PAYMENTS FOR FOREST ENVIRONMENTALSERVICES IN VIET NAM
Mr. Pham Hong Luong, Deputy Director
Department of Planning and Finance, VNFOREST
luong_phamhong71@yahoo.com

FFPRI International Seminar on REDD+ Finance Mechanism
Tokyo, Japan, February 3-4, 2015
1

OUTLINE OF PRESENTATION
1. Background of policy
2. Results/Initial impacts
3. Problems/difficulties need to be solved
4. Lessons learnt and Recommendations2

1. BACK GROUND OF THE POLICY
Vietnam is one of the firstcountries in Southeast Asiaand the world to initiate anationwide PFES scheme

14/01/2008Decree 05 on
05/02/2007 the Forest
Protection andViet Nam
Development
Forestry
Development Fund
Strategy
2006-2020

24/09/2010
Decree 99
10/04/2008
on theDecision 380
policy onon the Pilot
payment forpolicy on
forestpayment forenvironmen
forestenvironmental tal services
services (Lamimplementi
Dong & SonngLa)
nationwide

3

4

Level of Payment for each FES User
Hydropower generators

20 VND/kwh

Clean water suppliers

40 VND/m3

Industrial production facilities

On-going

Tourist service providers

1-2% ofrevenue

Others (carbon sequestration, aquaculture)

On-going5

PFES Distribution Mechanism
VNFF AT NATIONAL LEVEL(0,5% for administration fee)

FES USERS
100%99,5%

FES DELIVERS(Forest owners,organizations,households,individuals,communities)

85%

PROVINCIAL FUND (PFPDF)(10 % for admin, 5% contingencies)
Self-organized protection
and management

ORGANIZATIONAL FOREST OWNERS(10% for admin fee)
HOUSEHOLD, INDIVIDUAL, COMMUNITYOWNERS OF FOREST(100% of the payment)

Contracted to households,
individuals, communities
6

PFES Modality
Example: Trust fund for PFES according to Decree No. 99/2010/NĐ-CP
Payment through VNFFFOREST
ENVIRONMENTALSERVICES USERS(Hydropowers, Water
supplies, Tourismcompanies)

99,5%

100%

VNFF

PROVINCIAL FUND(PFPDF)

Extracted and kept maximum 0,5%

Payment not through VNFF
100%7PFES Modality (continued)
Payment through PFPDFFOREST
ENVIRONMENTALSERVICES USERS(Hydropowers, Water
supplies, Tourismcompanies)

85%

100%

FOREST OWNERSPFPDFExtracted and kept maximum 15%

100%
Payment not through PFPDF

8

Distribute PFES to forest owners

K = K 1* K 2* K 3* K 4

Total PFES
revenue=PFES payment
unit (VND/ha)x

Area ofallocated/contrac
ted forest (ha)xPayment leveladjustment
coefficient (K)K1 - Status and forest stock: 1.00 - Rich; 0.95 - Medium;0.90 - Poor & Regenerated stands.
K2 - Forest functions: 1.00 - Protected area; 0.95 Protection; 0.90 - Production.
K3 - Forest origin: 1.00 - natural forest; 0.90 - man-made.
K4 - Difficulty/workload level of forest protection: 1.00 Very difficult; 0.95 - difficult; 0.90 - less difficult.
92. RESULTS/INITIAL IMPACTS

Institutional

Economic

SocialEnvironmental

102.1. Institutional Impacts• Central fund• 3 provincial
funds

2010

2011
• Central fund;• 9 provincial
funds.

• Central fund;• 37 provincial
funds.

Now• Some provinces have already set up district branch of FPDF (SơnLa), and commune funds (Quảng Trị);• In the future, REDD+ FUND will constitute a part of FPDF.
11

2.2. Economic Impacts

397contracts
184.9
millionUS$• Hydropower: 276 contracts;• Water supply: 77 contracts;• Tourism: 44 contracts.

• Hydropower: 180.6 million US$;• Water supply: 4.05 million US$;• Tourism: 0.211million US$.

