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Evaluating the Pilot Implementation of Payment for Forest Environmental Services in Lam Dong, Vietnam


  • Nguyen Thi Y Ly

    () (Faculty of Economics, University of Agriculture and Forestry (UAF), Vietnam)


This study aims to assess the performance and the short-term impacts of the payment for forest environmental services (PFES) policy in Lam Dong Province, Vietnam. After a two-year pilot implementation (2009-2010), the Vietnam government plans to establish a national legal PFES framework. The paper describes the PFES pilot policy and how this pilot project is being implemented. The study focuses on the economic and environmental impacts of the pilot PFES. Economic effectiveness is estimated in terms of household annual income contribution, improved access to financial resources, and employment improvement. The environmental impact is assessed by proxy variables such as time spent conducting forest protection and conservation, amount of illegal logging, forest removed or burned, and farmers’ and local authorities’ awareness of environmental improvement. By applying the propensity score matching and difference in difference methods, the research found that PFES has contributed to increasing annual household income by about VND 3.9 million/ household per year. It has also generated positive effects on forest environmental services as well as improved the awareness of local farmers and authorities of the value of forests and the need for their protection. However, some problems remain and are associated with the following: forest environmental services have not been fully defined; participation is not completely voluntary; payment relies on a top-down mechanism; and the sustainability of the system is not assured.

Suggested Citation

  • Nguyen Thi Y Ly, 2013. "Evaluating the Pilot Implementation of Payment for Forest Environmental Services in Lam Dong, Vietnam," EEPSEA Research Report rr2013023, Economy and Environment Program for Southeast Asia (EEPSEA), revised Feb 2013.
  • Handle: RePEc:eep:report:rr2013023

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    References listed on IDEAS

    1. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
    2. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    3. Wendy Proctor & Thomas Köllner & Anna Lukasiewicz, 2008. "Equity Considerations and Payments for Ecosystem Services," Environmental Economy and Policy Research Working Papers 31.2008, University of Cambridge, Department of Land Economics, revised 2008.
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