Hybrid Outcomes of Payments for Ecosystem Services

Policies in Vietnam: Between Theory and Practice

Pamela McElwee , Bernhard Huber and Nguyễn Thi. Hải Vân

ABSTRACT

Vietnam has had a national Payments for Forest Environmental Services

(PFES) policy in place since 2010, which transfers money for forest pro-
tection from water and energy users to households who live in upland
watersheds. However, despite a loose resemblance to general Payments
for Ecosystem Services (PES) principles, implementation in Vietnam dif-
fers strongly from a theoretical ideal, and has a number of unique features,
including: strong state involvement in transactions; no use of markets to
set payments; poor definition and monitoring of ecosystem services; and
the adoption of non-conditional incentives that strongly resemble livelihood
subsidies for poor rural areas. The form that PES takes in Vietnam has been
shaped by institutional histories of forest management that have envisioned a
strong role for the state and for financial transfers to the rural uplands. At the
same time, PES has also been influenced by active engagement and agency
of central and local government actors, and local payment recipients, and key
areas in which they have impacted PES design include shared governance
and more equitable benefit distribution models. These institutional priorities
and local values that have shaped PES policy and implementation in Viet-
nam have led to a hybrid model, full of contradictions and compromises,
that neither fits a classical definition nor resembles neoliberal conservation
outcomes, and whose success is difficult to judge.

INTRODUCTION

For several decades, Payments for Ecosystem Services (PES) programmes

have been implemented in many areas of the world, on scales from local

Pamela McElwee’s work on PES has been funded by grant 1061862 from the National Science
Foundation’s Division for Geography and Regional Science and from support to Rutgers by
the National Institute for Food and Agriculture’s Hatch funding. She thanks Nghiêm Phương
Tuyến, Lê Thi. Huệ, Vũ Thi. Diêu Hương, Trần Hữu Nghi., Nguyễn Viết Dũng, Nguyễn Thi.
Hải Vân, Nguyễn Xuân Lãm, and Nguyễn Chı́ Thanh for their participation in several research
projects whose findings are mentioned here, and acknowledges the constructive feedback of the
anonymous referees of an earlier draft.

Development and Change 51(1): 253–280. DOI: 10.1111/dech.12548


C 2019 International Institute of Social Studies.
254 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

to national and directed towards landscapes ranging from montane forests

to coasts and wetlands. These programmes were premised on theoretical
lessons from environmental economics, whereby market values could be
harnessed for more efficient conservation, and for many years their imple-
mentation was guided by a broad definition of PES as a ‘voluntary transaction
where a well-defined ecosystem service (ES) (or a land-use likely to secure
that service) is “bought” by an ES buyer from an ES provider if and only
if the ES provider secures ES provision’ (Wunder, 2005: 3). Yet despite
the rapid uptake in policy, from a conceptual idea to codification in some
national laws in just a short time, real-world PES programmes have often
failed to live up to expectations as simple, efficient, market-driven solutions
to environmental externality problems (Muradian et al., 2013). This begs the
question: why do PES interventions designed to enhance effective resource
management frequently evolve very differently on the ground? One recent
answer is that such schemes fail to follow ‘sophisticated’ and ‘state of the
art’ advice on designing transactions between buyers and sellers of services,
leading to inefficient outcomes (Wunder et al., 2018). An alternative answer
from some scholars is that PES is a project to spread neoliberal interests,
and its failures reflect the danger of using such mechanisms to commodify
nature (Fletcher and Büscher, 2017).
We use a case study of Vietnam, the first country in Southeast Asia to
implement a national PES programme, to contest the idea that PES projects
are simply poorly designed on the ground, ignoring principles of efficiency
and maximum utility, which accounts for the uneven successes in achieving
cost-effective conservation. Instead, we argue that PES in Vietnam has been
specifically designed and shaped through implementation to meet entirely
different goals, often unrelated to ecosystem services (ES) provisioning or
market efficiency. Overall, Vietnam’s PES programme is more about rais-
ing new sources and amounts of funds for state and local co-management of
forests and to supplement household livelihoods. This outcome is a product
of two (sometimes contradictory) forces: the unique history of development
pathways in this socialist country, and the active engagement of numerous
stakeholders exercising agency. An examination of both rural histories and
forest institutions in Vietnam, as well as how people in sites of implementa-
tion have understood, accepted or rejected components of PES, helps explain
why PES takes the hybrid form and shape that it does — more a blend of
government-organized subsidies (albeit funded by water and energy users)
and forest co-management institutions, and less a market-driven theoretical
ideal or a neoliberal conservation tool.
This article also attempts to serve as a counterbalance to recent studies that
examine the implementation of PES in Vietnam with an eye to producing
more optimal outcomes, without considering its unique political context and
development history in shaping the somewhat unusual form it takes, which
makes improved efficiency unlikely (Đỗ Tro.ng Hoàn et al., 2018; Dương Thi.
Bı́ch Ngo.c and de Groot, 2018; Phan Đặng Thu-Hà et al., 2017). At the same
Hybrid Outcomes of PES Policies in Vietnam 255

time, we do not share a recent study’s pessimism regarding implementation

of PES as a form of state political co-optation to hide numerous problems
in the forest sector which has, at the same time, unleashed myriad nega-
tive impacts of neoliberal conservation (Tô Xuân Phúc and Dressler, 2019).
Rather, we see both challenges and opportunities in the hybrid form that PES
has taken, and identify openings for change through engaged action from
affected parties, such as payment recipients (usually rural households) and
local implementers (subnational officials); indeed, several of these stake-
holder groups have played large roles in shifting PES to be more equitable,
if not more effective (McElwee et al., 2014).
This article begins by examining the development of the Payment for
Forest Environmental Services (PFES) programme in place in Vietnam for
nearly a decade. We show that there are several specific elements to this pol-
icy that challenge notions of what PES is, namely the active role of the state
in implementation and pricing; the use of non-voluntary participation; the
absence of conditionality and enforcement mechanisms; and the lack of at-
tention to well-defined ecosystem services. We then explain these outcomes
by tracing the development pathways that have shaped Vietnam’s forest
management in the past half century, providing a genealogy for how cur-
rent approaches evolved as they did. We then turn to how situated agency
has also shaped PES, including how different stakeholders have rejected
components of the programme that were associated with a more neoliberal
model, namely efficiency in pricing and conditionality of payments. We
particularly note which actors have been able to affect change — namely
payment recipients, communities and local officials — and which have not,
including donors and buyers. These actors and their leverage points give us a
clearer indication of what PES looks like in Vietnam, and how it strays from
a simplistic theoretical model. We then conclude with a discussion of what
the case in Vietnam tells us about other national projects for PES elsewhere.
This article brings together insights from fieldwork that the three au-
thors have conducted independently in different parts of Vietnam at both
national and local levels. The first author has conducted research on PES
implementation in seven provinces of Vietnam since 2011 and interviewed
national-level officials and stakeholders in 2014 as part of a government
review of the first few years of the programme (McElwee and Nguyễn Chı́
Thanh, 2015; McElwee et al., 2014). The second author conducted disserta-
tion research in Yên Bái province in 2012–14, and served as a policy advisor
in 2016–18 for the Vietnam Forest Protection and Development Fund which
manages national PES funds. The third author has been engaged in PES pol-
icy research as an NGO staff member since 2015 and as a PhD student since
2018, and has conducted research in 11 different provinces implementing
the national PES programme (Nguyễn Viét Dũng and Nguyễn Thi. Hải Vân,
2015). Throughout the article we indicate where interview data come from
by the use of our initials, the subject of the interview, the location and the
date.
256 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

