Sunset over the Mekong River, near Luang Prabang, Laos.

HANOI, Vietnam—One river, many ways to protect its forests—but are those ways effective?

A recent workshop on incentive-based conservation in four Southeast Asian countries explored the diversity of approaches being employed—and highlighted worries about their long-term viability.

In the Mekong River region, the concept of Payment for Environmental Services (PES) has gained attention as a cost-effective and innovative means of promoting sustainable environmental management while improving livelihoods. Yet, a comparison of schemes highlights emerging concerns over equity for participants, financial sustainability of initiatives, and the need to measure environmental and social outcomes.

A series of studies by the Center for International Forestry Research (CIFOR) of PES schemes in Cambodia, Laos, Thailand and Vietnam, found that far from being market-driven, most PES initiatives are primarily funded by government, donor and civil society organizations.

PES was conceived as a voluntary, conditional transaction for a well-defined ecological service. Yet, Vietnam—which has the most developed PES scheme in the region and generates tens of millions of dollars annually—requires water supply, hydropower and tourist companies to pay fixed rates. These funds are distributed to the environmental services providers, which include state companies and villagers as they conserve forests for watershed protection and landscape aesthetics.

“Vietnam is a distinct example where the private sector is mandated to make payments for the use of environmental services, with the costs passed down to the end users—the consumers,” explained CIFOR scientist Jacob Phelps at a recent regional PES workshop in Hanoi.

The situation differs elsewhere in the region. In Thailand, corporate social responsibility investments protect ecosystem services such as fresh water and are implemented mostly by government agencies, with initial funding by international donors. In Laos, after significant pressure from the World Bank, a government hydropower project has set yearly payments of USD 1 million of dam revenues to protect the watershed. And some projects in Cambodia and Laos target biodiversity conservation, based on PES schemes led by non-governmental organizations (NGOs) linked to eco-tourism projects. In these schemes, communities are paid additional premiums if tourists successfully encounter target species such as tigers and deer.

THE ‘P’ IN ‘PES’

At the Hanoi workshop, Phelps elaborated on the implications of ad hoc, local projects funded by donors and NGOs in Laos, Cambodia and Thailand. “These represent many promising examples and models, but it will not necessarily lead to a massive scaling up,” he said. “We need to be realistic about how and who is going to pay. This is a major issue because there’s no such thing as PES if there’s no ‘P.’ ”

Workshop participants noted that developing a national policy framework that provides guidance and ensures compliance would be key to achieving sustainability for PES. Yet, further capacity building and awareness-raising is needed on the economic value of ecosystem services.

Chea Sokhon, Secretary of the Climate Change Working Group under Cambodia’s Ministry of Agriculture, Forestry and Fisheries remarked, “There is no policy framework for formulating PES. People’s understanding of PES and ecosystem services is very limited. PES is seen as reaping low economic returns compared with greater economic opportunities in agriculture and infrastructure development.

“Even supportive policymakers are hesitant about the costs of developing payment mechanisms. Identifying buyers and assessing their willingness to pay is a key concern.”

TO PAY OR NOT TO PAY

Voluntary participation was a central point of discussion at the two-day workshop co-hosted by CIFOR, USAID and the Vietnamese Academy of Forest Sciences.

“Voluntary participation of the providers of environmental services is a fundamental issue for PES”, stated Luca Tacconi, Professor at the Crawford School of Public Policy of The Australian National University, and author of an upcoming regional synthesis of PES in the Mekong region.

“Payments ideally cover the opportunity costs of service providers to ensure the scheme is equitable—especially as providers are often rural villagers whose livelihoods depend on forests and agriculture. This can lead to high costs as PES payments compete with commodities with high financial returns.”

“If a system is voluntary, farmers who volunteer to participate are likely to be those with lower opportunity costs. This way, you can provide the same ecosystem service protection at a lower cost and achieve the dual objective of a PES scheme being both equitable and cost-efficient.”

THE WAY FORWARD

Upcoming research urges further assessment of PES payments to ensure they cover opportunity costs and to reduce the risk of negative impacts on people’s livelihoods.

Clarification of resource use and property rights remains a challenge, Tacconi highlighted: PES schemes in the Mekong are implemented in different tenure regimes, including private land, state-owned land, community forests, and areas with unclear property rights. “The provision of benefits to ecosystem services providers is unlikely to occur unless resource use or property rights are attributed to them,” he said. “This must be a priority issue for governments implementing PES.”

More work must also be done to measure the success of these schemes for providing ecosystem services. Vietnam is leading the way by focusing efforts to develop a clear monitoring and evaluation system for its Payments for Forest Environmental Services (PFES) policy.

CIFOR scientist Pham Thu Thuy noted the absence of baseline data to monitor PFES.

“The capacity of government officials must be enhanced to support the collection and synthesis of national forest inventory and socio-economic data,” she said.

Indeed, the institutional settings of PES can also provide useful lessons for REDD+, as countries design REDD+ benefit-sharing mechanisms as well as monitoring and evaluation systems.

Vietnam’s efforts toward greater PES effectiveness, efficiency and equity will offer valuable lessons for Cambodia, Laos and Thailand where the idea of PES is still fairly new.

“It is vital that countries learn from each other for the future of forestry conservation and livelihood security in the region.”

For more information on the topics discussed in this article, please contact Terry Sunderland at t.sunderland@cgiar.org

CIFOR’s research on PES in Southeast Asia is supported in part by USAID and forms part of the CGIAR Research Program on Forests, Trees and Agroforestry.