BEIJING FORESTRY UNIVERSITY

SCHOOL OF ECONOMICS AND MANAGEMENT

TOPIC: PFES IN VIETNAM

SUBJECT: FORESTRY POLICY

Teacher: Wen Yali

Student name: Do Thi Thao – 杜氏洮
Student number: 3180825

Beijing, June 10th, 2019

 Table of Contents
ABSTRACT.................................................................................................................................................. 3
1. SOME DEFINITIONS OF PFES IN VIETNAM ..................................................................................... 4
2. PROCESS OF CONSTRUCTION AND IMPLEMENTATION OF POLICY TO PAY FOREST
ENVIRONMENTAL SERVICES IN VIETNAM........................................................................................ 4
3. RESULTS OF IMPLEMENTATION OF THE POLICY TO PAY FOREST ENVIRONMENTAL
SERVICES FROM 2011 TO 2014 ............................................................................................................... 5
3.1. Results of implementation organization ........................................................................................ 5
3.2. Results of establishment of PFES mechanism ............................................................................... 6
3.3 Economic results ............................................................................................................................... 6
3.4. Environmental results ................................................................................................................... 10
3.5. Social results ................................................................................................................................... 11
4. POLICY LIMITATIONS ....................................................................................................................... 11
CONCLUSION ........................................................................................................................................... 13
 ABSTRACT
Decree No. 99/2010 / ND-CP dated September 24, 2010 (hereinafter referred to as Decree 99) of
the Government on the policy of payment for forest environmental services (PFES) began to be
implemented from 01/1 01/2011, it has been more than 3 years now. This is a policy to create a
payment service mechanism among users of FES services and FES providers, in order to socialize
forest protection and promote the economic values of the forest environment in the field. The
natural resources of natural forest resources have been exhausted and the state budget investment
in forest protection is very limited. In the past years, PFES policy has brought about practical and
important effects for forest protection, increasing income for people living in forest areas,
contributing to supplying water for hydropower production and clean water, natural landscape for
tourism, environmental protection and climate change response. However, in the process of
implementing the policy, the organization of implementation and the policy itself has revealed
issues that need to be adjusted so that the PFES policy will bring better results of economy,
environment as well as society.
 1. SOME DEFINITIONS OF PFES IN VIETNAM
Forest Including components of forest ecosystems: plants, animals,
environment microorganisms, water, soil, air, natural landscapes
Use value of forest Including: soil protection, water source regulation, watershed protection,
environment coastal protection, disaster prevention, biodiversity, absorption and carbon
storage, tourism, habitat and breeding of species and other creatures, wood
and forest products
Forest The work providing the use values of the forest environment to meet the
environment needs of society and people's lives
service
Payment for forest A relationship of supply and payment between forest environmental
environmental service users to pay for forest environmental service providers
services
Types of forest 1. Protecting soil, limiting erosion and sedimentation of reservoirs, river
environmental beds and stream beds
services 2. Regulating and maintaining water sources for production and social life
3. Absorption and storage of forest carbon, reduction of greenhouse gas
emissions by measures to prevent forest degradation, forest area reduction
and sustainable forest development
4. Protection of natural landscapes and conservation of biodiversity of
forest ecosystems for tourism services
5. Provision of spawning grounds, natural feed and seed sources, using
water from forests for aquaculture
Principles for 1. Organizations and individuals benefiting from forest environmental
payment of forest services must pay forest environmental services to forest owners of the
environmental forest areas where the services have been provided.
services 2. Payment for forest environmental services is accounted into the cost of
products using forest environmental services
Forms of payment There are two forms: Direct and indirect payments
for forest Direct payments: Forest environmental service users pay directly to forest
environmental environment service providers, without needing to go through
services intermediary organizations.
Indirect payments: Forest environment service users do not have the
conditions and ability to pay directly to forest environment service
providers, must pay trust through forest protection and development funds
and epidemic prices. Forest environment is regulated by the state
Objectives of Forest owners are organizations that are allocated or leased forests by the
forest state
environmental Forest owners are households, individuals and communities that are
service provision allocated or leased forests by the state
Organizations, households, individuals and population communities sign
contracts to protect forests with forest owners