SETTING THE SCENE: THE DEVELOPMENT OF PES IN VIETNAM

Vietnam is an unlikely site for a PES ‘success story’, but that is how the
government sees its now more than 10-year experiment. A complex and long
history of state forest management under socialism (see McElwee, 2016 for
a history) led Sven Wunder, a scholar particularly associated with PES ap-
proaches, to write a pessimistic report in 2005 declaring that PES in Vietnam
would be a ‘non-starter’ due to the country’s long history of top-down envi-
ronmental management (Wunder et al., 2005). Wunder’s assessment listed
many reasons why PES was unlikely to be successful, including too lit-
tle progress on land reform (and hence challenges in enforcing transactions
without private property rights) as well as a number of previous payment-for-
protection projects in the forest sector in the 1980s and 1990s that provided
too little money with no conditionality. Yet despite Wunder’s prediction that
Vietnam could not follow an ‘ideal’ version of how PES should work, in
fact, PES has emerged on a widespread scale since 2008, when a national
pilot programme began (Hoàng Minh Hà et al., 2008; Pha.m Thu Thủy et al.,
2013).
PES-like payments were first introduced into Vietnam by several donor-
funded projects in the early 2000s, and the Ministry of Agriculture and
Development (MARD), under whose purview forest management belongs,
included market-based incentives as one potential option in the 2006–20
Vietnam Forest Development Strategy (Tô Xuân Phúc et al., 2012). Policy
makers within MARD quickly developed a framework to finance a national
scheme, known as Payments for Forest Environmental Services (PFES, or
Chi trả di.ch vu. môi trường rừng in Vietnamese). The rapidity with which
PFES was adopted was largely driven by anticipation of a decline of inter-
national funding for the forestry sector, given Vietnam’s rise to the status of
a middle-income country (McElwee, 2016).
The prime minister approved a two-year pilot of PFES in 2008–10 with
substantial international donor funding from the US Agency for Interna-
tional Development (USAID) and the German development agency GIZ in
two provinces (Lâm Đồng and Sơn La). The buyers of ecosystem services
in the pilot areas were designated (hydroelectric facilities, domestic water
suppliers and tourism companies) and were assigned fixed user fees, given
that they were dependent on services like water provisioning or scenic land-
scapes; these fees were channelled through a new institution called the For-
est Protection and Development Fund (FPDF). This provincial Fund would
pool the fees collected from buyers and distribute them to the owners and
managers of watershed forest areas. Many of these were state institutions, in-
cluding Forest Protection Management Boards or State Forest Companies,1

1. State Forest Companies are state-owned or invested logging or reforestation enterprises

with production objectives, while Forest Protection Management Boards are local (usu-
ally provincial or district level) authorities managing limited-use watershed forests for
Hybrid Outcomes of PES Policies in Vietnam 257

and these forest owners often subcontracted local households and individuals
to provide protection services (e.g. patrolling and reporting on violations),
and paid them with the user fees. In cases where individuals or communities
were the owners of forest land (in Vietnam, known as holding a ‘Red Book’
guaranteeing land use rights), they received money directly from the Fund.
Despite a lack of meaningful evaluation, the PFES pilot was quickly
deemed a success, and a national PFES policy was adopted in 2010 (known
as Decree 99/2010/NĐ-CP). Decree 99 expanded FPDFs to cover additional
provinces, as well as reconfirming the role of a central fund at the national
level set up in 2008, known as the Vietnam Forest Protection and Develop-
ment Fund (VNFF). The national and provincial funds collect user fees paid
by specified buyers, and transfer payments to recipients on PFES contracts.
By 2012, a mere four years after the start of the pilots, user fees collected
amounted to US$ 59 million annually, which has increased to approxi-
mately US$ 100 million per year currently (Nguyễn Chı́ Thanh and Vương
Văn Quỳnh, 2016; VNFF, 2018). Below we examine how different elements
of the national policy present contrasts with a traditional or ‘classical’ PES
approach, while subsequent sections will discuss how development histories
and actor agency have influenced the evolution of these features.

Government-run Implementation

As has been the case with most experiences around the world, active state
involvement has been required to jump-start PES. In Vietnam, the establish-
ment of PFES required not only involvement of government actors, but also
the creation of wholly new state financial organizations, namely the Funds
at both national and provincial levels. The central Fund (VNFF) receives
user fees from hydropower operators and water providers if the watersheds
cross provincial boundaries; if they do not, provincial Funds are in charge
of fee collection. VNFF then distributes revenues among the provinces ac-
cording to a formula relating to forest cover, after keeping 0.5 per cent of
user fees to cover administrative costs. The provincial FPDFs receive money
either from VNFF or directly from the service users within their boundaries,
and distribute these funds among forest owners/managers, after keeping
10 per cent to cover managerial costs and 5 per cent to cover contingencies.
Figure 1 shows the general PFES revenue model, from the users (buyers)
through the different Funds before going to service providers (households
and forest owners).

protection. A third category of state forest institutions are state-managed protected areas
(known in Vietnam as ‘special-use forests’) which are managed more strictly, either by
provinces or the central government.
 258

Figure 1. The Institutional Model for PFES in Vietnam

Notes:
MARD: Ministry of Agriculture and Rural Development; PPC: Provincial People’s Committee; DARD: Department of Agriculture and Rural Development; VNFF: Vietnam
National Forest Protection and Development Fund; VNFOREST: Vietnam Administration of Forestry; Provincial FPDF: Forest Protection and Development Fund
Source: Re-drawn from VNFF and relevant PFES policy documents
Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân
Hybrid Outcomes of PES Policies in Vietnam 259

Compulsory Participation and Non-market Pricing

Required buyers of ecosystem services under Decree 99 include hydropower

companies (both state-owned and private), water supply companies (mostly
state-owned) and private industrial facilities that use water, both state-owned
and private tourist companies, and others to be determined. Currently,
97 per cent of PFES revenues come from hydropower operators, making
them the primary source of income, while water and tourism companies
contribute the remainder (Pha.m Thu Thủy et al., 2013). Many hydropower
operators are state-owned or state-invested, and benefit from a regulated elec-
tricity market that has increased electricity rates to compensate for the costs
of PFES user fees; thus, hydropower contributions have remained the low-
hanging fruit of PFES financing, while other buyers have been more difficult
to engage.2 User fees are collected in nearly 60 designated watersheds where
provincial and national officials have determined there is sufficient forest
cover for compensation; in 2016, 5.3 million hectares of watershed forest,
or 38 per cent of Vietnam’s total forest area, was designated as eligible for
PFES (Nguyễn Chı́ Thanh and Vương Văn Quỳnh, 2016). At the end of 2018,
44 provinces, accounting for nearly three-quarters of provinces that have
some forest cover, were participating in PFES, across all regions of Vietnam
(see Figure 2b).
Like most other PES programmes worldwide, markets do not set the
prices paid for ecosystem services; rather, Decree 99 specified the precise
price for most payments. All hydropower companies, for example, were
initially required to pay VND 20 per kWh (US$ 0.0013 per kWh), while
water users were required to charge VND 40 per m3 (US$ 0.002 per m3 ).3
Tourism companies were to be charged at 1–2 per cent of their revenues,
with further elaborations of other fees and buyers in the future. The set
prices were the result of advice from hired consultants and a negotiation
process among high-ranking policy makers, especially the prime minister,
that the level of payment should not lead to significant changes to the price
of production of water and electricity, while still raising sufficient funds to
replace stagnating central state budgets for forestry (McElwee and Nguyễn
Chı́ Thanh, 2015). Table 1 summarizes the current state of payments under
national PFES policies.

