66634 Vietnam Development Report 2011 Natural Resources Management Photos by: Joint Development Partner Report to the Vietnam Consultative Group Meeting Hanoi, December 7-8, 2010 VIETNAM GOVERNMENT FISCAL YEAR January 1 to December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective September 20, 2010) Currency Unit = Vietnamese Dong (VND) US$ 1.00 = VND 19, 495.00 Weights and Measures Metric System ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AOM Air Quality Management BTNMT Vietnamese abbreviation for Ministry of Natural Resources and Environment AusAID Australian Agency for International Development CAI Clean Air Initiative CAIT Climate Analysis Indicators Tool CBDRM Community Based Disaster Risk Management CDA Community Development Agreement CECOD Center for Environmental and Community Development CEPF Critical Ecosystem Partnership Fund CFM Community Forest Management CIEM Central Institute for Economic Management CO2 Carbon Dioxide CO2e Carbon Dioxide Equivalent CSR Country Synthesis Report CSR Corporate Social Responsibility DANIDA Danish International Development Agency DECAFIREP Department of Capture Fisheries Exploitation and Protection EC European Commission EEZ Exclusive Economic Zone EIA Environmental Impact Assessment EIA Environment Investigation Agency EITI Extractive Industries Transparency Initiative EIU Economist Intelligence Unit EPI Environmental Performance Index EU European Union FAO Food and Agriculture Organization FoE Friends of the Earth International N AT U R A L R E S O U R C E S M A N AG E M EN T ABBREVIATIONS AND ACRONYMS 5 FLEGT Forestry Law Enforcement, Governance and Trade FOMIS Forest Information Management System FSC Forest Stewardship Council FSPS Fisheries Sector Programme Support GDLA General Department of Land Administration GDP Gross Domestic Product GHG Green House Gases GNI Gross National Income GOV Government of Vietnam GSO General Statistics Office GTZ German Agency for Technical Cooperation ICZM Integrated Coastal Zone Management ICEM International Centre for Environmental Management IDMC Irrigation and Drainage Management companies IPCC Intergovernmental Panel on Climate Change ISF Irrigation Service Fee ISPONRE Institute of Strategy and Policy on Natural Resources and Environment ITTO International Tropical Timber Organization IUU Illegal, Unreported and Unregulated IWRM Integrated Water Resource Management JICA Japan International Cooperation Agency KECO Korean Environment Corporation KIET Korean Institute for Industrial Economics and Trade LASUCO Lam Son Sugar Joint Stock Corporation. LROs Land Registration Offices LURCs Land Use Right Certificates MARD Ministry of Agriculture and Rural Development MEY Maximum Economic Yield MoH Ministry of Health MoIT Ministry of Industry and Trade MoNRE Ministry of Natural Resources and Environment MoST Ministry of Science and Technology MPA Marine Protected Areas MPI Ministry of Planning and Investment MQI Mining and Quarry Industry MRC Mekong River Commission MRV Monitoring, Reporting and Verification MSC Marine Stewardship Council N AT U R A L R E S O U R C E S M A N AG E M EN T 6 ABBREVIATIONS AND ACRONYMS MSY Maximum Sustainable Yield NFI National Forest Inventory NFIMP National Forest Inventory and Monitoring Program NPOA National Plan of Action NORAD Norwegian Agency for Development Cooperation NTP National Target Program NTP-RCC National Target Program to Respond to Climate Change PEMSEA Partnership in Environmental Management for Seas of East Asia PFES Payment For Forest Environment Service PPPs Public Private Partnerships QCVN Quy Chuan Viet Nam or National Regulation of Vietnam REDD Reduced Emissions from Deforestation and Forest Degradation SEA Strategic Environmental Assessment SEDP Socio-Economic Development Plan SFEs State Forest Enterprises SFCs State Forest Companies SOE State Owned Enterprises SUF Special-Use Forest UN United Nations UNESCAP UN Economic and Social Commission for Asia and the Pacific UNEP United Nations Environmental Programme UNFCCC United Nations Framework Convention on Climate Change UNDP United Nations Development Programme UNICEF United Nations Children’s Fund VDR Vietnam Development Report VIMICO Vietnam National Minerals Corporation VINACOAL Vietnam National Coal Corporation VINACOMIN Vietnam National Coal-Minerals Industries Corporation VINAFOR Vietnam Forest Corporation VHLSS Vietnam Household Living Standards Survey VIFEP Vietnam Institute of Fisheries Economic and Planning VND Vietnamese Dong VPA Voluntary Partnership Agreement WCMC World Conservation Monitoring Center WSR Water Sector Review WTO