Payment systems already in place for forest ecosystem services in Viet Nam are providing useful models for setting up REDD+ benefit sharing
IUCN & REDD+ series: On the road to Paris and beyond
In the lead up to the Paris Climate Change Conference in December (UNFCCC COP21), IUCN’s Global Forest and Climate Change Programme is publishing a series of articles highlighting the innovative steps developing countries are taking to equitably share the benefits from reducing emissions from deforestation and forest degradation and enhancing forest carbon stocks – activities commonly known as ‘REDD+’. Beyond COP21, this article series will continue to highlight the challenges and opportunities of setting up equitable REDD+ benefit sharing arrangements in tropical countries.
A key design consideration in REDD+ benefit sharing is cost. Costs are incurred at different stages of REDD+ implementation, and they include the direct expenses of setting up a REDD+ system (such as designing an appropriate policy framework, land titling and access to credit), what is needed to operate the system, and the cost of foregoing other opportunities. One of the most effective ways to lower costs when setting up REDD+ benefit-sharing arrangements is to take advantage of existing payment arrangements.
Viet Nam is currently working on leveraging its Payments for Forest Ecosystem Services (PFES) programme to deliver REDD+ benefits to local communities. Touted as “a major breakthrough for Vietnam’s forestry sector,” (Payments for Forest Environmental Services in Vietnam, CIFOR, p. xiii) the aim of the PFES programme is to compensate individuals and communities for providing and protecting environmental services. In Lam Dong province, for example, the country’s PFES scheme now covers more than 200,000 hectares of forest, with an average allocation of 20-30 hectares per household.
About 80 per cent of the 8,000 households that have entered into PFES contracts are from ethnic minority groups, and the government has set payment rates that prioritise the poorest households among them. The PFES scheme uses a coefficient called the “K-factor” to calculate payments based on a range of criteria including forest type and quality, the level of difficulty in managing a given area, as well as other poverty-related indicators.
This approach is a variation of the standard “pay-for-performance” model, allowing the country to focus, first and foremost, on benefiting the poor. And it’s a model that is proving potentially useful for REDD+ benefit sharing. Building on the equity-focused K-factor formula, Viet Nam is developing an “R-factor” for REDD+ payments, as a way of capturing social and environmental benefits.
In turn, potential REDD+ benefits hold the promise of improving the effectiveness of Viet Nam’s PFES scheme. Since PFES payments are often too small to compensate communities for the forgone economic gains from clearing forest, it has been observed that PFES alone cannot solve all problems (CIFOR, p. xi). To ensure the scheme creates an economically-viable alternative to extractive models, it has been suggested that PFES could be combined with other forest conservation mechanisms, such as REDD+, to channel more sources of funding to local communities for forest protection and livelihood improvement (CIFOR, p. xi).
Challenges for Viet Nam’s PFES scheme and REDD+
Given the lack of data and a robust monitoring system for the PFES programme’s K-factor model, there is some debate about the extent to which it can deliver positive impacts for people and the environment. Also, trials show that many local communities prefer equal rather than differentiated payments. As such, implementing an “R-factor” for differentiated REDD+ payments is likely to be challenging without a credible monitoring system and accessible grievance mechanism that local and provincial stakeholders can easily understand and use to track performance and impact.
REDD+ practitioners in Viet Nam have observed that strong awareness of the PFES scheme has helped set the stage for the introduction of REDD+ but has also raised expectations. The existing top-down PFES approach delivers payments efficiently, but REDD+ performance-based payments would likely see increased community ownership, which would necessitate more intensive capacity-building efforts. Viet Nam’s PFES scheme provides valuable lessons for REDD+ benefit sharing but does not address all aspects, including non-cash benefits.
This article is based on excerpts and case studies from The Forest Dialogue’s 2014 Review, “Country Options for REDD+ Benefit Sharing- Insights from TFD’s Multi-Stakeholder Dialogue Initiative”, as well as CIFOR’s Occasional Paper 93, “Payments for Forest Environmental Services in Vietnam”.
The REDD+ benefit sharing examples and lessons featured in this article series come from country experiences of two ongoing IUCN projects: the REDD+ Benefit Sharing Project funded by Germany’s Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB); and the Toward Pro-Poor REDD+ (Phase II) project, promoting rights-based approaches to strengthen the conservation, governance and sustainable management of landscapes in Cameroon, Ghana, Guatemala, Papua Province of Indonesia, and Uganda, funded by the Danish International Development Agency (DANIDA).