Funding the protection and development of mangrove forests at sub-national level Lessons from Ben Tre , Tra Vinh and Ca Mau provinces

• Existing financial incentive mechanisms (FIMs) to protect and develop mangrove in Ben Tre, Tra Vinh and Ca Mau come from 6 primary sources: central state budget; provincial state budgets; national scheme on Payment for Forest Environmental Services; foreign projects; public-private partnerships; and the private sector. • These FIMs have provided funding to incentivise forest owners and provincial government agencies for better mangrove protection and development. Nevertheless, accessing to these funding schemes is difficult for forest owners due to complex procedures, the requirement to have high-counterpart funding, and high initial investment costs to meet access criteria. • Due to challenges to access FIMs, these existing incentives are not attractive enough for forest owners to change their behaviour toward better mangrove protection and development. Pham Thu Thuy, Hoang Tuan Long, Nguyen Dinh Tien, Le Ho Nga, and Stibniati Atmadja


Introduction
Mangroves forest ecosystems are amongst the most important ecosystems in the world.They are highly productive, rich in biodiversity and adapted to the harsh and variable environment in the interface between the land and sea (Phan and Hoang, 1993;Edward and Suthawan, 2004).For many decades, mangrove all over the world have been under sever threat.In Vietnam, many factors have contributed to the steady decline and degradation of mangrove forests.These include population and economic pressures, exploitation of tree resources, conversion of mangrove area to shrimp and mud crab ponds, agricultural use and other human activities (Phan and Hoang 1993;Giri et al. 2015;Chen et al. 2017;Pham et al. 2019).
In response to the increasing decline of mangrove forest areas in Vietnam, international donors and the Government of Vietnam have worked to restore and protect the country's mangrove resources.However, limited and unsustainable financing sources have impeded the effectiveness of these programs, and overall outcomes of forest protection and development.Exploring new and more optimum use of funding resources to protect mangroves has become urgent.
Using case studies from Ben Tre, Tra Vinh and Ca Mau provinces in Vietnam, this brief analyses funding of the forestry sector in Vietnam, financial incentives in place to protect mangrove and whether these schemes have led to any environmental and social impacts of the schemes.As coastal provinces in the Mekong delta, Ben Tre, Tra Vinh and Ca Mau own a large amount of mangrove forests.The Vietnam Ministry of Agriculture and Rural Development (MARD) groups forests into three categories: special use forest, protection forest and production forest (Figure 1).Protection Forests are used predominantly for protecting water resources, land, to prevent erosion and desertification in key areas, to restrict natural calamities, and to regulate climate.Special-use Forests are mainly for conservation.These forests are designated as such to protect nature, national forest ecosystems, and biodiversity.The title is also for protecting areas of historical or cultural significance.Designations include: national parks, conservation zones, scientific research and experiment areas.Production Forests are those designed for timber and non-timber forest product production.Harvesting on these lands still requires a degree of environmental protection.Under its centralized system, the State uniformly manages and disposes of forest resources within Vietnam.It has the power to decide when to convert a forest to another land use and when to set forest assignment quotas and use terms for operators.
The brief is based on a literature review; in-depth interviews with 7 provincial government officers of the Forest Protection Department of Ben Tre,Tra Vinh and Ca Mau;7

Funding schemes for mangrove protection and development
Funding and investment for the forestry sector in these three provinces and these three types of forests come from 6 primary sources: State budget; provincial budgets; national payment for forest environmental services (PFES) initiative; foreign projects; public-private partnerships; and the private sector .Each source is described in the following sections and summarised in Table 1 and Table 2. Low level of payment.Forests owners in all three provinces are paid about VND 300,000/ha from the State budget to protect forests.

State and provincial budgets
According to all stakeholders interviewed, this level of payment is too low to compete with opportunity costs to convert mangrove for aquaculture production.

