Local Preferences and Strategies for Effective ...

Local Preferences and Strategies for Effective, Efficient, and Equitable Distribution of PES Revenues in Vietnam: Lessons for REDD+ Thuy Thu Pham, Moira Moeliono, Maria Brockhaus, Dung Ngoc Le, Grace Y. Wong & Thang Manh Le Human Ecology An Interdisciplinary Journal ISSN 0300-7839 Hum Ecol DOI 10.1007/s10745-014-9703-3

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Author's personal copy Hum Ecol DOI 10.1007/s10745-014-9703-3

Local Preferences and Strategies for Effective, Efficient, and Equitable Distribution of PES Revenues in Vietnam: Lessons for REDD+ Thuy Thu Pham & Moira Moeliono & Maria Brockhaus & Dung Ngoc Le & Grace Y. Wong & Thang Manh Le

# Springer Science+Business Media New York 2014

Abstract Local people’s preferences for how revenue from payments for environmental services (PES) schemes is distributed and used, and their ability to influence spending decisions, can shape the scheme’s effectiveness in achieving forest management and poverty reduction goals. We examine how the interplay between institutions, norms, and decisionmaking processes influences the outcomes of PES in Son La Province, Vietnam. Using information gathered in focus group discussions and interviews, we find that decisions are shaped by the perceived trustworthiness and capability of village authorities and by local definitions of “equity”. Our analysis also suggests that combining revenue-distribution options may be more likely to result in effective, efficient, and equitable outcomes while also supporting rural development. Our findings offer useful lessons for benefit sharing for REDD+ (reducing emissions from deforestation and forest degradation). PES and REDD+ revenues could be most effective when considered as supplements to budgets for social and economic development programs. Keywords PES . REDD+ . Benefit sharing . Vietnam

Introduction Reducing emissions from deforestation and forest degradation and enhancing forest carbon stocks (REDD+) in developing countries is increasingly attracting the attention of policymakers and donors because of its potential to mitigate climate change and support sustainable forest management. T. T. Pham (*) : M. Moeliono : M. Brockhaus : D. N. Le : G. Y. Wong : T. M. Le Center for International Forestry Research, Hanoi, Vietnam e-mail: [email protected]

However, the institutional, technical, and financial issues surrounding REDD+ design and implementation are complex. In particular, the management of REDD+ financial flows at national and subnational levels has been the subject of considerable debate. REDD+ benefit sharing can be interpreted simply as the distribution of direct and indirect net gains from the implementation of REDD+, or as a broader system that also includes the introduction of new institutional settings, organizational arrangements and instruments for distributing financial and other net benefits from REDD+ programs (Luttrell et al. 2012). In this paper, we refer to the latter interpretation. Benefit sharing may operate vertically (financial flows between levels of administration) or horizontally (within the same level). When designing a benefit-sharing system, the efficient distribution of costs, the institutional structures needed for financial transfers, and the processes for making decisions and implementing the final mechanism must all be considered (Lindhjem et al. 2010; Vatn and Vedeld 2011). To support the development of REDD+ and benefit sharing design, it is useful to learn from established mechanisms for sharing benefits in the forestry or environmental sectors (Springate-Baginski and Wollenberg 2010; Peskett 2011). Among these, payments for environmental services (PES) schemes and community forest management are the most relevant (Wunder 2009; Costenbader 2011; Kandel and Cuéllar 2011; Angelsen 2012) largely because they encompass not only mechanisms for both vertical and horizontal benefit sharing (Springate-Baginski and Wollenberg 2010; Kandel and Cuéllar 2011) but also approaches that potentially support collective action at the local community level (van Noordwijk et al. 2012). Several national REDD+ programs and their benefit sharing mechanisms are in fact being developed based on lessons learnt of existing national PES programs (e.g., in Vietnam: see Government of Vietnam 2012; in