2. For example, it has been difficult to assess fees for aquaculture producers, because ‘no one
keeps good records and they deal entirely in cash’ (PM interview, FPDF official, Lào Cai,
2014) while for expansion to carbon-emitting industries like cement, negotiators have faced
difficulties in convincing companies of the benefits of PFES as they have argued that adding
the fees to their product price will influence their competitiveness in the market (VHN
interview, FPDF official, Thừa Thiên Huế, 2019).
3. In November 2016, the government revised several articles of Decree 99 and increased fee
levels for hydropower and water companies by 80 and 30 per cent, respectively, to VND 36
per kWh, and for water users to VND 52 per m3 (Decision No. 147/2016/ND-CP).
 260

Figure 2a. Increasing Number of Provincial Funds, 2011–18 Figure 2b. Distribution of Provincial Funds by Region (2018)
[Colour figure can be viewed at wileyonlinelibrary.com] [Colour figure can be viewed at wileyonlinelibrary.com]

Source: VNFF (2018)

Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân
Hybrid Outcomes of PES Policies in Vietnam 261

Table 1. Types of Forest ES under the National PFES Policy

Type of Forest ES in Mechanism
ES buyers Decree 99 and status Level of payments
Hydropower Soil protection & Nationwide; 36 VND/kWh (US$
companies restriction of erosion Indirect payment 0.0016) since 2017
and sedimentation of through FPDFs
reservoirs, rivers and
streams; regulation
and maintenance of
water sources for
production
Domestic water Regulation and Nationwide; 52 VND/m3 (US$
production and maintenance of water Indirect payment 0.0022) since 2017
supply companies sources for production through FPDFs
Industrial and Provision of spawning Piloting in Lào Cai 44,500 VND/m3 pond
smallholder grounds, sources of province in 2016–17; volume (US$ 1.90)
freshwater fish feed and natural seeds waiting for future in 2016
aquaculture & use of water from decision to legalize; 20,000 VND/m3
producers forests for aquaculture Indirect payment (US$ 0.85) in 2017
through FPDFs
Industrial Regulation and Piloting in Thanh Hóa and 50 VND/m3 (US$
manufacturing maintenance of water Nghệ An province but 0.002) in 2017–18
companies sources for used for not yet legalized;
production Indirect payment
through FPDFs
Tourist service Protection of natural Nationwide (but only few 1–2% of revenue
providers landscapes and participants to date in
conservation of limited provinces, e.g.
biodiversity Lào Cai, Lâm Đồng);
Indirect and direct
paymenta
Carbon-emitting Forest carbon Feasibility study and Not identified yet
facilities sequestration piloting in Thừa Thiên
Huế province for cement
production companies
since 2018; separate
mechanism for
international carbon
markets (e.g. Reduced
Emissions from
Deforestation and
Degradation) to be
eventually linked with
PFES funds

Note:
a. Two tourism ventures pay PFES fees directly to National Parks with which they work or are located.
Source: VNFF documents and interviews.

Loosely Defined and Unmonitored Ecological Services

Decree 99 indicated that five types of forest ES can be financially compen-

sated: 1) payments for forest land protection, such as in preventing soil ero-
sion; 2) payments for watershed protection and water regulation; 3) carbon
sequestration payments; 4) landscape and biodiversity protection payments
262 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

for tourism purposes; and 5) payments to protect waters where spawning and
rearing for aquaculture takes place. In reality, however, most of these ES
concepts are only loosely specified in PFES law and guidance documents,
and local areas pay little or no attention to definitions, measurements and
monitoring of ES, nor to how fees paid should reflect different environmental
conditions.4 The set fee structure was derived from localized studies during
the pilot phase that assessed the value of ecosystem services in Lâm Đồng
province through a single willingness-to-pay study of water users down-
stream, and the modelling of soil erosion rates in the catchment area of a
single hydropower company (McElwee, 2016). These valuations were then
upscaled to the entire nation, despite dramatic differences in environmental
conditions and costs and benefits among Vietnam’s regions. In fact, stud-
ies that have quantified ES provisioning in specific watersheds have shown
much variation even within small regions; for example, the quantity of wa-
ter modulated by forests in the Hòa Bı̀nh hydropower watershed should be
worth closer to VND 733,000 per ha, more than twice the amount currently
being paid (Nguyễn Trung Thành et al., 2013).
Eligibility of watersheds for PFES is based largely on forest area and
topography and slope, rather than on actual service provisioning, as there
has not been any significant monitoring of levels of soil erosion or changes of
water level and water quality in reservoirs in relation to the area and quality
of forests where PFES is implemented, primarily because few provinces
or energy and water operations have the technical ability to do so (Pha.m
Thu Thủy et al., 2015). Furthermore, many of the forest cover maps used to
determine where fees should be collected and payments made are outdated or
inaccurate, as they were generated for other, earlier forest projects (Trần Thi.
Thu Hương et al., 2016). In some provinces, the new Funds offices do have
GIS and remotely sensed data to monitor and evaluate PFES areas, while at
the same time, the Forest Protection Department (a different and older state
agency), may have their own system to measure forest cover and change:
the resulting data are not usually the same. For example, in one province
in the north, the difference between data from the two agencies amounts to
thousands of hectares. However, because the ‘official’ forest cover statistics
of the province had already been approved, the PFES Fund revised its data to
follow the ‘official’, but incorrect, version (VHN interview, FPDF official,
a northern province, 2019).
Finally, non-upland forests, such as lowland forests or mangroves, have
been absent from national PFES payments, despite the fact that they provide
many useful services, including storm buffering, or sources of fish fry.
The absence of non-upland forests in PFES policy has occurred because it
has been difficult to determine ‘buyers’ of mangrove and wetland ES (as
opposed to the clearly visible energy and water users in downstream areas

4. PM interviews with FPDF officials, Lào Cai, Thừa Thiên Huế and Bı̀nh Phước provinces,
2014.
Hybrid Outcomes of PES Policies in Vietnam 263

Table 2. PFES Recipients and Forest Areas Nationwide, 2018

Proportion
Number of PFES forest of payment by
Forest owners recipients area (ha) area (%)
Forest Protection and Management 208 (subcontracting to 2.94 million ha 50.1%
Boards (e.g. state special use over 350,000
and protection forests) households)
State Forest Companies (e.g. state 81 716,500 ha 12.2%
production forests)
Communal People Committees 467 590,500 ha 10.1%
(e.g. local authorities)
Public security, army services, 195 356,400 ha 6.1%
private enterprises and research
centres (e.g. misc. state and
private entities)
Individuals, households or 115,138 1.26 million ha 21.5%
communities (e.g. with private
land ownership rights)

Source: VNFF data, cited in USAID (2018).

of watersheds), but also because the framework of forestry institutions in

Vietnam have long focused mostly on upland forests and directed forest
protection payments to ethnic minority and highland households, so they
have been prioritized first (McElwee, 2016).

