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Crafting sustainability: managing water pollution in Viet Nam’s craft villages Sango Mahanty, Trung Dinh Dang & Phung Giang Hai Abstract The spontaneous growth of Vietnam’s 2,790 rural craft villages has been a mixed blessing. Specialising in ‘traditional’ crafts such as processed foods, textiles and furniture, as well as newer commodities, such as recycled products, craft businesses have expanded rapidly since Vietnam adopted the ’Doi Moi(economic renovation policy) in the mid-1980s. As with small scale rural industries in other developing countries, the expansion, modernisation and diversification of craft production in Vietnam presents significant development opportunities as well as environmental and social risks. This largely unregulated increase in industrial activity has reduced rural poverty and brought prosperity to rural entrepreneurs, but it has also generated dangerously high levels of pollution with attendant risks to human health. Since the 1990s, the Vietnamese government has developed several laws and initiatives to regulate industrial activities and control craft village pollution, such as the ‘polluter pays principle’. However, the small scale and dispersed nature of craft production has continued to defy effective management by the state, and pollution levels in craft villages have increased alarmingly. The Crafting Sustainability project aimed to provide a better understanding of the drivers of pollution, and policy approaches to better addressing them. Drawing on four cases study sites in the Red River Delta region of Northern Vietnam, this paper provides an overview of key findings and policy recommendations. Discussion Paper 20 JUNE 2012

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Crafting sustainability: managing water pollution in Viet Nam’s craft villages

Sango Mahanty, Trung Dinh Dang & Phung Giang Hai

Abstract

The spontaneous growth of Vietnam’s 2,790 rural craft villages has been a mixed blessing. Specialising in ‘traditional’ crafts such as processed foods, textiles and furniture, as well as newer commodities, such as recycled products, craft businesses have expanded rapidly since Vietnam adopted the ’Doi Moi’ (economic renovation policy) in the mid-1980s. As with small scale rural industries in other developing countries, the expansion, modernisation and diversification of craft production in Vietnam presents significant development opportunities as well as environmental and social risks. This largely unregulated increase in industrial activity has reduced rural poverty and brought prosperity to rural entrepreneurs, but it has also generated dangerously high levels of pollution with attendant risks to human health. Since the 1990s, the Vietnamese government has developed several laws and initiatives to regulate industrial activities and control craft village pollution, such as the ‘polluter pays principle’. However, the small scale and dispersed nature of craft production has continued to defy effective management by the state, and pollution levels in craft villages have increased alarmingly. The Crafting Sustainability project aimed to provide a better understanding of the drivers of pollution, and policy approaches to better addressing them. Drawing on four cases study sites in the Red River Delta region of Northern Vietnam, this paper provides an overview of key findings and policy recommendations.

Discussion Paper 20

JUNE 2012

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Crafting sustainability: managing water pollution in Viet

Nam’s craft villages1

Sango Mahanty, Trung Dinh Dang & Phung Giang Hai

Sango Mahanty ([email protected]) is a Research and Teaching Fellow in the Resource Management in the Asia-Pacific Program at the Crawford School of Public Policy, ANU.

Trung Dinh Dang ([email protected]) is a Research Associate in the Resource Management in the Asia-Pacific Program at the Crawford School of Public Policy, ANU.

Phing Giang Hai is Deputy Director of the Division of Strategy and Policy Research at the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD).

Mahanty, S, Dan, TD & Hai, PG 2012, “Crafting sustainability: managing water

pollution in Viet Nam’s craft villages,” Development Policy Centre

Discussion Paper 20, Crawford School of Public Policy, The Australian

National University, Canberra.

The Development Policy Centre is a research unit at the Crawford

School of Public Policy, The Australian National University. The

discussion paper series is intended to facilitate academic and policy

discussion. Use and dissemination of this discussion paper is

encouraged; however, reproduced copies may not be used for

commercial purposes.

The views expressed in discussion papers are those of the authors

and should not be attributed to any organisation with which the

authors might be affiliated.

For more information on the Development Policy Centre, visit

http://devpolicy.anu.edu.au

1 This research was undertaken by The Australian National University and the Institute of Policy and Strategy for Agriculture and Rural Development, Hanoi, and was supported by an Australian Development Research Award (ADRA0800080 Crafting Sustainability: addressing water pollution in Vietnam’s craft villages). We thank numerous participants for freely contributing their time and opinion, and Sophie Dowling for her excellent editing support and research assistance. Susan Mackay and Nanda Gasparini, former students of the Master of Applied Anthropology and Participatory Development, respectively contributed important data on villagers’ perceptions of risk and recycled paper commodity chains.

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Crafting sustainability: managing water pollution in Viet Nam’s craft villages

1. Introduction

Since the 1980s, when the Doi Moi2 reforms opened up the Vietnamese economy,

thousands of small to medium scale, informal craft manufacturing enterprises have

mushroomed in villages across the country (EPA 2009). Many of Vietnam’s 3,221 craft

villages3 are situated on major river systems, particularly the highly populated Red

River Delta region of Northern Vietnam. While the government has encouraged this

enterprise growth in order to address rural poverty and to counter rural-urban income

gaps and migration, regulators have struggled to manage the environmental impacts of

these burgeoning industries. Consequently, some 90 per cent of craft villages have

pollution levels well above the standards set by the national environmental protection

law (MONRE 2008; EPA 2009; The World Bank 2008)4.

Although pollution from craft production is relatively small compared to large-scale

industrial and urban waste, the associated health risks for producers and their

immediate neighbours make craft village pollution a matter of significant government

and community concern (MONRE 2008, 2006). This growing local and national concern

about water pollution in particular led the Australian National University and the

Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) to

collaborate on research to produce a better understanding of the causes of the problem.

The Crafting Sustainability project sought to identify and understand the drivers of craft

village water pollution at the village, district, provincial and national levels, and to

recommend measures to address such pollution, thereby improving the economic,

social and environmental sustainability of craft villages in Vietnam.

2 The implementation of the Doi Moi (economic renovation) policy in 1986 sought to transform the Vietnamese economy from a centrally-planned to a market-oriented one. 3 This number refers to recognised craft villages where at least 30 per cent of households are engaged in off-farm activities (National Assembly of the Socialist Republic of Vietnam 2011). Each craft village specialises in one of the following specific areas of production: (1) food processing; (2) textile and leather products; (3) construction materials and masonry; (4) recycled products; (5) traditional handicrafts; or (6) ‘other’ products (MONRE 2008, p. 4). 4 These documents note that water pollution overrides atmospheric and solid waste as a locus of community concern.

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This paper is a synthesis of the study’s key findings and sets out recommendations for

future policy development on craft village pollution. The paper is organised into seven

sections. Section 2 provides an overview of the study design. Section 3 summarises

existing knowledge about water pollution from craft villages in Vietnam. Section 4

discusses how the specific characteristics of craft villages differentiate craft production

from larger scale industries and contribute to the growth of pollution. Section 5

examines local responses to pollution, which is largely driven by the competing

priorities of livelihoods and pollution management. Section 6 reviews how existing

governance weaknesses contribute to pollution, particularly the limited state resources

and capacity, weak coordination and low levels of local engagement. Section 7 concludes

and makes recommendations to inform future policy responses to water pollution from

craft villages.

2. Research overview

2.1 Conceptualising water pollution

Water pollution occurs when waste exceeds the absorptive capacity of a water body,

whether from identifiable point sources, or from diffuse non-point sources (Nguyen et al.

2003). However, the causes of this seemingly mechanical process are far more socially

complex.

From an economic perspective, pollution is a negative externality that arises because the

environmental and social costs of pollution are treated as external to the production

process. Because the polluter does not need to bear the costs of pollution, reducing

pollution is not a factor in their production choices (Nguyen et al 2003, p. 8). This line of

thinking has given rise to the ‘polluter pays principle’, where polluting industries are

made to bear the cost of measures to prevent and control pollution, thus giving them an

incentive to reduce polluting behaviour (Colby 1991; Fischhendler 2007). This

approach has also been embraced by Vietnamese regulators, in the form of a ‘pollution

fee’. As with many developing countries, weak capacity and corruption has been a

barrier to operationalising this in practice (Fritzen 2006; O’Rourke 2004), particularly

as the approach was designed to regulate large industrial firms rather than small scale

industries. Furthermore, determining an appropriate price can be problematic where

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the social costs of pollution are poorly understood, some pollutants have no safe levels,

and the interests of future generations cannot be readily quantified (Glazyrina et al

2006).

Given the sustained increase in levels of pollution in craft villages over the past two

decades, it is reasonable to suggest that the polluter pays approach has not succeeded in

mitigating pollution, at least in the craft village context. In recognition of these

limitations, our study took a broader approach to the analysis of pollution and its

causes. Drawing on commons research, we understand water quality to be a ‘common

pool resource’ (CPR), where the use of water as a sink for wastes cannot be easily

prevented (known as ‘low excludability’), and the reduction of water quality by one user

reduces it for others (known as 'subtractability' [see Ostrom 2009; Sarker et al 2008]).

In commons theory, the challenge in managing CPRs lies in devising effective collective

arrangements and rules (institutions) to manage the CPR and to address resource

related conflicts (Ostrom 1992; 2005).