Author's personal copy Hum Ecol

Brazil: see Pham et al. 2013a). In many cases, PES has also been perceived as contributing to poverty reduction by helping rural communities protect forests and improve their livelihoods (Wunder 2005; Lee and Mahanty 2009). Although the topic of benefit sharing in PES schemes has been covered extensively, three major gaps in the literature require special attention. First, the empirical literature on this topic largely focuses on identifying the level of payment needed to change land-use behavior (White and Minang 2010) and on determining the structure of payments and contracts (Engel et al. 2008). By contrast, few empirical studies have analyzed the impact of PES on the providers of environmental services, the social system within which they operate and the supplementary goal of poverty reduction (Pattanayak et al. 2010; van Noordwijk et al. 2012). Furthermore, most studies were conducted in the context of Latin America with little attention given to case studies from Asia, partly because most PES projects in Asia were more recently established within the past four years and are only now reaching the stage for evaluation. The present analysis of how PES affects local land managers and social systems in Asian contexts is thus timely. The second gap in the literature concerns how PES revenues are used. In principle, environmental service providers will continue to provide those services so long as they benefit from how the PES revenues that they receive are used. In practice, it is not always clear how revenues are used by providers and why; buyers of environmental services often query this, and appear to be particularly skeptical about claims that PES revenues are used to strengthen local commitments to forest protection and development (Courtney 2010; van Noordwijk and Leimona 2010). It is therefore essential to examine more closely the social and cultural dimensions influencing decisions about the distribution and use of PES revenues (Pascual et al. 2009; van Noordwijk and Leimona 2010). The third gap is the lack of “ research to understand how monetary or other incentive types interact with pro-social motivation and collective action” (van Noordwijk et al. 2012). The PES literature tends to focus mostly on individual decision making and preferences; however, in their global review of PES van Noordwijk et al. (2012) asserted that, given the equal importance of efficiency and fairness in PES schemes, it is important to understand the impact of PES on collective behavior and choices. Additionally, the individual’s choice and decision to participate in PES is in turn influenced by his or her social and cultural settings. The aim of this paper is to address these gaps and assess how the interplay among institutions, social and cultural norms, and decision-making processes in rural Vietnam influences the outcomes of a PES scheme. Outcomes of PES scheme refer to improvement of local livelihoods and enhanced forest protection through changes in land use practice.

Local preferences for the distribution and use of PES revenues and the extent to which local people can influence decisions are among the factors that determine a scheme’s effectiveness in achieving collective forest management and rural poverty reduction. We analyze existing approaches to distributing revenues and examine how local preferences and beliefs have shaped the effectiveness, efficiency and equity (3E) of PES benefit-sharing mechanisms. Our discussion is structured around two central aspects of PES in a community forest: the decision-making process and the institutional structures necessary for benefit distribution. We carried out our research in Son La Province in northern Vietnam. In 2008, Vietnam passed a national law on PES— the only country in Southeast Asia to have done so—and thus has a number of years of experience in implementing PES. In addition, the historical, economic and social constructs within Vietnam’s PES law and the community forestry and decisionmaking systems in Son La provide a rich setting for a study on the interplay among the individual, the collective, and institutions in the distribution and use of PES revenues. Conceptual Framework Our analysis builds upon theoretical frameworks developed by Archer et al. (2008), Clements et al. (2010), Corbera et al. (2009), Neef and Thomas (2009), Vatn (2010), and Zabel and Roe (2009) . These scholars asserted that the success of PES schemes in general and of benefit-sharing mechanisms in particular depends largely on the nature of the institutional framework and setting, as this influences relationships among actors, the distribution of finance, motivational factors such as beneficiaries’ level of interest and involvement, and the overall outcomes. Our study examines the operation of these variables in the Vietnamese PES context. To analyze the outcomes of PES, we adapt the 3E criteria in Angelsen et al. (2009). In our analysis: effectiveness refers to the extent to which PES schemes achieve their stated forest conservation and poverty reduction objectives; efficiency refers to the actual costs of achieving these outcomes; and equity refers both to the distributional aspects of costs and benefits and to the procedural aspects of participatory decision making within the specific social and cultural contexts that shape stakeholders’ perceptions of equity. We begin with the assumption that political, sociocultural and economic factors influence actors’ choices and preferences when they select options for benefit sharing. The first step in the analysis, therefore, is to review formal (the national and provincial legal and regulatory framework) and informal (village rules and cultural norms) rules for PES benefit sharing to understand both the enabling conditions for and obstacles to the achievement of 3E outcomes from PES. As the relationships among incentives, land-use decisions, and ecosystem services are many and complex, understanding