12

2.2. Economic Impacts (continued)
PFES (US$)
70.000.000,00
60.000.000,00
50.000.000,00
40.000.000,00
30.000.000,00
20.000.000,00
10.000.000,00
0,00
PFES (US$)

Year 2011

Year 2012

Year 2013

Year 201413.472.785,70

55.830.387,10

52.209.019,00

63.362.604,00

13

2.2. Economic Impacts (continued)
Promotemarketbased
PFES

Additional
fundingresource
for sector

Addedcontribution offorest sector to
the the growthof the national
economyFES payments provide additional capital investmentin the forestry sector (accounting for 22.3%)
14

2.3. Environmental Impacts

Reduced forestviolations

Contribution toincrease forested
area and forest
cover rate15

2.3. Environmental Impacts (continued)

Indicators
Forested area(million ha)

2008 2009 2010 2011 2012 201312,84 12,90 13,03 13,14 13,46 13,56

Forest coverage(%)

38,70 39,10 39,50 39,70 39,90 39,71

FES Money supports for forest protection of 2.8 - 3.37 million ha/year
out of the total 13.8 million ha (accounting for 20-24% of total
existing forest area of the country).
16

2.3. Environmental Impacts (continued)
Progress over years
Description of status
Forest violation case2010
66.9252011
58.6552012
57.132(+) / (-)
2013 vs2010

2013

Total

54.745(%)
237.457 -18,20%

Destroyed area (ha)133.850,00 117.290,00 114.264,00 109.490,00 474.894,00 -18,20%

Forest fired areas (ha)267.658,00 234.580,00 228.528,00 218.980,00 949.746,00 -18,19%

17

2.4. Social Impacts• Created jobs with participation of
236,425 households of contracted
forest (90% minority people);• Improved income/livelihood for people
who are engaged in forestry (from PFES
revenue average 90USD/household/year);• Created new revenue source for forest
owners, especially some forestrycompanies.

18

3. PROBLEMS/DIFFICULTIESAT CENTRAL LEVEL• Guiding document for implementation of Decrees 05 and99 not yet fully developed and detailed enough;• Difficult to determine forest area located in interprovincial watersheds.
• Not yet created sanction mechanism for PFES violation

AT LOCAL LEVEL• Delayed implementation arrangement, particularly fund’s
structure and staff.
• Policy dissemination, awareness communication, training
and capacity building have not been sufficient;disbursement rate quite low.

AT FES USERS• Awareness on policy still low. Some private or joinventured hydropower's still reluctant to pay or find theway to escape.
• M&E system has not been fully developed and detailed
enough to provide data timely.
19

4. LESSONS LEARNT AND RECOMMENDATIONS Political will, legal frameworks and strong commitment from Gov.
at all levels are needed for implementing in nationwide; Adequate resources and facilities should be provided for policy
implementation and for speeding up forest re-demarcation andre-identification for forest owners;
 Frequently update regulations and guidance; tools, instruments
developed, agreed by consultation of parties;
 Communications, awareness raising and capacity building toimprove knowledge of relevant actors;
 Strengthen collaboration amongst relevant stakeholders (in-sideand out-side) in implementing the policy;
 Set up M&E system helps supervision of fund management,utilization properly and update data of policy impacts.
20

SUMMARY OF STEPS TO IMPLEMENT PFES
Identify
potential
location andentities
Scaling up thepolicy onnationawide

Develop thenationalpolicy/legalframework

PFES

Implement
research andpilot the policy

Review anddraw lessons
learnt from thepilot phase
21

VISION OF THE VNFFVISION
Until 2020 the VNFF is striving to become a pioneering financial institution
in Vietnam and in Southeast Asia.
Its objective is to effectively support the development of Vietnam forest sector
through the mobilization of social resources for forest protection and development,
biodiversity conservation, climate change impact mitigation and adaptation,
contribute to improving the livelihoods of the communities andpeople living close to the forest
22

THANKS FOR YOUR KIND ATTENTION!
“Forest Protection and Development Funds
in line with Payment for Forest
Environmental Services”
For Green Future of Vietnam!

23