World Trade Organization WWF World Wide Fund for Nature N AT U R A L R E S O U R C E S M A N AG E M EN T ABBREVIATIONS AND ACRONYMS 7 ACKNOWLEDGEMENTS This report has been prepared in a participatory process and in partnership between the World Bank and many development partners, as indicated on the back cover. Development partners have contributed by providing documents and comments on draft chapters at various stages of the process. A meeting to discuss the Concept Note for the VDR was held on April 1, 2010. A half-day workshop on May 25 discussed chapter drafts, and a full-day workshop on August 23 reviewed the full chapters. All participants are thanked for their contributions. Special thanks are due to CIDA for their financial support to research underpinning the mineral resources chapter and to GTZ for the same with respect to the forestry chapter. Valuable written comments and contributions were also received from a large number of development partner staff: Dennis Ellingson (ADB); Dirk Deprez and Martin Junker (Belgian Development Agency); Jacqueline DeLima Baril, Son Van Le, and Andrew Smith (CIDA); Nguyen Van Kien (DFID); Hong Viet Tran (Embassy of Denmark); Thierry Facon, Simon Funge-Smith, Akiko Inoguchi, and Rebecca Metzner (FAO); Evelyn Ebert, Elke Foerster, Juergen Hess, and To Thi Thu Huong (GTZ); Toru Arai, Egashira Eiji, Nguyen Thanh Ha, Taro Katsurai, and Murase Noriaki (JICA); Thuy Nguyen (New Zealand Embassy); Vu Minh Duc (Royal Norwegian Embassy); Hoang My Lan (SDC); Timothy Boyle, Patrick Van Laake, and Koos Neefjes (UNDP); Andrei Barranik (USAID); Sameer Akbar, Dean Cira, Quang Hong Doan, Maria Delfina Alcaide Garrido, Keiko Kubota, Lan Thi Thu Nguyen, Cuong Hung Pham, Hoa Thi Mong Pham, Martin Rama, Federica Ranghieri, John Roome, Ulrich Schmitt, Neelesh Shrestha, Richard Spencer, Giuseppe Topa, and Phuong Thi Thanh Tran (World Bank). The nongovernmental organization (NGO) community in Vietnam has also contributed with documents and advice. NGO network meetings were held on May 21 and August 25. Mai Thi Hong Bo and the staff of the Vietnam Development Information Center facilitated this dialogue. Helpful written comments and documents were received from a large number of NGO, project, and research institute staff: Jonathan Eames (BirdLife International); Ute Bartels (Bread for the World); Nguyen Van Anh, Morten Fauerby Thomsen, and Vu Thai Truong (CARE); Vu Thi Hien (CERDA); Lutz Leman (CIM); Christian Aschenbach (EPMNR Project); Felise Hai-Ly Nguyen (European Forest Institute); Mark Infield and Steve Swan (FFI); Tomas Jonsson, Anders Pedersen, and Bjoern Wode (FLITCH); Tapio Leppänen (FORMIS Project); Richard Rastall (FRR); Fernando Potess (FSDP Project); Daniel Valenghi (Helvetas); Jake Brunner (IUCN); Vu Hai Nam (KfW 4 Project); Steve Hunt (KfW 7 Project); Wil de Jong (Kyoto University); Michael Akester and Paul Nichols (MARD advisors); Steve Price-Thomas (Oxfam GB); Richard McNally (SNV); Tom Osborn (TRAFFIC); Simon McCoy (University of Copenhagen), Duong Anh Tuyen (VietDHRRA); Christopher Turtle (Vietnam Conservation Fund); Robert Pomeroy (WorldFish); and Sebastian Schrader and Le Cong Uan (WWF). N AT U R A L R E S O U R C E S M A N AG E M EN T 8 ACKNOWLEDGEMENTS A number of Vietnamese experts were consulted in their capacity as individuals rather than as representatives of particular institutions and contributed generously from their knowledge. They include Le Khac Coi, Pham Manh Cuong, Le Dang Doanh, Minh Hoang, Tuong Phi Lai, Nguyen Thi Phuong Lam, Nguyen Ngoc Lung, Vo Chi My, Bui Xuan Nam, Nguyen Ba Ngai, Nguyen Van Tai, Bui Tat Thang, Nguyen Van Thong, and Dang Hung Vo. The preparation of this VDR was led by Jan Bojö (World Bank). Lead authors of the draft chapters that formed the “building blocksâ€? of the VDR were: Jan Bojö (Overview); Dzung The Nguyen (Land, World Bank); Des Cleary (Water, consultant); Tim Dawson (Forests, consultant); Keith Symington (Marine Resources, consultant); and Craig Andrews (Mineral Resources, World Bank). The chapters were edited into a consolidated report by Jan Bojö with the assistance of Linda Starke (consultant). Viet Tuan Dinh (World Bank) prepared the statistical annex. Major contributions to various VDR chapters were provided by Koos Nefjees (UNDP); James Anderson, Boubacar Bocoum, Douglas J. Graham, Dzung The Nguyen, Steven Jaffee, and Huong Thi Lan Tran (World Bank); Tran Ngoc Anh and other staff of ACC consulting; and Vu Xuan Nguyet Hong (consultant). Lourdes Anducta, Dung Thi Thuy Dao, Jeff Lecksell, Ngozi Blessing Malife, Ngan Hong Nguyen, and Chi Kim Tran (World