Generating Power and Profits through Paying for the Forests
Forests are of great value to people and the environment. It helps regulate water resources while protecting the land and natural sites. However, until now, the true cost of environmental services pertaining to forested land has not yet been evaluated or paid. At a recent workshop on the development of a guiding decree on the payment of environmental services pertaining to forests by the Ministry of Agriculture and Rural Development, specialists said it was important to pay the environmental costs and that it is a necessary calculation.
Dr. and Assoc. Prof. Vuong Van Quynh from the Forestry University said that “With absorbent land and thick vegetation, forests provide a vegetation carpet that could retain most of the rainfall that will later be gradually supplied into rivers and streams, reducing land erosion, and raising the level of the lake-bottom and the sea-bed.” Therefore, forests moderate water resources and prolong the life of water reservoirs in hydropower plants and water supply systems serving agriculture, domestic use, the fishing industry and tourism. These facilities benefit from forested land, and therefore developing a payment plan for environmental services related to forests is an important part of forest preservation.
The Forestry University has conducted surveys to determine the value of forest water regulatory functions in relation to hydropower plants and people’s livelihoods. The surveys have produced concrete results. For example, in the case of the Suoi Lap Hydropower Plant (Son La province), there are two scenarios. In the first, 14,000ha of forests near the plant area would allow the hydropower plant to run at full capacity in the four winter months, and then at 50 percent capacity in the four successive months, and in the four dry season months its capacity would only be a quarter of capacity, with the plant’s total revenue being VND21 billion per year. In the second scenario, with no forests at all, the plant can only generate revenue of VND15.75 billion. Based on the research group’s study results the forest’s moderation value towards the hydro-power plant is around VND17/kWh.
Similarly, in the case of the Son La Hydropower Plant with a total river basin area of over one million hectares the forest’s water moderation value is around VND11.3/kWh. As for the Hoa Binh Hydropower Plant, with a total river basin area of over 2.6 million hectares the forest’s total water moderation and soil protection value is a total VND90/kWh which is around 15 percent of the electricity cost (VND17.2/kWh for water moderation and VND75-80/kWh for soil protection). Specialists under the Asian biodiversity conservation program said that a forest’s environmental value depends not only on the type of forests, but also the degree of economic and community activities near the forest area, so that determining the environmental value of forests in particular areas is important, from there a proper payment of environmental service cost can be determined.
Further studies are required to be able to establish policies for wider application. However, specialists said that in the short term, hydro-power businesses should pay 50 percent of the set forest’s water moderation and soil protection service costs in specific areas, while for water supply businesses the level should be 70 percent. For example, in northwestern areas the cost will be VND40/kWh and VND100/cu.m of water (equal to 6.6 percent of the current electricity cost and 3.3 percent of the current water cost). In the long term, the environmental service cost should be based on the percentage of the electricity and water cost to avoid the devaluation of the Vietnam dong.
Survey results show that most of people recognize the importance of forests’ environmental value in the country’s sustainable development. Therefore, both local people and businesses willingly pay the environmental service cost based on their use of these services. “It is a necessity to assess forest environmental services and the beneficiaries (users and providers), from there developing a suitable payment mechanism, with a continual improving of relevant policies to ensure proper use of capital raising sources,” said Mr. Vu Tan Phuong from the Research Center for Forest Ecology and Environment under the Forest Science Institute of Vietnam, Vu Tan Phuong.
Dr. and Assoc. Prof. Vuong Van Quynh from the Forestry University said that for hydro-power plants, the forest’s water moderation service cost ranges from VND11-17/kWh and the soil protection service cost from VND75-80/kWh. For water supply units, the service cost ranges from VND180-200/cu.m depending on the lake.
In the coming period, Son La can procure VND400-800 billion from collecting forests’ water moderation and soil protection service costs, four to eight times more than current level of VND110billion./.
Tags: Vietnam agriculture, Vietnam forests
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