Livelihood and Environmental Impacts of Payments for Forest Environmental Services: A Case Study in Vietnam

Abstract

Payments for ecosystem services (PES) is widely employed in various settings; however, whether, and in what contexts, PES programs achieve their objectives by improving local livelihoods and conservation goals is still being debated. This paper aims to evaluate the impacts of payments for forest environmental services (PFES) policies on livelihoods and the environment using propensity score matching of data on 725 systematic randomly selected households in the buffer zones of seven protected areas (PAs) of Quang Nam and Thua Thien Hue provinces in Central Vietnam and data from the General Statistics Office and Landsat. The findings indicate that the PFES policy has some positive effects on economic and environmental issues for different groups. In terms of financial capital, the study found that poor households with PFES have slightly higher income than what they would have had they not participated in PFES. The difference in total income between poor households with and without PFES, however, was statistically insignificant, while the income of non-poor households with PFES was significantly higher than those without PFES. In addition, PFES households are likely to have more consumption expenditure for their daily living and better access to loans from various microfinance sources compared to those without PFES. The PFES policy has provided slight changes in the forest and forest cover and reduced natural forest loss between the pre-PFES and PFES periods. The findings of this study contribute to designing future PFES policies that can better distribute benefits to all household groups as well as harmonize social and natural capital.