Payment for forest environmental services
Ca Mau People's Committee issued Decision No. 111/QĐ-UBND in 2016, which regulated the pilot program on organic certification of shrimp production in Ca Mau province (Figure 2).This decision recognizes organic shrimp farmers as "sellers" of ecosystem goods and services that flow from well-managed mangroves.The consumers of organic shrimp, mostly in Europe, the United States, Japan and South Korea, are the "buyers".Together, these sellers and buyers form an international PFES system.MARD has recognized this approach, whereby payments do not pass through a governmentcontrolled trust fund (Decision No.99/2010/ND-CP) as part of a national PFES policy.Through organic certification, shrimp farmers are directly linked with processing companies such as Minh Phu Seafood Corporation.The Minh Phu seafood exporters support farmer participation in a certified organic shrimp program that links a 10% price premium to the maintenance of 50% mangrove cover in each farm.They pay shrimp farmers VND 500,000/ha of mangrove forest and an extra VND 3000-5000 for each kilogram of organic certified shrimp.They also pay VND 1000 to the forest owner (Decision No.111/QĐ-UBND).Together, these payments represent a price premium of about 2.5% compared to the 10% originally negotiated (IUCN 2016).According to forest owners interviewed in Ca Mau and Ben Tre, this PFES scheme has given incentives to many villagers to replant and restore mangrove in their shrimp ponds.However, the PFES initiative also has several constraints that discourage participation of villagers.These include high opportunity and transaction costs, and lack of an efficient monitoring and assessing system.The system also lacks clear criteria to ensure that parties respect their commitments (Tran 2017).
Tran (2017) also found the PFES scheme could only help villagers increase total revenue by 2.8%-3.9%,while requiring at least a 10% investment more to participate in the scheme compared to non-organic shrimp farming.Participants also noted high risk.Despite complying with all requirements of the companies, for example, local people could still be paid late or not at all.The scheme also requires a 70:30 split between the use of mangrove and water for the aquaculture pond.Villagers and the provincial governments alike do not believe this ratio is appropriate for sustainable forest management and sustainable income.Therefore, it is not widely accepted by the villagers.Moreover, the participants interviewed also claimed that companies are the prime drivers for contracts, and that local people have limited influence in how contracts are signed and monitored.

Public-private partnerships
In Tra Vinh province, funding for the forestry sector also comes from a public-private partnership (PPP) model.The both State and private sector (Mua Vang company) jointly funded reforestation activities.The company was allocated 3000 ha to replant forests in the province with a total investment of VND 56 billion (87% from the central government and 13% from the company).Government authorities interviewed claimed the PPP model addresses funding shortages for the forestry sector in the province.
Mua Vang often provides high quality experts to assist the program and therefore can ensure the survival rates of mangrove.However, the company has few incentives for the scheme, which has led to a short-term commitment and limited outcomes for environmental conservation.Over the last three years, Mua Vang could only plant 413 ha of forests (13.7% of the original plan) because the State could not allocate the promised budget.In fact, the company had to pay more (38% rather than the 13% planned).
In addition, the State often allocates funds from its budget late, which delays the process.

Foreign projects
Many foreign projects contribute funding to the forestry sector.These projects build capacity, develop livelihood models, enhance knowledge sharing for provincial authorities and local people, and provide subsidies and seed-funding for local people to invest in forest plantation.They also help provincial authorities to design and pilot new FMIs such as PFES in the province.However, the government officers interviewed also said this funding source is not sustainable and dependent on the project cycle.

Individual/private sector
The private sector is a potential source of finance, but it is not exploited effectively.Private sector contributions can be higher than those from State and provincial budgets.However, they focus mainly on production forest.

Discussion and Conclusions
Stakeholders perceive a positive but modest impact of FIMs on forest and livelihoods (Table 3).Our study does not use rigorous impact evaluation methods to measure the impact of FIMs on forests and livelihoods.Instead, we elicited the perception of stakeholders on the extent of forest area, environmental awareness, and livelihoods (Table 3).In general, these FIMs were perceived to have made a positive but modest impact on both environmental outcomes and livelihood improvement.These impacts are perceived differently across different funding sources.

Strategic investment.
According to government interviewees in three provinces, the production forests and newly planted mangrove account for the largest proportion of forest area in all three studied provinces.Available funding is mostly invested and allocated toward production forests.Special use forests only received support from the State budget, which is limited.Furthermore, the State often disbursed its budget late in the process.Old mangrove forests offer more environmental services, as well as carbon sequestration compared with young and newly planted mangrove.However, priority often to newly planted mangrove rather than maintenance and protection of existing old mangrove forests.This investment strategy requires careful reconsideration.Incentives should be used to protect special use forests and protection forest.The lack of funding is not the main problem for the forestry sector in the three studied provinces.Instead, it is about lack of timely, effective and efficient use of available funding.
Funding to date is only used to build infrastructure and support protection contracts.It overlooks other conservation activities such as restoration and conservation.This, in turn, leads to unsustainable forest resources management.Furthermore, funding does not offer strong incentives for provincial government and local people to take an active role in mangrove forest protection and development.
Most people participate in conservation schemes for nonmonetary benefits (such as training and knowledge sharing) rather than for money.The payment offered by most initiatives cannot cover the opportunity costs of aquaculture production.
Understanding local needs and concerns would help policy makers tailor their incentives to match local expectations and enhance local involvement in these schemes.