Benefit Eligibility via Tenure or Labour

Within the watersheds that are designated as PFES eligible, households and
other forest owners/users are the key beneficiaries. Rural households can
receive payments if they meet one of two criteria: they must either have a
Red Book conferring tenure and user rights to forests (either individually or
as a group), or have signed a contract with a state forest owner to protect
forests (again, either individually or as a group). Table 2 shows a nation-
wide breakdown of the different payment recipients, highlighting that over
three-quarters of PFES revenue goes to state-owned entities, such as Forest
Protection Management Boards, state forest enterprises, local authorities or
other social-political organizations. Many, although not all, of these state
institutions typically subcontract to local households for forest protection
and pay them with PFES fees, creating a type of ‘labour’ contract.5

5. There is no requirement in Decree 99 that forest owners must contract to households,

although for the first few years of PFES many have done so. Others have argued, however,
that payments are so small per individual household that state forest owners or a provincial
fund might be better able to use the accumulated money. As one FPDF officer noted, ‘the
average household payment from PFES is 200,000 VND [US$ 9], so what impact does that
have on livelihoods? If the Fund was able to keep all 20 billion [US$ 909,000] of PFES [it]
could buy a lot of equipment and necessary things, but when we distribute it to households
264 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

Of the approximately 500,000 households who received some type of

PFES money in recent years, only 115,000 had recognized Red Books,
while the rest participated through ‘labour’ contracts (Nguyễn Chı́ Thanh
and Vương Văn Quỳnh, 2016). This use of both private property and
non-property-owning household contracts is an unusual feature of the
Vietnam approach, and is a result of a complicated history of forest land
management that has resulted in some decentralization to households in
certain regions (namely northern areas) while retaining state control over
others (central and southern regions) (McElwee, 2012; Pha.m Thu Thủy
et al., 2016). The PFES system allows both property-based and labour-based
payment contracts for this reason. While there has been some concern that
allowing labour contracts might disincentivize local areas from continuing
to provide land use certificates for forests to households, there is mixed
evidence on this; some provinces rely mainly on the labour-type contracts
(particularly Lâm Đồng province), while some provinces have moved to
increase forest land ownership through distribution of Red Books motivated
by PFES (e.g. Thừa Thiên Huế).6 Some provinces have used a mix of labour
and land contracts, such as Quảng Nam province, which has organized
new community protection groups in response to PFES while officially
some forest land is still under the ownership of the local government (the
commune), leading to a co-management type model.

Equity over Efficiency

Despite a singular national policy and uniform state-set payment rates, there
are key differences in benefit distribution, particularly at community levels,
which are reflective of local concerns regarding equity. Payment distribution
to households is not very clearly specified in Decree 99, leaving much to be
decided at the sub-provincial level (Loft et al., 2017; Dương Thi. Bı́ch Ngo.c
and de Groot, 2018), and officials have much latitude in recognizing house-
hold ownership and access over forests and distributing these funds among
and within villages. The result is that the level of payments to participating

it is too little to make much impact, [especially] when 100,000 VND [US$ 4.5] is a day’s
labour here’ (PM interview, FPDF official, Lào Cai, 2014). We have encountered several
examples where state forest owners may choose not to subcontract: if households live too
far away from the forest (remoteness) or if they decide to hire new workers/rangers with
the PFES money rather than distribute to households (VHN interviews, multiple state forest
officials, Thừa Thiên Huế, 2019).
6. Allocating Red Books is an expensive process as it requires remotely-sensed maps of forest
cover and then on-the-ground assessment of land ownership. PFES administrative fees do
not cover this expense in most cases; for example, Lào Cai province estimated it would cost
VND 100 billion (nearly US$ 5 million) to map and issue Red Books for all the forest land
being used locally, while PFES administrative fees only raised a fraction of that amount
(PM interview, FPDF official, Lào Cai, 2014).
Hybrid Outcomes of PES Policies in Vietnam 265

households can vary significantly, even between neighbouring communes

or even within a village.
The national average for payments is VND 210,000 (US$ 9) per hectare,
with a range from VND 2,000 (US$ 0.09) to VND 1,300,000 (US$ 55) per
hectare between watersheds (Nguyễn Chı́ Thanh and Vương Văn Quỳnh,
2016); this is a function of the amount of user fees generated in any given
watershed. The size of these payments may or may not cover opportunity
costs of participants, but they are not designed specifically for this purpose
(Lê Ngo.c Lan et al., 2016).7 Local authorities, particularly at the commune
level, often apply different modalities of payment distribution, as they are
free to decide whether funds should be disbursed equally among all members
of a community or to single out specific recipients, such as those most
engaged in forest protection or those with larger forestland holdings (Pha.m
Thu Thủy et al., 2014). An empirical example in Box 1 illustrates this point.

Box 1. Variations in Local Distribution

Since 2011, villagers in Mù Cang Chải district in Yên Bái province
have received PFES funds. Although the payment rates per hectare of
forest are uniform throughout the vast watershed of the Black River and its
tributaries, payment levels per household and the distribution of payments
vary significantly between different communes of Mù Cang Chải. The
amount of funds that any commune receives depends on its forest area,
and payment levels per household are therefore related to the ratio of
forest area to population in a given commune. With its large forest area
and low population density, Chế Ta.o commune, for instance, receives
substantial PFES funds, and the commune distributes these funds across
all local households, paying VND 1.2 million (US$ 52), VND 1.7 million
(US$ 72.5) and VND 3 million (US$ 128) per person per year in 2011,
2012 and 2013, respectively. With limited other means of cash income and
household sizes reaching 10 or more members, PFES now constitutes up to
80 per cent of annual cash income for some of the mostly semi-subsistence
peasant households. Nearby Púng Luông commune has less forestland and
a higher population density, and therefore PFES funds per household are
lower and are distributed based on households’ forest land holdings rather
than equally on a per-person basis. In 2013, participating households in Nả
Hàng B village (in Púng Luông commune) received an average of VND
2.1 million (US$ 105) (BH interviews, Yên Bái, 2012–14).