Bank) provided essential administrative support. Peer reviewers from the World Bank were Milan Brahmbhatt, Tuuka Castren, Peter Dewees, and Severin Kodderitzsch. Overall guidance was provided by Hoonae Kim, Victoria Kwakwa, Magda Lovei, and Jennifer Sara (World Bank). Translation from English into Vietnamese was undertaken by Huong Thi Thu Hoang and was proofread by Cao Thang Binh, Pham Hung Cuong, Vu Xuan Nguyet Hong, Dzung The Nguyen, and Lan Thi Thu Nguyen. Typesetting and printing was done by Le Bros Company Ltd. Appreciation is due to all who contributed to this broad-based and inclusive process. However, the final report is an institutional product with no claims of individual authorship. N AT U R A L R E S O U R C E S M A N AG E M EN T ACKNOWLEDGEMENTS 9 TABLE OF CONTENTS EXECUTIVE SUMMARY 5 CHAPTER 1 : 18 NATURAL RESOURCES MANAGEMENT—AN OVERVIEW Sustainable Use of Natural Resources 23 Climate Change 25 Natural Resource Management for Sustainable Growth 26 Environmental Sustainability 28 A Reform Agenda 30 References 31 CHAPTER 2 34 LAND MANAGEMENT Land Resources and Dynamics 35 Policy and Institution Settings 37 Land Policy 37 Institutional Setting 37 Issues 39 Efficiency Reforms 41 Enhancing Land Use Rights 41 Developing Land Markets 42 Modernizing Land Administration 43 Strengthening Land and Property Taxation 45 Environmental Sustainability Reforms 47 Advancing Land Use Planning 47 Equity Reforms 49 Improving Land Acquisition and Compensation 51 References 52 N AT U R A L R E S O U R C E S M A N AG E M EN T 10 TABLE OF CONTENTS CHAPTER 3 54 WATER RESOURCES Water Resources in Vietnam 55 Provision of Water Services 57 Use of Water for Economic Production 57 Major Issues Concerning Water Resources Management 60 Institutional, Legal, and Policy Context 60 Water Security 61 Sustainable Water Supply and Sanitation Services 61 Sustainable Agriculture and Irrigation Services 61 Financing and Assets 62 Pollution and Degradation 62 Storms and Floods 62 Climate Change 63 The Reform Agenda 62 Efficient Water Use 63 Environmental Sustainability 65 Equity 67 Measures to Support the Reform Agenda 67 References 68 CHAPTER 4 70 FOREST MANAGEMENT Institutional Perspectives 73 Policy Perspectives 73 Economic Perspectives 73 Social Perspectives 76 Biodiversity Perspectives 77 Major Issues in the Forestry Sector 79 The Reform Agenda 80 Governance and Institutional Reforms 81 Efficiency Reforms 83 Equity Reforms 85 Environmental Sustainability Reforms 86 References 88 N AT U R A L R E S O U R C E S M A N AG E M EN T TABLE OF CONTENTS 11 CHAPTER 5 92 MARINE RESOURCES Major Issues for the Marine Sector 95 Fishing Overcapacity and Resource Inefficiency 97 Illegal, Unreported, and Unregulated Fishing 97 Lack of Data and Formal Reference Points 97 Vulnerability and Equity 97 Supply Chain Inadequacies 98 Sustainable Fisheries 98 The Way Forward 99 Sustainable Use of Marine Biodiversity 103 References 105 CHAPTER 6 109 MINERAL RESOURCES Efficiencies in Providing Access to Resources 110 Commodity “Master Plansâ€? 110 Granting of Mine Titles and Concessions 112 Effective Sector Administration and Environmental Sustainability 114 Theory versus Practice: The Environmental and Social Impact 116 Physical Environmental and Social Impacts 117 Equitable Development and Distribution of Benefit Streams 119 Annex. Case Study: Coal 200 References 123 Statistical Appendix 125 Notes 151 Boxes Box 2.1. Climate change and agriculture 40 Box 2.2. Using auctions to sell public land 43 Box 2.3. Low-cost and participatory approach in land administration 41 Box 2.4. Transparency and corruption in land management 46 Box 2.5. Seven principles for efficient, equitable, and environmentally 47 sustainable land management Box 2.6. Case study: Competing land uses, impacts, and repercussions for 48 more-integrated natural resource management in Dak Lak Province Box 3.1. Inland fisheries and aquaculture 58 N AT U R A L R E S O U R C E S M A N AG E M EN T 12 TABLE OF CONTENTS Box 3.2. The Vedan water pollution case 62 Box 3.3. Improving urban water services: A case study from the Philippines 64 Box 4.1. New rules for woods-based exports: EU Partnership Agreements 75 and the US Lacey Act Box 4.2. Responsibilities for protected area management 79 Box 4.3. National REDD + Programme 80 Box 4.4. Evolution of forest sector institutions 81 Box 4.5. Forest information management 82 Box 4.6. The Forest Carbon Partnership Facility (FCPF) in Vietnam 83 Box 4.7. Smallholder group management scheme 84 Box 4.8. Community-based mangrove management 86 Box 4.9. Climate change and forestry in Vietnam 88 Box 5.1. Key issues and constraints for Vietnam’s marine capture fisheries 96 Box 5.2. Low on the food chain but high on the value chain? 