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In most upper-catchments of the Northern provinces of Vietnam current land uses are producing negative externalities that affect downstream areas. Slash-and-burn is often blamed as the main cause for the problem. Land uses that would bring about environmental benefits include tree-based land use alternatives and agro-ecological practices (e.g. direct-seeded mulching cropping systems). However, the environmental services these alternative land uses would provide are un-rewarded. Payments for Environmental Services (PES) schemes present a new approach that focuses on creating a conditional benefit transfer between the upland providers of environmental services and the downstream beneficiaries. Agricultural households in upper-catchments have unequal access to natural resources, inducing contrasted farming practices and livelihood strategies. Our main objective was to evaluate the response of contrasted households to PES schemes that would reward them when they set aside some land for forestry projects. We looked at the specificity of PES schemes targeted at agricultural households of the upper-catchments in Northern Vietnam. Based on farm typologies developed earlier and using a simplified farm model, we analyzed how households with different endowments would respond to such PES schemes.

Northern provinces of Vietnam suffer from environmental problems such as deforestation, soil degradation, and loss of biodiversity. As a result, the livelihoods of most agricultural households are unsustainable. Moreover, the current land use practices are also producing negative externalities that adversely affect the downstream areas. Deforestation and slash-and-burn cultivation techniques are blamed by some governmental organizations as the main causes for the problem. A mix of incentives (generally subsidies), technical assistance (usually improved and sustainable agricultural practices), and regulation have been used to address the problem. While some progress can be observed in terms of reforestation, many agricultural households are still employing unsustainable agricultural practices that will in the medium term affect their own livelihoods. Land use practices, which would bring about environmental benefits, include forest plantation, agro-forestry, tree-based land use alternatives and agro-ecologically sound practices such as conservation agriculture (Gouyon, 2002). However, the environmental services these land use provide, i.e. watershed services, biodiversity conservation and carbon storage are usually un-rewarded and only indirectly connected to economic activities (Bui Dung The et al., 2004). Payments for Environmental Services (PES) schemes present a new approach that focuses directly on creating a conditional benefit transfer between the upland providers of environmental services and the downstream beneficiaries. Such schemes can take the advantage of upland-lowland interactions in generating environmental benefits while improving the livelihoods of upland farmers. The past few years have witnessed a surge of interest in the development of PES schemes in Asia. In Vietnam, while some projects using the conceptual framework of PES are being initiated in the central and southern part of the country (e.g. WWF, 2007), no PES schemes are currently being im

In most upper-catchments of the Northern provinces of Vietnam current land uses are producing negative externalities that affect downstream areas. Slash-and-burn is often blamed as the main cause for the problem. Land uses that would bring about environmental benefits include tree-based land use alternatives and agro-ecological practices (e.g. direct-seeded mulching cropping systems). However, the environmental services these alternative land uses would provide are un-rewarded. Payments for Environmental Services (PES) schemes present a new approach that focuses on creating a conditional benefit transfer between the upland providers of environmental services and the downstream beneficiaries. Agricultural households in upper-catchments have unequal access to natural resources, inducing contrasted farming practices and livelihood strategies. Our main objective was to evaluate the response of contrasted households to PES schemes that would reward them when they set aside some land for forestry projects. We looked at the specificity of PES schemes targeted at agricultural households of the upper-catchments in Northern Vietnam. Based on farm typologies developed earlier and using a simplified farm model, we analyzed how households with different endowments would respond to such PES schemes.

Northern provinces of Vietnam suffer from environmental problems such as deforestation, soil degradation, and loss of biodiversity. As a result, the livelihoods of most agricultural households are unsustainable. Moreover, the current land use practices are also producing negative externalities that adversely affect the downstream areas. Deforestation and slash-and-burn cultivation techniques are blamed by some governmental organizations as the main causes for the problem. A mix of incentives (generally subsidies), technical assistance (usually improved and sustainable agricultural practices), and regulation have been used to address the problem. While some progress can be observed in terms of reforestation, many agricultural households are still employing unsustainable agricultural practices that will in the medium term affect their own livelihoods. Land use practices, which would bring about environmental benefits, include forest plantation, agro-forestry, tree-based land use alternatives and agro-ecologically sound practices such as conservation agriculture (Gouyon, 2002). However, the environmental services these land use provide, i.e. watershed services, biodiversity conservation and carbon storage are usually un-rewarded and only indirectly connected to economic activities (Bui Dung The et al., 2004). Payments for Environmental Services (PES) schemes present a new approach that focuses directly on creating a conditional benefit transfer between the upland providers of environmental services and the downstream beneficiaries. Such schemes can take the advantage of upland-lowland interactions in generating environmental benefits while improving the livelihoods of upland farmers. The past few years have witnessed a surge of interest in the development of PES schemes in Asia. In Vietnam, while some projects using the conceptual framework of PES are being initiated in the central and southern part of the country (e.g. WWF, 2007), no PES schemes are currently being im