7. For example, in an interview with a state Forest Protection Management Board, officials
noted that they had trouble getting households in their area to sign PFES contracts which
paid only VND 200,000/ha (US$ 8.5) per year, as there were other sources of income in
the area like labouring on private acacia plantations that paid VND 180,000–200,000 (US$
7.6–8.5) a day, so ‘households don’t like money for state forestry projects that pay less’
(PM interview, Forest Protection Management Board official, Thừa Thiên Huế, 2014).
266 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

The many different local distribution mechanisms in place in Vietnam

— ranging from shared equal-size payment to all, to payments based on
who laboured the most in protection, to needs-based payments, as well as
community investment models — have raised questions about equity and
who gets to decide who benefits (Loft et al., 2017; Dương Thi. Bı́ch Ngo.c
and de Groot, 2018). For example, when benefits are distributed to all on
a per-capita basis, household payments will then vary with household size,
rewarding large households over smaller, often younger households. This
system also rewards those that may not actively engage in forest protection
if the assumption is that all will benefit. Interviewed commune officials
justified this with a hypothetical scenario that in case of a large forest fire,
all villagers will be needed to fight the fire, and if certain ones had received
a smaller share of the commune’s PFES funds, they would be less inclined
to join firefighting efforts (BH interviews, commune officials, Yên Bái,
2013–14).
Alternatively, when benefits are directed only to specific communities with
high forest cover nearby, other areas with less forest often complain about
not receiving benefits. One official argued that it is fair that remoter villages
receive relatively more of the commune’s PFES funds, as these villagers
typically have limited access to market-based and other income opportunities
(BH interview, commune official, Yên Bái, 2014). This position invokes a
conception of distributive justice that is based on need rather than equity
and follows these leaders’ valuation of PES as a means of redistribution
(see Loft et al., 2017; Sikor et al., 2014). Despite attempts to reflect local
contexts and values in benefit distribution, the variability of households’
payment levels and the lack of transparency in distribution have resulted in
much contestation in many areas, and are the subject of continuing discussion
at both national and local levels (Đàm Việt Bắc et al., 2014; Lê Ngo.c Dũng
et al., 2016; Loft et al., 2017; Pha.m Thu Thủy et al., 2014). While there
are very high transaction costs from the current model of letting localities
decide the best system for them, no other alternative appears likely for now
(Pha.m Thu Thủy et al., 2015).

Lack of Conditionality

In order to make PFES more performance-based, Decree 99 originally at-

tempted to institute a tiered system of payments which would be dependent
on forest type and protection status; for example, 1 ha of forest would be
compensated based on the total amount of payments collected for the wa-
tershed, minus administrative management fees, divided by the total area
protected, and multiplied by a special coefficient called Coefficient K (Ar-
ticle 16, Decree 99/2010). This use of Coefficient K was an attempt to set
some levels of conditionality on the PFES payments by linking them to four
criteria:
Hybrid Outcomes of PES Policies in Vietnam 267

r K1: broad categories of ecological status of forest (rich, medium and

poor);
r K2: classification of forest (Vietnam divides all forests into production,
protection or ‘special use’8 );
r K3: origin of forest (planted or natural);
r K4: type of forest protection provided (ranging from forest areas that
are challenging to patrol to those easy to access, in an attempt to ac-
knowledge effort) (Pha.m Thu Thủy et al., 2013).

However, in the first years of PFES, using multiple K coefficients led to

complicated calculations for local officials and increased transaction costs
as tens of thousands of payees needed to be individually assessed using these
coefficients. For example, in Sơn La province, provincial officials tried in the
first year to implement their own interpretation of the coefficients, ranging
from US$ 7 to US$ 3.5 per ha per year. But once forest officials tried to
calculate individual payment rates for the nearly 52,000 forest owners in
the province, many of which had more than one plot of land in different
classification categories, the officials found themselves overwhelmed with
work, and decided to abandon the idea and simply use one payment rate
across the board (PM interview, FPDF official, Sơn La, 2012).
Many other provinces also dropped the use of K coefficients quickly after
their PFES programmes began (Trần Thi. Thu Hương et al., 2016). By 2014,
only two provinces were still trying to use all four coefficients, while some
provinces used one or two (primarily K3) (McElwee and Nguyễn Chı́ Thanh,
2015). Variable K coefficients were primarily abandoned because of the high
transaction costs for officials, as well as local complaints that they were a
violation of principles of equity (Loft et al., 2017); public consultations
found that participants felt it unfair if payments were linked to forest quality
in particular which households felt they had little control over (McElwee
and Nguyễn Chı́ Thanh, 2015).
Further conditionality through monitoring has also been challenging
(Pha.m Thu Thủy et al., 2015). Although payment recipients sign contracts
and are usually required to patrol their designated forest area, there are
few provisions to make payments truly conditional upon conservation per-
formance or outcomes. In some areas, conditionality may be enforced by
social sanction or pre-existing rules of forest management (Trần Thi. Thu
Hương et al., 2016). Some state forest owners that contract out protection
to households will conduct regular checks, while others do not. According
to interviews with institutional forest owners like Biduop Núi Bà National
Park, checks focus primarily on whether overall forest area has been retained,

8. ‘Production’ forests are managed for timber and have minimal conservation rules in place;
‘protection’ forests are usually watershed forests with moderate protection in place, while
‘special use forests’ refer to the highest levels of protection, such as national parks and
reserves.
268 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

rather than details about quality (PM interview, National Park vice-director,
Lâm Đồng, 2014). Overall, officials tend to look for correlations between
PFES implementation and lower rates of forest clearance in general in their
provinces, which have been seen in some areas (Phan Đặng Thu-Hà et al.,
2018), rather than a direct assessment of whether PFES is motivating con-
servation changes.
While some local areas have refused to renew yearly payments for a hand-
ful of egregious offenders (households which might have deforested large
tracts of land they were supposed to have protected), this has involved only
a handful of cases. In most areas, little conditionality is applied, and there
is no direction on this in either Decree 99 or subsequent policy interpre-
tations from MARD; for most recipients, therefore, PFES remains largely
non-conditional (McElwee et al., 2014). In fact, non-conditionality may be
more deeply embedded in the system; national officials are concerned about
non-participants becoming resentful of the PFES programme and deforest-
ing out of spite. One VNFF official suggested that a solution might be that the
central government simply subsidize villages that lie outside PFES payment
areas, thereby extending the lack of conditionality (PM interview, VNFF
official, Hanoi, 2014).

SHAPING PES THROUGH DEVELOPMENT PATHWAYS AND SITUATED

AGENCY

In this section, we discuss how the outcomes described above — which

a neoclassical economic viewpoint would view as inefficiencies in Viet-
nam’s PES implementation — are actually a result of deliberate choices,
prioritization of values, and institutional organization reflective of localized
socio-economic dynamics. Such local shaping of PES policies to fit with
social, cultural and economic preferences reveals the instability of the ‘PES
as neoliberal conceit’ concept (Fletcher and Büscher, 2017), and supports
the analysis of actual on-the-ground outcomes as a way to understand the
performativity of PES concepts and the agency of PES participants (Van
Hecken et al., 2018). As has been the case with other conservation inter-
ventions, local implementation is shaped by institutional contexts, histories
and power dynamics in sometimes unexpected ways (Sikor and Hoàng Cầm,
2016; Tô Xuân Phúc et al., 2017). In other words, we see both constraints and
opportunities coming from development trajectories and situated agency, as
the Introduction to this special issue emphasizes.