100 Box 5.3. Successful examples of fisheries co-management in Vietnam 101 Box 5.4. Key recommendations for the reprioritization of fisheries subsidies 103 Box 5.5. Lessons learned for MPA planning and management to support 104 sustainable use of marine biodiversity in Vietnam Box 6.1. Contributions of a mining project: The case of Ban Phuc Nickel 113 Box 6.2. Mining concessions: The case of bauxite 115 Box 6.3. Community social responsibility: The case of Talisman Energy 119 Figures Figure 1.1. Intensities of resource use, 1990–2007 20 Figure 1.2. GDP and absolute resource use indexes (1990 =1) 20 Figure 1.3. Pollution intensity, 1990–2007 20 Figure 1.4. GDP growth and absolute air pollution indexes (1990 =1) 21 Figure 1.5. Vietnam: Gross and net savings, 1999–2008 24 Figure 2.1. Vietnam: Land use, 1993 and 2008 36 Figure 2.2. Progress of land allocation and issuance of LURCs 37 in total and by category, December 2009 Figure 2.3. Difficulties when applying for land use rights certificates 44 Figure 3.1. Major river basins 56 Figure 3.2. National surface water allocation (percent) 58 Figure 4.1. Area of forest by type, 2005 71 Figure 4.2. Vietnam forest cover, 1983 and 2004 72 Figure 4.3. Turnover of forest sector enterprises, by type of activity 74 N AT U R A L R E S O U R C E S M A N AG E M EN T TABLE OF CONTENTS 13 Figure 4.4. Forest tenure change in Vietnam between 1995 and 2009 77 Figure 5.1. Total catch and engine power in Vietnam’s marine fisheries, 1981–2009 94 Figure 5.2. Total engine power and yield in Vietnam’s marine fisheries, 1981–2009 95 Figure 6.1. Evolution of Vietnam’s coal industry, 2000–2008 121 Tables Table 2.1. Vietnam’s land policy evolution, 1945–2007 38 Table 4.1. Species richness and threat status in Vietnam in 2005 78 N AT U R A L R E S O U R C E S M A N AG E M EN T 14 TABLE OF CONTENTS EXECUTIVE SUMMARY T he Vietnam Development Report (VDR) is a joint development partner report. It aims to inform the reform agenda of the government of Vietnam and to harmonize development partner support for this framework. Therefore the emphasis is not so much on background description as it is on a discussion of the way forward. The current VDR is one in a long series of annual reports addressing the most important development topics of Vietnam. They do so against the backdrop of the Socio-Economic Development Plan, which lays out the government’s broad development agenda. The theme of this VDR is natural resources management. The main question that the VDR poses is: How can natural resources be used efficiently to promote robust economic growth and alleviate poverty in a manner that is environmentally and socially sustainable? An examination of that question entails addressing several subthemes that run through the different chapters. The report is organized to address the lead themes of efficiency, environmental sustainability, and equity in sectoral chapters on land, water, forests, marine resources, and mineral resources. The first chapter provides a broad overview connecting the sectoral chapters. A statistical annex provides further data in support of the text. The VDR is the result of a consultative process involving not only development partners but also nongovernmental organizations, academics, researchers, and independent consultants. The process has been coordinated by the World Bank. The Big Picture Vietnam has enjoyed two decades of strong economic growth, and the nation reached the status of “lower-middle-income countryâ€? in 2009. Aligned with that economic growth is a sharply declining poverty rate. Government policy provides for a transition from a centrally planned economy toward one that is increasingly market-oriented, with a socialist orientation. Part of this is a process of devolution of decision making to lower levels of government. Aggregate population growth is not high, but people are moving rapidly into urban centers and leaving agriculture for industry and services. Much of the economic growth has been fueled by intense exploitation of natural resources. Utilization of land has intensified, water resources are increasingly stretched, natural forests have been logged, capture fisheries have depleted their resource base, and mineral resources are increasingly exploited. There is nothing wrong with using natural resources for economic growth. But sustainable development requires that renewable resources be harvested at a level that allows for replenishment, and that