River systems are large and diffuse CPRs that cannot be solely managed through local

self-governance, for instance by individual villages. Water quality in a river basin is thus

a ‘complex commons’ whose management requires coordination between users in

different localities through ‘nested’ systems of governance and mutually supportive

institutions at the local, regional, national and even international level (Ostrom 2005,

2009) 5. Management challenges are amplified in complex CPRs. For example, allocating

responsibilities to the lowest competent level of governance requires knowledge about

capacity, and the ability to adapt arrangements to strengthen or work around differing

capacities (Marshall 2007). Additionally, multi-scale governance does not emerge in a

political vacuum (Armitage 2008; Dowsley 2008), but is shaped by the power and

positioning of different social actors, social organisation, the knowledge held by

different actors and how such knowledge is valued (Mosse 1996). As such, horizontal

and vertical relationships at different levels can exert a significant influence on the

functioning of multi-scale governance (Berkes 2008; Dowsley 2008).

5 The coordination of resource appropriation, monitoring, enforcement, conflict resolution and governance, at multiple levels of governance is one of Ostrom’s eight principles of robust CPR governance (Ostrom 2005). Multi-level governance links the local to higher levels of social and political organisation in order to address multiple management objectives, knowledge systems and collaborative problem solving (Berkes 2008).

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Based on this conceptual underpinning, our study examined the institutions and

relationships between key actors (producers and different levels of government)

involved with craft village pollution. These relationships were studied horizontally (e.g.

within communities, and between agencies at a particular level of government) and

vertically (e.g. between craft producers and government, and between agencies at

different levels of government). In this paper we organise our discussion of the

challenges and options for multi-scale governance of craft village pollution around two

broad themes: (i) the characteristics and conditions within craft villages, and (ii) the

overall governance of craft village pollution.

2.2 Methods

We used a qualitative case study approach to gain an in-depth understanding of the

conditions in craft villages, and the perspectives of different stakeholders (producers,

non-producers, government officials and other key informants) on the causes and

governance of water pollution.

Four case study villages (see Figure 1) were chosen for in-depth study on the basis that

they:

1. Made products associated with high levels of water pollution (textiles, food

processing, recycled paper production)

2. Featured a range of different enterprise sizes (small to large); and

3. Were situated in provinces at varying distances from Hanoi.

This approach enabled us to compare how the causes of and responses to water

pollution varied in different craft village contexts. For instance, we could assess

differences between ‘traditional’ (albeit rapidly changing) craft villages with villages

that featured ‘new’ products and larger, more self-contained enterprises. We could also

explore the reach of government regulations at differing distances from Hanoi. All four

case study villages were located in the Red River Delta region of Northern Vietnam, an

area known for its high population density and concentration of craft industries, as well

as its high level of pollution.

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Interviews and focus groups were held with a total of 113 participants from the four

case study villages and with commune, district, provincial and national government

officials. These interviews assessed the development of craft production systems over

time, changes to major livelihood activities, perceptions of pollution – its extent, causes

and impacts – and perceptions about rules related to pollution and their

implementation. Village participants were selected from differently sized enterprises

(small to large), positions holding important community knowledge (e.g. commune

officials, teachers, health workers) and households not involved in craft production. The

data was then analysed using NVivo software. An overview of the cases is provided in

Table 1.

Figure 1: Location map

This paper uses village names for Nha Xa, Phong Khe and Duong Lieu, but refers to the

commune name for Duong Noi, where two villages were studied. Nha Xa, a traditional

craft village on the Red River, features predominantly small household enterprises

involved in specialised stages of silk production. Water pollution in Nha Xa arises from

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the dumping of bleach and dyes in village ponds and into the river. Duong Noi, also on

the Red River, produces printed polyester, cotton and knit textiles. Here, the

predominantly large-scale factories release untreated waste water and dyes into village

canals and the river. The recycled paper village of Duong O in Phong Khe has numerous

large and medium factories, as well as small household enterprises that sort and recycle

urban waste paper. The untreated waste water from Duong O workshops contains

cleaning, bleaching and dying chemicals. Duong Lieu produces cassava and arrowroot

starch, noodles and cakes, releasing waste water that is high in biological contaminants

into village drains and canals.

Table 1: Case study overview

Commune Duong Noi1 Phong Khe1 Moc Nam1 Duong Lieu1 Craft villages studied

2 (Y La and La Noi)

1 (Duong O) 1 (Nha Xa) 1 (Duong Lieu)

District, Province; distance from Hanoi

Ha Tay district; Hanoi City; 15 km

Yen Phong district; Bac Ninh Province; 32 km

Duyen Tien District; Ha Nam; 100 km

Hoai Duc District; Ha Noi city (formerly Ha Tay Province); 27 km

Population 17,000 8,546 (1,964 HH) 4,131 (1,211 HH) 11,000 (2652 HH) Product Polyester and

cotton textile Recycled paper Silk Cassava and

Arrowroot starch, noodles and malt

Number of craft enterprises

20 large and 9 medium; 800 small trading shops; 100 animal husbandry

7 large-scale factories with over 30 regular workers; 190 medium scale factories; countless smaller businesses sort, weigh, carry waste paper and trade the finished product

186 weaving households; 30 dyeing households of which 2 are medium scale; 30 trading households

500 cassava and arrowroot processing households; 300 starch filtering; 146 malt production; 150 noodle making; 20 trading households); 30 medium and large enterprises including 18 working in food processing

Number of interviews

18 27 + 1 focus group 43 + 1 focus group 30 + 1 focus group

Source: Commune records in Duong Noi, Phong Khe, Moc Nam and Duong Lieu, 2010

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Our analysis draws on the above primary research, as well as information attained from

secondary research and policy documents.

3. Water Pollution in Craft Villages

In 2008 the Vietnam Ministry of Natural Resources and Environment (MONRE) released

a major environmental assessment of craft villages. This study6 found that almost all

craft enterprises and villages were releasing untreated waste, which was seriously

polluting and degrading the environment. Several different types of pollution were

attributed to craft production, including: water pollution, air pollution, soil pollution,

heat and noise pollution (See table 2). Our study focuses on water pollution, which is

accorded highest priority in the current policy discourse in view of its implications for

health and agricultural production.

Villages involved in food processing, animal husbandry and slaughter, silk and textile

production are primarily responsible for releasing large volumes of waste water which

contain high levels of organic waste and chemicals. The volume of waste varies between

enterprises and villages according to production levels and season. An earlier MONRE

study (2006:27) estimated that 458 craft villages released approximately 45,000 to

60,000 cubic meters of untreated wastewater per day into the Nhue-Day River sub-

basin. Villages producing recycled and metal products release lower volumes of waste

water, but with higher levels of toxicity.

Although the most significant pollution impacts are at the local level and immediately

downstream, craft village pollution does ultimately reach the river sub-basin and basin

level. However, at the larger river basin scale, craft villages are responsible for only a

small proportion of pollution in comparison with other sources. In the Nhue-Day River

sub-basin, the waste water from craft villages accounts for only four per cent of the total

waste water discharged (MONRE 2006, p. 28). Domestic waste, the industrial sector and

agriculture all contribute significantly more pollution to the sub-basin (See Figure 2).

6 MONRE (2008), ‘Bao Cao Moi Truong Quoc Gia 2008: Moi Truong Lang Nghe Viet Nam.’ Hanoi: MONRE (Ministry of National Resources and Environment).

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Figure 2: Proportion of waste water discharged per sector, Nhue-Day River

sub-basin (2006)

Source: MONRE 2006, p. 25

Table 2: Craft product types and associated pollution

Waste types:

Air Water Solid Others

1. Food

processing,

animal husbandry

and slaughtering

Dust and

chemical

pollutants

Biological and

chemical

pollutants

Cinders and other solid

waste

Localised heat and

humidity

2. Textile and

dyeing, silk and

leather tanning

Dust and

chemical

pollutants

Biological and

chemical (dyes,

bleaches)

contaminants;

heavy metals

(Cr6+) from

tanning

Cinders and textile scraps;

unsafe chemical

containers

Localised heat,

humidity and noise

3. Handicraft

Heat (ceramics) - Ceramic Dust and

chemical

pollutants

Biological waste,

oils and dye

chemicals

Coal ash (ceramics) and

other solid waste

- Lacquer, stone

engraving

Dust and

chemical

pollutants from

solvents

Craft

villages 4

%

Farming and animal

husbandry 16

%

Domestic sector 56

%

Industrial sector 24%

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4. Recycling

Heat (all)

- Paper Dust and other

chemical

pollutants

Biological and

chemical

pollutants (including acid,

bleaches, dyes)

Waste paper

- Metal Dust and other

chemical

pollutants (e.g. CO and acidic

compounds)

Heavy metals and

oils

Coal ash, iron waste,

small metal scraps

- Plastic Dust and other

chemical

pollutants

Biological and

chemical

pollutants, oils

Waste plastic and rubber

5. Building

material, stone

processing

Dust and other

chemical

pollutants

Chemical

pollutants

Coal ash, small stone

scraps

Heat, noise,

exposure to

vibration

Source: Dang 2005

3.1 Health impacts of craft village pollution

In craft villages, pollution is generally most concentrated at the site of disposal; in

waterways directly connected to craft enterprises (see Plate 1). The clustering of a large

number of small workshops creates multiple, individual sources of pollution within the

residential areas of craft villages. The pollution therefore poses the greatest risk to craft

producers themselves, workers and nearby residents (KEI and the World Bank 2003).

