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Net Present Value of Alternative Uses



Personal NPV

Social NPV


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NPV (billion VND)

Figure 3.1: Net present value of options for using renewable energy

Source: Author's processing (2008)


Step 6: Sensitivity analysis


Assumption 1 : Increase water surface rental price from 300,000 VND to 1,000,000 VND/1 ha/

year.

Table 3.5: Net present value of options for using wetlands when water surface rental prices change

Unit: VND



Personal NPV

Social NPV

Option 1

543.018.624.178

560.983.882.383

Option 2

668.906.306.568

688.794.159.927

Option 3

677.948.131.973

704.956.140.466

Option 4a

572,641,045,748

594.047.055.850

Option 4b

581,682,871,153

610.209.036.392

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Net Present Value of Alternative Uses

Source: Author's processing (2008)



Assumption 2 : Production costs increased by 50% since 2010.


Table 3.6: Net present value of options for using DNN

Unit: VND



Personal NPV

Social NPV

Option 1

368.148.893.763

386.114.151.967

Option 2

491.197.958.220

511.085.811.580

Option 3

490.990.528.049

517,998,536,543

Option 4a

401.196.437.566

422.602.447.670

Option 4b

400.989.007.395

429.515.172.633

Source: Author's processing (2008)


Assumption 3 : Discount rate 12%, other assumptions unchanged


Table 3.7: Net present value of options for using DNN (r=12%)

Unit: VND



Personal NPV

Social NPV

Option 1

535.253.633.080

545.875.673.527

Option 2

608.050.548.177

625.140.815.526

Option 3

615.592.611.717

638.801.455.697

Option 4a

521,731,595,412

540.126.463.322

Option 4b

529.273.658.953

553.787.103.494

Source: Author's processing (2008)


Assumption 4 : Discount rate 15%, other assumptions unchanged


Table 3.8: Net present value of options for using DNN (r = 15%)

Unit: VND



Personal NPV

Social NPV

Option 1

442,763,223,823

451.783.585.256

Option 2

520.008.829.124

533.806.645.268

Option 3

525.759.245.554

544.496.890.531

Option 4a

445.746.406.025

460.597.490.577

Option 4b

451.496.822.454

471.287.735.839

Source: Author's processing (2008)



Step 7: Discuss calculation results and management recommendations


Discuss the calculation results


In all calculated cases, social NPV and private NPV are always positive, in which social NPV is always significantly larger than private NPV due to the existence of environmental externalities created by the afforestation project for society.

In all cases, Option 3 always gives the largest social NPV and individual NPV, followed by Option 2, then Option 4b.

In all cases, the increase in the discount rate causes the individual and social NPV to decrease significantly. However, when the discount rate increases to 15%/year, the NPV of all options is still positive and quite large.

When production costs are assumed to double from 2010, the

The option still yields quite large individual and social NPV.


When the rental price of aquaculture water surface increases to 1,000,000 VND/ha/year (300% increase compared to the present), the individual and social NPV will decrease insignificantly compared to the case of keeping the rental price as it is at present.


Management proposal


First, local authorities and management agencies should consider long-term land leases to aquaculture households because if the lease period is too short, households will not have the economic incentive to invest in pond renovation and reforestation in the pond. Only when the lease period is longer than 10 years will households consider reforestation.

Second , the locality should promote a mechanism for people to borrow money to invest in effective afforestation and aquaculture. Currently, the loan period is 2 years, with principal and interest to be paid back, which is very short. According to the recommendations of the households, the loan period should be extended to 5 years because aquaculture is subject to considerable risks from diseases, natural conditions, and market reactions.



Third , local authorities should study a policy mechanism that requires tenants to reforest their ponds to bring both personal and social benefits. This requirement should be bound by strict terms in the water surface lease contract regarding the time, area of ​​reforestation and responsibility for maintaining and protecting the forest.

Fourth , management agencies should also review the price calculation for households renting water surface for aquaculture in the District. According to Decree No. 142/2005/ND-CP of the Government on "Collection of land and water surface rent", the maximum limit for renting one hectare of water surface for aquaculture can be up to 1,000,000 per hectare per year [10]. With profitable activities such as clam farming, this price can be applied because it still brings long-term profits to farming enterprises, while also bringing budget revenue to local management agencies.


3.2. APPLYING A PAYMENT MECHANISM FOR ENVIRONMENTAL SERVICES TO PROTECT

WETTLELAND RESERVATION


As presented in Chapter 1, Payment for Environmental Services (PES) is an economic tool used to conserve and sustainably develop environmental ecological services. The essence of PES is to create an incentive mechanism and bring benefits to the subjects providing ecosystem services, in order to create a sustainable financial source for environmental protection.

Currently, Vietnam has a legal basis for implementing PES, which is the Law on Forest Protection and Development (2004) and the Law on Biodiversity (2008). In addition, PES is being piloted in Lam Dong and Son La provinces according to Decision 380/QD-TTg of the Prime Minister dated April 10, 2008 on "Pilot policy on payment for forest environmental services" with the following types of services: water resource regulation; erosion and sedimentation control; and tourist landscape [11].