the proceeds from exploitation of nonrenewable resources are invested in other forms of capital. More-intense utilization will also bring about more competition and even conflict over resources. This will increase the need for clear property rights, rules of transactions, and conflict resolution. The overall growth of the economy, population growth, urbanization, and industrialization are all combining to increase water pollution, urban air pollution, and the extraction of natural resources. To some extent this is counterbalanced by increasing efficiency in the use of natural resources and technological progress. But the net result is increasing pressures on the resource base and pollution. In many cases the benefits will be registered by way of economic growth but the costs will be “hiddenâ€? as poor human health, longer-term losses of ecosystem productivity, and reduced environmental quality. Climate change stresses require adaptation measures. Much about the long-term impacts of climate change is uncertain. But enough is known already to prompt action: temperatures will increase, the sea level is rising, and saltwater intrusion will increase further. Precipitation is likely to exacerbate droughts and floods, and it is likely that extreme climate events will become more frequent and intense, while the current level of impact is quite significant and warrants countermeasures. Vietnam operates in an international context. The entire economy is increasingly integrated into the global system, particularly since joining the World Trade Organization in 2006. Most of Vietnam’s surface water resources come from outside the country. Vietnam will be affected by the massive hydropower plants being planned in the Mekong River. The wood processing industry of Vietnam is quite strongly import-dependent for raw material. Many of its products are intended for export, and new legislation in those markets is placing new demands on Vietnam. The marine fisheries and aquaculture industries are also very export-oriented, and the former competes with foreign fleets in international waters. Some important marine products export markets will require proof of sustainable resource management in Vietnam. The mining industry is also strongly export-oriented. All these situations strongly affect the reform agenda. Conclusions on the Reform Agenda Vietnam is already engaged in a dynamic reform process. This report makes suggestions for reinforcing that momentum. Vietnam’s recent history is one of successful economic reform. Sometimes the goals of efficiency, environmental sustainability, and equity are quite compatible— witness the growth pattern combined with poverty alleviation. But there are also trade-offs between these goals. In particular, economic growth that puts a “zero priceâ€? on environmental impacts will send markets and decision makers the wrong signals and therefore undermine the benefits of development. Efficient markets may not produce results that are acceptable from an equity perspective, and so on. Thus reforms have to be pursued with an eye to multiple and sometimes competing goals. There are also important gaps between theory and practice that need to be addressed. Good policies require adequate resources for successful implementation. N AT U R A L R E S O U R C E S M A N AG E M EN T 16 EXECUTIVE SUMMARY In very broad terms, the reform agenda for natural resources management suggested by the VDR involves: A focus within public management on enhanced data gathering, analysis, and public dissemination to support functioning markets as well as efficient public decision making and coordination. This will contribute to efficiency, environmental sustainability, and equity. Priorities in the short term include: enhanced public transparency in land markets; improved water data collection to underpin rational watershed management under increasing competition for water; stringent data standards in forestry to allow for international transfers in support of carbon sequestration, sustainable forestry, and biodiversity conservation; an improved database to determine the status of marine fisheries and hence reasonable catch levels; and public disclosure of the results of environmental assessments of the impacts of mineral exploitation. Assignment of clear and more-secure long-term property rights and an increase in the use of market prices to provide incentives for investment, growth, and decentralized solutions. This is fundamental for greater efficiency. Short-term priorities to enhance efficiency include: modernizing land administration to lower transaction