Almost all the usual pollution parameters in craft production workplaces, including

noise, light, toxicity, humidity, and temperature, are known to exceed national

standards. It is estimated that as many as 95 per cent of craft workers are exposed to

toxic airborne particles, 85.9 per cent to excessive heat, and 59.6 per cent to other toxic

chemicals (KEI and the World Bank 2003; MONRE 2008).

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While systematic data is not available,

disease incidence in many craft villages

has increased, with the life expectancy of

craft villagers now reported to be ten

years shorter than the national average

(MONRE 2008).7 In 2003, a key study by

the Korean Environment Institute (KEI)

and the World Bank in the Red River Delta

found that the health status of craft village

residents compared very poorly with

agricultural villages, with higher levels of

eye, intestinal and skin disease and

respiratory conditions.8 Life-threatening

conditions such as cancer and heavy metal contamination are also more common in

craft villages engaged in plastic, lead and metal recycling (MONRE 2008). The health

impacts of craft pollution are considered more serious for women and children (See

Plate 2).

These growing health risks have propelled craft village pollution into the public eye,

attracting the attention of policy-makers and the media (see Box 1). Since 2000, the

national government has issued several decrees, regulations and laws to tackle the

growing pollution problem (see Section 6). These form the basis of Vietnam’s regulatory

system to address pollution in general and pollution from craft villages in particular, but

they face several implementation challenges.

7 Statistics from seven craft villages and seven non-craft villages in Ha Nam province showed that the incidence of skin, respiratory and intestinal disease among residents in craft villages is many times higher than that in non-craft villages. The rate of respiratory disease in craft and non-craft villages is 50 per cent and 40 per cent respectively. The rate of diarrhea was 80 per cent and 10 per cent respectively for craft and non-craft villages. For skin disease, 70 per cent of craft village residents suffered from these ailments compared with 20 per cent in non-craft villages (MONRE 2008). 8 In Dong Mai lead recycling village (Hung Yen province), 71.1 per cent of residents are reported to have mental illnesses associated with lead poisoning and 65.6 per cent to have respiratory disease. The rate of serious pollution-related issues is also high among children, in the form of disabilities such as lameness, polio, and blindness. An estimated 100 per cent of workers in this village suffer from chronic lead poisoning (KEI & World Bank 2003; Hoang et al 2004).

Plate 1: Waste water from dyeing paper is released into a basic drainage system in the village of Phong Khe.

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In summary, there is mounting evidence that water pollution from craft villages is a

significant and growing problem, particularly at the village and district levels. Recent

research has confirmed that unchecked craft village pollution has serious implications

for human health in craft communities and among their immediate neighbours.

4: Characteristics of Craft Villages and Craft Production Systems

In Vietnamese policy terms, a craft village is defined as a rural village where (a) at least

30 per cent of households participate in craft activities; (b) businesses have operated

steadily for at least two years; and (c) villagers comply with government policies

(MONRE 2008). The government further differentiates between ‘traditional’ and non-

traditional or ‘new’ craft villages. A traditional craft village is one that has existed for at

least 50 years, reflects Vietnamese cultural identity, and sustains at least one traditional

craft and well-known artisan. In contrast, a new craft village has been more recently

Box 1: Media headlines express alarm about pollution

“Moi truong lang nghe suy thoai tram

trong” [Environment in craft villages

has seriously deteriorated] (Nguoi Lao

Dong, 21 April 2009)

“O nhiem moi truong nghe o Bac Bo o

muc bao dong” [Pollution in craft

villages in the Northern region reaches

the alert level] (Ha Noi Moi, 9 March

2007)

“O nhiem moi truong la nghe: thuc

trang dang lo” [Pollution in craft

villages: a worrying situation] (Ha Noi

Moi, 21 April 2009)

“Bao Dong Do o nhiem lang nghe” [A

red alert on pollution in craft villages]

(Cong An Nhan Dan, 27 August 2009)

Plate 2: A young girl with a pronounced tumour on her neck, one of several children with this condition in Nha Xa village.

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established in response to market demand and the availability of input materials

(MONRE 2008: 4). The traditional craft village label appears to primarily be used for

reasons of ‘branding’ traditional craft products, and to support the retention of artisanal

knowledge in traditional craft villages.

According to these criteria, traditional craft villages in the Red River Delta in 1998

accounted for only 29.4 per cent of the total, while new craft villages accounted for 70.6

per cent (Nguyen et al 2003, p. 18).

Table 3: Number of traditional and new craft villages, Red River Delta (2010)

Province

Number of craft villages

Traditional craft villages New craft villages total

Thai Binh 14 68 82

Ninh Binh 20 141 161

Nam Dinh 29 61 90

Ha Nam 16 21 37

Hai Duong 30 12 42

Hung Yen 11 28 39

Hai Phong 15 65 89

Bac Ninh 21 27 58

Ha Noi 20 20 40

Ha Tay 20 68 88

Vinh Phuc 9 5 14

Total 215 516 731

Source: Figures provided by IPSARD and MARD, November 2011

Craft villages have been further classified according to their production focus. The most

widely-accepted classification comes from Dang et al (2005) and MONRE (2008), which

divides craft villages into six different categories: (1) food processing, including animal

husbandry and butchery, (2) textile production including dyeing, silk production and

leather processing, (3) the production of construction material and masonry, (4)

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recycling, (5) handicraft production9, and (6) others. Figure 3 shows the proportion of

craft villages that were included in each of these categories as at 2008.

Figure 3: Breakdown of craft villages according to product type (2008)

Source: MONRE 2008, pp. 7-9

4.1 The historical development of craft villages

Craft villages have been part of Vietnam’s rural economy and society for many

centuries, emerging as peasants looked to supplement their income in response to an

oversupply of labour in the agricultural sector (Gourou 1955[1936]). For example, Dai

Bai bronze casting village in Bac Ninh has a history of over 900 years (MONRE 2008:3).

Many traditional products are still manufactured today, such as processed foods, tools

for agriculture and fishing, ritual goods, common household goods, construction

materials, paper and textiles (DiGregorio 2001, p. 62). In the early 1900s, Gourou

(1936) counted 180 specialised craft occupations and corresponding villages within the

Red River Delta region, employing more than 250,000 people, or about seven per cent of

the adult population (Gourou 1955 [1936]).

Before the 1945 revolution, craft villages produced diverse crafts and sold products

domestically as well as internationally (Dang et al. 2005, p. 22). After 1945 the major

political, social and economic transitions occurring in Vietnam also altered the

9 Handicrafts (thu cong my nghe) refer here to a specific type of craft product created by skilled artisans which are considered to be high art and command high prices.

Food processing, animal husbandry and butchery

22%

Textile production including

dyeing and leather processing

19%

Construction material production and masonry 5%

Waste recycling

4%

Handicraft production

32%

Others

18%

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development of craft villages, particularly from 1954 to 1986 when craft production

was collectivised. Like peasants, artisans were organised within handicraft collectives

that manufactured products according to state plans and targets. Export markets were

mainly in other socialist countries. This strong, centralised market regulation led to the

disappearance of some crafts (Dang et al. 2005, p. 12). Although peasants and artisans

faced many financial difficulties when Vietnam’s centrally planned economy

approached collapse in the early 1980s, they were also able to supplement their

livelihoods through the informal production and marketing of crafts.

The Doi Moi reforms of 1986 opened up markets and opportunities for craft producers.

Collectives were dismantled, land was returned to households and price controls were

lifted (Kerkvliet 2005; O’Rourke 2004, p. 36). Craft entrepreneurs emerged, purchasing

machinery from disbanded collectives and setting up informal production spaces within

family homes and land plots. The option of employing family members and additional

labour enabled handicraft businesses to expand in size and number.

The development of craft villages was initially a spontaneous and locally-driven

process, with little government intervention and planning. Since 2000, the government

has initiated policies to promote the development of rural non-farming businesses in

general and craft villages in particular, largely due to the benefits they bring in terms of

reducing rural-urban migration and increasing rural employment and incomes (see

Table 4).

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Table 4: Government polices related to the development of craft villages

Name Purpose Year enacted

Decision 132/2000/QD-TTg

Promoting the development of rural non-farming businesses

2000

Decree 90/2001/ND-CP

Supporting policies for SME development 2001

Resolution 15/TQ-TW

Accelerating rural industrialisation and modernisation in the period 2001-2010

2001

Decision 68/2002/QD-CP

Government’s acting plan to implement the fifth resolution of 9th Vietnamese Communist Party Central Committee

2002

Instruction 24/2005/CT-TTg

Continuous strengthening of the implementation of the fifth resolution of 9th Vietnamese Communist Party Central Committee on rural industrialisation and modernisation from 2001-2010

2005

Decree 66/2006/ND-CP

Promoting the development of rural non-farming businesses

2006

Circular 116/2006/TT-BNN

Guiding the implementation of Decree 66/2006/ND-CP on the development of rural non-farming businesses.

