6 CONCLUSIONS AND RECOMMENDATIONS
6.1 K EY CONCLUSIONS
• The initial livelihood pilot model appears successful. Based on our interviews with HHs, BCA staff, and other experts in October 2013, we find that the livelihood pilot model has been successful. For example, the program has
o improved capacity building through investment in high valued crops (e.g., dragon fruit) that would not otherwise have been possible for low-income households, leading to increased income from agriculture and tourism.
o improved HHs’ awareness of their dependence on, and need for, ecosystem services provided by mangrove forests, leading to a better understanding of the economic value of these resources
o led to intangible benefits related to HHs’ optimism about their future welfare and general feelings of being more productive and technically proficient.
o provided technical training in ecologically-sustainable seafood production methods, which leads to improved future flows of ES, as well as a potential base from which to build future eco-labeled food production.
One potential weakness of the livelihood model, however, is an insufficient incentive for HHs to provide adequate forest protection through e.g., re-planting, restoration, and reporting of illegal de-forestation activities. This report considers how best to integrate this promising livelihood pilot model within a future PES pilot scheme in MCMNP.
• Mui Ca Mau National Park (MCMNP) represents a suitable area for implementing Payment for Ecosystem Services (PES). Based on suitability criteria for developing PES at a particular site, we conclude that MCMNP is an ideal location to implement a PES pilot study. This is due primarily to the fact that the ES associated with mangroves and coastal wetlands are at risk and highly demanded by users. Further, land users in the area have the capacity and interest to be active providers, based on our field evaluation and interviews with households who demonstrated a high level of
sophistication and understanding of the importance of ES. We believe that continued development of PES testing is warranted, with an eye toward eventual implementation of a full PES model.
• Coastal wetlands and mangrove forests deliver Ecosystem Services (ES) that are compatible with a PES model. The ES delivered by coastal wetlands and mangroves in MCMNP include food provisioning, carbon sequestration, shoreline stabilization, protection of freshwater supplies from saltwater intrusion, provision of biodiversity, and aesthetic quality/landscapes, and these provide valuable inputs to a host of valuable goods and services: seafood, wood, fruit, climate regulation, protection of drinking water, protection of real estate, and tourism. By viewing these ES as “natural capital” inputs, it is possible to develop price-based approaches aimed at improving the quality and quantity of these valuable services.
• Several PES schemes are possible within MCMNP. As summarized in (Table 18) we identify five alternative PES schemes from among a range of alternatives. Our approach begins by mapping the key ES that provide value within MCMNP and then identifying economic goods that depend on – and affect – those ES. We then identify potential beneficiaries, i.e., human populations that are dependent on the delivery of these ES for their welfare (e.g., economic production or consumption). These beneficiaries may exist across various geographic scales (local, regional, global) and can be considered potential buyers in a PES scheme. Finally, we identify possible ES providers, i.e., actors who can affect the provision of ES (although their legal capacity for affecting ES is somewhat uncertain – see below). In four of the five proposed PES schemes, we identify local households as providers, or sellers, in a PES scheme.
• To assess the alternative PES schemes we apply a set of general evaluation criteria. To determine the advantages and disadvantages of each of the five alternative PES
schemes, we develop a set of general evaluation criteria. These criteria are described in Table 9 and help to identify which PES schemes are more likely to succeed based on the inherent characteristics of the ES being bought and sold, the attributes of the buyers and sellers, the legal structure within which the PES model would operate, etc. Some of these criteria are considered more important than others for the effectiveness of the PES model (referred to as essential criteria), while others represent an ideal that may be sought after in the long term, but may not be fully achievable in the short term (referred to as less critical criteria). Further, since only the rudimentary details of each proposed PES scheme are described at this stage – technical issues will need to be worked out in future pilot studies – it was not possible to assess every PES
characteristic with respect to the criteria. Nonetheless, we feel that the identification of these criteria represents a key contribution to this stage of the decision-making process, as they assist decision-makers in identifying feasible PES schemes to consider in a next phase.
• Some PES schemes may be stronger than others. In applying the criteria from Table 9, we find that some PES schemes may be preferable to others. For example, the carbon market and eco-labeling PES schemes do well against the evaluation criteria, in
particular the essential criteria (the first nine in (Table 9), relative to the other PES schemes. Further, we believe that the additionality criterion is particularly important given that the objective of PES schemes is to improve long-term environmental outcomes. Our analysis concludes that both the carbon market and eco-labeling schemes are more likely to deliver additionality. Eco-labeling appears to be promising because it relies on global beneficiaries (i.e., environmentally conscious seafood consumers) with a significant willingness to pay for ES provision. Further, permanence of ES provision is more likely given that Jonell et al. (2013) point to
anticipated growth in the willingness to pay by global seafood consumers. Eco-labeling is also likely to contribute to alleviating poverty among households in MCMNP.