costs, improving irrigation efficiency, raising the yield in forest plantations, reforming marine subsidies so as not to encourage overexploitation of these resources, and creating more enabling conditions for the private sector to pursue opportunities in the minerals sector. Enhancing environmental regulatory implementation to close the gap between theory and practice; assigning values to the environment where markets fail to do so; scaling up of co- management schemes in forestry and marine resources and of payments for environmental services; and integrating climate change into public planning. These are fundamental to environmental sustainability. Short-term priorities from an environmental perspective include: land use planning to protect critical habitat; vigorous implementation of regulations to combat water pollution; scaling up of systems for payments for forestry protection and expansion in coastal areas; expansion of the Marine Protected Area system in combination with community- based protection schemes; and enforcement of environmental regulations related to mining. Community benefits sharing schemes, fair-market value compensation for property expropriation, improved information access, transparency in governance, and public participation. These are fundamental measures to ensure equity in natural resources management. Short-term priorities include: efficiently and fairly addressing grievances occurring in land markets; targeted improvements in water services for the poor; scaling up of the promising pilots in both community forestry management and marine resources; and provisions for communities to benefit directly from minerals exploitation in their neighborhoods. N AT U R A L R E S O U R C E S M A N AG E M EN T EXECUTIVE SUMMARY 17 CHAPTER 1 NATURAL RESOURCES MANAGEMENT— AN OVERVIEW V ietnam has enjoyed two decades of strong economic growth, and the nation reached the status of “lower-middle-income countryâ€? in 2009. Aligned with that economic growth is a sharply declining poverty rate. Government policy provides for a transition from a centrally planned socialist economy toward one that is increasingly market-oriented. Part of this is a process of devolution of decision making to lower levels of government. Aggregate population growth is not high, but the population is rapidly moving into urban centers and leaving agriculture for industry and services. The overall growth of the economy, population growth, urbanization, and industrialization are all combining to increase air and water pollution and the extraction of natural resources. To some extent this is counterbalanced by increasing efficiency in the use of natural resource and technological progress. But the net result is increasing pressures on the natural resources base and pollution. In addition, climate change will increasingly add the need for adaptation to sea level rise, salt water intrusion, and changes in precipitation and temperature. These issues prompt a reform agenda that is outlined in the following chapters, with a focus on three themes: economic efficiency, environmental sustainability, and social equity (“the three Esâ€?).Vietnam is already engaged in a dynamic reform process. This report aims to build on and reinforce that momentum. In very broad terms, this reform agenda for natural resources management involves: A public management focuses on better administrative coordination and enhanced data gathering, analysis, and public dissemination to support functioning markets and efficient public decision making. This will contribute to all of “the three Es.â€? The assignment of clear and more secure long-term property rights and an increase in the use of market prices to provide incentives for investment, growth, and decentralized solutions. This is fundamental for greater efficiency. Enhancement of environmental regulatory implementation to close the gap between theory and practice; assigning values to the environment where markets fail to do so; scaling up of co-management schemes in forestry and marine resources and of payments for environmental services; and the integration of climate change in public planning. These are fundamental to environmental sustainability. Community benefits sharing schemes, fair-market value compensation for property expropriation, improved information access, transparency in governance, and public participation. These are fundamental measures to ensure equity in natural resources management. Vietnam’s economic growth has been 1993 to about 14 percent in 2008.3 Inequality spectacular in the last couple of decades, increased