Proposed payment model for environmental services in Xuan Thuy


The research results in Chapter 2 of the thesis show that mangroves in Xuan Thuy National Park provide many ecological values ​​to local people and communities. These services include: biodiversity conservation, prevention of damage to sea dykes, ecological support for aquaculture activities, and carbon sequestration. The above ecological services have also been calculated and converted to specific monetary values.

Thus, the prerequisites for applying the Payment Mechanism for Environmental Services are quite clear, including: (i) there is a legal basis for implementing the mechanism, (ii) the beneficiaries of ecological services and the service providers are clearly identified; (ii) ecological services are quantified into money based on scientifically and empirically based calculations.

Based on the research experience of existing PES models in the country and internationally, the thesis proposes a PES model for RNM conservation in Xuan Thuy.

The purpose of the payment model for environmental services in Xuan Thuy


Implementing the Payment for Environmental Services policy contributes to changing the investment mechanism for the protection and development of mangrove forests in Xuan Thuy, from mainly relying on the State budget to mobilizing social resources, forming a new financial source, directly from those who benefit from the services provided by the forest, contributing to the cause of sustainable development.

Applicable objects


Organizations using and paying for forest environmental services are expected to include:


Management Board of Agricultural and Rural Development Projects, Nam Dinh Province (benefiting from the sea dike protection benefits of mangrove forests by avoiding the costs of maintenance and repair of the sea dike system with mangrove protection)



Organizations and individuals producing and raising aquatic products in the buffer zone of Xuan Thuy National Park (benefiting from the ecological support value of mangroves)

People in the buffer zone communes of Xuan Thuy National Park (benefit from conservation value)

biodiversity conservation of RNM.


The environmental service provider is the Xuan Thuy National Park Management Board.


Type of environmental services


RNM's sea dike protection services


Ecological support services for aquaculture of RNM


Biodiversity conservation services of RNM


Forms of payment for environmental services


Direct payment for environmental services: is when the user of environmental services (the payer) pays directly to the environmental service provider (the payee).

Indirect environmental service payment: is when the user of environmental services indirectly pays the environmental service provider through another organization.

Proposed payment level


Management Board of Agricultural and Rural Development Projects, Nam Dinh Province: estimated at 1 billion VND per year. Payment is made directly between the Department and the Management Board of Xuan Thuy National Park.

Individuals and organizations producing and raising aquatic products in the buffer zone of Xuan Thuy National Park: expected to be 300,000 VND/household/year. Payment is made indirectly, in which individuals and business households pay money annually to the District's Mangrove Forest Protection and Development Fund. The Fund can return 50% of the collected money to Xuan Thuy National Park for planting and protecting forests, the remaining 50% is used



to subsidize and support afforestation activities of households raising aquatic products in ecological forms in buffer zone communes.

People in the buffer zone of Xuan Thuy National Park: expected to be 30,000 VND/household/year. Payments are made indirectly, in which households will pay money annually to the Mangrove Protection and Development Fund. The annual revenue is used for afforestation and biodiversity conservation activities in Xuan Thuy National Park.

Responsibilities of the payer and payee of environmental services


With the service payer


Must pay for environmental services fully and on time to Xuan Thuy National Park Management Board (in case of direct payment) or pay money to the Forest Protection and Development Fund (in case of indirect payment).

With the service payee


It is necessary to ensure that RNM is protected in terms of quantity and quality, and that forests are developed in accordance with planning and plans. It is necessary to report annually on the forest management situation to the paying party based on objective and scientific assessments.

Responsibilities of the parties involved


Giao Thuy District People's Committee


Organize propaganda about policies and regulations on payment for environmental services in the locality and develop a plan to implement the policy.

Coordinate with District authorities to direct and inspect the implementation of payment mechanism for environmental services in Xuan Thuy.

Establish a District-level Forest Protection and Development Fund and summarize policy implementation and make adjustments to environmental service payments in the area.

People's Committees of relevant communes



Organize propaganda and dissemination to raise people's awareness of the practical significance and importance of people's responsibility in contributing money to protect community resources and environment to implement the policy of payment for environmental services.

Identify the list of organizations, individuals, and households that are subject to payment for

environmental services


Participate in monitoring the implementation of the pilot policy on payment for environmental services at the local level.

Organizations, households, individuals


Organizations, households and individuals subject to the policy of payment for environmental services are responsible for strictly implementing regulations on responsibilities and obligations and must be legally responsible for implementing the policy of payment for environmental services in the locality.


3.3. BUILDING A DATABASE FOR WETTLELAND MANAGEMENT


Building a database on wetlands is one of the wetland management solutions commonly applied in the world with the purpose of monitoring the fluctuations of wetlands, providing information for wetland use planning, providing background information to resolve disputes and assess the damage of wetlands when there are external impacts.

In Vietnam, collecting relevant information and building a wetland database has been mentioned as a key measure for managing wetland resources in many State documents and regulations, typically Decree No. 109/2003/ND-CP of the Government on conservation and development of wetland areas and the National Strategy on Environmental Protection to 2010 and orientation to 2020.

With the above important meanings and in order to concretize the Party and State's policies and guidelines, the Action Plan on Conservation and Development of Wetlands in Vietnam for the period 2004 - 2010 was developed and approved according to Decision No.

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