the feedbacks between these three components are critical to capture synergistic effects and to avoid tensions (Bryan 2013). We argue that feedback mechanisms are important not only in the relationship between buyers and sellers of environmental services but also within seller groups, particularly in the context of community forests where multiple individual households are covered by a single PES contract. To be viable, PES schemes must secure the engagement of a range of stakeholders (Mayrand and Paquin 2004) who can exercise their right to access to information (in implementing, monitoring and feedback) (Corbera et al. 2007; Vignola et al. 2012;). We therefore examine one feedback mechanism in our case study province: how the flows and distribution of PES revenues affect local people and how they choose to use their land in response. Local concerns and conflicts around PES benefit sharing will influence land-use decisions and, consequently, the delivery of ecosystem services. We attempt to assess the effectiveness of existing grievance mechanisms in addressing and resolving concerns and conflicts from the perspective of local people. We also examine the monitoring and evaluation system to explore how other feedback relationships among incentives, land-use decisions, and ecosystem services are captured (or not). The effectiveness of PES incentives depends largely on the quality of governance arrangements and the perceived distributive equity of the benefit-sharing mechanism (Corbera et al. 2007; Vignola et al. 2012; Pham et al. 2013a). Several factors influence this perception: distribution of income, the ex ante level of endowment among agents, and concerns about equity among stakeholders and among a reference set of participants in PES schemes (Pascual et al. 2009). Furthermore, according to Corbera et al. (2007), weaknesses in a PES scheme, such as limited economic impact and inequities in decision making and outcomes, can be attributed to poor institutional design, particularly to the inability of markets and payments for ecosystem services to account for context-specific factors. In this study, we review the management structures and the options for benefit sharing/distribution of revenues observed in the case study sites and we assess the reasons underlying local people’s preferences for each option. Case Study Sites and Research Approach Son La Province, in northern Vietnam, was one of two provinces selected to pilot PES in 2008. Communities are the main forest managers in the province, with 52% of the total forested area under community management. Although national policy broadly recognizes the role of communities in forest protection and development, the forest area actually allocated to village community management accounts for only 22% of the country’s total (Nguyen and Pham 2006). Most community forests in Vietnam are degraded and geographically isolated (Enters and Nguyen 2009; IUCN 2010); they therefore

generate almost no benefits in the short term and require major investment for their management (Wode and Bao 2009). Given these features, the experience with PES in this province promises useful lessons on the interactions and feedback among PES incentives, community forestry management, and the dynamics between individual and collective decision making. In consultation with government officials, we selected three representative communes in Son La as our case study sites: Ngoc Chien in Muong La District, Chieng Co in Son La City, and Phieng Khoai in Yen Chau District (Fig. 1). There are three forest categories in Vietnam: (i) special use forest comprises national parks, nature reserves, species and habitat protected areas, landscape protected area, and scientific research and experiment forest area; (ii) production forest mainly used for production and trading of timber and non-timber forest products in combination with protection, contributing to environmental protections including natural and planted production forests and seeding forests; and (iii) protection forest established to protect water sources and land, prevent erosion and desertification, restrict natural calamities and regulate climate, thus contributing to environmental protection. According to local authorities and Son La Forestry Department, protection forests account for more than 80% of total forest area in the three communes studied. However, the protection forests have been seriously degraded due to agricultural expansion and rapid maize cultivation over the last 50 years (Son La Forestry Department 2012). There has been no large scale commercial logging in the area since there is only a small area of natural forest retained (Son La Forestry Department 2012). In the three communes, more than 95% of local income is derived from agriculture (mainly maize, cassava and coffee production). Interviews with local households indicated that income from collection of non-timber forest products (e.g., bamboo shoot) is relatively small and local households collect them for their daily needs rather than for sale as commercial products. Local people can apply for permission to cut 1–2 logs to repair and fix their traditional houses. The three communes also share common characteristics: more than 50% of the forest area in the commune is managed by communities. A questionnaire was sent to village management boards in 55 villages (32 villages in Phieng Khoai commune, 15 villages in Ngoc Chien commune and eight in Chieng Co commune). The questionnaire covered how revenues are distributed, who decides how they are distributed, how PES revenue is managed, local participation in spending decisions, villagers’ awareness of how the money is managed,