2006

Craft villages are viewed as a vehicle for rural industrialisation and modernisation, a

means to increase national and local budgets, to expand export revenues and reduce

rural poverty (Dang et al 2005). Yet it is primarily local entrepreneurship that has

underpinned the expansion of craft production in many provinces of Vietnam. The

majority of craft village businesses, being unregistered or informal, are unable to access

government support programs (Hansen et al 2009).

4.2 Production systems in craft villages

In his 1930s study of Red River Delta peasants, Gourou (1955[1936]) highlighted four

key characteristics of craft villages. First, the peasant household was the basic unit of

production in craft industries with family members providing most of the labour and

the family home or land plot serving as the production site. Second, individual

households tended to specialise in particular stages of the production process, for

example one household may prepare a raw material for further processing by another.

Third, craft industries were labour-intensive, with low capital inputs and simple

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technology. Lastly, income from craft production was low and considered secondary to

farming income. Gourou (1955[1936]) also grouped village-based peasant industries

into two main types; one settled (generally producing goods) and the other itinerant

(generally providing services). While some of these characteristics of production can be

seen in craft villages today, rural craft industries have also undergone significant

changes, particularly since the Doi Moi era.

As with other villages in Vietnam, craft villages are much more than just clusters of

homes. Kinship and intra-village economic and social ties are important to their socio-

economic and administrative functioning, and to some extent have made Vietnamese

craft villages socially cohesive ‘corporate’ communities. Prior to the 1945 socialist

revolution each village enjoyed a certain degree of autonomy in setting rules to govern

its affairs and vis-à-vis other villages and the state (Kleinen 1999; O’Rourke 2004). For

villages with a craft specialisation, village rules excluded non-residents from learning

the ‘secrets’ of their craft occupation. In order to safeguard production secrets, skills

were passed down to family members only who lived within the village.

Today craft villages have more open interaction and exchange with others, but have

retained these tendencies to keep certain aspects of production secret and to rely

heavily on both family members for labour and close neighbours as production chain

partners. Despite having modernised and diversified their products in recent decades,

each craft village tends to specialise in a certain type of product and engage different

families within and outside it in different stages of the production chain. Thus the

‘monopolistic spirit’ of craft villages continues to organise craft production, not just in

terms of relying on insiders, but also in terms of maintaining industrial activities in

scattered home-based workshops and, to a certain extent, resisting regulation by the

state (Digregorio 2001, p. 40).

In the craft villages that we studied, production chains were typically decentralised,

complex and interdependent. For instance, in Phong Khe, a single roll of recycled paper

involved as many as nine production chain partners scattered in separate household

production workshops (See figures 4 and 5). These workshops were family-run, often

linked by kinship ties and had a long history of association. Thus, there was a high level

of mutual economic and social interdependence between craft producers in most cases.

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In some villages, medium or larger enterprises tended to undertake all or most of the

manufacturing stages for a product under one roof, but these were the exception, rather

than the norm.

Figure 4: Production processes and relationships in Nha Xa village

4.3 Relationship of production systems to pollution

With the demise of collectivisation and the privatisation of land and craft enterprises in

the 1980s, craft production no longer took place in centrally planned, dedicated

workshops, but returned to the pre-1945 pattern of taking place in small residential

households. This important aspect of craft production has had significant implications

for the treatment and management of waste, particularly as craft enterprises rapidly

multiplied in the wake of the Doi Moi reforms.

Close social networks and relationships are a key point of difference between polluting

workshops in rural craft villages and large scale urban industrial factories. In craft

villages, the polluter is an ‘insider’, and therefore more easily accommodated by local

residents. Other craft producers ultimately depend upon polluting processes to ensure

that they can continue production, access markets and, thus continue to gain their share

of the value chain. In interviews, most villagers could easily identify the workshops that

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were the main polluters. Although Vietnamese law enables affected persons to take

legal action against environmental polluters, priority was placed on maintaining social

networks and relationships of mutual economic interdependence (see Box 2).

Figure 5: Production processes and relationships in Phong Khe village

Commodity chain analysis can uncover where pollution occurs relative to profits along

the commodity chain. In Phong Khe, for example, large and medium scale recycled

paper producers released the most untreated waste water, and also happened to take

the largest share of profit from recycled paper production and trade (Gasparini 2009).

This was not the case with food and silk production which tended to involve

interconnected small scale household workshops. In Duong Lieu, food processing

workshops were identified as the main polluters but took a small share of the income

compared to others along the chain such as traders, malt and noodle producers. In Nha

Xa, the dyeing workshops were primarily responsible for pollution, but mainly had

small profit margins, similar to other producers. Meanwhile, urban traders took a

relatively large share of the profit from silk production.

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The predominantly small scale, interconnected nature of craft production suggests that

an approach to pollution regulation and mitigation that targets individual businesses

may be ineffective (see Section 6). But in developing collective approaches to managing

waste within craft villages, the distribution of costs and benefits in production need to

be considered –which in some cases may extend beyond the village (e.g. to external

traders). Detailed commodity chain analysis can also help to identify and prioritise

which stages of production should be concentrated in dedicated village industrial zones.

4.4 Technology, capital and land

constraints

Old, low-cost and inefficient technologies

are often identified as the primary cause

of pollution in craft villages (Dang a&

Nguyen 2005; Konstadakopulos 2008; see

Plate 3). Most craft enterprises still use

old technology manufactured in the

1950s or 1960s and purchased from

disbanded collectives (Dang et al. 2005; interviews). As O’Rourke notes, technology that

ought to be consigned to a museum still remains in operation throughout Vietnam

(2004, p. 109). Inefficient machinery contributes to pollution as more inputs and waste

are associated with each unit of production (Dang et al 2005, p. 161; see Box 3).

Producers are unable to upgrade outmoded technology because of their significant

capital constraints.

The types and quality of input materials and energy sources used for production also

contribute to pollution. For example, waste recycling villages generally process waste

materials that contain chemicals. In textile villages, cleaning and dyeing activities use

large volumes of chemicals. Many small villages in the Red River Delta now recycle

heavy metals such as lead, with serious impacts on the local environment. For many

enterprises, the main source of energy is still either highly polluting coal or firewood

(Dang et al 2005; Konstadakopulos 2008).

Box 2: The interdependence of

small scale producers

We are dependent on each other.

- Small scale weaver, Nha Xa, July 2010

We don’t want to have quarrels with each

other; we want to live in harmony.

- Silk trader, Nha Xa, July 2010

The polluter is my relative.

- Small scale weaver, Nha Xa, July 2010

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Plate 3: Technology from the 1960s producing recycled paper in Phong Khe

The substantial growth of craft villages and the expansion of craft production has also

depleted natural resources in surrounding areas, including local underground water

(e.g. in Duong Lieu), timber, clay, stone, grass, plants, seashells, metal, and animal horn

and/or bone. One study found that almost one third of craft villages in the Red River

Delta have problems sourcing raw materials (MARD-JICA 2003, pp. 62-3). Some

important resources, particularly timber, pig iron, and copper can no longer be found

locally, and many craft enterprises now depend on illicit, smuggled, or waste materials.

Box 3: Capital, land and technology constraints faced by craft village producers

“We know that if we apply new technology we could address 80 per cent of the pollution

and we could save the dead river. We use a lot of chemicals. We use waste material [in

production]; in order to make good quality products we need good machines and

technology but the capacity of family enterprises is limited.”

- Small enterprise owner, Phong Khe, July 2009

“Craft households use their homes as production sites and we all lack production space. On

average, the area of each house is about 80-100m2 and there are four people in a family.

We work and live in these narrow spaces, so pollution is unavoidable.”\

- Cassava processor, Duong Lieu, March 2010

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As discussed in Section 4.3, the household remains the basic unit of production in most

craft villages, with family members providing the bulk of the labour and the family

home serving as a production site. Such scattered, unplanned, and small scale family-

based workshops make pollution regulation and treatment difficult as point-sources of

pollution may be dispersed over a wide area. Serious land shortages in craft village

communes make planning for village industrial zones and wastewater treatment

systems difficult. As a result, untreated waste is routinely discharged by individual

enterprises (KEI & World Bank 2003).

Lack of production space and land, shortage of capital, shortage of trained workers and

a lack of knowledge about the benefits of new technologies have all been identified as

key challenges to improved waste management (see Box 4). Capital shortages have been

reported in as many as 60-70 per cent of craft enterprises (Dang et al 2005). According

to a 1999 Ministry of Agriculture and Rural Development (MARD) survey, the average

capital holdings of a craft enterprise was VND 35.8 million; only 12.2 million of this was

in the form of credit, such as a bank loan. It is estimated that craft businesses would

need available capital of between VND 50-100 million to expand their production, build

tailored premises and upgrade machinery and technology. Research by

Konstadakopulos (2008) found that 36 per cent of enterprises cannot find enough

trained workers, and almost all enterprises lack sufficient land on which to build a

workshop away from residential areas (ibid 2008, p. 57).

