Implementation of Payment for Forest Environmental Services in Vietnam

Viet Nam Forest protection and Development Fund – Ministry of Agriculture & Rural Development

IMPLEMENTATION 0F PAYMENT FOR FOREST ENVIRONMENTAL SERVICES IN VIET NAM

Pham Van [email protected]

Vietnam Forest Protection and Development Fund (VNFF)Ministry of Agriculture and Rural Development (MARD)

Jakarta, May 2014


Background; Mobilization of the

PFES payments; Utilization of the

Fund; Current status,

equity & challenges;

CONTENT


14/01/2008Degree 05, on the Forest Protection and Development Fund (FPDF)

10/04/2008 Decision 380, on payments for forest environmental services (Piloted in Lam Dong & Son La)

24/09/2010 Degree 99, on policies for payments for forest environmental services(nationwide)

Background

05/02/2007Viet Nam Forestry Development Strategy 2006-2020

Vietnam is the first country in Asia to

initiate a nationwide PFES scheme


Background

Relation

PFES Policy

Forest Authorities 2

Controlling / management of forest quantity and quality

FUNDs

3

M&E and supervising PFES implementation

4Entrusted contracts of PFES (applies to indirect payment)

Ecosystem USERs

Forest Owners

1FES buyers/users & sellers/providers (applies to direct payment)


Mobilization of the PFES payments

Carbon sequestration, Aquaculture…

Hydropower

Water supply

Tourism

Industrial production

40 VND/m3

20 VND/Kw

H

1% - 2%Annual income

…ongoing

…ongoing

~ 98%

~ 2 %

~ 0.1 %

User of the EcosystemPaymentsources


Year Hydropower Clean water Tourism Total (USD)2009 5,950,302 327,655 14,535 6,292,492

2010 3,323,580 530,120 17,242 3,870,942

2011 12,728,523 689,514 31,708 13,449,745

2012 54,889,864 803,547 41,431 55,734,842

2013 49,574,948 1,136,482 52,234 50,763,664

2014 (QI) 17,323,580

PFES Revenue

Mobilization of the PFES payments


Utilization of the Fund

PFES SUPPLIERS (FOREST

OWNERS)

HOUSEHOLDS, INDIVIDUALS (can use 100% of received amount)

ORGANIZATIONS(deduct 10% for

administration costs)

PFES Users 100%VNFF

(Keep 0.5% administration costs)

99.5%

Provincial FPDFs(Keep maximum 10%

administration costs + 5% contingency)85%

Utilization procedure

100%


Current status, equity & challenges

Economic impacts: • Implementation of the PFES policy = increasing the

contributions of the forest sector in the national economy;• Signed 281 entrusted contracts with hydropower plants

(190), water suppliers (51) and tourism facilities (40); • 35 funds are established;• Annual revenue above 50 million USD.

Impacts


Current status, equity & challenges (cont)

Environmental impacts: - Violation cases of forest management and protection have been reduced 40%.Violations 2008 2009 2010 2011 2012 2013

Cases 42,429 40,841 33,821 29,551 28,565 25,776

Violated area (ha) 3,172 2,072 1,747 2,186 1,164 694

- Above 4.1 million ha was determined to implement PFES, in there around 3.6 million ha was contracted for forest protection.

Indicators 2008 2009 2010 2011 2012

Forest area (million ha) 12,84 12,90 13,03 13,14 13,46

Forest coverage (%) 38,70 39,10 39,50 39,70 39,90

Impacts



Total payment to forest owner per year = Average unit payment per ha of forest * Forest area

managed for services * K-coefficient (K = K1*K2*K3*K4 )

K1 – Forest volume status: 1.00 (rich); 0.95 (medium); 0.90 (poor & rehabilitated);K2 – Forest function: 1,00 (special use); 0,95 (protection); 0,90 (production);K3 – Forest origination: 1,00 (natural forest); 0,90 (plantation);K4 – Difficulty of forest protection: 1,00 (very difficult); 0,95 (difficult); 0,90 (less difficult).

Equity



K-coefficient applicationPeople’s Committees of province will base on the specific conditions of their provinces & cities to specify number of the sub K factors applicable to their respective provinces. (Circular no 80/2011/TT-BNNPTNT dated 23/11/2011 on methods to determine for PFES, issued by MARD).

K-coefficients have not fully applied due to lack of forest inventory data;

Provinces have just applied K2 & K3-coefficient; applying K=1 in some provinces.

Equity



Using different K-coefficients is appropriate, but it is difficult to explain the system to communities & can provoke conflicts between community members;

Due to lack of forest inventory data, so local communities have not agreed on the value of the K-coefficients.

Equity - Occasional Paper

Recommendations: “For PFES to have outcomes that are effective, efficient and equitable, however, policy makers must also work toward developing a functional M&E system with an accessible grievance mechanism, to ensure transparency & accountability in the distribution of PFES revenues from central to local levels…”



No Indicator 2008 2009 2010 2011 2012 2013

1 Electricity price (VND/kwh)

890 948,5 1.058 1.242 1.437 1.508

2 The payment rate of hydropower plants compared to the electricity selling price (%)

2,25 2,11 1,89 1,61 1,39 1,32

Equity

Annual inflation, electricity selling price increased but the payments of buyers have been unchanged



Equity

The average level of payment of the amount determined forest area for PFES in VN (2013) is around 10,6 USD/ha/year;

Too different levels of payments among basins in some provinces such as Gia Lai, Yen Bai, Dak Nong, Kon Tum…

Different levels of payments for forest owners:

Province Payment level/ha/year (USD)

Lam Dong 14- 21

Gia Lai 0.1 - 10

Yen Bai 1 - 22


Current status, equity & challenges (cont)Equity - Solution

Implement the “national forest inventory program period 2013-2016”, one of the important objective of the program is supporting to PFES payments;

Propose to revise the Degree no 99 on policies for PFES;

Strengthen capacity for government officers & improve communication related to PFES to local communities;

Finalize guidelines / policies related to carbon sequestration, aquaculture, water for industrial zones & factories;

Improve the M&E system.


Current status, equity & challenges (cont)Challenges

Direction for PFES implementation is not timely;

Mechanisms, levels of payments for forest owners are not realistic;

Payments of hydropower plants are still delayed;

Lack of guidelines for aquaculture, carbon sequestration, Industrial production facilities;


Many thanks!

Pham Van [email protected]

Vietnam Forest Protection and Development Fund (VNFF)Ministry of Agriculture and Rural Development (MARD)

Implementation of Payment for Forest Environmental Services in Vietnam

Education

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pfes payments utilization