Chapter 4 - Cash-Based Versus Water-Based Payment for Environmental Services in the Uplands of Northern Vietnam: Potential Farmers’ Participation Using Farm Modeling

Abstract

The forested areas of northern Vietnam, mostly located in mountainous areas, have important watershed regulating functions. However, current land-use changes pose a threat to the continuing provision of environmental services. This chapter investigates two alternative payment for environmental services (PES) programs tailored to reestablish natural or productive forests in the uplands of northern Vietnam: “Payments for Forest” (PFF) and “Terraces for Forest” (TFF). Both programs involve setting aside sloping land for reforestation but they differ in the type and amount of compensation offered. PFF offers annual payments per area of retired land. TFF offers to convert a certain amount of the current sloping land into a terraced area, combined with annual payments per area of retired land. The main objective of the chapter is to compare the two types of programs in terms of potential participation (what type of farmers will likely participate?), and what impact it would have on their revenues. Using mathematical programming, we developed a set of farm models corresponding to typical farms of a mountainous district of northern Vietnam. We simulated the level of participation of different types of farms for the two types of PES programs. For each specific PES, we analyzed participation, measured by the area of land converted into forest land and its impacts on land use and household revenues. Results show that, given the assumptions of the models, increasing access to irrigated terraces as a way to compensate for land conversion to forest increases the participation of the poorest farmers. Therefore, our research suggests that PES schemes, when fine-tuned to a Southeast Asian context, may not only be used as a way to restore ecosystem services but also as a way to alleviate poverty.