Payment for forest environmental services: encouraging results but constraints remain

Payment for forest environmental services: encouraging results but constraints remain

Viet Nam - 24 July, 2017

Payment for Forest Environmental Services has created considerable impacts in terms of relieving the Vietnamese government’s financial burden towards forest protection and development, is the main conclusion derived from the discussions during the workshop “Disseminating the Policy of Payment for Forest Environmental Services (PFES) to Contribute to Sustainable Forest Management and Improved Livelihoods of Ethnic Minority People in the Uplands.” The workshop was jointly organized by Tropenbos Viet Nam and Vietnam Forest Science Technology Association (VIFA) on 27 June 2017 in Ha Noi.

Between 2011-2016 more than VND 6.51 billion, equivalent to USD 287 million, were collected from forest environmental services, from which hydropower plants paid 97.04%. Approximately 5.87 million hectares, 42% of the total nationwide forest area, have received payment thanks to their environmental service provisions. The fees collected from PFES build up to 22% of the annual investment funds for the forest sector, a huge amount that contributes to effective forest protection and development in Viet Nam. A new decree issued in 2016, to increase the fees paid by hydropower plants and water supply providers (Decree 147/2016/ND-CP) created a new boost to the fees collected, around VND 1.70 billion annually (or USD 75 million).


Apart from the ample results mentioned above, certain constraints remain. These are: 1)the low payments for PFES established by the law fail to create an incentive for local people to protect the forest; 2) the uneven distribution of hydropower plants and water companies in the same region and between regions results in differences in the amounts available to pay for environmental services, in some cases people in the same river basin are payed while others don’t receive any benefit, which lead to conflicts among local people; 3) for 3 out of the 5 environmental services identified by Decree 99 (on PFES, released on 24 September 2010 by the Government of Viet Nam) fees are being paid, namely hydropower plants, water supply providers and tourism enterprises, while carbon sequestration and mangrove forest are not yet operational; 4) the legal status of the provincial forest protection and development funds, known as a trust funds, which collects the fees from users and pays to the providers is still unclear; and 5) inconsistent understanding of the nature of PFES cause difficulties for PFES implementation and management.


A recommendation derived from the workshop and for which all participants agreed was that further research is needed to feed the policy with sound knowledge and recommendations.