EVALUATION OF THE PILOT PAYMENTS FOR FOREST ENVIRONMENTAL SERVICESCASE STUDY IN LAM DONG PROVINCE, VIET NAM

Phong Tran1, Bui Duc Tinh, Tran Huu Tuan1Technical Lead, ISET Viet Nam, phongtran@i-s-e-t.org

Overview

Introduction Background Objectives

Project Methodology Analytical framework Data collection

Key Findings Conclusion

Introduction

The Government of Viet Nam has made great efforts to protect and improve forest resources in country Government’s 5 million hectares of forest

(Program 661), National Program 327 of re-greening barren

hills, closing forest gate policy, control illegal activities and forest certification were implemented.

However, achievements have been limited to only some parts of Viet Nam, while significant losses of forests led to loss of biological services

Pilot PFES program

The Decision 380/QD-TTg dated on 10 April 2008 to establish the foundation for the development of the legal framework for a national policy on PFES to socialize the forest protection and development to improve livelihoods of forest laborers to eradicate hunger and reduce poverty for the

mountainous and forest areas. Pilot PFES is considered as tool for forest

protection, carbon sequestration, biodiversity conservation, watershed improvement, local livelihood improvement and bundled services.

Objectives of the research project To evaluate the performance of the PFES

program in Lam Dong To assess the socio-economic and

environmental impacts of the pilot program

To explore the behaviors of stakeholders involved especially service providers and users

Draw lessons and propose recommendations for the development of PFES policy for Vietnam

Methodology

Socio-economic and environmental impacts of the PFES policy on participants were evaluated through quantitative and qualitative data analysis

Data collection Secondary data collected 25 key informant interviews conducted 11 focus group discussions organized 218 household questionnaire surveys completed

and cleaned for data entry and analysis

Analytical framework

Economic impact: The annual household income received from PFES is

measured by amount of money received for forest protection and management activities:

Household income from PFES (VND) = Unit payment (VND/ha) x Forest area managed by household (ha) and income generating by employment opportunities and non-timber products

Change in net profits in pre-PFES and post-PFES period is calculated as (Post-income – Post- expense) – (Pre-income – Pre-expenses).

Changes in net profit = f(district, ethnicity, education, land area, ratio of labor, ratio of dependent and family labor).

Analytical framework

Environmental impact: Total labor-days that households spend for a

hectare of forest protection or conservation per year before and after participated in the PFES

Numbers of illegal logging cases per year before and after applying PFES

Forest area burnt before and after the application of PFES policy

Deforestation rate Local awareness

Study site

Lam Dong is the third largest plateau province on the Central Highlands in Vietnam.

Lam Dong is considered a forest province with forest coverage accounting for 70 percent of the total area.

With 1,179,200 persons living in total area of 9,776km2, Lam Dong is largest population province in Central Highlands

Pilot PFES in Lam Dong

Fund for PFES was collected from the fees of VND 20/kw for hydropower, VND 40/m3 for water supply companies and 1% of total revenue generated from ticket of tourism firms.

2 years (2009 – 2010) pilot PFES program in Lam Dong: There are 584,396 ha of state-owned forest

area were allocated to 7,997 households On average, US$ 500 – 600/household/year

Pilot PFES in Lam Dong

PFES does not use government budget for payment

Fees collected from PFES users and paid to households that are contributing to forest protection.

Total PFES Revenue generated over the 2 years 2009 and 2010 was VND 98.6 billion (nearly US$ 5million).

PFES revenues by its sources

Tourism companies

1%Da Nhim

Hydropower 41%

Dai Ninh Hydropower

48%

Water supply companies

10%

PFES and effects at household level PFES has contributed a significant

improvement in average household income.

A strong economic impact of the PFES program to local households in Lam Dong province

Household income from PFES Household income of PFES depends on the

forest area they protected and the payment rate/ha

In total, the costs for labor, equipment, and materials is about VND 7.7million per year

Benefit change was VND 18.5 million (equivalent US$900) per household

Different benefit by group

Changes in household benefit between different ethnic groups show significant difference.

Despite the positive effects of the PFES program, it apparently failed in counteracting social inequities.

Different benefit by location

The profit between 4 districts in pilot PFES catchments is significance difference

This is partly explained by a far greater proportion of households in Da Lat district are Kinh while more other ethnic (non-Kinh) groups are living in other districts.

Predictor of profit changes

Yi = βo + β1X1i + β2 X2i + …βn Xni + εi Where:

Yi – profit changes of households Pre-PFES and Post-PFES

βi – Coefficient of predictor i Xi - Predictor I

Three predictors having negative impacts on profit changes of households, including ethnicity of respondents, distance to PFES forest, and number of dependents in household

Impacts on poverty reduction Significant positive effect of the PFES

program on poverty reduction

PFES and Environment protection The pilot PFES program has generated significant

change in forest management at household level. Households involved in the PFES program have

formed groups to protect the forests allocated to them.

Each group operated as community-based forest management unit. The number of forest fires decreased significantly The number of illegal logging cases reduced

significantly (50%) The area of forest invaded/encroached has been

reduced.

Other impacts

The source of income from PFES is more stable than from illegal invasion in to forest.

Payment rate by PFES program largely depend on their achievements in forest protection.

The quality of forest is better by PFES program, however it is difficult to evaluate the quality of forest as the Pilot PFES has only adopted in 2 years.

A common concern of users is the quality of forest services and responsibility of PFES providers in maintaining it

Challenges

The main questions are how to manage and evaluate the quality forest services, when the quality is affected by many factors, both human-made and natural factors.

No mechanisms for monitoring and evaluation of PFES services and define the rights and tasks of PFES providers in the pilot PFES

PFES users have not clearly understood about the framework of PFES program, which is a constraint to their willingness to participate in PFES program

Conclusion and policy implication Pilot PFES created positive effects on local

livelihoods, particularly for the poor households, in terms of income improvement and poverty reduction.

The contribution of income source from PFES program to household income is accounted for about 32 percent in 2010.

Pilot PFES has also contributed to raising awareness to environmental issues and the role of forests to different stakeholders.

Pilot PFES has significantly contributed to forest service improvement and forest protection.

The pilot PFES has exacerbated social inequities between Kinh and non-Kinh minorities.