How to apply PES experience and lessons leant to Bac Kan project'Pro-poor partnerships for Agro-forestry development'

Rewards for, Use of and Shared Investment in Pro-poor Environmental Services(RUPES) is an innovative opportunity to create the institutional, investment, technical and social environment necessary to support sustainable, pro-poor growth in the Bac Kan province rural economy, while also protecting the environment. This working paper presents recommendations to the project formulation mission for the GEF–supported components of the overall IFAD-GEF project in Bac Kan. The recommendations result from interaction between ICRAF Vietnam and RUPES II since May 2008, in close collaboration with the Global Environmental Centre (GEC), Bac Kan stakeholders and IFAD Vietnam. The on-going ICRAF Vietnam-RUPES II-GEC scoping study during September-November 2008 has contributed a more detailed design of Payment for Environmental Services (PES) and PES-like mechanisms for the three project districts in Bac Kan province: Ba Be, Pac Nam and Na Ri. The Vietnamese Government’s strong commitment to the global Agenda 21 and its inclusion of PES, albeit in a limited way, in environmental legislation and strategies, reflects the Government’s greater attention to new ways of achieving realistic, conditional and voluntary incentive mechanisms for enhancing environmental services. Furthermore, Vietnam is already using some of the economic and financial instruments needed to implement PES. However, several limitations in central and local public administration show a need for a more careful piloting approach, whereby pilot Payment/Rewards for Environmental Services (PES/RES) mechanism development and capacity building should go hand in hand if PES is applied in Bac Kan province. The lessons learnt from PES projects in Vietnam show that a lack of financial resources is not the issue, rather the lack of a supportive legal framework and ES buyer-led schemes. If the Bac Kan PES component uses a systematic and careful design, with good planning between the piloting and scaling up phases, high transaction costs (which are an acknowledged disadvantage in the reviewed small-scale PES projects in Vietnam) can be avoided

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