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Action

Mapping planned public investments for green growth in Vietnam

The Ministry of Planning and Investment of Vietnam, through its Central Institute for Economic Management, and the EU REDD Facility mapped and analysed planned public investments (2016-2020) in land use in the five provinces of the Central Highlands region. This innovative research looked at the main sources of finance and their role in supporting the objectives of Vietnam’s National REDD+ Action Plan (NRAP). The study also looked at broader land-use finance and its potential negative impact on forests to identify opportunities to ‘green’ investments and align them with national REDD+ commitments.

Key facts

  • Year: 2017-2018
  • Country: Central Highlands, Vietnam
  • Partners: Conducted by the Central Institute for Economic Management of the Ministry of Planning and Investment and the EU REDD Facility, in partnership with the Vietnam REDD+ Office and the UN-REDD Programme.
  • Budget: EUR 50 000
  • Funded by: EU REDD Facility

The objective

The objective of this study was to identify and quantify relevant planned public investments (2016-2020) in land-use sectors in the Central Highlands’ five provinces to: 

  • Identify the main sources of finance and spending patterns related to land use and forests
  • Quantify the contribution of public investment spending to the achievement of REDD+ objectives and identify the main gaps in the implementation of the NRAP
  • Understand the role of investments from central and provincial levels in potentially driving land-use change and forest loss in Central Highlands

The results of the study support the implementation of the NRAP in Central Highlands and the integration of sustainable land-use objectives into provincial socioeconomic development.
 

The challenge

Vietnam has an ambitious legal framework aimed at halting deforestation and forest degradation, and its national forest cover has increased over the past 20 years. However, driven mainly by unsustainable logging, forest conversion for infrastructure, land conversion for agriculture and population increase, deforestation and forest degradation continue to dramatically threaten Vietnam’s environment. 

The Central Highlands region, whose forests represent 22.3 per cent of the national cover, is considered a deforestation hotspot. The regions’ forest cover decreased from 67 to 46 per cent between 1976 and 2016, amounting to 22 per cent of national emissions from forestry and land-use change. 

Central Highlands is also one of the least economically productive regions of Vietnam, with an economy dominated by agriculture and the often unsustainable exploitation of natural resources. Notably, the poverty rate is high in the large areas covered by forests.

The scheduled update of the region’s Master Plan by the Ministry of Planning and Investment and planned targeted REDD+ support provide various opportunities to better integrate REDD+ objectives in future land-use decisions, if priorities for the alignment of spending with green growth objectives are well identified.

 

The approach

This study analysed planned international, national and provincial public investments for the period 2016-2020 in the Central Highlands’ five provinces (Kon Tum, Gia Lai, Dak Lak, Dak Nong and Lam Dong) that have a potential impact on forest cover. These include investments in agriculture and rural development, forest development, forest protection, non-urban land management, and to a certain extent, those related to social policies and hydropower construction.

The scope of the study was defined based on the Government’s wish to analyse to what extent planned investments in Central Highlands will support environmental and forest protection objectives, and to identify opportunities to better mainstream these objectives in its budget planning. 

In Vietnam, spending from sub-national governments accounts for approximately 70 per cent of total public spending. It is therefore a key level for examining the landscape of land-use finance. It enables an understanding of the impact of local financing in delivering sustainable land-use objectives and its contribution to national policies. 

The study considered public finance related to both the revenue and expenditure of public authorities. The sources of revenue considered included that collected from private entities and redistributed to public entities, such as the Payment for Forest Environmental Services (PFES) scheme. The analysis focused on national and provincial ministries and bilateral and multilateral donors. Public enterprises and funds were integrated to the extent possible, while private investments were not covered. 

The study divided the flows of planned land-use investments into two groups:

  • Finance aligned with NRAP objectives: This consists of support to activities that directly contribute to reducing the drivers of deforestation and forest degradation, and to enhancing and protecting forest cover.
  • Finance not aligned with NRAP objectives: This consists of support to activities that do not aim to reduce pressure on forests and/or do not explicitly take deforestation risks into account. It can be argued that part of these investments could potentially drive deforestation in the future and require additional safeguards to avoid forest conversion.

 

Results and Impact

Results

  • Out of the total planned public investments in the Central Highlands region for the period 2016-2020, 57 per cent, or VND 23.4 trillion, are related to land use.
  • About a third of total planned public domestic and international investments in land-use sectors in Central Highlands for the period 2016-2020 seem to be aligned with NRAP objectives (VND 7.2 trillion). 
  • In the future, the Central Highlands region could increase planned public investments aimed at protecting forests by up to VND 3.2 trillion per year (or VN 16.2 trillion over five years) by safeguarding and aligning existing land-use investments with NRAP objectives.
  • Almost half of planned land-use investments for 2016-2020 in Central Highlands are related to agriculture and rural development (VND 10.3 trillion), underlining the importance of this sector for the region’s economy. However, only 5.3 per cent of planned agricultural investments are consistent with NRAP objectives.
  • About 90 per cent of the planned donor investments identified by the study are not aligned with NRAP objectives (VND 6 trillion).
  • In the region, 75 per cent of planned investments in the forest sector come from PFES, which is the main source of finance for forest protection. It amounts to VND 3.36 trillion over the period 2016-2020.
  • Data is fragmented, the assessment of overlaps among various plans and programmes is complex, and information about investment objectives and impacts is limited.

Impact

  • The study highlights the importance of the land-use sector in the Central Highlands region and the potential negative impact on forests of planned public investments. Ongoing planning reform at national level in Vietnam should ensure better mainstreaming of environmental and forest protection objectives, including in spatial planning. Results from this study will support the piloting of the new Planning Law in selected Central Highlands provinces.
  • The study’s results demonstrate that some planned public investments in land use could be ‘greened’ by applying more rigorous safeguards in donor and domestic finance, as well as by enforcing existing forest protection measures. Greater coordination between Vietnam and its donor partners is essential, as most donor support is not aligned with NRAP objectives. Furthermore, additional support will be needed for Central Highlands to transition to sustainable commodity production and align planned investments with forest protection objectives.
  • PFES is the main mechanism and source of funding in Central Highlands. Efforts should therefore be made to monitor its impacts and ensure it provides the right incentives for forest owners and communities to adopt sound forest management practices. Adequate frameworks and safeguards should be put in place to ensure the realisation of the PFES’ environmental objectives, as well as the fair and effective distribution of benefits to forest-dependent stakeholders.
  • This first step in mapping public actors and flows related to land-use investments offers a methodological approach that other Vietnamese provinces and their partners can build on and improve when developing their sub-national REDD+ investment plans. Results from this study will be built upon to support selected provinces in Central Highlands in updating their sustainable development/green growth strategies. 
  • This increased transparency and periodic tracking of resources invested in land-use activities can contribute to mobilising additional resources for integrated sustainable planning. 

 

Project resources

  • Full Report: Overview of planned public investments related to land use in the Central Highlands region of Vietnam, 2016-2020 [PDF English] [PDF Vietnamese]
  • Executive Summary: Overview of planned public investments related to land use in the Central Highlands region of Vietnam, 2016-2020 [PDF English] [PDF Vietnamese]