Payments for forest environmental service policy and sustainable development : a case study of Vietnam

Abstract

Payments for ecosystem services (PES) is widely employed in various settings; however, in what contexts and whether PES programs achieve their objectives by improving local livelihoods and conservation goals is still being debated. This dissertation assessed the impact of the Payments for Forest Environmental Service (PFES) policy on financial, natural and institutional capitals in order to respond to the critical question on whether and how much the PFES policy has contributed to poverty reduction and ecological enhancement. A case study from Vietnam known as the PFES policy was used as the basis for an in-depth empirical study. Mixed methods, including propensity score matching of data on 725 systematic randomly selected households in Quang Nam and Thua Thien Hue provinces, data from the General Statistics Office and Landsat, and institutional data from 28 provincial forest protection and development funds in Vietnam were analyzed in this study to assess the impacts of the PFES policy after eight years of implementation.

The research findings imply that the PFES policy has some positive effects on financial, natural and institutional impacts for different study groups. In terms of financial capital, the study found that poor households involved in PFES have slightly higher income than what they would have had they not participated in PFES. The difference in total income between poor households with and without PFES, however, was statistically insignificant, while the income of non-poor households with PFES was significantly higher than those without PFES. In addition, PFES households have more consumption expenditure for their daily living and better access to loans from various microfinance sources compared to those without PFES. In terms of natural capital, the PFES policy likely resulted in slight changes in forest cover and reduced natural forest loss between the pre-PFES and PFES periods. Institutionally, the study found that the PFES policy has resulted in positive impacts on institutional capital, which was evaluated by the changes in legislative documents and the decline trend of forest violations, as well as the strengthened institutional capacity building, and the improved distribution of PFES revenue. In terms of effectiveness, efficiency and equity of the PFES policy, mixed results were found. While the PFES policy is effective in delivering its outcomes, there is still not enough strong evidence to prove that the PFES policy is efficient and equitable due to the limitations of this study. The findings of this study contribute to designing future PFES policies to better serve target groups as well as harmonize social and natural capital.

Keywords: financial capital, natural capital, institutional capital, livelihood, payments for forest environmental services, propensity score matching.