Box 4: Characteristics of craft villages pose challenges to waste management

“Craft villages have unique characteristics; production is scattered in residential areas and each household has a very small production space, less than 200 square meters, which is also used for other daily domestic activities and animal husbandry. The second characteristic is that population density is very high in craft villages. Road systems have been built and upgraded but still do not meet the needs of producers. Production is not spread evenly over the year but is concentrated in a few months or season. As a result, infrastructure such as roads and the drainage system are not able to support production and waste management.” - District official, Hoai Duc, March 2010

The recent global downturn has seriously impacted the availability of credit for craft

producers, both from informal sources such as money lenders and from banks. Rising

expenses have not only created an acute shortage of funds for craft businesses, but

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access to loans has also become much harder.10 This limits the capacity of craft villages

to improve production technology and expand production. Where credit is available,

interest rates are high and only short-term loans tend to be available. As a

consequence, the vast majority of enterprises rely on their own limited resources and

must make use of existing technologies. This lack of capital perpetuates cramped

working conditions and environmental degradation (Konstadakopulos 2008, p. 26;

Dang et al 2005, pp. 166-169).

To help craft enterprises and other SMEs to overcome financial difficulties, the

government has issued credit policies providing loans and funding with preferential

interest rates. For example, Decision 193/2001/QD-TTG called for the establishment of

a SME Credit Guarantee Fund to provide financial support for SMEs. Direction

84/2002/TT-BTC guided financial support for the development of rural non-farming

jobs (World Bank 2008). However, because so few craft enterprises are formally

registered and the process of applying is bureaucratic and lengthy, only a small number

of craft enterprises have managed to access these government loans.

Box 5: Challenges in accessing capital

The government loans offer a monthly interest rate of 1.4-1.5 per cent but they are limited

and difficult to get. I could not wait for a government loan so I had to look for loans from

money lenders. These lenders give a higher interest rate of 1.8-2 per cent but I can borrow

the money when I need it. However, only people that the lenders trust are able to access

their loans.

- Silk trader, Nha Xa, July 2010

Although economic reform in Vietnam has significantly changed land ownership and

property rights, the land market is still not well developed, which makes it difficult for

enterprises to acquire more land for expansion. With land for production space at a

premium, many larger operations have developed workshops on their allocated family

farmland or ‘purchased’ the lease from others. This strategy of using houses and

farmland for production space gives craft enterprises an ‘illegal’ and informal status,

making it more difficult to access formal credit. It also makes them highly vulnerable in

land acquisition processes.

10 Vietnamnet News, Global downturn spells disaster for craft villages. (see http://english.vietnamnet.vn/social/2008/12/818317)

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Plate 4: Demolition of workshops to make way for a new urban centre creates

uncertainty for craft producers in Duong Noi

Against a backdrop of high-speed urbanisation and industrialisation, land has become

scarce, valuable and a source of disputes. In the Vietnamese context, provincial and

district authorities are responsible for land management in accordance with national

laws. Land insecurity and related disputes between land users and state agencies are

common, particularly when the state reclaims land for commercial, industrial or

residential purposes (Kerkvliet 2006). Tensions over access to land were evident in the

four case study craft villages, and at times prevented craft businesses from investing in

improvements to their production systems. During our research, craft workshops in

Duong Noi were demolished to make way for new urban settlements and related

infrastructure on the fringe of Hanoi (see Box 6; Plate 4).

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Box 6: Land insecurity creates investment uncertainty

“Due to urbanisation it is very difficult to retain the viability of craft enterprises, because of

the loss of land and removal of workshops. We are trying to create a zoned area – one is 4

Ha, another is 7 Ha – just planning so far but no implementation yet. Our enterprises are

now separated from residential areas – but with the new road system and urbanisation the

government has asked them to move to other industrial zones. You know the cost of

removing one enterprise with heavy machines is enormous. It can take six months to move

an enterprise. It cannot produce during that time. Infrastructure has not been established

yet so if they move they cannot operate.”

- Commune official, Duong Noi, July 2009

“My brother and I own an enterprise which has lost some land through compulsory land

acquisition. About 7 workshops were affected by road widening in this area. We lost one

third of our land and had to sell around 20 machines. We had bought these machines at 500

million dong per machine and sold them at 250 million dong – we lost a lot of money.”

- Medium-scale enterprise owner, Duong Noi, April 2010

5. Local Concerns and Responses to Pollution

5.1 Livelihoods

Producers revealed in interviews that livelihoods took top priority in their daily

decision making, even though they knew the risks associated with pollution. Producers

and workers often justified their actions by referring to a lack of alternatives, given the

need to secure their family’s livelihood, and to pay for their children’s education (see

Box 7).

Since the majority of producers had low profit margins and were solely dependent on

craft production for their livelihoods, maintaining market competitiveness left little

room for investment in the “luxury” of costly water treatment. This was seen most

clearly in Nha Xa (Moc Nam) where producers repeatedly cited the need to keep

production costs low in order to compete with producers in other parts of Vietnam and

also China. Phong Khe enjoyed a relatively unique position in the northern part of

Vietnam in having few competitors, but producers remained sensitive to the issue,

highlighting that unilateral action on water treatment was extremely unlikely.

Despite concerns about exposure to pollutants, producers frequently made decisions

based on cost and resource constraints. Nha Xa villagers said that in the past, natural

plant dyes were used to colour silk, but since economic liberalisation in the 1980s,

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market demand had driven craft producers to manufacture brighter colours using

highly toxic chemicals, mostly originating from China. While many producers in Nha Xa

expressed a preference for dyes from Japan or Taiwan, regarding them as safer and of

higher quality, to reduce costs they usually used the less expensive but more dangerous

Chinese bleaches and dyes.

Another example of costs driving decisions about waste treatment was the fate of pilot

water treatment projects. Government agencies installed pilot water treatment facilities

for small groups of workshops in Nha Xa and at a few individual households in Duong

Noi. These facilities were designed to treat waste water to such a high standard that it

“could be used to raise fish.” However, after a few months, their use was abandoned or

reserved for official visits, due to their substantial running costs.

Local authorities were also conscious of the need to maintain local livelihoods and were

reluctant to regulate and fine craft enterprises because of concerns that any economic

impacts or job losses might lead to unrest and social disharmony. Lack of enforcement

of national laws at the local level was thus frequently attributed to conflicts of interest

between economic development and environmental controls. Investigations of pollution

were infrequent, and sanctions for pollution violations were not implemented (also

recognised in MONRE 2008, pp. 61-7). This conflict of interest, together with the small

scale, dispersed and informal nature of craft enterprises, has compounded the

Box 7: Prioritising livelihoods over health

“Doing this job, I have contact with toxic chemicals. Of course, I am afraid of chronic

disease such as cancer. Everyone can see and is afraid of this. But I still have to live with it

because of my livelihood. I need to raise my family.”

- Large scale dyeing workshop owner, Nha Xa, July 2010

“In fact, I am really afraid of cancer. Everything about dyeing is harmful but I still do it

because that’s my livelihood.”

- Medium scale dyeing workshop owner, Nha Xa, July 2010

“I am a dyer in a dyeing workshop. Because of working directly with chemicals, sometimes

I get sick and go to the hospital. The hospital staff have often asked me to stop doing this

work but I have to keep going. I know the chemicals are toxic, but there is no choice. I am

concerned about my health but need to work for this income otherwise we would die of

hunger. There is no choice.”

- Dyeing worker, Nha Xa, July 2010

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difficulties faced by local authorities in implementing environmental laws, monitoring

pollution and enforcing compliance (O’Rourke 2004; Chapter 4).

5.2 Local responses to pollution: high awareness, low action

Low awareness of environmental issues is flagged as a contributing factor to pollution

in some studies and by the media in Vietnam. Although the link between education and

pollution is yet to be clearly established, low education levels are blamed for limiting

people’s ability to understand the causes of pollution, access and share information on

waste management, as well as reluctance to adopt new technologies. There is some

evidence that people in craft villages appear to be unaware of the damaging impacts of

their activities on their health. For instance, many enterprises do not provide their

workers with protective equipment or if they do, workers do not use it (Dang et al 2005,

p. 162; MONRE 2008).

Contrary to these perceptions, our research found that despite low levels of formal

education, craft villagers had high levels of awareness about the different forms and

causes of pollution and their impact on health, agriculture and other economic activities.

This was gained through their daily observations, personal, family and community

experiences, as well as exposure to discussions in the media, particularly television and

radio:

“The people started to get concerned about pollution in the village in 2000.

But there is no solution so far. Surface and underground water here is

polluted and now nobody dares use the pond or well water for domestic

use. In the past, water in the ponds was clear and children often swam in

them but now it’s polluted from chemical discharge. The water releases a

very bad smell – when it evaporates into the air the smell is really sour.

Now none of the children ever dare play or swim in the pond. If we eat

vegetables from the pond, we will get stomach ache and food poisoning.”

