Value of Sustainable Forest Management
Attributes
Medium: Land
Country: Vietnam
Analytical Framework(s): Least Cost Concept, Other
Unit(s): Transaction Cost, WTA
Study Date: 2005
Publication Date: 2006
Major Result(s)
| Resource/Environmental Good | VND, per farmer (2005) |
VND, per farmer (2014)1 |
USD, per farmer (2014)2 |
|---|---|---|---|
| Mean WTA to adopt a sustainable forest management approach3 | 155,000.00 | 289,208.30 | 13.54 |
| WTA upper bound | 400,000.00 | 746,344.00 | 34.94 |
| WTA lower bound | 90,000.00 | 167,927.40 | 7.86 |
| Average transaction cost | 37,494,000.00 | 69,958,554.84 | 3,274.78 |
| Average transaction cost per contract | 572,000.00 | 1,067,271.92 | 49.96 |
| Average transaction cost per hectare enrolled | 339,000.00 | 632,526.54 | 29.61 |
About the Inflation Adjustment: Prices in Vietnam (VND) changed by 86.59% from 2005 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.87 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2026) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.
Study Note: The main problem facing the country's uplands is that a significant number of upland farmers still do not manage their land in sustainable ways and often clear cut the forest, which is very destructive to the environment. Moreover, the majority of upland farmers are not paid for those environmental services they do provide. This problem is compounded by the fact that many of the planted forests managed by upland farmers are in ecologically sensitive/fragile areas.
Study Details
Summary: This study assessed the potential for the PES conservation approach in Vietnam. This was done through a review of the country's legal framework and by conducting an experimental PES scheme involving sustainable forest management. The work was constrained by the fact that all land in Vietnam is state-owned and that there has been limited ES market development in the country. However, the results of the PES experiment (in forest areas where the fundamental conditions for PES were met) were quite promising. Participation in the trial scheme was good, despite the fact that it was an experiment of limited duration. Moreover, institutional support for this kind of PES initiative was found to be already available and effective. Expected environmental impacts were also observed: The sustainable forest management regime that was tied to the PES scheme resulted in a reduction in both soil erosion and in destructive natural forest extraction activities. In light of these findings, it is suggested that more practical policy/program trials should be implemented. These will allow Vietnamese policy makers to gain more experience and knowledge before the large-scale implementation of PES is tried in the country.
Site Characteristics: In Vietnam, forests are classified into three categories: special use forest (national park, natural reserves, historical area, etc.), protection forest (watersheds, sandy, sea-wave, etc.), and production forest. The protection forest is further divided into three subcategories: highly critical, critical and less critical. The protection forest classification allows for some degree of timber exploitation, and there are cases where forests have been reclassified from production to protection forest, and vice versa. There is therefore some flexibility built into the system which allows it to respond to society's changing demands on the national forest resource. The country now appears to be on the rising part of a forest transition curve: In 1943 forest cover stood at 43%, this fell rapidly to 29% in 1991; however by the end of 1999 it stood at 33.2%, and by 2005 it was 39.7%. Between 1990 and 2000, the average annual reforestation rate in Vietnam was 2.52%. This rate decreased to 2.06% for the period 2000 - 2005. At present, the country's forest area is 12,931,000 hectares. Of this, 0.7% is classified as primary forest, the most biodiverse form of forest. Reforestation policies in Vietnam have been motivated by both environmental and commercial factors. The country's demand for construction timber, paper, furniture, etc. is rapidly growing. Producer prices for wood have also risen. These factors provide motives for the government to give priority to reforestation efforts using fast-growing native and exotic species. They also give good incentives to rural households to grow trees. The need to safeguard and improve forest services, in particular watershed protection, has also been an important motive behind the country's massive reforestation drive.
Comments: This research attempted to answer several questions related to the potential for PES in Vietnam. These were as follows: What factors determined a person's decision to join the study's PES scheme? What changes would take place in the allocation of household labor resources as a result of the adoption of the study's PES scheme? The cost of a PES program includes not only the amount paid to the households but also the transaction costs (TC) associated with establishing and monitoring the scheme. How much would the TC of the project be?