Since 2011, Viet Nam’s payments for forest environmental services (PFES) program has generated $140 million for rural households to protect around 4 million hectares (40%) of the country’s forests.

By far Southeast Asia’s largest PFES scheme, more than 350,000 Vietnamese households are helping to patrol and manage vital forest and watershed areas. In return, they are compensated through financial resources provided by hydropower and water supply companies that rely on clean water and other environmental services in these areas. 

With support from the GMS Core Environment Program and the Center for International Forestry Research, Viet Nam’s Ministry of Agriculture and Rural Development hosted a workshop to reflect on the program’s successes, challenges, and future opportunities.

Government representatives from the other five GMS countries also attended to learn about Viet Nam’s PFES experience and exchange information about similar initiatives from their own countries.

Key achievements identified for the PFES program in Viet Nam included:

• The extensive legal framework for PFES has reinforced political commitment and strengthened the capacity of implementing agencies operating both nationally and provincially.
• PFES revenue has increased the forestry sector’s contribution to the national economy.
• Communities are benefiting from job creation and financial rewards, and better understand sustainable forest management.
• PFES is contributing to environmental protection with reduced forest degradation and legal violations.

But there remain many challenges:

• Government implementing agencies lack technical and communications capacity, leading to high transaction costs and delays in PFES payments.
• PFES payments remain relatively low compared to high opportunity costs – for example forest clearing for agriculture provides greater economic gains.
• Payment systems inevitably create tradeoffs between effectiveness, efficiency, and equity.

International donor support to Viet Nam's PFES program has been led by USAID, with additional technical support provided by ADB and other partners.

To find out more, please click on the links below to access the workshop presentations, factsheets,  and other materials.