Lessons from the perceptions of equity and risks in payments for forest environmental services (PFES) fund distribution: A case study of Dien Bien and Son La provinces in Vietnam

Abstract

• There are currently five payment distribution models implemented in Dien Bien and Son La provinces under the national payment for forest environmental services (PFES) program for community forests: (1) equal distribution to all households within a community, (2) payment for forest protection groups, (3) building infrastructure, (4) community investments, and (5) livelihood development options e.g. microcredit schemes. Each of these models has pros and cons for achieving the 3Es outcomes of effectiveness, efficiency and equity. Current payment distribution models focus on the equality aspects and overlook the equity, efficiency and effectiveness of the program. Combining different payment distribution options can enhance the 3Es outcomes.• The main underlying factors that drive villagers' to decide on a payment distribution model are the local communities' perceptions on equity, the size of the PFES funds and their trust in local authorities' accountability and capacity.• There is a risk of PFES contractual obligations being breached given the absence and their associated of regular auditing and monitoring of financial transactions. A better monitoring system and auditing system is required to assess the chain of benefit distribution, from ecosystem service payments provided by the users (hydropower/water companies), the transactions mediated by the intermediaries (FPDF, commune government) and benefits received by the sellers (village committees/households). One option for those communities with access is to promote the use of banking systems to deliver funds from the province to the community. Alternatively, mobile banking systems could be an option in addition the government should aim to improve the capacity of people in the village to manage and record all of their financial transactions.• Local people have a limited understanding of how the PFES funds are distributed; they are unsure of their eligibility, the payment amount, the timing of payments and the conditions attached to the payment. Enhancing information dissemination, availability and transparency about payment conditionality and distribution is recommended to support both effective decision-making on resource use and PFES overall.