PFES experiences in Lam Dong andPFES experiences in Lam Dong andSon La provinces, Viet NamSon La provinces, Viet NamDr. Nguyen Chi Thanh Director of the Research Center of Forest and Wetlands (FORWET)Key member of the PFES policy makers group

EBA Workshop in Ha Noi, 15-16 October 2013

What PES policies that Viet Nam has issued?

The Law of Biodiversity (2008) stipulates in the Article 74 (Environmental services related to biodiversity) that:

1. Organizations and individuals using environmental services related to biodiversity shall pay charges to service providers.

2. The Government shall specify environmental services related to biodiversity.

This is a regulation of the Biodiversity Law, not is a policy for implementation yet

The policy on Payment for Forest Environmental Services(PFES) to implement

the Law of Forest Protection and Development and the Law of Biodiversity

The Vietnamese Government issued the Decree No.99 dated 24/9/2010 on the policy of PFES

This policy shall apply to: State agencies; Organizations, households, individuals, village communities in the country; Vietnamese residing overseas, foreign organizations and individuals

with operations relating to supply, use, and payment for forest environmental services and management of the payment from forest environmental services

Why the Government of Vietnam Why the Government of Vietnam issued the issued the Policy on Payment Policy on Payment for Forest for Forest EnvironmentalEnvironmentalServices?Services?

Viet Nam has: Viet Nam has: Over 10,000,000 ha of natural forestOver 10,000,000 ha of natural forest 80% of which is low quality80% of which is low quality

At present, natural At present, natural forests have been forests have been destroying even the destroying even the special use forests and special use forests and watershed protection watershed protection forestsforests

Over 20 millions people living in the forest andOver 20 millions people living in the forest and moutainous areas moutainous areas

They are mostly ethnic minority people and They are mostly ethnic minority people and the poorsthe poors

Their subsistance is still depending on forest,Their subsistance is still depending on forest, have not been improved by forest employment have not been improved by forest employment

Social awareness on forest value is still limitedSocial awareness on forest value is still limited

Many consider that forest is created by natureMany consider that forest is created by nature so they take it for granted and investment intoso they take it for granted and investment into forest is responsibilities of the Governmentforest is responsibilities of the Government

The state budget is not enough to coverThe state budget is not enough to cover activities of protection for over 10 millions haactivities of protection for over 10 millions ha of natural forestof natural forest

Therefore a new financing mechanism for forest Therefore a new financing mechanism for forest protection in close linkage with livelihoodprotection in close linkage with livelihood improvement for local people is very urgent improvement for local people is very urgent and and neededneeded

That is reason why the Government of Viet Nam That is reason why the Government of Viet Nam issued the Decree on Payment for Forest issued the Decree on Payment for Forest Environmental Services (PFES) Environmental Services (PFES)

Objectives of the policy are: Objectives of the policy are: to prevent deforestation and forest to prevent deforestation and forest degradationdegradation to eleminate hunger and reduce poverty forto eleminate hunger and reduce poverty for local people local people to develop socialization of forest protectionto develop socialization of forest protection to develop a new financing mechanism forto develop a new financing mechanism for protecting forest protecting forest

Some main concepts of the Some main concepts of the PFES policy that are stipulatedPFES policy that are stipulatedby Vietnamese Government:by Vietnamese Government:

What is forest environmental services?What is forest environmental services?

Forest environmental service is the Forest environmental service is the work to provide the use values of forest work to provide the use values of forest environment to meet the needs of the environment to meet the needs of the society and people society and people

What is payment for forest What is payment for forest environmental services?environmental services?

Payment for forest environmental Payment for forest environmental services is a providing and payment services is a providing and payment relationship in which the users of forest relationship in which the users of forest environmental services pay to the environmental services pay to the suppliers of forest environmental suppliers of forest environmental services services

What are types of PFES?What are types of PFES?

2. Regulation and maintenance of water 2. Regulation and maintenance of water sources for production and living activities sources for production and living activities of the societyof the society

1. Soil protection, reduction of erosion and 1. Soil protection, reduction of erosion and sedimentation of reservoirs, rivers, and sedimentation of reservoirs, rivers, and streamsstreams

3. Forest carbon sequestration and 3. Forest carbon sequestration and retention, reduction of emissions of retention, reduction of emissions of green house gases through measures green house gases through measures for preventing forest degradation and for preventing forest degradation and loss of forest area, and for forest loss of forest area, and for forest sustainable developmentsustainable development

4. Protection of natural landscape and 4. Protection of natural landscape and conservation of biodiversity of forest conservation of biodiversity of forest ecosystems for tourism servicesecosystems for tourism services

5. Provision of spawning grounds, sources of 5. Provision of spawning grounds, sources of feeds, and natural seeds, use of water from feeds, and natural seeds, use of water from forest for aquacultureforest for aquaculture

Mechanism on Payment Mechanism on Payment for Forest Environmental for Forest Environmental

Services in Viet NamServices in Viet Nam

UsersUsers

PayersPayers

Forest Forest FundFund

ProvidersProviders

FES providing

FES providing

PayingPaying

PFES in coastal wetland ecosystemsPFES in coastal wetland ecosystems

ProviderProvider

UserUser

Provider

Provider

UserUser

PROGRESS OF PFES POLICY IN VIET NAMPROGRESS OF PFES POLICY IN VIET NAM

2007Idea & policy

writing

10/4/2008 – Decision 380PM decided piloting PFES policy in Lam Dong & Son La provinces