Challenges in tapping into different funding schemes.
Although the three provinces have different funding sources, accessing to these funding is challenging due to the lack of clear and concise legal guidance (e.g.PFES applied for mangrove).Moreover, the mangrove area is relatively small and fragmented.This creates high transaction costs for management and protection activities, discouraging private sector investment in these areas.As discussed earlier, the lack of timely and adequate co-funding from the State budget also weakens incentives for the private sector to take part in PPPs.

Figure 2 .
Figure 2. PFES scheme for mangrove protection and development in Ca Mau.Note: Currency in figures are in VND

Mangrove areas of Ben Tre, Tra Vinh and Ca Mau provinces in 2017.
officers of the district Forest Protection Department; 15 local people; 4 private companies in three provinces; and a consultation workshop in Hanoi with 35 forestry experts from government agencies, academia, civil society organizations and nongovernmental organizations.

Mismatch between estimated funding vs. actual funding allocated. Tra
time to run these activities to spend all money before the end of the year.Thirdly, there is a lack of available land for forest plantation and mangrove restoration has slowed disbursement.According to government officers in Ben Tre, only 15.2% of the State budget allocated to the province was disbursed by 30 May 2018.In Tra Vinh, provincial authorities agreed to fund VND 15 billion for the sustainable forest development program.However, so far only VND 0.7 billion has been disbursed.The Tra Vinh government claimed that disbursed money was spent to build and manage dikes, and control soil erosion.

Table 1 . Financial incentives and funding sources for mangrove forest protection and development in Ben Tre, Tra Vinh and Ca Mau (in VND).
Sources: Authors' in-depth interviews, Ben Tre Forest Protection Department 2018, Tra Vinh Forest Protection Department 2018, Tra Vinh Department of Agriculture and Rural Development 2017 and Ca Mau People's Committee 2017.

Table 2 . Stakeholders' perceptions on pros and cons of each funding source. Funding sources Pros Cons
• Short-term support based on project cycle.Other budget/ private sector (individuals, organizations)• To provide funding from non-state sources without a complicated procedure.•Main(only) focus is on production forest.Forest owner  Manage the mangrove  Maintain and protect mangrove

Table 3 . Impact of funding
The CGIAR Research Program on Forests, Trees and Agroforestry (FTA) is the world's largest research for development program to enhance the role of forests, trees and agroforestry in sustainable development and food security and to address climate change.CIFOR leads FTA in partnership with Bioversity International, CATIE, CIRAD, ICRAF, INBAR and TBI.FTA's research is supported by CGIAR Fund Donors: cgiar.org/funders/Thisimbalance limits local acceptance of the objectives of the incentives, which reduces the effectiveness of incentives in achieving those objectives.Local communities would be more committed to long-term forest protection if decisions and objectives are more inclusive and participatory process.In summary, enhancing impacts of FIMs requires design and implementation of incentives should be based on local preferences and interests identified through participatory decision making.Reducing complexity and high transaction costs of transferring funds from the State budget to provincial authorities would help maximize the potential impacts of FIMs.Strategic use of funding to generate long-term impacts would also enhance the effectiveness and efficiency of these schemes.
*Note:  = Increase/positive; = Decrease/negative; : No change/the same cifor.orgforestsnews.cifor.orgCenter for International Forestry Research (CIFOR) CIFOR advances human well-being, equity and environmental integrity by conducting innovative research, developing partners' capacity, and actively engaging in dialogue with all stakeholders to inform policies and practices that affect forests and people.CIFOR is a CGIAR Research Center, and leads the CGIAR Research Program on Forests, Trees and Agroforestry (FTA).Our headquarters are in Bogor, Indonesia, with offices in Nairobi, Kenya; Yaounde, Cameroon; Lima, Peru and Bonn, Germany.