND 2/ Juvenile fish (21) Cost of buying juvenile fish VND VND 3/ Chemicals (31) Cost of chemicals VND VND (32) Family labor ____ days ____ days (33) Hired labor VND VND 4/ Feed (41) Cost of feed VND VND (42) Family labor ____ days ____ days (43) Hired labor VND VND 5/ Water treatment (51) Cost (excluding labor) VND VND (52) Family labor ____ days ____ days (53) Hired labor VND VND 6/ Other costs (61) Agricultural engineer VND VND (62) Electricity/fuels VND VND (63) Other costs (rent, ) VND VND HARVEST (71) Times of harvesting times times (72) Average cost per time VND VND (73) Family labor ____ days ____ days (74) Hired labor VND VND Question 51: POND 2 Season 1 Season 2 (01) Kind of fish (02) Actual area m2 m2 COSTS 1/ Pond preparation (excluding costs of digging pond) (11) Clean pond (pumb mud out) VND VND (12) Fish medicine VND VND 42 (13) Lime VND VND (14) Other chemical costs VND VND (15) Family labor ____ days ____ days (16) Hired labor VND VND 2/ Juvenile fish (21) Cost of buying juvenile fish VND VND 3/ Chemicals (31) Cost of chemicals VND VND (32) Family labor ____ days ____ days (33) Hired labor VND VND 4/ Feed (41) Cost of feed VND VND (42) Family labor ____ days ____ days (43) Hired labor VND VND 5/ Water treatment (51) Cost (excluding labor) VND VND (52) Family labor ____ days ____ days (53) Hired labor VND VND 6/ Other costs (61) Agricultural engineer VND VND (62) Electricity/fuels VND VND (63) Other costs (rent, ) VND VND HARVEST (71) Times of harvesting times times (72) Average cost per time VND VND (73) Family labor ____ days ____ days (74) Hired labor VND VND C. LIVESTOCK BREADING Question 52: Is your livestock breading protected by August dike? (1) □ Yes (0) □ No Question 53: How does the August dike affect your livestock breading activities? (1) □ Bad (2) □ No effect (3) □ Good Question 54: What are the difficulties of your family livestock? a) Lack of land □ Yes □ No b) lack of capital □ Yes □ No c) Lack of labor □ Yes □ No d) Input prices and suppliers □ Yes □ No 43 e) Output prices and buyers □ Yes □ No f) Waste treatment □ Yes □ No g) Disease □ Yes □ No Question 55: How many kinds of livestock do you bread? _______________ kind. Question 56: Kind 1 Kind 2 (01) Quantity of year 2015 animals animals (02) Current value of the livestock VND VND (03) Value of the livestock in last 12 months VND VND COSTS 1/ Cage (excluding costs of building cage) (11) Amending cage VND VND (12) How long do you amend it? ________ year ________ year (13) Family labor ___days ___days (14) Hired labor VND VND 2/ Breading (21) Cost of breading in year 2015 VND VND 3/ Veterinary (31) Cost of veterinary medicine VND VND 4/ Feeding (41) Cost of feeding VND VND (42) Family labor ___days ___days (43) Hired labor VND VND 5/ Water and water treatment (51) Cost (excluding labor) VND VND (52) Family labor ___days ___days (53) Hired labor VND VND 6/ Other costs (61) Veterinary surgeon VND VND (62) Other costs VND VND HARVEST (71) Times of harvesting time time (72) Average value per time VND/time VND/time (73) Other revenue VND VND D. OTHER INCOME Question 57: Did your family grow any other trees/crops for sales this year? (1) □ Yes (0) □ No (move to Question 59) Question 58: How much does your family have from selling these fruits/crops? ___________ VND. Question 59: Did your family raise any other fish for sales this year? (1) □ Yes (0) □ No (move to Question 61) 44 Question 60: How much did your family have from selling the fish? ________ VND. Question 61: Did your family bread poultry for sales this year? (1) □ Yes (0) □ No (move to Question 63) Question 62: How much did your family have from selling the poultry?____________ VND. Question 63: Agricultural services that your family earns income this year? Amount (VND) Amount (VND) 1. Lease land 4. Sell breed 2. Lease machines 5. Consultancy 3. Sell seeding 6. Others, specify ______ Question 64: Nonfarm income that your family earn this year? Amount (VND) Amount (VND) 1. Salary 4. Remittance 2. Self-employed 5. Interest 3. Handicraft 6. Others, ____________