- Female weaver, Nha Xa, July 2010

Many informants in Duong Lieu, Nha Xa, Duong Noi and Phong Khe said that pollution

was responsible for a high rate of respiratory and intestinal disease; sleep disorders,

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skin disease, and cancer amongst craft workers (see Plate 5). Craft village residents and

workers perceived and understood the pollution risk not only in relation to health but

also in terms of risks to animals and plants. Research by the Vietnam Agricultural

Science Institute found that craft village communities ranked environmental pollution

as the issue of greatest concern to them, followed by unemployment; lack of capital;

difficulty in accessing the consumer market; the use of dangerous agro-products and

animal disease (Nguyen et al 2003). Our focus group interviews confirmed these

findings. Nonetheless, awareness and action are two different things. Further analysis

shows that the daily decisions of individual craft households were shaped primarily by

the livelihood and resource constraints detailed above.

Plate 5: Working in bleaching and dyeing workshops exposes workers to

chemicals at extremely high temperatures, but they prioritise their families’

livelihoods over their health

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In spite of high awareness of the adverse impacts of pollution, local actors have not

adopted any form of collective action in relation to waste treatment. So far community

engagement has been limited to expressions of discontent and complaints about

pollution that affect villagers’ health. The government has so far given little attention to

the role of communities in implementing standards for environmental pollution (see

Section 6.5).

In conclusion, access to land and capital, as well as livelihood imperatives and market

competitiveness were critical constraints for craft producers in taking action on waste

water treatment. Despite highly interdependent production systems, there was very

limited coordination amongst producers on matters related to pollution, although

producer associations might provide a basis for facilitating such coordination in the

future. The localised severity of pollution created the potential for local organisation on

waste water management. However, local institutions for managing water and waste

would first need to be designed, and participants’ concerns about reduced market

competitiveness addressed before local action to address pollution could be realised.

6: Assessing the Governance of Water Pollution

Numerous studies (including MONRE 2008) point to weaknesses in Vietnam’s

regulatory framework and the poor performance of the state’s environmental agency as

important underlying drivers of pollution. MONRE has attributed this to shortcomings

in the following areas: (i) regulatory design and enforcement; (ii) coordination (iii)

planning and infrastructure; (iv) resources and capacity; and (v) limited civil society

and local engagement.

6.1 Regulatory design and implementation

Although craft industries in Vietnam expanded rapidly in the wake of Doi Moi, laws to

regulate pollution did not appear until over a decade later (see Table 5 for an overview

of existing laws and regulations). The most important amongst these was the National

Environment Protection Law (2005) which outlines environmental protection

standards for craft villages and assigns enforcement responsibility to provincial

Peoples’ Committees. Additional regulations informed by the principle of ‘polluter-pays’

specify emissions standards (TCVN [Vietnam Standard]), pollution fees for discharging

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waste water (Decree 67/2003/NĐ-CP) and penalties for administrative violations

concerning environmental protection (Decree No. 81/2006/NĐ-CP), as well as

guidelines for environmental impact assessment and the preparation of environmental

protection plans by enterprises (Decree 80/2006/NĐ-CP and Decree No. 21/2008/NĐ-

CP). Provincial Committees are also required to plan and zone craft activities (Decree

No. 66/2006-ND-CP).

Table 5: Laws and regulations related to craft village pollution

Name Purpose Year

enacted

Law on water

resources

Prohibits the introduction of waste water to water sources that

is not treated up to the permissible environmental standards

2003

Decree

67/2003/NĐ-

CP

Decree No.

26/2010/ND-

CP

Sets environmental protection fees for wastewater discharge

and environmental protection.

Decree No. 26/2010/ND-CP amends and supplements Clause

2, Article 8 of the earlier Decree (67/2003/ND-

CP) on environmental protection fees for waste water

discharge

2003/20

10

Decision

256/2003/QD-

TT

Prime ministerial Decision No 256/2003/QD-TTg approved

the strategy on environment protection by 2010 to 2020.

The Decision requires MONRE, as the main administrator, to

cooperate with other ministries to achieve the strategy

objectives.

2003

Resolution 41-

NQ-TW and

Decision

34/2005/QD-

TTg

The National Environmental Protection Strategy, Politburo

Resolution 41-NQ/TW on environmental protection and the

Prime Minister’s Decision 34/2005/QĐ-TTg underpin

Government action on Resolution 41-NQ/TW.

These documents incorporate environmental plans and

programs, including the early use of environmental

assessment in development planning

2004/20

05

National

Environmental

Protection Law

Article No. 38 emphasises environmental protection in craft

villages and assigns responsibility to provincial level Peoples’

Committees

2005

Regulations on

Environmental

Standard of

Vietnam:

Decision No.

35/2002/QD-

BKHCNMT,

Decision No.

22/2006/QD-

BTNMT;

Decision

These establish discharge standards for wastewater, air and

noise that all enterprises must comply with. Environmental

standards for water quality have been set up as follows:

- QCVN 08:2008/BTNMT -National Technical Regulation on

Surface Water Quality;

-QCVN 09:2008/BTNMT -National Technical Regulation on

Underground Water Quality;

- QCVN 10:2008/BTNMT -National Technical Regulation on

Coastal Water Quality;

- QCVN 11:2008/BTNMT -National Technical Regulation on

Waste water of Aquatic Products Processing Industry;

1995/20

05/2008

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16/2008/QD-

BTNMT

(national

technical

specifications

on

environment)

- QCVN 12:2008/BTNMT -National Technical Regulation on

Waste water of Pulp and Paper Mills;

- QCVN 13:2008/BTNMT -National Technical Regulation on

Waste water of Textile Industry;

- QCVN 14:2008/BTNMT -National Technical Regulation on

Domestic Waste Water;

- QCVN 15:2008/BTNMT -National Technical Regulation on

Pesticide Residues in Soils.

Decree

66/2006/NĐ-

CP and

Circular

116/2006/TT-

BNN

Decree No. 66/2006/ND-CP on Development of Rural Trades

provides legal support and incentives to develop craft villages.

Article 7 gives provinces responsibility for planning craft

development, and requires new developments to comply with

environmental protection. Preferential land pricing, tax

concessions and subsidies are outlined to assist craft

producers in moving to industrial zones.

MARD Circular 116 on implementation of Decree 66 sets out

criteria for various types of craft villages.

2006

Decree No.

81/2006/NĐ-

CP

Sets penalties for environmental protection violations. Fines

for wastewater discharge above permitted levels range from

VND 100,000 to 70,000,000 (equal USD 5 to 3500).

2006

Directive

28/2007/CT-

BNN

MARD‘s Directive No. 28/2007/CT-BNN requires planning

and zoning to promote rural employment and to address

pollution in craft villages. It assigns responsibilities to local

authorities and Departments under MARD to improve

environment protection in craft villages.

2007

Decree No.

80/2006/NĐ-

CP, Decree

No.

21/2008/NĐ-

CP, Degree

29/2011/ND-

CP and

Circular

26/2011/TT-

BTNMT

Guides implementation of the Environmental Protection Law

via instructions on Environmental Impact Assessment,

environmental protection requirements and the preparation of

environmental protection plans

Decree No. 21 amends some articles of Decree No.

80/2006/NĐ-CP to better suit actual village conditions

The Decree 29/2011/ND-CP and MONRE’s Circular

26/2011/TT-BTNMT replace previous regulations on

procedures and requirements for the preparation of strategic

environmental assessment reports, environmental impact

assessment reports and environmental protection commitment

registrations.

2006/20

08/2011

Circular No.

08/2009/TT-

BTNMT

This Circular provides for the environmental protection and

management of economic zones, hi-tech parks, industrial

parks and industrial complexes at all stages of their

construction, particularly: formulation of construction plans;

investment preparation; investment approval; and

infrastructure construction. It specifies that state management

agencies must restrict the use of agricultural cultivation land

for production space; minimise adverse impacts on the

surrounding environments; ensure that solid waste and

wastewater are treated up to national standards and approve

environmental impact assessment reports.

2009

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MONRE (2008) has found that although Vietnam has made impressive progress in

environmental regulations, the current regulatory arrangements for pollution in craft

villages is inadequate and unclear. Although Provision No. 38 of the 2005

Environmental Protection Law and other regulations mentions environmental

protection in craft villages, there are no concrete guidelines for its implementation, or

how it might apply in different craft villages. Former MONRE minister Pham Khoi

Nguyen has conceded that despite government efforts to protect the environment,

pollution from craft villages has continued to increase, resulting in severe impacts on

the health, social and economic activities of craft communities (Dan Tri news, 24 April

2009)11.

Our research confirms that the regulatory framework for craft pollution is complex and

inappropriately designed. Craft enterprises are treated as mini factories, able to be

individually monitored and regulated, and capable of meeting requirements to produce

environmental management plans and fees for the release of waste water. However, as

outlined in Section 4, craft enterprises are predominantly small in scale, informal in

legal status, and interconnected and dispersed throughout craft villages, which makes

monitoring and regulation far more challenging than the regulation of large scale

enterprises (see Box 8).

A range of implementation challenges were found in our study. As discussed in Section

5, local authorities were reluctant to strictly enforce pollution regulations because of

conflicting interests between economic development and environmental regulation.

Investigations of pollution events were infrequent, and sanctions for pollution

violations were rarely implemented, usually because the regulators were sensitive to

the livelihood imperatives faced by craft producers. There was little action authorities

could take over this non-compliance in light of the informal (unregistered) status of

most enterprises.

