PFES experiences in Lam Dong and Son La provinces, Viet Nam Dr. 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, 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 issued the Policy on Payment for Forest EnvironmentalServices?

Viet Nam has:  Over 10,000,000 ha of natural forest  80% of which is low quality At present, natural forests have been destroying even the special use forests and watershed protection forests

 Over 20 millions people living in the forest and moutainous areas moutainous areas  They are mostly ethnic minority people and the poors the poors  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 limited  Many consider that forest is created by nature so they take it for granted and investment into so they take it for granted and investment into forest is responsibilities of the Government forest is responsibilities of the Government  The state budget is not enough to cover activities of protection for over 10 millions ha activities of protection for over 10 millions ha of natural forest of natural forest  Therefore a new financing mechanism for forest protection in close linkage with livelihood protection in close linkage with livelihood improvement for local people is very urgent and improvement for local people is very urgent and needed needed

That is reason why the Government of Viet Nam issued the Decree on Payment for Forest Environmental Services (PFES) Objectives of the policy are:  to prevent deforestation and forest degradation degradation  to eleminate hunger and reduce poverty for local people local people  to develop socialization of forest protection  to develop a new financing mechanism for protecting forest protecting forest

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

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

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

What are types of PFES? 2. Regulation and maintenance of water sources for production and living activities of the society 1. Soil protection, reduction of erosion and sedimentation of reservoirs, rivers, and streams

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

4. Protection of natural landscape and conservation of biodiversity of forest ecosystems for tourism services 5. Provision of spawning grounds, sources of feeds, and natural seeds, use of water from forest for aquaculture

Mechanism on Payment for Forest Environmental Services in Viet Nam Users Payers Forest Fund Providers FES providing Paying

PFES in coastal wetland ecosystems Provider User Provider User

PROGRESS OF PFES POLICY IN VIET NAM 2007 Idea & policy writing 10/4/2008 – Decision 380 PM decided piloting PFES policy in Lam Dong & Son La provinces 2010 Wrap up piloting work 24/9/2010 – Decree 99 Government decided implementing PFES policy in whole country up to now

Decision 380 of the PM dated 10/4/2008 on piloting PFES in Lam Dong and Son La provinces Forest 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 Decision 380 of the PM dated 10/4/ VND/KWh Commondity of electricity 40 VND/m 3 Commondity of water 1-2 % Revenue of tourism in period

General achievements after two years of PFES piloting in Lam Dong and Son La under the 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 1

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 2

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 3 Total PFES fund that Son La province received in piloting year of 2009 is 60 billion VND  equivalent to $US 3.2 million 4 Ave. PFES fund of one HH in Lam Dong is 11 mill. VND/year Average PFES fund of one HH in Son La is 8 mill. VND/year This amount is very significant for poor and ethnic HHs though this is still limited to cover their subsistence 5

Forest protection is better. Number of illegal violation to forest reduced 50% in two years 2009 and 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 9 Local households understand clearly position, boundary, area of the forest plot that they have to protect6 Hydropower, water and tourism busineses understand clearly their obligation on payment of PFES fund7

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 10 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 11

Current situation on PFES Implementation 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 policy of Viet Nam for sharing

FES users/payers PFES Fund FES providers Government Forest managers Contracted households 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

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/m 3 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 for your attention