Economic Analysis of Infrastructure Investment and Break‐Even Carbon Prices for Low‐Water, Low‐Emission Farming Techniques in Vietnam

Excessive water use in rice production is a major source of methane emissions, the dominant greenhouse gas from Vietnam's agricultural sector. Improving water‐use efficiency can enhance water security and reduce emissions, but achieving these gains requires substantial changes in farming practices and significant investment in supporting infrastructure. This study provides an economic analysis of low‐water, low‐emission (LWLE) farming techniques, such as Alternate Wetting and Drying and the System of Rice Intensification, and their associated infrastructure requirements. Using survey data from 14,312 rice‐producing households in Vietnam, we evaluate the economic performance of farmers who adopt LWLE practices and those who do not. The results show that producers adopting LWLE not only achieve higher yields than those using traditional farming techniques—and consequently higher revenues—but also incur higher costs and ultimately earn lower profits. In addition, LWLE entails considerable hidden upfront irrigation costs, posing barriers for farmers and limiting smallholder participation. We also undertake a break‐even carbon price analysis to illustrate the economic trade‐offs in reducing one tonne of CO 2 equivalent through LWLE techniques, and the results suggest that these practices could reduce farmers' vulnerability to future carbon pricing.