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An analysis of payment modalities in Vietnam – Lessons learnt from 7 provinces


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This presentation was delivered by Pham Thu Thuy and LeNgoc Dung to the Vietnam Forest Protection and Development Fund in Hanoi, 11th November.

Topics discussed include forms and frequency of payment, the discourse of equity, and research methodology.

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An analysis of payment modalities in Vietnam – Lessons learnt from 7 provinces

  1. 1. An analysis of payment modalities in Vietnam – Lessons learnt from 7 provinces Hanoi, 11th November 2015 Pham Thu Thuy and Le Ngoc Dung
  2. 2. 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
  3. 3. 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 ?
  4. 4. 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
  5. 5. 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)
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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