2. PROCESS OF CONSTRUCTION AND IMPLEMENTATION OF POLICY TO

PAY FOREST ENVIRONMENTAL SERVICES IN VIETNAM
Issuing the Government Decree on PFES policy
With the technical and financial support of Winrock International, MARD completed the draft of
the Decree and the Prime Minister signed the Decree No. 99/2010 / ND-CP on September 24, 2010,
there are 5 Chapters and 25 Articles. The objectives of PFES policy are:
- Socializing forest protection through promoting the economic value of forest environment,
establishing service and payment relations between FES users and FES providers.
- Using PFES money to improve income for households participating in forest protection to
provide FES, thereby promoting the effectiveness of forest protection.
- Creating a new financial mechanism for the forestry sector by way of paying entrusted
funds not from the State budget for forest protection.
 The main contents of Decree 99
Regulating 5 types of FES:
a) Protecting soil, limit erosion and sedimentation of reservoirs, river beds, stream beds;
b) Regulating and maintaining water sources for production and social life;
c) Forest carbon sequestration and retention, reducing greenhouse gas emissions by preventing
forest degradation, reducing forest area and sustainable forest development;
d) Protecting natural landscapes and conservation of biodiversity of forest ecosystems for tourism
services;
e) Providing spawning grounds, natural feed and seed sources, use of water from forests for
aquaculture.
3. RESULTS OF IMPLEMENTATION OF THE POLICY TO PAY FOREST
ENVIRONMENTAL SERVICES FROM 2011 TO 2014
3.1. Results of implementation organization
 Establishing a Forest Protection and Development Fund from central to local levels
MARD has established the Vietnam Forest Protection and Development Fund and the Fund's
Executive Board.
According to VNFF data (2014), the PFES Steering Committee has been established in 40
provinces, of which 36 provinces have established FPDFs and 22 of these provincial funds have
been stabilized in terms of organization and implementation. PFES payment.
 Tasks of VNFF:
a) Mobilizing, receiving and managing compulsory contributions; aid, sponsorship, voluntary
contributions, entrustment of domestic and foreign organizations and individuals.
b) Organizing the appraisal and selection of programs, projects or non-project activities that the
Fund can provide funding to submit to competent authorities for approval.
c) Financial support for programs, projects, provincial FPDFs or non-project activities.
d) Directing, guiding, inspecting and supervising subjects in the management and use of funds
supported by the Fund.
e) Implementing the provisions of law on statistics, accounting, auditing and reporting to MARD.
f) Preserving and developing the Fund's capital sources and covering management expenses.
g) Guiding and exchanging experience on fund management operations.
h) Performing other duties assigned by the Minister of MARD.
3.2. Results of establishment of PFES mechanism
3.2.1. FES types
In 5 types of PFES stipulated in Decree 99, there are 3 types of PFES that have been paid, including:
 Soil protection services, limit erosion and sedimentation of lakes, riverbeds and stream
beds.
 Service regulating and maintaining water sources for production and social life.
 Service of natural landscape protection and biodiversity conservation of forest ecosystems
for tourism services.
3.2.2 Identifying the beneficiaries of PFES payment
Subjects are entitled to receive PFES money in reality
According to the report and summarized data on PFES of provincial funds in 2011, 2012, 2013
and preliminary review of 3 years (2011-2013), and through the results of the actual PFES survey
at one Number of provinces, beneficiaries of PFES payment include:
1) Forest owners are households
2) Forest owners are residential communities
3) Forest owners are organizations (enterprises, youth volunteers, ...).
4) Households have contracts for forest protection contracts signed with state forest owners
5) Groups of households with contracts for forest protection signed with state forest owners are
represented by the head of the household group to be elected by households in the group.
6) Groups of employees of forest owners are state organizations that receive forest protection
7) The CPC is being assigned to manage a forest area
8) Border guard stations, communal guerrilla groups have contracts for forest protection contracts
signed with state forest owners
3.3 Economic results
3.3.1. PFES money has been collected from 2011 to August 2014
Table 1. PFES money has been collected from 2011 to August 2014 (Unit: million dong)
 Fund 2011 2012 2013 August 2014 Total
VNFF 231,749.9 981,398.7 850,272.6 624,008.0 2,687,429.2
Provincial funds 51,178.6 202,516.4 246,116.8 141,777.8 641,589.6
Total 282,928.5 1,183,915.1 1,096,389.4 765,785.8 3,329,018.8

According to the data in the table above, the total PFES amount collected from 2011 to August
2014 is VND 3,329,018.8 million, equivalent to USD 157 million.
Details are as follows:
a) Rate of collection by years:
Total revenue of 2011: VND 282,928.5 million, equal to 08.5%
Total revenue of 2012: VND 1,183,915.1 million, equal to 35.6%
Total revenue of 2013: VND 1,096,398.4 million, equaling 32.9%
8 months of 2014: VND 765,785.8 million, equaling 23.0%
Thus, the amount of PFES money collected in 2012 and 2013 and is expected to be relatively stable
in 2014.
b) Rate of collection among funds:
Total revenue of VNFF: VND 2,687.429.2 million, accounting for 80.7%
Total revenue of provincial funds: 641,589.6 million VND, accounting for 19.3%
The amount of PFES money collected by VNFF is 4 times higher than that of provincial funds
because the river basin of hydropower and clean water plants is usually located in many provinces.
 90.00%
80.70%
80.00%

