An analysis of payment modalities in
Vietnam – Lessons learnt from 7
provinces
Hanoi, 11th November 2015
Pham Thu Thuy and Le Ngoc Dung

Outline
 Background study/Research questions
 Methods
 Findings:
 Equity discourse
 Forms of payment: In-kind vs. In cash
 Frequency of payment
 Payment distribution approach
 Key messages

Key research questions
 What is the current discourse on benefit sharing and PFES
payment in Vietnam ?
 Are PFES payment made in-kind or in cash or in another
form? What criteria/factors local people use to choose in-kind
and in cash payment ?
 How frequently payments are being made in Vietnam ? And
how does this frequency influence the PFES outcomes ?
 What are existing payment mechanism be used by local
people ? What are the pros and cons of those mechanism
and their influence on PFES outcomes ?

Methodology
 Literature review from lessons learnt on
PES benefit distribution both internationally
and nationwide
 Semi-structured interviews: FPDFs,
forest rangers and local authorities in 7
provinces
 Focus Group Discussions: 15 FGDs with
villagers
 In-depth interviews: 351 in-depth
interviews with villagers

Current equity discourse under
PFES in Vietnam- Conflicting views
and discourse at different level
• Benefits should go to forest stewards
("stewardship" rationale)
• Benefits should go to the poor ("pro-poor"
rationale)
Benefits should go to actors with legal rights related
to ecosystem services supply ("legal rights" rationale)
- Benefits should go to those who contribute to forest
protection (“contribution" rationale)
- actors incurring costs should be compensated ("cost-
compensation" rationale)
- benefits should go to effective facilitators of
implementation ("facilitation" rationale)

Are PFES payment made in-kind or
in cash ?
Provinces In-kind In- cash Combination of
in-kind and in-
cash
Son La x
Dien Bien x
Nghe An x
Bac Kan x
Lao Cai x
Thai Nguyen x
Lam Dong x

Factors influencing in-kind vs. in cash
Factors In-kind In-cash Combination of in-
kind and in-cash
Distance to market
and infrastructure
Long distance Close/short
distance
Close/short
distance
Level of
incomes/wealthy
Disadvantaged
communities
Relatively
wealthy
communities
Disadvantaged
communities
Level of trust – local
communities towards
governmental actors
High Low High
Existence of strong
collective action and
customary law
Strong presence Absence Formal and informal
system exist
Financial capacities of
authorities and
villagers
Good capacities Weak capacities Good capacities

Pros and cons of in-kind and in-cash
Advantages Disadvantages
In cash • Greater flexibility in the use of
resources
• Less prone to be seen as
paternalism
• Reinvestment to other land uses
• Raise participation in communal
tasks
• Reduce social motivations in case of
collective action made on the basic
of social norm
• Depends on financial management
skills
• Investment in certain type of land
uses creates pressure to forest
• Different implications of promoting
collective action
In kind • More likely to lead to long-lasting
benefits and predicable welfare
improvement
• Potential to benefit the whole
community
• Less flexibility
• Might be seen as paternalism
• Ambiguous implications for
promoting collective action within
groups
• Depends on decision-making
process

Frequency of payment ?
Frequency of
payment
Ratio Rationale
Son La 1 100%
Dien Bien 2 50-50
Nghe An 1 100%
Lao Cai 2 10-90 for HHs, 90-10
for state organisations
State orgs are more
accountable
Bac Kan 2 50 – 50 for HHs and
communities; 80 – 20
for state organizations
State orgs are more
accountable
Thai Nguyen 1 100% Payment only made after ES is
delivered
Lam Dong 4 20 – 20 – 20 - 40 Spread out to create stronger
incentives

Paradox
PROVINCIAL FOREST
PROTECTION AND
DEVELOPMENT FUND
LOCAL COMMUNITIES
Small payment is okie
as long as it is paid
when we need
(harvesting time,
seedling requirements,
school fees), and fixed
when it will be made
Payment is
made depend
on availability
and schedule
of the Fund,
cannot be
fixed

Paradox
PROVINCIAL FOREST
PROTECTION AND
DEVELOPMENT FUND
LOCAL COMMUNITIES
• Lack of incentives
• Inequity between
State orgs vs.
communities
State-owned
orgs: 90-
100%/1st
payment
Individual: 20%
- 30%/time

How the PFES payment is currently
distributed?
Province Distribute to
individual
households
Payment
through
cooperatives
Payment to
Forest
Protection
group
Payments to
groups of
households
Building
infrastructure/
improve
communities
hall
Setting up
micro
credit
Other forms
Son La x x x x x
Dien Bien x x x x
Nghe An x x x
Thai
Nguyen
x
Bac Kan
Lao Cai x x x
Lam Dong x

3Es in options of benefit distribution intra
communities
Options Effectiveness Efficiency Equity
Payments made to
forest protection groups
Incentives for regular Low level of payment Few villagers can benefit
Common assets for
community hall
Enhances community
collective action
Does little to support
the community’s
economic development
All villagers can benefit
Building infrastructure Support livelihood
development; reduce
pressure on forest
Payments might not be
sufficient to cover the
costs of infrastructure
All villagers can benefit
Equal payments to all
households
Enhances villager’s
responsibility; reduce
elite capture
Low level of payment All villagers can benefit
(performance-based?)
Microcredit and
livelihood strategies
Livelihood development;
pressure on forests
A small number of
households can benefit
Criteria to classify
“poor” households

When to choose what BDS ?
Enabling conditions
Individual
households
HHs manage large area under PFES  sufficient revenues and strong
incentives
Homogenous conditions for HHs, neighbours have similar conditions
and incentives
Group of
households (10-
15HHs)
Homogenous
History of working together, same ethnic groups
Well-established groups (trust) amongst members
Cooperatives Group has a history of working towards livelihood improvements
before
Accountable structure should be in place
Village Fund Accountable system
Strong and accountable village leadership
Clear monitoring and auditing protocol

Factors for relevant BDS selection
 Size of payment
 Social motivation complement with existing financial
incentives
 History of collective actions
 Leadership, financial capacity and accountability of local
management
 Discourse on equity and local preferences of local people on
BDS
 Location of the sites

Conclusions and key messages
 Combination of both in cash and in kind could
leverage the impacts of PFES
 Fixed schedule tailored to the need of local people
enhance commitment in delivering ES
 Ratio of payment needs to ensure the ES is
actually delivered
 A mixture of payment ensure benefits reach to
different groups and reduce the risks of inequity
 No one size fits all recipes and need to be locally
adapted
 Local preferences and perceptions changes
overtime - BDS has to be adapted overtime

We acknowledge the support from:
the Norwegian Agency for Development Cooperation (Norad), the Australian
Department of Foreign Affairs and Trade (DFAT), the European Union (EU), the
UK Government, USAID, the International Climate Initiative (IKI) of the German
Federal Ministry for the Environment, Nature Conservation, Building and
Nuclear Safety (BMUB) and the CGIAR Research Program on Forests, Trees and
Agroforestry (CRP-FTA) with financial support from the CGIAR Fund.
& all research partners and individuals
that have contributed to the GCS research
Thanks