Fig. 1 Study area

and whether a grievance-handling system is in place. All village management boards responded to the questionnaire (100% response rate). Focus group discussions and in-depth interviews were conducted with provincial, district, commune, and village stakeholders in seven villages (Phay and Pa Te villages in Ngoc Chien commune; Bo Rom, Kim Chung 1 and Kim Chung 2 in Phieng Khoai commune, Chieng Yen and Home villages in Chieng Co commune). These were selected based on their geographic accessibility, permission from the government, and local communities’ and households’ willingness to participate. The aim of the focus group discussions and interviews was to understand the drivers of deforestation and forest degradation, the strengths and weaknesses of the PES scheme and its distribution systems, the impact of PES on local livelihoods

and environmental services, and recommendations for future PES design and implementation. Participants in the focus group discussion were selected, in consultation with local authorities, based on their availability and willingness to participate and their representation of certain groups (age, gender, ethnicity, socioeconomic status). The focus group discussions were facilitated by a five-member research team to ensure that all participants were given equal opportunity to speak. In addition, visual aids, such as diagrams, were used to assist marginalized groups so they could express their ideas freely. In total, 315 interviewees participated in our study (Table 1). Data from the discussions were recorded in three main formats: (1) notes taken in all interviews and focus group discussions; (2) notes and flip charts made during focus group discussions and later transcribed into Word documents; and

Author's personal copy Hum Ecol Table 1 Key informants in the study No. of key informants Provincial level Yen Chau district (Phieng Khoai belongs to) Muong La district (Ngoc Chien belongs to) Chieng Co commune Phieng Khoai commune Ngoc Chien commune Hom village (Chieng Co commune) Chieng Yen village (Chieng Co commune) Bo Rom village (Phieng Khoai commune) Kim Chung 1 village (Phieng Khoai commune) Kim Chung 2 village (Phieng Khoai commune) Phay village (Ngoc Chien commune) Pa Te village (Ngoc Chien commune) Total

8 6 6 8 17 14 34 36 34 35 36 41 40 315

&

&

(3) diary entries by the research team containing their observations, reflections, feelings and initial assessments of the interviews, the interviewees and the themes that emerged. The transcripts were then coded to ensure the anonymity of interviewees. Data gathering and analysis techniques included: taking notes, sketching ideas, summarizing and reducing data, coding, identifying data patterns, comparing data, and counting the frequency of codes or identifying codes where little information resides. The authors moved back and forth between transcripts, focusgroup flip charts, diary entries, and the research literature. Thematic and comparative analyses were also employed. Thematic analysis involves the identification of specific themes and summarizes all the data in relation to those themes. In comparative analysis, the results from interviewees in the same group categories and from different group categories are compared until no new issues emerge.

Findings & The Nature of PES in Vietnam and Son La All interviewees claimed that PES is a major breakthrough in the forestry sector in Vietnam and in Son La (To and Hess 2010; Nguyen 2011). By 2012, total PES revenue had reached about US$30 million. However, PES schemes in Vietnam differ from the classic definition of PES (Wunder 2005) as comprising voluntary and conditional transactions for a well-defined environmental service (or land use that secures the service) between well-defined buyers and sellers, in the following ways: &

Involuntary transactions. The level of PES payments is administratively set by the Vietnamese government

through legislation; as such, payments effectively function as a water use fee or tax for hydropower plants and water supply companies. Buyers of forest environmental services make payments into provincial forest protection and development funds, which are responsible for distributing the revenue raised to the forest owners that provided the services. Mandatory participation. In Vietnam, buyers and sellers are identified by law and must take part in the program. Decree No. 99/2010/ND-CP defines buyers as water supply companies and hydropower plants. Sellers are defined as: forest owners (organizations, households or individuals) with forests allocated or leased by the state for stable and permanent use for forestry purposes; who have planted forests on allocated land areas certified by the Provincial or District People’s Committee; or who have contracts for forest protection with state organizations. Lack of well-defined conditionality. Forests can provide a wide range of ecosystem services but most well-known and valuable services are (1) watershed protection (enhance and maintain water quality and quantity by reducing runoff);(2) biodiversity conservation; (3) carbon sequestration; (4) provision of wood and other non-timber product; and (5) landscape beauty (Wunder 2005; Pham et al. 2009; van Noordwijk et al. 2012). Environmental services in Son La are defined as watershed protection and soil erosion; they are approximated by forest cover as an indicator. The monitoring and evaluation system for PES looks solely at the maintenance of existing forest cover as a proxy for environmental services and not at the end outcomes (Pham et al. 2013b). There is no requirement or protocol for monitoring of forest quality, soil erosion or water regulation, even though all of these environmental services are included as the targeted outcomes of PES (Pham et al. 2013b). For landowners to be eligible for PES payments, the government must classify their land as forested. According to the Ministry of Agriculture and Rural Development (Decision QPN 6/84), land is defined as “forested” when it has at least 30% forest cover. Neither buyers nor sellers are well defined. In reality, buyers, defined under Decree No. 99 as water supply companies and hydropower plants, simply pass their PES costs on to the end user. As a result, the formal institutional structure of PES revenue distribution is centered on the Son La Forest Protection and Development Fund (FPDF) (Fig. 2).

