China and Vietnamhave established some of the most promising payments for ecosystem services(PES) initiatives for watershed conservation and forest management. China’s SlopingLand Conversion Programme (SLCP) and Vietnam’s pilot projects for Decision 380subsequent PES laws are one of these initiatives. The selected research paperis reviewing how these two actions are meeting their environment anddevelopment objectives in terms of their institutional arrangements,implementation in practice, and sustainability prospects. The fundamentaldefinition of PES was defined as a voluntary transaction for distinctecological services, with at least one buyer, one provider, and based on thecondition that the payment continues only if the provider(s) provides thedefined ecosystem services to the buyer over time period.

Though PES does notspecifically target poverty alleviation, yet these payments can offer betteropportunities to the service providers for a diversified livelihood and greaterwell-being with fair incentives for exchange of services. Since both theparties can receive benefits from PES outcome, the acceptance by potentialparticipants may be more for PES than for the government laws or regulations. Theincentive-based environmental policy programmes, called as PES oreco-compensation in China and Vietnam, gained rapid development and globalspotlight. There has been a substantial political determination to expand pilotprograms and learn from experiences from local diversification of nationalschemes for domestic and international environment. As a result of economic growth, rapid urbanization,population explosion, and increased demand for marginal land have affected theenvironmental conditions and natural resources negatively. Major elementsrelated to land degradation includes soil erosion, deterioration of waterresources, deforestation, desertification and loss of biodiversity.

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The mountingsocial and environmental problems as a result of increasing developmentdiscrepancies and denudation of natural resources, have taken care by both thegovernments by introduction of laws, institutional frameworks, and publicprograms.This study wants to create an insight forwater and forest management, based on experiments with incentive based schemesin these traditionally command driven countries to achieve their environmentand development goals; and implications for large scale government-run programsin conserving the perception of PES from concept to action. This is evaluatedthrough examination of program’s legal and institutional frameworks,implementation in practice, and prospects for long-term sustainability. The twonational program considered for study here are the Sloping Land ConversionProgram (SLCP) in China and the PES pilots being implemented in associationwith Decision 380 in Vietnam.  BackGround China’sSLCP : After the Yangtze River flood of 1998, China’s centralgovernment recognized the extreme impacts of steep slope farming on theecological loss of services of forest and grasslands on slopes, in particularthe effect on run-off and soil erosion. SLCP was introduced in year 1999 by thegovernment also known as Grain for Green or the Conversion of Cropland toForests and Grasslands Program, as the largest known land retirement programworldwide.

The farmers with field on slopes 15-25° or greater, have the optionto transform the field into ‘ecological forest’ (timber producing) or ‘economicforest’ (farming cash crops). In exchange they were given in-kind subsidy ofgrain or cash, on annual basis. Based on type of conversion and region locationof land (w.r.

t. different fertility of land), period of compensation differed.SLCP, the first national PES program, could directly engage at household leveland encouraged voluntary participation in terms of choice of farmers forparticipation and type of land management. Vietnam’spilot projects implementing Decision 380 and subsequent PES legislation:  Withmountainous terrain and monsoonal climate, the rural upland area forest’swatershed services play significant role in Vietnam’s economy mainly asagriculture and hydropower sector. Incentive based program, Program 661(Decision No.

661/QD-TTg/1998), introduced by Vietnamese government to promotesustainable development that aimed to increase forest coverage by five millionhectares within a period of 12 years (1998-2010). In 2007, Decision no. 380/QD-TTg/2008, a national PES policy contained legal, institutional, andfinancial guidelines pertaining to PES. Important forest watershed services aswater flow regulation, soil erosion reduction, and scenic landscape wereeconomically evaluated based on program 380. Son La and Lam Dong provincesidentified as PES pilot testing, generates high demand of municipal water and hydropowerdevelopments resulted from dense population; also, these provinces have thepotential to integrate land-management activities with biodiversityconservation and tourism from nearby national parks. Suitably, three classes of’buyers’ were specified as hydropower facilities, water suppliers, and tourismcompanies.