11 See http://dantri.com.vn/c25/s20-321114/nhieu-dong-song-dang-doi-mat-voi-an-tu.htm

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Indeed, we found that more than any other factor, the registration status of enterprises

determined whether environmental protection agencies could impose pollution fines

(see Box 8). The situation differed in communities with larger enterprises. For example,

in Duong Noi, where there were many medium to large workshops, enterprises were

more likely to be registered and most of the production stages – weaving, dyeing,

printing and marketing –were undertaken by one enterprise. Here the government

seemed more able to regulate and charge fees to identified polluters. This enforcement

was strengthened after Duong Noi came under Hanoi City administration in 2009.

In summary, our research highlighted that the current ‘one size fits all’ regulatory

framework does not fit with the special characteristics, socio-economic situation and

constraints of craft villages and enterprises (see Box 9). A polluter-pays approach, that

sets fees for individual polluting enterprises, is not only inappropriate for the

economically marginal, poorly resourced, interdependent, small scale and unregistered

majority of craft enterprises, but is also proving impossible for government agencies to

enforce in practice.

Box 8: Regulation and monitoring challenges

“It is very difficult to control production because of the large number of production

households and the differences in production patterns of each household. If their

production is carried out regularly in a specific location, it would be much easier to

control. However, in this village, they produce in their homes and the timing is

unpredictable. Sometimes when the officers visit the house, production is over or has not

begun or has been shut down intentionally to avoid inspection, which creates a lot of

difficulties for us.”

- Commune official, Duong Lieu, March 2010

“The authorities are able to collect environmental protection fees only in industrial zones

but not for small households whose production is spontaneous and unregistered. If the

government does not invest in providing treatment facilities and infrastructure, they have

no rights or mechanism to collect these fees. In industrial zones, the management board

has the rights to collect the fees because they have invested in environmental treatment.”

- District official, Hoai Duc, March 2010

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Box 9: Addressing the special situation of craft villages

“In order to deal with craft village pollution, at least three conditions need to be met. The

first is land, the second is capital and the third is technology. Pollution cannot not be dealt

with one of these conditions is not met. Government regulations can only be applied when

these factors are all met. Otherwise, craft villages have to change their occupation [if

pollution is to be reduced]. However, in order to change their occupation, there needs to be

good planning, training and other support policies that enable craft producers to shift into

another occupation. This is a difficult problem. Crafting has already become an essential

part of local people’s life and culture.”

- District official, Hoai Duc, March 2010

6.2 Coordination and delineation of responsibilities

Addressing an environmental issue like water pollution requires not only local action,

but coordination between different levels of government. In Vietnam, the central

government is responsible for national policies and laws for craft village development

and environmental management. The provincial government administers state budgets

and is responsible for planning, regulation and enforcement. The district government

also has planning and regulatory responsibilities, and deals with monitoring and

approvals. The sub-district or commune level of government comprises elected officials

from the constituent villages and carries out the day-to-day monitoring and reporting

on craft activities (MONRE 2008; Kerkvliet 2004).

MONRE (2008) acknowledges that coordination between levels of government has been

a challenge, in part due to an unclear delineation of responsibilities for environmental

protection in craft villages between ministries, departments, and local government. In

theory, the two ministries in charge of developing craft villages are the Ministry for

Agriculture and Rural Development (MARD) and the Ministry of Industry and Trade,

while the Ministry of Natural Resources and Environment (MONRE) is in charge of

environmental protection. In reality, coordination is weak, management tasks lack

definition and responsibilities overlap between ministries.

Lapses in vertical (between different levels of government) and horizontal (within one

level of government) coordination has already been identified as a major barrier to

environmental governance in Vietnam (Kerkvliet 2004; O'Rourke 2004;

Konstadakopulos 2008). MONRE has carriage of environmental management; MARD

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(Ministry of Agriculture and Rural Development) is responsible for forest protection

and fostering rural development, including the promotion of handicrafts; MARD's

Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt

Production is responsible for planning and promoting craft development. The Ministry

of Construction is responsible for planning the construction of urban infrastructure,

industrial parks, economic zones, urban drinking water and waste water facilities; and

the MIT (Ministry of Industry and Technology) is in charge of managing industrial zones

and registered enterprises but not small enterprises in craft villages. At the provincial

level, responsibility for environmental management rests with the provincial offices of

MONRE (known as DONRE). However, the effectiveness of these offices varies greatly,

depending on factors such as the size of the province, its level of economic development

and the priority given by provincial leaders to environmental protection

(Konstadakopulos 2008; Le 2006: 24).

Our findings affirmed that this is a continuing reason for weak implementation of craft

village pollution policies and regulations. Furthermore, we found that the role of

commune authorities may be underutilised. Given their proximity to craft villages,

authorities at the level of the commune enjoyed the strongest relationships with

producers. Communes, however, had limited authority on issues of land and

infrastructure provision and monitoring, which were central to pollution management.

In interviews, commune officials said they lacked the staff and resources to monitor

pollution and enforce compliance (Commune official, Moc Nam, July 2010).

The preceding discussion highlights the inherent challenges of effective inter-scale

governance in environments where there are poor resources and coordination.

Although decentralisation in Vietnam creates the scope for more locally nuanced

implementation, in practice the weaknesses in coordination, capacity and resources

within and between levels of government undermines this possibility (Sikor 2001). In

particular, the role of commune authorities needs further consideration. An expanded

role could build on existing close relationships with craft producers, but would need to

be supported with appropriate resources and capacity building.

MONRE (2008) has recognised that a key area for regulatory improvement will be to

strengthen environmental management bodies at the commune, district and township

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level, in order to reinforce the implementation of environmental protection laws and

regulation in craft villages (Dang & Nguyen 2005; MONRE 2008). Our research also

supports the view that the commune is a key level in environmental management

because commune officials understand the local conditions and activities of each

household, and are therefore in a better position to successfully implement workable

management solutions on the ground.

6.3 Planning and infrastructure provision

As described in Section 4, craft villages have undergone rapid, unplanned development,

leading to inadequate and late development of infrastructure as well as a lack of

planning for production. Many enterprises continue to operate in residential areas. In

most craft villages, craft enterprises have developed spontaneously in response to

market demand, with each enterprise determining the type and scale of production,

inputs and location of operation, without reference to any regulations or plans (Dang et

al 2005, p. 168; VACNE 2004).

In each of the four cases we found that the quantity of waste from craft villages far

outweighs the capacity of existing infrastructure such as drainage, waste storage and

treatment facilities, to manage it. Waste management pilot projects have been poorly

planned and conceived, with many falling over as soon as funding finishes, if not sooner

(see Box 10).

Box 10: The challenges of waste water treatment

Hoai Duc district invested in a treatment project in 1994-1995 by establishing the Mat Troi

Xanh company which was supposed to treat waste water and convert solid waste to make

bio-fertilizers. Since its establishment, the company has faced great difficulties because they

could not find market outlets for the bio-fertilizers. At the moment, the company treats less

than 10per cent of solid waste and cannot treat waste water. The amount of waste is now 10

times the amount in 1994 due to changes in production technology and production

expansion.

-Distict official, Hoai Duc, March 2010

In order to concentrate and treat pollution in craft villages, some provinces and cities

have initiated policies to develop industrial zones or production concentration areas for

craft villages. Such zones existed or were planned in the four case study communes

where this research was conducted. In one case, Duong Noi, urban expansion had

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overridden plans for an industrial zone although producers were keen for such

production space to be made available. However, since being absorbed into the

boundaries of Hanoi, approval for the industrial zone lay with the City of Hanoi and not

commune authorities.

Where zones were being established, in general we found a lack of clear planning and

strategy for production and waste treatment. Infrastructure was often limited to roads

and electricity, and sometimes extended to drainage systems. In order for industrial

zoning to have an effect on water pollution levels, treatment facilities must be in place,

but nowhere did we find facilities for collective waste water treatment. As such, the

zones were concentrating, but not treating, pollution. This stemmed in part from

resource limitations as well as poor coordination and delineation of responsibilities and

budgets between different levels of government.

Where zoned village land was made available, it was generally taken up by medium to

large scale enterprises that saw an opportunity to expand their production base.

Smaller producers were less able to bear the costs of moving, and preferred the relative

convenience of working from home. In some cases, production secrets, for instance in

dyeing combinations or designs, fuelled a desire to keep production within the family

home, away from the view of competitors. Provincial authorities confirmed that

amongst those who were able to move, newly zoned land was often used to expand

rather than relocate production, with existing workshops in residential areas continuing

their production. We also found evidence that zoned land was not solely used for

production workshops, but also had residential dwellings, suggesting that land was

being diverted for non-production uses. In any event, the industrial zones in craft

villages did not have common waste treatment facilities, so at this time zoning has not

reduced the release of polluted waste water.

6.4 Limited government resources and capacity

Aside from limited resources, lack of technical capacity was raised as a major concern

by Provincial and District staff. According to recent statistics, 95 per cent of

environmental management staff from the district to village level lack environmental

qualifications (MONRE 2008). Professional development for staff is also very limited,

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which contributes to weak understanding of national policies and inconsistencies in

dealing with environmental issues.