Shaping Development Pathways

The design of PFES and its implementation on the ground have very clearly
been influenced by the forest management and institutional systems in place
at the time (Trædal et al., 2016). These conditions have long been shaped
Hybrid Outcomes of PES Policies in Vietnam 269

by pushes and pulls between national central state actors and those locally
responsible for forest management and economic development over the past
half century. While Vietnam’s state-dominated PES system has been noted
and commented on in other studies (McElwee, 2012; Pha.m Thu Thủy et al.,
2014; Suhardiman et al., 2013; Trædal et al., 2016), looking at the country’s
historical development trajectories provides a genealogy of why this model
has developed, as well as showing where there may be potential to create
openings for transformative change.
Shortly after the Democratic Republic of Vietnam was founded in 1954,
a state decree indicated that ‘Forests are a national asset that the State
manages’ (Đặng Thi. Kim Phu.ng et al., 2012). The need to develop socialist
forestry on a widespread scale led authorities to a centralized approach that
had already been tested in agriculture in the early 1950s: the development
of state-run enterprises, whose outputs would be managed by national Five-
Year Plans. State Forest Enterprises (SFEs) (known as lâm trường) were
established to log and manage the nationalized forest lands. Particularly
in remote or sparsely populated areas, SFEs were envisioned as a driver
of economic activity, source of employment and visible sign of the new
state itself (McElwee, 2016). However, the villages that had previously
used and managed nearby forest lands before state nationalization received
little to no financial benefits from SFEs; this was particularly the case for
ethnic minorities, who traditionally resided in much of the uplands where
Vietnam’s richest forests were located. This legacy of dispossession has
resulted in highly uneven access rights to forests in Vietnam’s uplands
and the loss of traditional institutions of forest management for many local
communities (Nguyễn Quang Tân, 2008).
Concerns over employment in rural areas, redistribution of population
from deltas to highlands, and management of ethnic minority populations
through forestry operations were important drivers of these socialist poli-
cies, but so too was increasing attention regarding the role of forests
in provisioning water downstream. In the 1960s, the Ministry of Agri-
culture and Forestry explicitly linked goals of expanded forest cover to
the protection of agricultural crops downstream from the twin threats of
droughts and floods (Chu Vân Tấn, 1962). Later, landslides and floods
in the 1980s and 1990s drew more attention to upland watersheds and
forests’ perceived (though often exaggerated) role in preserving water flow
(Trần Phóng et al., 2010).
In 1986, Vietnam liberalized its economy to reflect a more open orienta-
tion, in what has come to be known as the Đổi Mới (renovation) era. One
key aspect of these reforms was revision to the national land law begin-
ning in 1988, which allowed households to take primary responsibility for
agricultural and forest production and which set into motion a large-scale
process of decollectivization (Kerkvliet, 2005). Forest decentralization was
driven less by neoliberal concerns of privatization and profit, and more by
alarm that deforestation rates were excessively high and the productivity of
270 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

SFEs was declining, as many were financially insolvent. New land allocation
programmes were combined with investment incentives, such as cash and
seedlings, to get households to reforest and protect former state forest lands.
These programmes were early precursors to PES approaches and included
a tree-planting campaign known as the 327 programme and a US$ 1 billion
project known as the 5 Million Hectare Reforestation Project (5MHRP) that
ran from 1998 to 2010 (also called the 661 project). Numerous state policies
for reducing poverty among ethnic minorities have also been implemented
in upland and forested areas, most notably the Programme 135 (P135) and
Hunger Eradication and Poverty Reduction (HEPR) programmes, which
began in the late 1990s. The form and modalities of these projects give
historical insights into the shape of current-day PES projects in Vietnam.
For example, PFES payments are often described by officials as ‘assistance’
from the state for poorer households, rather than as a means by which to
instil certain forms of forest conservation behaviour (PM interview, FPDF
official, Lâm Đồng, 2014). Thus, previous development pathways go some
way to explaining the specific form that PES takes in Vietnam. But such path
dependency does not entirely account for the shifts and changes to the PFES
approach that have occurred in the past decade, namely newly empowered
local forest institutions, and contestations over benefit sharing. To explain
these outcomes, we need an examination of the situated agency of actors on
the ground.

Expressing Situated Agency

Despite agrarian histories that have framed the path PES has taken, and
despite much acknowledgement that the state dominates PES policy, there
is room for manoeuvre by different actors to shape the implementation on
the ground in specific ‘surfaces of engagement’ (Shapiro-Garza, 2013). Not
all actors have consistent ability to exercise agency, however; those who
have had a large influence on the shaping of PES are local officials and
payment recipients, while those who have had less influence include buyers
and donors. This outcome is worth examining, since these latter stakeholders
might prove to be the most powerful elsewhere.

State and Local Officials

Many observers of Vietnam’s PES programme have noted that PFES appears
to have strengthened the state role in forest management rather than dimin-
ishing it (Suhardiman et al., 2013; Tô Xuân Phúc and Dressler, 2019). We
agree with this assessment to a point — certainly the state has been strongly
involved — but wish to note here that PFES has actually restructured power
relations among the many actors within the state forest governance system in
Hybrid Outcomes of PES Policies in Vietnam 271

Table 3. Source of Funds for Forest Protection in Kon Tum Province

Before PFES % After PFES %
Central state budget VND 30 billion 75% VND 12 billion 8%
Provincial state budget VND 10 billion 25% VND 3 billion 2%
PFES revenues 0 0 VND 130 billion 90%

Source: documents from Kon Tum DARD and FPDF, 2015.

ways that are worth recognizing. A more nuanced analysis can be developed
by acknowledging that state actors include both central and local officials,
who often express disagreement about how PFES should work. Different
actors within the state system have been assigned new tasks and new roles
through PFES, and while this may have the appearance of simply rearrang-
ing chairs, there is in fact potential for active reshaping of PFES from these
shifting responsibilities. We therefore see potential in thinking of PES as
creating hybrid institutional forms.
The biggest rearrangement involves the financial streams available via
PFES. By 2015, PFES revenues already contributed 22 per cent of total
financial investment for the Vietnamese forestry sector, while the traditional
central state budget accounted for 29 per cent (Pha.m Thu Thủy et al., 2018).
PFES overall has made the forestry sector less reliant on central state budgets
at provincial levels; for example, as can be seen in Kon Tum Province, the
dramatic increase in funds available for forest protection, and the shifts away
from central and provincial budgets, are quite striking (Table 3).
With many provincial Funds now having an annual revenue of VND 50
billion (over US$ 2 million) or more from PFES, these offices have quickly
become a major part of the forest bureaucracy, taking on the function of
financial management through entrusted payment contracts, distribution of
payments and expenditure monitoring, and are now considered a ‘great
power’ institution. As one interviewee noted, ‘the Fund currently is like the
second financial department of the province but for only the forestry sector.
Since the birth of PFES, we do not have to wait for the allocation from
the central budget or compete with each other for annual budgets’ (VHN
interview, FPDF official, a Central Highland province, 2015). At the same
time, however, the provincial Funds do have to interact with VNFF in Hanoi,
which transfers some revenue to them: ‘we have to be nice to the national
fund if we want to receive PFES money on time’, said one interviewee (VHN
interview, FPDF official, a Central Highland province, 2015). This has led
some provincial Funds to try to negotiate directly with ES buyers to avoid
the dependence on VNFF.
In return, from VNFF’s perspective, work with provincial Funds requires
pressure as well as negotiation, as one VNFF official noted: ‘it is very
difficult to require the provincial Funds to submit their reports to national
level. So we delayed the transfer of PFES revenue to some provincial Funds
as the punishment to request them to send reports on time’ (VHN interview,
272 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

VNFF official, Hanoi, 2016). Thus, these local and central forest officials
are in constant negotiation over who has rights and responsibilities in a new
PFES-funded system, with delicate dances around disbursement of payments
and submission of reports. In a workshop on PFES implementation in local
areas in 2014, for example, there was a long debate among local and central
Funds officials about who exactly had the most administrative responsibility
(quản lý hành chı́nh) within the system. As one provincial official noted,
Funds ‘were set up to be middle men originally but were now taking on
more responsibilities. How should their jobs be defined?’ (PM fieldnotes,
Lào Cai, 2014). In other words, different parts of the state at different scales
continue to actively shape PFES implementation and institution building in
different ways, which may create opportunities for innovation and locally
worked-out systems that more closely match local values.

