1. CASE STUDY ON VNFF IN VIETNAM
MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT VIETNAM ADMINISTRATION OF FORESTRY
RAISING CAPITAL AND REVENUES FOR FOREST FUNDS THROUGH PAYMENTS FOR FOREST ENVIRONMENTAL SERVICES (PFES)
CASE STUDY ON VNFF IN VIETNAM
Bonn, May 31, 2013

2. OUTLINE OF PRESENTATION
Background 1
PFES Legal framework and Objectives 2
Linkage of VNFF with PFES 3
Potentials and Initial Results and Achievements 4
Difficulties, Solutions and Recommendations 5
Lessons Learnt 6

3. There are some forest funds existing in Vietnam:
BACKGROUND
There are some forest funds existing in Vietnam:
Trust Fund for Forests (TFF);
Vietnam Conservation Fund (VCF);
Vietnam Forest Protection and Development Fund (VNFF).
Besides, still need for new other funds to meet the expectations from donors and governments through new initiatives such as REDD+ Fund.
Vietnam Forestry Development Strategy ( );
Master Plan for Forest Protection and Development ( )

4. BACKGROUND (Cont’) TFF VNFF REDD+ VCF
Established: 2004;
Source: ODA/Donors;
Objective: Sector support;
Results: 35 Projects
VNFF
Established: 2008;
Source: ODA, State Budget, trust and Voluntary Contribution, ect;
Objective: forest protection and development;
Results: 29 PFPDF
REDD+
Tentatively Established: 2013;
Source: REDD+ domestic and International;
Objective: Support for REDD+ programme.
Pilot/Scale up
Integrated
VCF
Established: 2005;
Source: ODA/Donors;
Objective: Support for Special Used forests;
Results: 70 Projects

5. BACKGROUND (Cont’)
Vietnam is a typical country pioneering in Asia as well as in the world for formulating the legal framework on Forest Protection and Development Fund and the policy on Payments for Forest Environmental Services (PFES).
Set up the fund
Pilot PFES
Official PFES
Implementation of PFES
14/01/2008
10/4/2008
24/9/2010
13/12/2010
Government issued Decree No. 05/2008/NĐ-CP on Forest Protection and Development Fund (Decree 05)
Prime Minister issued Decision No. 380/QĐ-TTg on piloting PFES policy (Decision 380)
Government issued Decree No. 99/2010/NĐ-CP on PFES policy (Decree 99)
Prime Minister issued Decision No. 2284/QĐ-TTg approval for PFES implementation plan

6. Forest Protection and Development fund (Fund)
BACKGROUND (Cont’)
FORESTRY SECTOR
Forest Protection and Development fund (Fund)
Policy on Payments for Forest Environmental Services (PFES)
OPPORTUNITY

7. LEGAL FRAMEWORK RELATED TO PFES
Law on forest protection and development (2004); Forestry development strategy
Decree No. 05/2008/NĐ-CP; Decree No. 99/2010/NĐ-CP.
Decision No. 380/QĐ-TTg; Decision No. 2284/QĐ-TTg.
Circulars and guiding documents for implementations.

8. GENERAL OBJECTIVE OF PFES POLICY SUSTAINABLE DEVELOPMENT
Economically sustainable :
Growth;
Development;
Efficiency.
ECONOMICAL
SUSTAINABLE DEVELOPMENT
ENVIRON-MENTAL
SOCIAL
Environmentally sustainable :
Ecosystem integrity;
Biodiversity;
Carrying capacity.
Socially sustainable:
Cultural identity;
Accessibility;
Stability.

9. PURPOSE OF DECREE No. 99 1 2 3 4
Renovating management practice of forestry sector, creating financial sources for forest protection & developmen;
Improving and step-by-step increasing income of stakes directly participate in forest protection & developmen;
Socializing forest protection & developmen;
Contributing to better protection of forest.

10. LINKAGE WITH PFES POLICY
FOREST PROTECTION AND DEVELOPMENT FUND
FOREST OWNERS
FES USERS
PFES POLICY
FORESTRY AUTHORITIES 1 2 3 4

11. LINKAGE WITH PFES POLICY (Cont’)
Relation between FES buyers/users and sellers/providers (apply for direct payment type);
Relation in controlling and management for forest quantity and quality;
Relation in M&E and supervising PFES implementation;
Relation in signing entrusted contracts of PFES (apply for indirect payment type).
FOREST PROTECTION AND DEVELOPMENT FUND
FOREST OWNERS
FES USERS
PFES POLICY
FORESTRY AUTHORITIES 1 2 3 4

12. VNFF LINKAGE WITH PFES POLICY (Cont’)
Example: Trust fund for PFES according to Decree No. 99/2010/NĐ-CP
Payment through VNFF
FOREST ENVIRONMENTAL SERVICES USERS (Hydropowers, Water supplies, Tourism companies)
VNFF
PROVINCIAL FUND (PFPDF)
100%
99,5%
Extracted and kept maximum 0,5%
Payment not through VNFF
100%

13. PFPDF LINKAGE WITH PFES POLICY (Cont’) Payment through PFPDF
FOREST ENVIRONMENTAL SERVICES USERS (Hydropowers, Water supplies, Tourism companies)
PFPDF
FOREST OWNERS
100%
85%
Extracted and kept maximum 15%
100%
Payment not through PFPDF

14. POTENTIAL SERVICE USERS
Hydropower
Waster supply
Industrial production
Tourism (organizations or individuals)
Other organizations, individuals