In September 2010, the study from the success of pilot projectsassociated with Decision 380 were developed as the national ‘Payments forForest Ecosystem Services’ Law (Decree 99-CP, 2010).EVALUATIONOF SLCP AND DECISION 380 PILOTSLegal, institutional, andadministrative frameworksSLCP: In SLCP, multiple agencies were involved including thedepartments from forestry and grain supply, to finance and land management, including the Ministry of Land and Resources, theMinistry of Agriculture, the State Forestry Administration (SFA), and theMinistry of Water Resources. Agencies were engaged in releasing thecompensation (cash and grain), management of land contracts with farmers, negotiationof disputes, selecting and measuring land area for conversion, distribution ofsaplings or grass species, issuing contracts, and monitoring results ofconversion. There is no specific legal guidance for establishment of PES likeapproaches in China. Even though complete ownership rights of natural resourcesand lands belongs to the state, by SLCP the right for land use and managementwere provided during the period of SLCP contract. According to this policy of’whoever plants maintains and benefits,’ land-users are allowed to manage andbenefit from the products and services on their assigned land.Decision380: It elaborates the term ‘forest ecosystemservices’ (FES) for national legal framework by defining the rationale forpayments, also the responsibilities and rights of parties to the contracts.Further it defines the calculation method, form and duration of payments,manages and implements payment transactions, the roles of implementingagencies, and the budget in relation to the source of financing.

Though thescheme supports payments based on direct negotiations, the language in thedocument implies mandatory participation for both the buyers and providers forthe service. If Decision 380 dictates specific rate of payments for thestakeholders, it appears the fee and tax approach has been adopted. It appearsthat the participation is not based on voluntary negotiations. Theinstitutional framework configuration promotes the vertical collaborationbetween different ministries for preparation of national PES, but thehorizontal collaboration was limited imposing challenge for effective andefficient PES implementation. The land use rights in Vietnam are restrictiveand comprises of factors like user group, forest type and classification,forest allocation, and source of investment. The institutional framework helpsto maintain and enhance well-being-environment synergiesImplementationSLCP: SLCP gained rapid expansion by political support and ambitious target,from an initial pilot phase in 2001 with three upstream provinces to reachacross 25 provinces by 2006.

Over the same period, the rate of conversion wentsix times. The diversified and undocumented local implementation with limiteddocuments about locality’s characteristic opportunities and resources, it wasdifficult to draw any firm conclusions about SLCP implications. There werebserved significant removal of sloping farm land, but the associated impact onwatershed protection, as first objective, was unclear. Furthermore, emphasis onplanting tress was not the only solution to protect sloping soil but ratherfactors like land use, type of vegetation cover, size of basin also effects thebasin management.

Also, monoculture approach of afforestation resulted inlimited biodiversity. Absence of study of proto-type forest pre-SLCP withintargeted areas, limits the ability to substantiate claims. The budgetdeficiency of local agencies resulted in poor monitoring and enforcement of theSLCP, and failed to coordinate with farmers and providing technical assistancewith plantation. Again, irrespective of local conditions, land use practices,or household needs, some farmers were forced for scheme subscription byneighbours and village councils in order to meet conversion targets set by highercentral councils.

In poorer Ningxia province, 80% of sampled farmers wereforced to participate in SLCP.Decision 380: It resulted in huge amount of payment flows. (VND 62 billion, equiv. toUS$2 million) within one to two years. Since the period of commissioning forpilot implementation was very short (2009-2010), with payments delivered andlaw enactment as primacy, the evaluation assessments becomes difficult. Thoughfor a proper implementation, organization of sensitivity analysis forrehabilitation of critical ecological habitats, community level awarenessinitiatives with capacity building and specialized training was performed.

Also, due to availability of poor information of forest status and impreciseclarification and realization of voluntary transactions, prompt implementationencountered problems.