only moderately during this time.4 reaching more than $1,000 per capita in 2009.1 Real growth in the gross domestic product (GDP) Along with the impressive economic growth, the was about 8 percent in 2005–08, and this intensity of use of some basic natural resources weakened only somewhat in 2009 in spite of the such as land, water, and energy to produce one recession. For 2010–11 GDP growth is forecast to unit of economic output in Vietnam tended to 6–7 percent.2 Along with GDP growth, poverty decrease during 1990–2007. In other words, the has fallen drastically—from almost 60 percent in country tended to use fewer resources to N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 19 Figure 1.1. Intensities of resource use, 1990–2007 Source: UNESCAP & CIEM 2009. Figure 1.2. GDP and absolute resource use indexes (1990 =1) Source: UNESCAP & CIEM 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T 20 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW Figure 1.3. Pollution intensity, 1990–2007 Source: UNESCAP & CIEM 2009. Figure 1.4. GDP growth and absolute air pollution indexes (1990 =1) Source: UNESCAP & CIEM 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 21 generate $1 million of GDP (Figure 1.1). This is residents in 2025.9 The share of agriculture in GDP partially explained by a structural shift from declined to 22 percent in 2008, while industry’s agriculture toward industry and services.5 share reached 40 percent, and services accounted for almost the same share.10 Notwithstanding these signs of increased resource use efficiency, the absolute level of Another important social dynamic is resource use continued to increase (Figure 1.2). decentralization of decision making. The Vietnam Development Report 2010: Modern Institutions Measures of air pollution intensity show a mixed focused on devolution and accountability—and picture during 1990-2007, but the rapid growth of the reader is referred to that report for an in- the economy implies that the absolute levels of depth treatment of this subject.11 However, it pollution are rapidly increasing (Figures 1.3 and 1.4). bears recalling here that this process has involved decentralization of decision-making powers to The government’s Socio-Economic Development provincial and lower levels of government, Plan (SEDP) 2006–2010 and the draft SEDP 2011– administrative and service delivery units, the 20156 detail the transition toward a middle- courts and elected bodies, the media and civil income country, based on a market economy society, and all the way down to firms and with a socialist orientation. This development farmers. This implies that people who are closer builds on the successes of the renovation process to facts on the ground, and who can adjust with initiated in the late 1980s (doi moi) while also more flexibility to opportunities and changing preserving the strong poverty-reduction focus. circumstance, are more empowered. However, The SEDP sets out four broad objectives: to there are important counterpoints to the improve the business environment; social advantages of decentralization. First, lower levels inclusion; natural resources and environment of government may not be able to capture the management; and governance. Since the turn of benefits of, for example, the larger river-basin the century, there has been increased reliance on perspective on efficient allocation of water market mechanisms, development of a multi- resources. Second, lower levels of government stakeholder economy, and further integration may come to subsidize an over establishment of, with the region and the world. For example, for instance, fishing capacity or a fisheries Vietnam joined the World Trade Organization processing industry based on their local interests. (WTO) in 2006. The role of the state sector in Hence while the overall tendency of allowing manufacturing has declined from more than half more decentralized decision making is beneficial, in 1995 to about one-third in 2006, as private there are cases where the national interests sector growth has outpaced the state sector.7 require centralized management. The population in 2008 stood at about 86 million Taken together, population growth, urbanization, people, growing at slightly more than1 percent and industrialization have had significant a year.8 Behind this aggregate are rapid changes impacts on the natural environment. The most in the location and employment of the serious pollution problems arise in and around population. The definition of “ruralâ€? and “urbanâ€? Ho Chi Minh City and Hanoi. By sector, the most is somewhat