15. FES USERS AND PFES SCALE
Hydropower
20 VND/kwh (0,001$)
during payment period
Water supply
40 VND/m3 (0,002$)
during payment period
Industrial production
Will be regulated later
Tourism (organization, individuals)
1%-2% of total income
of period subject to payment
Other organizations, individuals (carbon sequestration, aquaculture)
Will be regulated later

16. forest owner in the year with forest owner for protection
CALCULATING PFES
Total payment to
forest owner in the year
(VND) =
Average
unit payment
for 1 hectare of forest
(VND/ha) x
Area of forest
contracted
with forest owner for protection
(ha) K-
coefficient
K is coefficient to adjust payment rate for each lot of forest based on forest condition

17. DETERMINATION OF K COEFFICIENT
K1 – Forest condition and yield: reach; average; poor and rehabilitated
K2 – Forest use: 1,00 - Special use; 0,95 - Protective ; 0,90 - Production
K = K1* K2* K3* K4
K3 – Forest origination: 1,00 - natural; 0,90 - planted
K4 – Level of difficulty of protection: 1,00 - very difficult; 0,95 - difficult; 0,90 - less difficult 17

18. STEPS TO IMPLEMENT PFES POLICY
EVALUATION
Review and evaluation, lessons learned;
Recommendations, amendments, perfection of PFES policies.
IMPLEMENTATION
PREPERATION
Establish steering committee, task forces and fund(s);
Awareness raising;
Develop, approve projects and prepare implementation plan.
Implement PFES projects;
Sign contracts and commitments for forest protection;
Payment, consolidation.

19. OVERALL MODALITY ON POLICY FOR PFES FES providers (receivers)
Contractees
Forest mngmnt
Central VNFF
Provincial VNFF
FES providers (receivers)
Trust fund for PFES
Forest receivers
FES
FES users
(payers)

20. EXISTING INCOMES OF VNFF
Hydro-power
Tourism
Clean water suply

21. INITIAL RESULTS AND ACHIEVEMENTS
SUPPORT ISSUANCE OF LEGISLATIONS
Circular guiding calculation of PFES (Circular 80); Circular guiding consolidation of PFES (Circular 20);
Circular guiding Fund financial management (Circular 85); Inter-ministry Circular guiding PFES management and utilization (Circular 62);
Circular guiding calculation of forest area of watershed (Circular 60).
GUIDANCE AND SUPPORT TO LOCAL LEVELS
Establishment of task forces, preparing instruction documents, supervising establishment process (total 29 Funds established);
Guidance on procedures to register and sign contract (Decision 119);
Support, provide advance for provinces; organizing guidance on fund operation.
IMPLEMENT PROFESSIONAL ACTIVITIES
Provide offices, recruit personnel, procurate equipment;
Sign trust contracts for PFES (total 30 contracts);
Income from PFES in 2012 is nearly 60 million USD (Central 50 million, provincial 10 million);
Developed database and website for manageemnt.

22. INITIAL RESULTS AND ACHIEVEMENTS (Cont’)

23. INITIAL RESULTS AND ACHIEVEMENTS (Cont’)

24. SHORTCOMINGS, DIFFICULTIES
AT CENTRAL LEVEL
Inter-minitry circulars for guiding implementation of Decrees 05 and 99 not yet developed;
Project for determining forest area in emerging inter-provincial watersheds not yet completed.
AT LOCAL LEVEL
Policy dissemination, awareness communication, training and capacity building have not been sufficient; Disbursement quite low.
Lack of financial resources to implement PFES projects as well as to organize and operate fund.
AT FES USERS
Awareness on policy compiance still weak. Some private or join-ventured hydropowers still reluctant or finding reasons to not pay.

25. SOLUTIONS AND RECOMMENDATIONS
ENHANCE THE ISSUANCE OF IMPLEMENTATION REGULATIONS AND GUIDELINES
Guidance documents for Decree 99: (1) PFES in aquaculture; (2) Conttribution of water users in industry
Circular for guiding Decree 05: Determining compulsory contributions
ENHANCE GUIDANCE AND SUPPORT TO LOCAL LEVELS
Supervising and guiding the establishment, organization and operation of the fund and policy enforcement
Support and advance finance for provincial funds to implement projects and operate fund
STRENGTHEN POLICY AWARENESS, COMMUNICATION AND DISSEMINATION
Implement awareness, propaganda and dissemination over mass media channels
Organize meetings, workshops, conferences and trainings, public awareness campaigns

26. LESSONS LEARNT FROM OPERATION OF FUNDS
Objectives of funds must be clear, consistant with the sector’s priorities and donors’ cooperation strategy.
Need strong commitments from Government and closely cooperation among in-side and out-side sector bodies.
Tools, instruments developed, ageed by consultation of parties.
Frequently discuss and have unofficial meetings to obtain understanding and trust among partners.
Funds only effectively operational with full legal framework and detailed guidances; Training and raising awareness need regularly taken place.
Establishment of M&E system helps supervising fund management and utilisation properly.

27. Q & A Thank you and willing to receive your feedbacks/comments!
VNFF and PFES – Green future of Vietnam
Q & A Thank you and willing to receive your feedbacks/comments!
For more information, please contact:
Mr. Pham Hong Luong – Deputy Director, Dept. of Planning - Finance, VNFOREST, Deputy Director , VNFF.
Address: 207, 2nd floor , B9 building, MARD
No.2, Ngoc Ha, Ba Đinh , Hanoi, Vietnam.
Phone: ++(84) ;