Payment Recipients

The PFES model has also given some additional power to local house-
holds and communities to play roles in forest management, although this
is highly uneven. In one example, when Decree 99 first came out, Quảng
Nam province was not included as a site for payments, despite having both
hydropower generation and extensive forest cover. Its absence from PFES
payments was due to historical conditions of having incomplete forest cover
maps and limited local decentralization of forest management to households.
In order to fix the situation and ensure benefits, the province organized pro-
tection contracts for over 1,000 new forest protection groups (of approxi-
mately 20 households each) for nearly 25,000 ha (VHN fieldnotes, Quảng
Nam, 2015 and 2019). Similarly, in A Lưới district, Thừa Thiên Huế, the
process of setting up PFES stimulated movement on the forest land alloca-
tion process, which had previously been delayed: one recipient noted, ‘It is
the first time ever we have our own forests with a red book’ (VHN interview,
household, Thừa Thiên Huế, 2019). These processes have been complicated
by previous land allocation histories, with some provinces much slower in
land distribution than others and with disputes over the accuracy of land
cover maps in many areas. There has also been concern that PFES may
simply replicate the previous allocation and protection payment approaches
first piloted in the 1980s and 1990s by steering PFES contracts to those who
are already known to officials (Tô Xuân Phúc and Dressler, 2019) and who
tend to be better-off households.9 While this has certainly happened in some

9. For example, for some payments in Thừa Thiên Huế province, Forest Protection Manage-
ment Board officials noted that they chose who got labour contracts based on whether the
household had sufficient good health for patrolling and the ‘intelligence’ to understand the
contracts (PM interview, Forest Protection Management Board, Thừa Thiên Huế, 2014).
Hybrid Outcomes of PES Policies in Vietnam 273

areas, our research does indicate the inclusion of new households into the
PFES payments who had never before benefited from forest projects.
Local participants in PFES have also shaped the benefit distribution sys-
tems in place across the country. For example, in the first years of the pilot
project in Lâm Đồng province, households did not understand why neigh-
bours were being paid different rates for having invested the same amount
of time and labour in protection; some households fell in a watershed with
higher payment rates, while other neighbours had contracts for less land.
The unequal payments led to resentment and even vandalism toward those
who were benefiting the most (McElwee et al., 2014). As we saw above,
these complaints and protests eventually resulted in Fund officials calcu-
lating payment rates in a simpler fashion and abandoning K coefficients.
Continuing disputes over who is paid what have accounted for the many
locally worked-out benefit distribution systems noted previously.
However, there are still numerous problems. Many households do not
understand why they receive the amount of money they do; a recent survey
by the third author in Thừa Thiên Huế showed that 80 per cent of local
people did not understand the benefit distribution formula. As one household
protection group leader noted, ‘I do not know how they count the money and
why the amount is different every year. Our group has been allocated 75 ha,
but they paid for only 60 ha’ (VHN interview, forest protection group leader,
Thừa Thiên Huế, 2019). Many local people see the PFES money as coming
from the government, not from user fees from water and energy (McElwee
et al., 2014). The question of whether the PFES payments are an incentive
or a subsidy is thus quite relevant; from the local perspective, they do not
incentivize significant behaviour change, and are considered by households
as a subsidy-like non-conditional social welfare programme of cash transfers
from the state. Nonetheless, the payments have set higher expectations by
local beneficiaries vis-à-vis forest officials: households expect payments
to be on time and feel empowered to complain when they are not (PM
interviews, households, Lâm Đồng, 2014).
The other side of benefit sharing is sharing of responsibility be-
tween the state and households over forest protection, and these ne-
gotiations account for why the PFES system largely resembles what
would be called forest co-management elsewhere. During an interview
with the Management Board of the Sông Hương Watershed Protec-
tion Forest, they stated that ‘even if we only have 10 per cent of the
management fee, we still have 100 per cent responsibility for forest
protection’, as the board was the Red Book ‘owner’ of forest land. House-
holds were not seen as trustworthy enough to organize forest protection on
their own, even with PFES payments; as the head of the Board asserted, ‘The
problem with contracting local people to protect is that they may not under-
stand the reason to protect, so that they [still] deforest, and the Management
Board is ultimately responsible’ (PM interview, Management Board official,
Thừa Thiên Huế, 2014). Thus, officials believe there is a continuing need for
274 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

a ‘guiding hand’ from the state for forest protection activities, which could
be conjoined with household labour, leading to a hybridized institutional
model of state and citizen responsibilities under PFES.

Buyers

It is also useful to understand which institutions and actors in Vietnam’s

PES programme do not have much voice or power. For example, buyers of
ES remain organized, subordinated and regulated by the state. Some 97 per
cent of total PFES funds are financed from hydropower operators, which
have been able to roll over their user fees to electricity consumers. Despite
being the near-sole payer, they are not a vocal customer: they do not question
to what extent PFES contributes to the provisioning of watershed services
or advocate for policy changes that would enhance this (PM interview, of-
ficials at hydropower plant, Hòa Bı̀nh, 2014). For example, they may be
affected by additional dredging costs due to continued siltation stemming
from poor soil conservation in some watershed areas, yet they have not been
active advocates for better monitoring systems. For these buyers, the PFES
is mostly considered a compulsory government tax rather than a payment
for environmental services that their business depends on: ‘yes, it is a state
regulation. If it is state regulation, we must comply’; and if late payment
occurs, the companies have to pay the fines because it would be considered
‘against the Prime Minister’s order’ to do otherwise (VHN interview, of-
ficials at hydropower plant, Thừa Thiên Huế, 2019). Other private sector
PFES payers interviewed similarly expected no environmental returns but
were more likely to portray their PFES contributions as an investment in
corporate social responsibility that may pay off if marketed well, raising
questions about the longevity of this non-voluntary approach (see Đỗ Tro.ng
Hoàn et al., 2018).

