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An analysis of payment modalities in Vietnam – Lessons learnt from 7 provinces
Hanoi, 11th November 2015
Pham Thu Thuy and Le Ngoc Dung
Outline Background study/Research questions Methods Findings:
Equity discourse Forms of payment: In-kind vs. In cash Frequency of payment Payment distribution approach
Key messages
Key research questions What is the current discourse on benefit sharing and PFES
payment in Vietnam ? Are PFES payment made in-kind or in cash or in another
form? What criteria/factors local people use to choose in-kind and in cash payment ?
How frequently payments are being made in Vietnam ? And how does this frequency influence the PFES outcomes ?
What are existing payment mechanism be used by local people ? What are the pros and cons of those mechanism and their influence on PFES outcomes ?
Methodology
Literature review from lessons learnt on PES benefit distribution both internationally and nationwide
Semi-structured interviews: FPDFs, forest rangers and local authorities in 7 provinces
Focus Group Discussions: 15 FGDs with villagers
In-depth interviews: 351 in-depth interviews with villagers
Current equity discourse under PFES in Vietnam- Conflicting views and discourse at different level
• Benefits should go to forest stewards ("stewardship" rationale)
• Benefits should go to the poor ("pro-poor" rationale)
Benefits should go to actors with legal rights related to ecosystem services supply ("legal rights" rationale)
- Benefits should go to those who contribute to forest protection (“contribution" rationale)- actors incurring costs should be compensated ("cost-compensation" rationale)- benefits should go to effective facilitators of implementation ("facilitation" rationale)
Are PFES payment made in-kind or in cash ?
Provinces In-kind In- cash Combination of in-kind and in-cash
Son La x
Dien Bien x
Nghe An x
Bac Kan x
Lao Cai x
Thai Nguyen x
Lam Dong x
Factors influencing in-kind vs. in cashFactors In-kind In-cash Combination of in-
kind and in-cash
Distance to market and infrastructure
Long distance Close/short distance
Close/short distance
Level of incomes/wealthy
Disadvantaged communities
Relatively wealthy
communities
Disadvantaged communities
Level of trust – local communities towards governmental actors
High Low High
Existence of strong collective action and customary law
Strong presence Absence Formal and informal system exist
Financial capacities of authorities and villagers
Good capacities Weak capacities Good capacities
Pros and cons of in-kind and in-cashAdvantages Disadvantages
In cash • Greater flexibility in the use of resources
• Less prone to be seen as paternalism
• Reinvestment to other land uses• Raise participation in communal
tasks
• Reduce social motivations in case of collective action made on the basic of social norm
• Depends on financial management skills
• Investment in certain type of land uses creates pressure to forest
• Different implications of promoting collective action
In kind • More likely to lead to long-lasting benefits and predicable welfare improvement
• Potential to benefit the whole community
• Less flexibility• Might be seen as paternalism• Ambiguous implications for
promoting collective action within groups
• Depends on decision-making process
Frequency of payment ?Frequency of payment
Ratio Rationale
Son La 1 100%
Dien Bien 2 50-50
Nghe An 1 100%
Lao Cai 2 10-90 for HHs, 90-10 for state organisations
State orgs are more accountable
Bac Kan 2 50 – 50 for HHs and communities; 80 – 20 for state organizations
State orgs are more accountable
Thai Nguyen 1 100% Payment only made after ES is delivered
Lam Dong 4 20 – 20 – 20 - 40 Spread out to create stronger incentives
Paradox
PROVINCIAL FOREST PROTECTION AND DEVELOPMENT FUND
LOCAL COMMUNITIES
Small payment is okie as long as it is paid
when we need (harvesting time,
seedling requirements, school fees), and fixed when it will be made
Payment is made depend on availability and schedule of the Fund, cannot be
fixed
Paradox
PROVINCIAL FOREST PROTECTION AND DEVELOPMENT FUND
LOCAL COMMUNITIES
• Lack of incentives• Inequity between
State orgs vs. communities
State-owned orgs: 90-100%/1st payment
Individual: 20% - 30%/time
How the PFES payment is currently distributed?Province Distribute to
individual households
Payment through cooperatives
Payment to Forest Protection group
Payments to groups of households
Building infrastructure/improve communities hall
Setting up micro credit
Other forms
Son La x x x x x
Dien Bien x x x x
Nghe An x x x
Thai Nguyen
x
Bac Kan
Lao Cai x x x
Lam Dong x
3Es in options of benefit distribution intra communitiesOptions Effectiveness Efficiency Equity
Payments made to forest protection groups
Incentives for regular Low level of payment Few villagers can benefit
Common assets for community hall
Enhances community collective action
Does little to support the community’s economic development
All villagers can benefit
Building infrastructure Support livelihood development; reduce pressure on forest
Payments might not be sufficient to cover the costs of infrastructure
All villagers can benefit
Equal payments to all households
Enhances villager’s responsibility; reduce elite capture
Low level of payment All villagers can benefit (performance-based?)
Microcredit and livelihood strategies
Livelihood development; pressure on forests
A small number of households can benefit
Criteria to classify “poor” households
When to choose what BDS ?Enabling conditions
Individual households
HHs manage large area under PFES sufficient revenues and strong incentivesHomogenous conditions for HHs, neighbours have similar conditions and incentives
Group of households (10-15HHs)
HomogenousHistory of working together, same ethnic groupsWell-established groups (trust) amongst members
Cooperatives Group has a history of working towards livelihood improvements beforeAccountable structure should be in place
Village Fund Accountable systemStrong and accountable village leadershipClear monitoring and auditing protocol
Factors for relevant BDS selection Size of payment Social motivation complement with existing financial
incentives History of collective actions Leadership, financial capacity and accountability of local
management Discourse on equity and local preferences of local people on
BDS Location of the sites
Conclusions and key messages Combination of both in cash and in kind could
leverage the impacts of PFES Fixed schedule tailored to the need of local people
enhance commitment in delivering ES Ratio of payment needs to ensure the ES is
actually delivered A mixture of payment ensure benefits reach to
different groups and reduce the risks of inequity No one size fits all recipes and need to be locally
adapted Local preferences and perceptions changes
overtime - BDS has to be adapted overtime
We acknowledge the support from:the Norwegian Agency for Development Cooperation (Norad), the Australian Department of Foreign Affairs and Trade (DFAT), the European Union (EU), the UK Government, USAID, the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) and the CGIAR Research Program on Forests, Trees and Agroforestry (CRP-FTA) with financial support from the CGIAR Fund.
& all research partners and individuals that have contributed to the GCS research
Thanks