This agency receives money from the water supply companies and hydropower plants, decides on the level of PES payment per hectare of forest, and distributes the cash to providers of environmental services either by bank transfer or in person during village meetings. According to Son La authorities interviewed, political actors at all levels support


VND40/m3

Water

VND40/m

INTERMEDIARIES

SELLERS

Forest Protection and

Households

3

supply companies

Development Fund Groups of households District PES Management

management fee

Board

BUYER

–10%

Communities (traditional

BUYER

communities and mass Commune PES

organisations)

Management Board Economic organisations: Hydropower companies

VND20/kwh

state forest enterprises, Village PES Management

private companies, forest

Board

management boards

VND 20/m3 Fig. 2 Institutional arrangements for payment for environmental services in Son La province, Vietnam (VND=Vietnamese dong)

and are committed to the institutional arrangements, but the transaction costs incurred in disbursing the payments are high relative to the total amount of PES revenue received. According to the Son La FPDF, it costs the province at least 1.2 billion Vietnamese dong (24% of the total revenue the FPDF receives from PES payments) in management fees to distribute payments to all 64,000 forest owners. Results from our focus group discussions and in-depth interviews with provincial and commune government staff revealed that no PES management board, at any level, includes representatives of local communities or civil society groups. This structure does not include an adequate grievancehandling system to capture feedback from local communities. The reporting system (set out in Circular 20 on PES reporting) is designed for lower-level agencies to report to higher government agencies on the process for making PES payments, progress in implementing PES, and any disputes or complaints. However, those interviewed from the Son La FPDF claimed that they had never received any complaints from lower-level agencies. At the same time, local people interviewed in all villages studied said that they had raised concerns about the level of payments received, the assessment

criteria used to monitor and verify the forest area, and entitlements to payment. As households had neither the knowledge and understanding of the technical monitoring system nor the power to act on its results, their feedback was not considered in the final decision made by commune staff and forest protection officers. Villagers interviewed in all seven villages said they were aware of three channels through which they can express their concerns: village heads, the Commune People’s Committee, and the media (Fig. 3). In all seven villages, fewer than 20% of the respondents interviewed had approached the Commune People’s Committee. Villagers said that they would talk to the Commune People’s Committee only if the village head could not provide answers (e.g., Hom and Bo Rom villages) or if they did not trust the village head (e.g., Phay and Pa Te villages). Only 22% of villagers interviewed in Chieng Yen and 5% of those in Kim Chung 1 had sought help from the media, stating that they had done so because they trusted neither the village head nor the Commune People’s Committee. However, the local authorities interviewed noted that the media, which are controlled by the state, would never broadcast negative stories about these nationally important areas.


Fig. 3 Who villagers approach to express their concern about environmental services payments