• The design of PES schemes requires unavoidable value judgments. Developing PES scheme alternatives and then selecting between them inherently requires subjective value-driven decisions. This report identifies where these types of unavoidable judgments arise and provides discussion of the resulting trade-offs facing policymakers. For example:
o Which ES are most important to protect – those that provide short-term economic value or those that provide long-term ecosystem resilience and stability?
o Given that certain segments of society may gain or lose from a proposed PES scheme, should measures be implemented to compensate losers? If so, how should they be incorporated?
o To what extent should fairness be balanced with economic efficiency? For example, an efficient PES scheme would allow for varying prices (incentives) to focus protection on the most valued ES (where value may be a function of e.g., location). But this means that some providers (HHs) may receive a higher payment than a neighbor if they, by chance, have influence over a more valued ES.19
These types of judgments are best made by politicians and should incorporate the preferences of those directly affected by the PES schemes or community-based organizations and other PES experts. Below we elaborate on the types of unavoidable value judgments facing policymakers in MCMNP related to e.g., property rights and conflicting evaluation criteria.
19 An exception is carbon sequestration because carbon leads to a constant marginal damage, i.e., the value of reducing a ton of carbon in Sweden is equivalent to reducing a ton of carbon in Vietnam.
However, this is the exception rather than the rule with most ES, which tend to have locally-‐specific values.
Property rights. Vietnam’s advocacy of the “beneficiary pays” principle encoded in the country’s Biodiversity Conservation Law contains a key underlying assumption: those who demand an ES should be required to pay for that service. This, in turn, has implications about property rights. Deciding on property rights is a key issue in developing a PES scheme and requires value judgments.
A simple way to think about the supply of ES20 is to ask who has the right to a clean environment: the person who benefits from the ES (the user or beneficiary) or the person who affects the supply (the provider, who may be a polluter in some cases)?
Economic theory suggests that it does not matter: a market transaction for an ES such as carbon sequestration can take place regardless of whether the property right belongs to a household (who could be paid for sequestering carbon by global citizens) or to global citizens (who could be paid by households for the right to emit carbon through, e.g., timber harvest) (see e.g., Coase 1960). But from a practical standpoint the property right does matter if one cares about fairness or other subjective criteria.
Consider an example involving the improvement of water quality and associated ES that come from a stream. These ES may be affected by adjacent farming activity due to water pollution from fertilizers. Scenario A might assume that the beneficiaries of clean water (swimmers, kayakers, fishermen, etc.) have a right to the flow of ES from the stream. Scenario B might assume that the farmer has a right to conduct his farming, even if it pollutes the stream. In solving the water quality problem, Scenario A suggests that the farmer incur the cost of improving ES (the so-called “polluter pays” principle), while Scenario B suggests that the swimmers, kayakers, and fishermen incur the cost by paying the farmer not to pollute (the so-called “beneficiary pays” principle). PES schemes generally follow the “beneficiary pays” principle but not always. Consider, for example, biodiversity offset markets, where developers causing environmental damage are required to compensate for ES loss through the provision of restored habitat elsewhere. These markets are based on a “polluter pays” principle: providers are the developers and the beneficiaries of restoration are the general public.
The important conclusion is this: we can still solve the water quality problem no matter what we assume about property rights, but policymakers should recognize that selecting an ownership assumption involves an unavoidable value judgment related to who wins and who loses from the proposed plan to improve ES from the stream. For example, Scenario A may be preferred if society is interested in increasing the income
20 Note that the supply of ES can mean the provision of “environmental goods” (e.g., clean air and water) or the prevention of “environmental bads” (polluted air or water).
of farmers and/or in placing the burden of environmental improvement on users.
Scenario B may be better if society prefers farmers to bear environmental responsibility. These types of value judgments can affect the public acceptance of a PES scheme or other environmental policy instrument. Further, Vietnam's Biodiversity Conservation Law suggests that policymakers may prefer Scenario B, since it is based on the “beneficiary pays” principle. This has implications for the treatment of ES users and ES providers, where the latter may sometimes be polluters.
These value judgments are required regardless of a country’s economic growth or standard of living and thus are not unique to Vietnam.
Criteria conflict In some cases the general evaluation criteria for assessing alternative PES schemes may conflict with each other. Deciding which criterion is more important may require a value judgment. One example involves a possible conflict between the criteria additionality and Beneficiaries as buyers, if one were to combine PES#4 (eco-labeling) and PES#3 (carbon markets). In describing the potential for mangrove carbon projects in Vietnam, McNally et al. (2011) suggest that a carbon market may not meet the additionality criterion if it is layered on top of an existing program that already pays providers for protecting forests (see also Recommendations below).
However, one could also argue that combining these two schemes meets the beneficiary as buyers criterion, which leads to more buyers, greater demand for the ES, a higher price, and thus a greater incentive for providers. In short, an ‘additional’ ES may still arise because a greater forest area is protected as more beneficiaries are included as buyers. A value judgment is required to determine which criteria – and thus which argument – is most convincing in selecting one PES scheme over another.
Baseline assumptions. Note that the argument above regarding additionality hinges on how one defines the baseline. Since this is necessarily an assumption about the future in the absence of some action (i.e., the intervention undertaken by a seller), it is an inherently subjective judgment. For example, one could argue that the current baseline level of ES in MCMNP is quite high given the coverage of mangrove forests and the history of “extensive” aquaculture activity. This would imply that establishing a PES model based on eco-labeling might only deliver a relatively small increase in environmental benefits. But if one assumed instead that the baseline in the absence of the eco-labeling program would be characterized by large-scale “intensive”
aquaculture production, then one could argue that the “additional” benefits to the environment from an eco-labeling PES would be significant. Thus, applying the additionality criterion requires a value judgment regarding a future baseline.