70.00%

60.00%

50.00%
VNFF

40.00% Provincial funds

30.00%
19.30%
20.00%

10.00%

0.00%

Fig 1. Ratio of collecting money among funds

3.3.2. FES payment amount has been collected according to the payers and FES types
Table 10. FES money collected from 2011 to August 2014 by FES objects and types

Objectives of Type of FES Collected amount (million Total (million Ratio %

payment dong) dong)
By VNFF By provincial
fund
Hydropower Soil 2,629,514.7 623,226.3 3,252,741.0 97.7
business protection,
limiting
erosion and
sedimentation
of river beds,
stream beds
Clean water Regulating 57,914.5 14,967.7 72,882.2 2.1
enterprises and
maintaining
water sources
for
production
and social life
Tourism Natural 3,395.6 3,395.6 0.2
enterprises landscape
protection
and
biodiversity
 conservation
của các hệ
sinh thái rừng
Total 2,687,429.2 641,589.6 3,329,018.8 100

120.00%

97.70%
100.00%

80.00%

60.00%

40.00%

20.00%

2.10%0.20%
0.00%

Hydropower Clean water Tourism

Fig 3. Ratio between FES objects and types

Table 11. FES money from 2011 to 8/2014

Fund 2011 2012 2013 8/2014 Total

Hydropower 267,756.7 1,165,348.7 1,071,544.2 748,091.4 3,252,741.0
Clean water 14,504.8 17,694.1 23,609.7 17,073.6 72,882.2
Tourism 667.0 872.3 1,235.5 620.8 3,395.6
Total 282,928.5 1,183,915.1 1,096,389.4 765,785.8 3,329,018.8