All villagers interviewed criticized the monitoring of PES contracts and reported conflicts between indigenous people and migrants. For example, a national resettlement program in the 1960s moved Kinh people (the largest ethnic group in Vietnam) from Thai Binh Province to settle in Chieng Yen village, homeland of Thai and Hmong people. The Kinh people were allocated forest land and now benefit from the PES program. By contrast, the neighboring Hmong people continue their customary practice of clearing forest for swidden but as land for swidden is limited fallows have been drastically shortened causing more degradation. In practice, those who have PES contracts cannot prevent the customary landowners (Thai and Hmong) from clearing forest, as they were in the area first. The Kinh tried to arrest illegal loggers, but the commune requested their release because they wanted to avoid conflicts between Kinh and ethnic minority groups. In this regard, the national priorities of supporting ethnic minorities and poor groups and the fear of social conflicts and disruptions are major obstacles to effective monitoring of PES. Two themes in the monitoring of contracts recurred during the interviews: the transparency of distribution mechanisms and the complexity of institutional arrangements, particularly with the interpretation of what is “forest” and the acknowledgment of local efforts. Transparency in the distribution of revenues is a major issue for PES monitoring and evaluation. Regular audits are not required at district, commune or village level, and there is little reporting on financial flows and disbursement either to the brokers who collect the money or to members of the public, who are the actual end users of PES. Among the three communes studied, only Ngoc Chien conducted audits in all villages. Provincial, district and commune leaders revealed that they requested villages to conduct and submit an audit report regularly only when (1) the Commune People’s Committee knows a village to be at high risk of corruption, or (2) villagers had complained to the Commune People’s Committee about not being able to trust reports by the village head. Even where villages were audited, the audit was not conducted by professional auditors, but by teams of provincial and commune staff

and the village heads, with villagers having no involvement or representation. From the point of view of local people, a shortcoming of the institutional arrangements for PES is the inherent tension between the equity and effectiveness of payments. However, the current definition of forest fails to recognize local efforts to protect the forest or to undertake reforestation activities preceding PES. An estimated 30% of households in Hom and Bo Rom villages in Phieng Khoai migrated to the area in the 1970s and were allocated degraded land. They invested in rehabilitating this land without any government support. However, as the forest cover of these areas remains below 30%, they are not eligible to receive payments for the provision of environmental services. By contrast, many other households in the same village were allocated better forest land five years ago and now receive payments. As a result, a large number of households that have successfully managed and protected their forest have become discouraged and conflicts among community members have erupted. Existing Management Types for Revenue Distribution According to the Son La Provincial People’s Committee, parties that are eligible to receive payments for the provision of environmental services are village management boards and mass organizations (farmers associations, women’s unions, youth unions) that hold a formal land-use right certificate for community forests (Table 2). Almost 90% of PES revenue goes to village management boards for distribution. Comments in questionnaires and focus group discussions in the three communes revealed that revenue distribution may be managed by village management boards, mass organizations or self-formed groups. Village management boards In some cases (e.g., Phieng Khoai and Ngoc Chien), village management boards are represented by the head of the village (transaction 1 in Fig. 4). Village management boards provide information and are often the only bridge between villages and outsiders. According to the provincial authorities interviewed, the village head, if trusted and accountable, can perform the role of referee, leader, and supervisor for PES activities in the village. The village head can also ensure the effectiveness of collective action in forest monitoring and protection and reduce illegal logging by local people for cultivation of maize. However, focus group discussions and in-depth interviews with provincial government staff and villagers revealed that village management boards often have poor understanding of PES and REDD+ (in all villages studied) and weak financial management skills (in all villages studied), and are prone to corruption and nepotism, granting land access and eligibility to receive PES payments only to members of their families (e.g., Ngoc Chien). As a result, community members mistrust the system

Author's personal copy Hum Ecol Table 2 Number of PES payments made to communities in the study communes

Number of payments made through village management boards Village heads Self-formed groups Subtotal A Number of payments made through mass organizations Farmers associations Women’s unions Youth unions Veterans Fatherland Fronts Subtotal B Total number of environmental services payments made to communities (A+B)

and renege on their PES contracts (e.g., Chieng Yen village, Pa Te village). Mass organizations In some cases, mass organizations, represented by their chairs, take receipt of the revenue from payments for environmental services (transaction 2 in Fig. 4). The provincial and commune authorities interviewed claimed that these organizations have enough staff to be able to regularly engage in activities and meetings with household heads. These interviewees also noted that mass organizations have motivated their members to participate in forest protection and development and in the management of government Fig. 4 Management of PES revenues in study communes

