China and Vietnam
have established some of the most promising payments for ecosystem services
(PES) initiatives for watershed conservation and forest management. China’s Sloping
Land Conversion Programme (SLCP) and Vietnam’s pilot projects for Decision 380
subsequent PES laws are one of these initiatives. The selected research paper
is reviewing how these two actions are meeting their environment and
development objectives in terms of their institutional arrangements,
implementation in practice, and sustainability prospects.

The fundamental
definition of PES was defined as a voluntary transaction for distinct
ecological services, with at least one buyer, one provider, and based on the
condition that the payment continues only if the provider(s) provides the
defined ecosystem services to the buyer over time period. Though PES does not
specifically target poverty alleviation, yet these payments can offer better
opportunities to the service providers for a diversified livelihood and greater
well-being with fair incentives for exchange of services. Since both the
parties can receive benefits from PES outcome, the acceptance by potential
participants may be more for PES than for the government laws or regulations.

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incentive-based environmental policy programmes, called as PES or
eco-compensation in China and Vietnam, gained rapid development and global
spotlight. There has been a substantial political determination to expand pilot
programs and learn from experiences from local diversification of national
schemes for domestic and international environment. As a result of economic growth, rapid urbanization,
population explosion, and increased demand for marginal land have affected the
environmental conditions and natural resources negatively. Major elements
related to land degradation includes soil erosion, deterioration of water
resources, deforestation, desertification and loss of biodiversity. The mounting
social and environmental problems as a result of increasing development
discrepancies and denudation of natural resources, have taken care by both the
governments by introduction of laws, institutional frameworks, and public

This study wants to create an insight for
water and forest management, based on experiments with incentive based schemes
in these traditionally command driven countries to achieve their environment
and development goals; and implications for large scale government-run programs
in conserving the perception of PES from concept to action. This is evaluated
through examination of program’s legal and institutional frameworks,
implementation in practice, and prospects for long-term sustainability. The two
national program considered for study here are the Sloping Land Conversion
Program (SLCP) in China and the PES pilots being implemented in association
with Decision 380 in Vietnam. 


SLCP : After the Yangtze River flood of 1998, China’s central
government recognized the extreme impacts of steep slope farming on the
ecological loss of services of forest and grasslands on slopes, in particular
the effect on run-off and soil erosion. SLCP was introduced in year 1999 by the
government also known as Grain for Green or the Conversion of Cropland to
Forests and Grasslands Program, as the largest known land retirement program
worldwide. The farmers with field on slopes 15-25° or greater, have the option
to transform the field into ‘ecological forest’ (timber producing) or ‘economic
forest’ (farming cash crops). In exchange they were given in-kind subsidy of
grain or cash, on annual basis. Based on type of conversion and region location
of land (w.r.t. different fertility of land), period of compensation differed.

SLCP, the first national PES program, could directly engage at household level
and encouraged voluntary participation in terms of choice of farmers for
participation and type of land management.

pilot projects implementing Decision 380 and subsequent PES legislation:  With
mountainous terrain and monsoonal climate, the rural upland area forest’s
watershed services play significant role in Vietnam’s economy mainly as
agriculture and hydropower sector. Incentive based program, Program 661
(Decision No. 661/QD-TTg/1998), introduced by Vietnamese government to promote
sustainable development that aimed to increase forest coverage by five million
hectares within a period of 12 years (1998-2010). In 2007, Decision no. 380/
QD-TTg/2008, a national PES policy contained legal, institutional, and
financial guidelines pertaining to PES. Important forest watershed services as
water flow regulation, soil erosion reduction, and scenic landscape were
economically evaluated based on program 380. Son La and Lam Dong provinces
identified as PES pilot testing, generates high demand of municipal water and hydropower
developments resulted from dense population; also, these provinces have the
potential to integrate land-management activities with biodiversity
conservation and tourism from nearby national parks. Suitably, three classes of
‘buyers’ were specified as hydropower facilities, water suppliers, and tourism
companies. In September 2010, the study from the success of pilot projects
associated with Decision 380 were developed as the national ‘Payments for
Forest Ecosystem Services’ Law (Decree 99-CP, 2010).


Legal, institutional, and
administrative frameworks

SLCP: In SLCP, multiple agencies were involved including the
departments from forestry and grain supply, to finance and land management, including the Ministry of Land and Resources, the
Ministry of Agriculture, the State Forestry Administration (SFA), and the
Ministry of Water Resources. Agencies were engaged in releasing the
compensation (cash and grain), management of land contracts with farmers, negotiation
of disputes, selecting and measuring land area for conversion, distribution of
saplings or grass species, issuing contracts, and monitoring results of
conversion. There is no specific legal guidance for establishment of PES like
approaches in China. Even though complete ownership rights of natural resources
and lands belongs to the state, by SLCP the right for land use and management
were provided during the period of SLCP contract. According to this policy of
‘whoever plants maintains and benefits,’ land-users are allowed to manage and
benefit from the products and services on their assigned land.

380: It elaborates the term ‘forest ecosystem
services’ (FES) for national legal framework by defining the rationale for
payments, 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 implementing
agencies, and the budget in relation to the source of financing. Though the
scheme supports payments based on direct negotiations, the language in the
document implies mandatory participation for both the buyers and providers for
the service. If Decision 380 dictates specific rate of payments for the
stakeholders, it appears the fee and tax approach has been adopted. It appears
that the participation is not based on voluntary negotiations. The
institutional framework configuration promotes the vertical collaboration
between different ministries for preparation of national PES, but the
horizontal collaboration was limited imposing challenge for effective and
efficient PES implementation. The land use rights in Vietnam are restrictive
and comprises of factors like user group, forest type and classification,
forest allocation, and source of investment. The institutional framework helps
to maintain and enhance well-being-environment synergies


SLCP: SLCP gained rapid expansion by political support and ambitious target,
from an initial pilot phase in 2001 with three upstream provinces to reach
across 25 provinces by 2006. Over the same period, the rate of conversion went
six times. The diversified and undocumented local implementation with limited
documents about locality’s characteristic opportunities and resources, it was
difficult to draw any firm conclusions about SLCP implications. There were
bserved significant removal of sloping farm land, but the associated impact on
watershed protection, as first objective, was unclear. Furthermore, emphasis on
planting tress was not the only solution to protect sloping soil but rather
factors like land use, type of vegetation cover, size of basin also effects the
basin management. Also, monoculture approach of afforestation resulted in
limited biodiversity. Absence of study of proto-type forest pre-SLCP within
targeted areas, limits the ability to substantiate claims. The budget
deficiency of local agencies resulted in poor monitoring and enforcement of the
SLCP, and failed to coordinate with farmers and providing technical assistance
with plantation. Again, irrespective of local conditions, land use practices,
or household needs, some farmers were forced for scheme subscription by
neighbours and village councils in order to meet conversion targets set by higher
central councils. In poorer Ningxia province, 80% of sampled farmers were
forced to participate in SLCP.

Decision 380: It resulted in huge amount of payment flows. (VND 62 billion, equiv. to
US$2 million) within one to two years. Since the period of commissioning for
pilot implementation was very short (2009-2010), with payments delivered and
law enactment as primacy, the evaluation assessments becomes difficult. Though
for a proper implementation, organization of sensitivity analysis for
rehabilitation of critical ecological habitats, community level awareness
initiatives with capacity building and specialized training was performed.

Also, due to availability of poor information of forest status and imprecise
clarification and realization of voluntary transactions, prompt implementation
encountered problems.