Support for the National Roll Out of Payments for Forest Environmental Services and Benefit Sharing Mechanisms: Viet Nam

Total Project Cost: $345,000
PEP Funding: $320,000 
Approval Date: 1 July 2011
Main Project Partner(s): Provincial Forest Management Board, Department of Finance, Electricity VietNam, Provincial People's Committee (PPC) of Quang Nam Province
Project Officer: Lauren Sorkin, VRM
Type of Intervention: Pilot intervention
Status: Completed

Summary: The project expanded the existing benefit sharing mechanisms (BSM) to distribute payments for forest ecosystem services (PFES) in the forested watershed catchments upstream from two hydropower projects -- A Vuong and Song Bung 4 -- in Quang Nam province. In five villages, the project tested an adapted PFES approach based on PFES Groups rather than individual households, providing a model that is less resource-intensive and consequently more realistic for scaling up at a provincial level. Finally, the project assisted the PPC in developing a provincial plan for PFES implementation, with this plan integrated into the overall provincial plan for forest protection and development that was being prepared at the same time.

Poverty-Environment Linkage: PFES mechanisms can help improve livelihoods while increasing returns for hydropower investments. Payments are made to households providing forest protection services, which increase profits to hydropower facilities through reduced plant and operating costs via avoided siltation A combination of compensation payments through BSM mechanisms and forest protection contracts represent strong potential to strengthen project safeguards, improve livelihoods of displaced and/or economically disrupted families, and improve returns to hydropower investments.

Expected Outputs:

  • Economic evaluation of PFES in the areas of the A. Vuong and Song ᅠBung IV hydropower projects to determine appropriate levels of PFES paymentsᅠ
  • Capacity development workshops for provincial authorities on valuation of services and monitoring and evaluation
  • Monitoring stations set up to establish a baseline and monitor PFES in project areasᅠ
  • For each hydropower project, a plan to collect revenue from the hydropower stations and distribute revenue to households in communes within the watershed to maintain ecosystem servicesᅠ
  • For each of the projects, contracts between buyers and sellers of the PFES to implement the plan over a set period of time associated with investment and operation of the infrastructure project
  • A final report demonstrating how to value ecosystem services and how to design a system that will generate revenues through their maintenance, provision and improvementᅠ