According to data in Table 11, PFES money collected from hydropower in 2013 was lower than
2012 of VND 93.8 billion, while revenues from clean water and tourism increased significantly.
Since there are no detailed data on the revenues of hydropower plants over the years, this
phenomenon is not commented. The reduced revenue from hydropower will reduce the average
payment per hectare of forest, thus reducing the income of households from PFES.
3.3.4. Evaluation on economic results
From 2011 to August 2014, PFES funds from the central to local levels have obtained a large
amount of PFES payments, more than 3.3 trillion VND.
This source of money is really a very important factor to carry out the task of forest protection
when the state budget from the 5 million ha forest project has ended. With this PFES money source,
about 30% of the total forest area in the country has been protected, hundreds of thousands of
ethnic minority households in mountainous areas have participated in forest protection and paid
PFES and income. improved, though not commensurate with their labor value. The money sources
collected by FPDFs due to hydropower, clean water and tourism enterprises are actually money of
individuals and organizations in the society that pay indirectly to forest owners and contracted
households. Forest protection to provide FES for their use. But almost all people in society do not
understand and are not aware of this, many people still believe that the source of PFES money is
money of businesses. While the Government has allowed enterprises to account into the price of
products using FES. There is no clear awareness about the different roles of service users,
businesses and service providers in PFES policy. Users who are currently few are popular about
what they are paying in their electricity and water bills.
The revenue from PFES from tourism has great potential, but the reality is still limited. In the
coming time, there is a need to promote, support and guide from MARD to increase the amount of
payment from this type of FES. If PFES on forest carbon absorption, forest and aquaculture, the
use of water resources from forests for industrial production is implemented, the amount of PFES
payment will increase significantly. But there are still waiting documents for implementation
instructions of the Prime Minister and MARD.
3.4. Environmental results
According to the data in Appendix 10, "Summary report on the performance of the tasks in 2013
and the 2014 work plan of Vietnam FPDF", total forest area managed and protected by PFES
money in 2013 was 4,180,486 ha, in the area of 24 provinces.
PFES policy began to be implemented in 2011, at the time of the end of the 5 million hectare forest
project, the state budget spent on forest protection was extremely difficult, while the forestry and
The whole society is responsible for protecting 13,954,454 hectares of forest. But after only 3 years
of implementation, there were 4,180,486 hectares of forest protected by PFES money, most of
which are natural forests and watershed protection forests. This is a very significant result of
environmental protection, biodiversity conservation and response to climate change impacts that
Vietnam is one of the most severely affected countries.
Forest area to provide FES will increase if in the coming time, the remaining types of FES are
implemented. Source of PFES payment in the past 3 years mainly came from hydropower. But the
monitoring of the quantity and quality of forest providing FES for hydropower plants has not been
conducted. The monitoring of the quantity and quality of water in reservoirs as a control for the
management and protection of watershed forests to provide FES has not been conducted. This
omission affects the sustainability of payment service relations between users and providers.
Other PFES have relatively little contribution to fund development, which is FES for tourism.
PFES such as carbon sequestration and storage have not been fully paid, and in the future, there
should be guidance on implementing PFES for these services. Forest maps are made for each basin
to determine the scope of payment responsibility of FES using enterprises. But there is a lack of
mechanisms to ensure this forest area is well protected, not being used for purposes to maintain
the capacity of providing PFES for the service users. Of the three types of forests, special-use
forests are paid at least PFES to protect, while this type of forest contains high values of natural
ecosystems and biodiversity, being the top priority for conservation, serving sustainable economic
and social development. There has been no analysis of the cause of this situation. It is not clear
whether PFES money is being spent on forest land areas at risk of deforestation and conversion of
the highest use purpose, because basic PFES maps are built on the basis of saved maps. area, not
based on the degree of risk of deforestation.
3.5. Social results
One of the main purposes of PFES policy is to mobilize and attract households to participate in
forest protection through PFES to improve their income. At the same time, change the forest
protection practices by attaching PFES amounts received with the obligation to protect forests in
a specific way. As a result, after 3 years, according to incomplete statistics, there were more than
350,000 households across the country participating in this policy and received PFES money, of
which more than 50% of households of Northwest and Central Highlands. Most households
participating in implementing PFES policy are excited and have good evaluation of this policy.
This is the greatest success of PFES policy of Vietnam, after a very short implementation process,
just over 3 years. This is also one of the few policies of the Government and the forestry sector
that really come to life. When interviewing the leadership of the Ministry of Agriculture and Rural
Development and the General Department of Forestry, all stated that the PFES policy is an
important policy of the forestry sector and the payment mechanism is sustainable, stable and has
brought about Significant results for forest protection and income improvement of households
participating in forest protection, especially poor households and ethnic minorities.
4. POLICY LIMITATIONS
Besides the above successes, there are still some limitations and shortcomings in the process of
implementation as follows:
• There is a difference in the total amount of money collected from PFES among provinces: There
is a difference in the level of payment for each hectare between river basins in a province and
between river basins of adjacent provinces, leading to questions in residential communities.
• There is no connection between implementing PFES policy and forest protection activities under
the Forest Protection and Development Plan to 2020: Lack of coordination and linkage between
implementing PFES policy and Forest Protection and Development Plan for the period 2011-2020,
while both have the same goal of forest protection.
• The review of progress and identification of forests and forest owners to serve PFES is still slow:
After 3 years, the determination of forests and forest owners is still a limitation in implementing
PFES policies. The aim is to determine the location, boundaries, area and status of PFES forests
that need to be protected, but forest owners are organizations, households, and households
contracted forests. However, existing data is not accurate and there is a big difference between the
map and reality.
• There are no guidelines on demarcation or PFES payment for tourism and clean water, or other
environmental services: PFES has basically been implemented for 3 of the 5 types of PFES
stipulated in the Decree. Decree 99 (hydropower, clean water and tourism). In particular, payment
for hydropower related services is relatively complete, while tourism and clean water related
services have not been fully implemented due to the lack of defining boundaries and forest areas.
providing services to clean water and tourism companies. Other environmental services such as
carbon and nursery grounds for aquaculture have not been implemented due to a lack of guidance.
• Need to adjust issues related to the management of Provincial Forest Protection and Development
Fund: There are no specific guidelines in Decree 99 or related circulars on the role of the Fund
Management Board, termites. the relationship between the Fund Management Board and the
Fund's Executive Board, and there is no clear provision on the establishment and use of the reserve
fund at the provincial level.
• There are no specific regulations and guidelines on monitoring PFES: PFES has been
implemented for 3 years but there is no monitoring mechanism yet. The main reason is that the
monitoring of PFES is not regulated in Decree 99. Therefore, to ensure long-term sustainability of
the policy, there needs to be a more uniform monitoring system, ensuring satisfaction. for payers,
and service providers are providing appropriate services and are paid for that supply.
• The level of PFES is still low: Most households receiving PFES think that the payment level is
too low and not commensurate with the effort they spend to protect the forest. Electricity and water
prices have increased many times but PFES is still fixed at 20 VND / kwh and 40 VND / kwh.
Payments related to hydropower and clean water services need to be adjusted appropriately and
calculated according to the percentage of electricity and water prices. In addition, we can not
confirm that PFES is for the poor because of simplicity, we do not have data on how many PFES
recipients are poor compared to the number of rich and medium households. Therefore, it is
necessary to collect data on PFES receivers and the objectives of PFES contracts.
 CONCLUSION
Evaluating 3 years of implementing PFES is quite successful in building national mechanisms.
The PFES policy currently has a favorable start to the establishment of financial mechanisms
(some adjustments still need to be made), but the challenge for this success is that the VNFF is
only considered a financial institution and not available. personnel or role to support further
monitoring or advocacy of education or implementation of coordinated activities. The current
difficulty is adjusting the PFES policy according to a more comprehensive approach, applied to
more environmental services; more stakeholders are more concerned, more beneficiaries and more
users. This will be a long-term goal when evaluating PFES.