2010Wrap up

piloting work

24/9/2010 – Decree 99Government decided

implementing PFES policy in whole country up to now

Decision 380 of the PM dated 10/4/2008 Decision 380 of the PM dated 10/4/2008 on piloting PFES in Lam Dong and Son La on piloting PFES in Lam Dong and Son La

provincesprovincesForest environmenal services for piloting: 1.Soil protection, reduction of erosion and sedimentation of reservoirs, rivers, and streams

for Hydropower electricity production

2.Regulation and maintenance of water sources for production and living activities of the society

for Living water production

3.Protection of natural landscape and conservation of biodiversity of natural forest ecosystems

for Tourism services

Payment levels regulated in the Payment levels regulated in the Decision 380 of the PM dated 10/4/2008Decision 380 of the PM dated 10/4/2008

20 VND/KWhCommondity of electricity

40 VND/m3

Commondity of water

1-2 %Revenue of tourism in period

General achievements after two years of General achievements after two years of PFES piloting in Lam Dong and Son La under PFES piloting in Lam Dong and Son La under the Decision 380 of the PM dated 10/4/2008the Decision 380 of the PM dated 10/4/2008

FES suppliers in Lam Dong were: Forest owner is MB of Da Nhim Forest Protection 3,342 local contracted HHs of poor and ethnic minority 112,208 ha of watershed forest of Da Nhim river

FES users in Lam Dong were: Da Nhim Hydropower Company Dai Ninh Hydropower Company Sai Gon Water Company (SAWACO) Tourism Companies in Da Lat city

11

FES suppliers in Son La were: 4,507 organizations, FMUs, households, household groups, communities locate in 9 communes of 9 districts 50,894 ha of watershed forest of Da river

FES users in Son La were: Hoa Binh Hydropower Company Suoi Sap Hydropower Company Son La Water Company

22

Total PFES fund that Lam Dong province received in two piloting years of 2009 and 2010 is 108 billion VND equivalent to $US 5.4 million

33

Total PFES fund that Son La province received in piloting year of 2009 is 60 billion VND equivalent to $US 3.2 million

44

Ave. PFES fund of one HH in Lam Dong is 11 mill. VND/yearAverage PFES fund of one HH in Son La is 8 mill. VND/yearThis amount is very significant for poor and ethnic HHs though this is still limited to cover their subsistence

55

Forest protection is better. Number of illegal violation to forest reduced 50% in two years 2009 and 201088

The people of Ho Chi Minh City has been paying for their water using service monthly for forest protectors in the upstream region of Dong Nai river

99

Local households understand clearly position, boundary, area of the forest plot that they have to protect66

Hydropower, water and tourism busineses understand clearly their obligation on payment of PFES fund77

It is the first time in Viet Nam the forest protection work is recognized as a service and the payment mechanism is established and implemented in the context of forest and forest land is managed by the State, not private property

1010

The PFES policy makes the local people living in forest area very happy because they are received money by their labor to protect forest with the detail objectives and higher than the money they receive before

1111

Current situation on PFES Current situation on PFES Implementation in Viet NamImplementation in Viet Nam

At present, the PFES policy under the Decree 99 has been implementing payment in 25 provinces

with the total PFES fund in 2012 is 1,172,000,000 VND equivalent to $US 57,000,000

About 500,000 poor local households who are PFES suppliers received PFES fund

About 3,500,000 ha of forest which are forest area to supply forest environmental services are protected and illegal violations to forest reduced 50% for 4 years

from 2008 to 2012

There are 3 forest environmental service types which have been implementing in 25 provinces, including:

Service 1: Soil protection, reduction of erosion and sedimentation of reservoirs, rivers, and streams

Service 2: Regulation and maintenance of water sources for production and living activities of the society

Service 4: Protection of natural landscape and conservation of biodiversity of forest ecosystems for tourism services

Two forest environmental service types which have been waiting for guiding documents of the Prime Minister for

implementation, including:

Service 3: Forest carbon sequestration and retention, reduction of emissions of green house gases through measures for preventing forest degradation and loss of forest area, and for forest sustainable development

Service 5: Provision of spawning grounds, sources of feeds, and natural seeds, use of water from forest for aquaculture

The experiences from PFES The experiences from PFES policy of Viet Nam for sharingpolicy of Viet Nam for sharing

FES users/payers

PFES Fund FES providers

GovernmentGovernment

Forestmanagers

Contractedhouseholds

1. The role of the Government is very important

2. Awareness raising of PFES policy for levels from the top to the root is very important

PFES POLICY PFES POLICY

3. Accuracy of forest data for forest plot of each household is very important to determine exactly obligation on forest protection and benefit

Household

Forest plot

4. Current payment levels are still limited to meet the daily subsistance of the poor people who are forest environmental services suppliers in moutainous region

20 VND/KWh

40 VND/m3

1-2% revenue

5. PFES monitoring action is very important but this is not regulated in the Decree 99 yet

The monitoring activities shall be include:

Monitoring variation of forest area and illegal impacts to forest

Monitoring income of local households

Monitoring livelihood of local households

Thank you Thank you for your attentionfor your attention