Donors

Donors were initially involved in bringing the PFES pilots to Vietnam and
financially bankrolling them, and since 2008 have sponsored a number of
workshops and additional local implementation projects, as well as support-
ing policy development. Donors’ influence is quite modest in comparison
with their funding support, however. Indeed, some donor projects have
failed, such as local PES payment plans between villages outside of the gov-
ernment system (Đỗ Tro.ng Hoàn et al., 2018). In interviews, donors often
stressed their interest in expanding the involvement of new actors, such as
NGOs and private businesses, as service providers and buyers (PM inter-
views, officials representing bilateral donors, Hanoi, 2014). One example is
a USAID-funded project that has operated for several years and has tested
Hybrid Outcomes of PES Policies in Vietnam 275

pilot models for buyers of ES within industrial sectors, such as water, soda
and beer bottling companies, but new guidelines for industrial water use are
still not formalized by the state. The same project has worked to research
the gaps in monitoring and evaluation of PFES, noting this to be a particular
shortfall of the programme (Pha.m Thu Thủy et al., 2015; Tacconi, 2015).
Despite donors’ attendance at several large workshops in the past few years
to evaluate lessons from PFES and identify needed policy changes, a result-
ing revision of Decree 99 made in November 2016 did not include several
donor priorities, including expanding the pool of buyers or strengthening the
monitoring and evaluation system.10

CONCLUSION: OUTCOMES OF INTERPLAY AND MEASURES OF

SUCCESS

The conclusion of many scholars is that Vietnam’s system is merely ‘PES-

like’, and not a true PES (Pha.m Thu Thủy et al., 2013), while others note
that it is enough like PES to qualify as neoliberal conservation (Tô Xuân
Phúc and Dressler, 2019). Yet from our perspective, it is clear that the
institutional forms that PES has taken in Vietnam are more reflective of
histories of forest institutions than of the introduction of new neoliberal
concepts such as incentives or market-set payment rates. PES in Vietnam
bears little resemblance to any other system: as we have noted, the system
is mandatory for many buyers and sellers; it does not rely on any market
mechanisms to fix prices; and it does not monitor or condition payments on
the delivery of a well-defined ecosystem service. Yet these outcomes are
neither design flaws nor negative ramifications of a neoliberal conservation
paradigm; rather, we believe the evolution of this approach has been a
result of distinct histories of state forest institutions, counterbalanced by
pushback by affected parties exercising situated agency, and thus represent
the goals that state and local authorities and residents have mutually decided
are most appropriate for Vietnam’s particular situation, regardless of PES’s
‘seemingly neoliberal’ origins. In the final analysis, PES in Vietnam has
been turned into ‘something else’ for many participants: for households,
PES is a state livelihood subsidy, while for local officials it is a new source
of locally controlled funds they can manage with minimal interference from
above. These hybrid outcomes are unique and unrelated to the idea of PES
as an efficient market-oriented solution, but they are entirely consistent with
both Vietnam’s development history and the push and pull of actors on the
ground.

10. The revisions in No. 147/2016/ND-CP primarily focused on raising set fees for energy
and water users, adding a contingency fund to administrative fee use, and clarifying which
participants were eligible.
276 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

For the government, the PFES programme is a resounding success: it

raises in excess of US$ 100 million each year; the number of forest law
violations and area of forest destruction are estimated to be down since
PFES began; and there are half a million households participating in or
getting benefits from PFES (Nguyễn Chı́ Thanh and Vương Văn Quỳnh,
2016). Others have been more sanguine about Vietnam’s PES outcomes.
For some, PES has strengthened state forest governance and may also be
increasing conflict in local areas as households debate who should benefit
from the programme (Tô Xuân Phúc and Dressler, 2019). For other scholars,
transaction costs and inefficiencies remain high despite relatively simple
distribution mechanisms, and the current system provides no incentives to
change forest management or improve ES provisioning, given the lack of
conditionality, monitoring and evaluation (Pha.m Thu Thủy et al., 2015).
Some of the literature has thus focused on how to ‘fix’ these problems, such
as how to make Vietnam’s PFES more efficient and in line with design
principles (Chu Long et al., 2018) or to reduce transaction costs (Phan Đặng
Thu-Hà et al., 2017), without acknowledging that the contradictory and non-
neoliberal parts of it are purposeful and hence unlikely to be fixable in a
conventional sense.
Overall, the fact that this hybrid outcome falls short of an ideal PES ap-
proach in theory, and yet continues to be called PES, and held up as an
example of the success of what PES can be, tells us something about the
performativity of the PES concept (Kolinjivadi et al., 2019). From our per-
spective, it is better not to try to measure PES by what it looks like and how it
fits particular definitions, but rather to focus on its potential in any particular
context, and in this sense, it remains a work-in-progress. For Vietnam, we
are unlikely to see much adoption of increased conditionality and monitor-
ing, for example, as any change in this area might reveal the instability of
the data used for assessing payments and threaten the subsidy-like nature of
the outcomes. Other components that could potentially change, given how
important they are to local actors, are improved benefit distribution mech-
anisms, expanded funding sources from new buyers, and higher payments
overall. Furthermore, we can also see some emerging outcomes that are sug-
gestive of the possibility of future transformational changes: slowly evolving
modes of new relationships between central and local officials, and between
state officials and households, leading to new hybrid institutional structures
guiding forest management. There are also potential pitfalls, however: some
of the new institutional responsibilities may drive state forest owners to try to
keep PFES fees themselves, rather than continuing to share with households,
and unresolved benefits-distribution questions may contribute to low partic-
ipation by some households who view decisions as unfair or not transparent,
as we have noted above.
Such an analysis leads to a question: does Vietnam’s very localized and
context-dependent PES present a viable alternative to more market-driven
examples elsewhere? Are there lessons with regard to institutions or agency
Hybrid Outcomes of PES Policies in Vietnam 277

that might be drawn for comparison with other cases? We caution that
Vietnam’s case shows the broad trends that are important in PES understand-
ing, without necessarily presenting a useful model, given that contextual
development trajectories or agrarian histories are likely to shape processes
very differently in another country. Thus, the framework presented by the
introductory article to this special issue has usefully outlined how such a
‘grounded theory’ approach might operate, and what some potential benefits
and outcomes might be (Shapiro-Garza et al., this issue). Ultimately, useful
analysis of PES as locally conditioned and shaped by different forms of
agency will help drive future research agendas that can point to alternative
pathways in the development of PES and other forms of hybrid environmen-
tal governance.

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Pamela McElwee (pamela.mcelwee@rutgers.edu) is Associate Professor of

Human Ecology at Rutgers, The State University of New Jersey, USA. She
has worked on forest and conservation issues in Vietnam since 1996, and
is the author of Forests Are Gold: Trees, People and Environmental Rule in
Vietnam (University of Washington Press, 2016).
280 Pamela McElwee, Bernhard Huber and Nguyễn Thi. Hải Vân

Bernhard Huber earned a PhD from McGill University for research on

peasant livelihoods and forest governance, including the implementation and
outcomes of PFES, conducted between 2012 and 2014 in two ethnic minority
villages in Yên Bái Province, Vietnam. Between 2016 and 2018 he worked
as a policy advisor at the Vietnam Forest Protection and Development Fund,
funded through Germany’s CIM-Integrated Expert Program. Since June
2018, he has been working for the German development agency GIZ in
Bonn, Germany on global climate politics and finance.
Nguyễn Thi. Hải Vân is a PhD student at the Institute of Geography and
Sustainability, University of Lausanne, Switzerland. She currently works for
the project ‘Assessing the nature of forest transition in Vietnam: Ecosystem
services and social-ecological resilience in locally managed forest land-
scapes’, funded by the Swiss National Science Foundation and the Swiss
Agency for Development and Cooperation. Her PhD dissertation is exam-
ining household livelihoods and forest policy and project interventions in
Upland Central Vietnam over the past few decades.
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