Ngoc Chien

Phieng Khoai

Chieng Co

51,930 0 51,930

11,304 100 11,404

16,616 50 16,666

0 4,175 3,159 1,102 3,634 12,070 64,000

76 55 248 81 0 460 11,764

0 0 0 0 0 0 16,666

funds for poverty reduction and environmental protection programs (e.g., Program 661, the largest national reforestation program, which was of a similar scale to the PES program and was implemented using the present institutional structure and monitoring and evaluation system). However, all mass organizations and provincial interviewees claimed that the forest areas they manage are often small and the overall environmental impacts are minimal. Moreover, these interviewees claimed that, although they are trusted by villagers to act as mediators to resolve conflicts between households, they do not exercise any power over how PES revenues are used, nor do they have the legal right to impose sanctions in the case of

Environmental services payments to communes Head of villages 1

Village management boards

5

Self-formed groups

3

4

Farmer’s associations

Women’s unions Mass organizations

Youth unions

2

Veterans

Fatherland Front


violations. Furthermore, mass organizations are key grassroots supporters of the party and government, and mass organizations and commune government staff interviewed pointed out that their main priority is to disseminate propaganda on government policies. As such, they are not in a position to receive local people’s complaints or suggestions. Self-formed groups All villagers reported that when they found their village management boards to be neither accountable nor competent they had requested that self-formed groups, such as the village police unit or national defense group, take receipt of payments (transaction 5 in Fig. 4) (e.g., Kim Chung village, Phieng Khoai). Villagers trust members of these groups because they are knowledgeable about financial management. However, commune authorities who were interviewed claimed that these groups do not have any legal authority to impose penalties for noncompliance, and that they depend on village management boards for information on PES. As described by villagers and village management boards, financial flows are highly complex (see Table 2 and Fig. 4). The decision over who manages the PES revenues for community forests depends on power structures, village rules, and villagers’ level of trust in the capacity and accountability of their village management board. In some cases, responsibility for financial management is transferred to another party (transactions 3 and 4 in Fig. 4). For example, in Pa Te village in Ngoc Chien, PES revenues were given to the village management board, but the board and villagers asked the youth union to manage the funds because of its chairman’s superior financial management skills and stronger strategic vision (transaction 3). In all the other villages surveyed, mass organizations were allowed to keep up to 10% of the total revenue to cover their administrative fees and costs of forest protection activities, with the remaining funds given to the village management boards (transaction 4).

Influence of Trust on Preferences for Distribution of Revenues and Associated PES Outcomes Preferences for revenue distribution differ from place to place, with the result that each commune has its own set of distribution mechanisms (Fig. 5). The principal factor determining the distribution of revenues is the extent to which villagers and the Commune People’s Committee trust in the accountability and capacity of the village management boards and mass organizations (Fig. 6). Where villagers trust their management board, they accept the board’s decisions on the distribution of revenues (e.g., Bo Rom and Bo Hom villages in Phieng Khoai). By contrast, where the level of trust is low, local communities and authorities insist that the

Fig. 5 Distribution of PES revenues, according to questionnaire responses from 55 villages in three communes

money be divided equally among all households (e.g., all villages in Ngoc Chien; Chieng Yen village in Chieng Co). In Ngoc Chien, only one method of distributing revenues has been used: the entire amount was distributed equally among all households. All interviewees in the commune said that they prefer this option because it reduces elite capture by village management boards and the fact that everyone receives the same amount means that all villagers have the same responsibility for forest protection. However, villagers and commune interviewees also noted that this option means that each household receives only a small amount of money. Ninety percent of the respondents claimed that they had received only US$1/year, whereas the opportunity cost of corn production is about US$1,500–2,000/year. Given this shortfall, the payment is clearly not sufficient to motivate people to protect forests. Although this approach means that in principle all villagers benefit, it removes the conditionality or performance aspects of PES . In contrast to Ngoc Chien, Phieng Khoai and Chieng Co adopted a combination of options for distributing revenues, namely: making payments to the members of forest protection groups; using funds to buy or upgrade equipment for the community hall; making equal payments to all households in the village; using funds to build infrastructure; and others, mainly microcredit schemes. Each of these five options has both strengths and weaknesses (discussed below), and the amounts each commune allocated to each activity differed. The village management boards in these communes viewed this combination of approaches as a way to ensure PES was of benefit to a large number of stakeholders. Making payments to members of forest protection groups Each village has a forest protection group (usually 10–15 people from 15 households) typically led by the village head. In Phieng Khoai, forest protection groups received the largest share of the total revenue (40%) but in Chieng Co, they received the smallest share (10%). As communities in Phieng Khoai generally manage only a small area of forest (