Provincial Departments of Natural Resources and Environment (DONRE) – key players

in managing water pollution – were found to be under-staffed, under-skilled, and lacked

the necessary resources to effectively monitor pollution or to plan and implement waste

treatment infrastructure. The environmental protection fees collected from polluting

enterprises were supposed to supplement the local government budget. Since they were

rarely collected, such fees could not bolster Provincial resources for waste water

treatment. Our findings reflect earlier studies on the limited allocation of funding for

environmental protection activities in Vietnam. Although the Government established

the Vietnam Environmental Protection Fund (VEPF) in 2002 to help localities and

enterprises invest in environmental infrastructure, investment has been poorly

organised, and is still lower than in other Asian countries (KEI and the World Bank

2003).

While the upgrading of production technologies rests with enterprises, the majority of

craft producers expressed the view that waste treatment technology was too capital

intensive for individual enterprises to meet. The government has persisted with a

model for waste treatment that transfers costs to individual businesses, despite the low

capital holdings, competitive pressures and interdependence of most craft enterprise.

Given this, an individualistic approach to waste treatment is unlikely to produce an

overall reduction in pollution (see Box 11). The government will therefore need to

retain a lead role in waste treatment in the craft village context, and allocate sufficient

resources to this function. This does not preclude some level of contribution from craft

enterprises, but this would need to be coordinated to ensure that enterprises

contributed collectively and equitable financial arrangements could be agreed, given the

capital constraints of most enterprises.

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If craft village pollution is to be effectively tackled, then the government at all levels

needs to address deficiencies in technical capacity and in current policies and

regulatory frameworks. They also need to understand the root causes of pollution and

barriers to its effective management both within government and local communities.

Improved vertical and horizontal coordination, capacity building and policy design will

be essential to bolster environmental governance in general and effectively address the

situation of craft village pollution in particular (KEI & World Bank 2003).

6.5 Limited community engagement

In order to increase awareness and incorporate environmental protection into craft

village norms, MONRE (2008) recommends community engagement through education

and information dissemination. While education is important, the government’s

approach is currently limited to increasing awareness, rather than local empowerment

in decision making. Our study has demonstrated that local awareness of pollution, its

causes and its impacts are uniformly high amongst craft producers, but local collective

action to address pollution is low to non-existent. This suggests that community

engagement initiatives need to take a different approach, which focuses on improving

relationships between government and craft entrepreneurs, as well as better

coordination amongst craft producers to support collective strategies for pollution

management.

12 http://vtc16.vn/news/19/4583/Kho-khan-trong-xu-ly-o-nhiem-moi-truong-hieu-qua-tai-lang-nghe

Box 11: Who should pay for pollution treatment?

“It is the government who should treat the pollution, not me; we are just responsible for

concentrating the waste in one area. If the government subsidises us to install individual

treatment facilities, it will cause many problems. If one out of five households installs

treatment facilities, they would incur increased cost and would be not be able to continue

their business.”

- Craft Producer, VTC 16 news, 01/11/201112

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Box 12: All stick and no carrot: poor relations between craft producers and government threaten the effectiveness of pollution reduction strategies

“We are dynamic and responsive but we cannot use all our capacity and potential. When

we joined the village industrial zone we had more space but production space was still

limited and this is difficult for enterprises. Also difficulties come from government policy.

We need support from government. However, the mechanism is not supportive . . . we need

support from authorities to survive, especially tax policies. We are turning waste into a

commodity and contributing to this country. But we find it very difficult to operate. State-

own paper companies use materials from forests and have support from the government

while craft village enterprises have no support. We buy material from garbage collectors

without receipts. That’s why we have to pay higher VAT tax.”

- Large scale paper enterprise, Phong Khe, July 2009

A study of Cat Que commune in Ha Tay (now part of Hanoi city) found that village

communities and local organisations, in particular the Elder’s Association, made a

significant contribution to local environmental management (Nguyen et al. 2003). In

two of the four communes that we examined (Duong Noi and Phong Khe) , there were

producer’s associations in place that facilitated coordination on a limited range of issues

such as price. These associations were not engaged in environmental management, but

could in the future provide a basis for local organisation and collective action regarding

pollution.

Effective collaboration between government and community requires a level of trust

and communication between these parties, as well as institutional arrangements and

tangible commitments of human, financial and technical resources. However, our study

found that (beyond the commune level) communication and trust between craft

producers and local regulators was low. Producers felt they were constantly being

targeted to follow new regulations, while receiving little support to secure their

livelihoods and tackle the pollution problem (see Box 12). Such weaknesses in the

relationship between the government and producers will need to be addressed as part

of any strategy to broaden community engagement in the management of water

pollution. Concerted efforts at consultation and negotiation of pollution management

strategies as well as actual financial commitments to infrastructure development on the

part of government would assist in improving relationships and dispelling mistrust.

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7. Conclusion and policy implications

Based on our research findings, we propose that measures to address craft village

pollution need to work from a rich understanding of the social, political and economic

conditions in which craft enterprises are evolving, rather than applying scaled-down

versions of industrial environmental management policies. The current regulatory

framework does not appear to be based on in-depth knowledge and understanding of

conditions in most craft villages, nor does it seek to enrol producers or local levels of

government in building consensus and developing solutions to craft pollution. These

strategic failings, along with problems of communication, capacity and resourcing

across and between a complex array of responsible government agencies, has created

an ineffective top-down regulatory regime with poor levels of compliance, not only on

the part of craft producers, but implementing levels of government. A summary of

policy approaches that could improve the governance of craft village pollution follows.

Current regulations and policies do not recognise intrinsic differences between craft

enterprises and large industries. Such policies and regulations are more likely to

succeed if they are tailored to the small scale, financially marginal, dispersed and

interconnected characteristics of craft enterprises, rather than a scaled-down version of

regulations designed for large scale industry. One approach might be to set a size

threshold for craft enterprises to which particular regulations such as pollution

penalties, the requirement for environmental management plans, and supportive

measures apply. For example, while medium and large scale polluting enterprises may

be required to register and comply with environmental management plans, smaller

enterprises will need support to change. In the communities studied here, businesses

with over 20 employees, and holding business registration could be a relevant threshold

for the application of fees.

The overlapping jurisdictions and weak coordination cited in this paper need to be

addressed at several levels of government. Nationally, responsibilities need to be clearly

delineated between ministries dealing with craft villages (MONRE, MARD, MOIT, MOC,

MOF and their decentralised units), with ongoing coordination arrangements in place

(e.g. a working group or committee structure). Special attention could be given to the

future role of commune administrations in tackling environmental pollution,

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particularly as facilitators of greater local engagement. This would include additional

resources (staff, funding) as well as training to build capacity of commune authorities.

The poor planning and development of industrial zones in craft villages is another area

for future attention, and will remain an important means to concentrate highly polluting

enterprises in order to treat their waste water. However, these land-constrained zones

need to more effectively target the most polluting types of craft villages and enterprises.

Value chain analysis and environmental impact assessment can help to identify the most

polluting stages of pollution and relevant workshops. Targeted enterprises will most

likely need support to relocate in the form of financial incentives and co-financing.

Importantly, there is a need to guard against industrial zones being used to expand

production or for residential purposes. They also need to be standardised and provided

with the necessary infrastructure and processes to treat pollution, rather than simply

concentrating it. In this context, pilot treatment facilities can be useful in testing new

and appropriate technologies; however they need to overcome the piecemeal and

ineffective pilot activities of the past. For instance, they might be trialled at the level of

an industrial zone rather than at an enterprise level, and should incorporate capacity

development and ongoing financing mechanisms to address the institutional and capital

constraints that have undermined previous pilots.

So far, the limited government investment in infrastructure has shifted the costs of

addressing pollution to capital-poor enterprises. In the future, it will be important for

government to take the lead in investment in and in coordinating the development of

waste treatment infrastructure, in collaboration with craft enterprises. As provincial

budgets are insufficient to develop the infrastructure and systems needed for water

treatment, central government investment should be considered, along with

mechanisms to support co-financing by craft producers. Incentives to craft producers to

encourage the uptake of cleaner technologies could also be effective, for example tax

incentives and loans with favourable interest rates.

The limited government capacity to implement current pollution regulations can be

dealt with in three major ways. Firstly, it is important to simplify, improve and tighten

the regulatory framework. Secondly, at every level of government, the capacity of

individual staff and organisations to develop and implement environmental policies and

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regulations needs to be strengthened. Important areas for attention include institutional

coordination, incentive structures and ongoing staff development. Information on craft

village pollution and health impacts are insufficient and inconsistent, and more

comprehensive data is needed to inform and guide authorities and craft producers in

their decision making regarding pollution prevention and control. Finally, the illegal

import and use of unlabelled toxic chemicals and waste materials needs to be

controlled, if rural Vietnam is to avoid becoming a dumping site for international

wastes.

While the government cites community engagement as an important strategy, there is a

tendency to focus on awareness-raising rather than joint action. In order to strengthen

relationships between the key stakeholders (different levels of government, producers,

communes), a collaborative approach to addressing craft village pollution is needed.

This will involve further consultations with producers to ensure their livelihoods and

other interests are addressed in policies, thus gaining their commitment to policy

implementation. In particular, the role of civil society in managing environmental

pollution could be encouraged both within craft villages and externally.

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