arbitrary and subject to dispute. serious water pollution—measured as biological However, it seems clear that urbanization is oxygen demand—emanates from the progressing rapidly. Official figures show a production of textiles and food. Total suspended growth in urban population from 30 percent solids are mainly a product of the furniture and today to a projected 50 percent by 2025, at an food industries.12 The pressures on natural annual growth rate of more than 3 percent, with resources—agricultural land, natural forests, a likely total of more than 50 million urban fisheries, and mineral resources—are also N AT U R A L R E S O U R C E S M A N AG E M EN T 22 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW increasing.13 This development is also sustainable? There are several approaches to threatening biodiversity in a country with responding to that question. One is to take an globally significant amounts of it, as nearly 10 “adjusted net savingsâ€? approach.17 Figure 1.5 percent of the world’s mammal and bird species summarizes the overall picture by adjusting the are found in Vietnam.14 traditional savings measure in several ways. It adds the investment of resources in education (as It should be recalled that Vietnam operates in an recurrent expenditure), but subtracts for costs for international context. The entire economy is air pollution (the cost of particulate matter increasingly integrated into the global system, damaging human health) and the generation of particularly since joining the WTO. The links are carbon dioxide that contributes to climate also quite strong in terms of natural resources change. It also subtracts the depletion of management. Most of Vietnam’s surface water minerals and forest resources above sustainable resources emanate in foreign territory. Vietnam yield. The income from them represents the will be affected by the massive hydropower plans depletion of a resource, not sustainable income. under way in the Mekong River. The wood processing industry of Vietnam is quite strongly The result is a large differential between the import-dependent for raw material. In addition, traditional savings measure (gross savings as many of its products are intended for export, and percentage of the gross national income (GNI)) new legislation in those markets is placing new and the adjusted savings. Still, net savings are demands on Vietnam. The marine fisheries and strongly positive at about a 10–17 percent rate of aquaculture industries are also very export- GNI in the last decade. But this can be compared oriented, and the former competes with foreign with the level of more than 22 percent for the fleets in international waters. Again, some entire group of lower-middle-income countries important marine products export markets will to which Vietnam now belongs. The East Asia & require proof of sustainable resource Pacific Group shows an even higher adjusted net management in Vietnam. The mining industry is savings rate, of almost 29 percent. Comparisons also strongly export-oriented. As shown in detail can also be made for 2008 with China (35 in the statistical appendix to this VDR, crude oil— percent), Indonesia (minus 2 percent, due mainly the export value of which swings considerably to considerable energy resources depletion), and from year to year—fell to a second place in 22 percent for the Philippines. Comparisons can exports after textiles and garments in 2009. also be made with high-income countries for Marine products occupied the third place, context. For example, the USA shows an adjusted followed by footwear, handicraft and electronics. net savings rate of about 1 percent of GNI in 2008 Not far behind were rice and wood products.15 (mainly due to low gross savings), while France registers about 10 percent.18 The conclusion is Sustainable Use of Natural therefore that Vietnam does meet this type of “sustainability testâ€? but does not compare well Resources with several other countries in its own income “Sustainable developmentâ€? has many definitions. group. However, this picture omits certain An often quoted interpretation is from the World aspects, such as depletion of marine resources, Commission on Environment and Development degradation in the quality of non-timber forest in 1987, as “… development that meets the needs resources, and the impacts of water pollution. of the present without compromising the ability The appropriate adjustments for these factors of future generations to meet their own needs.â€?16 would vary considerably across countries. But general definitions need to be complemented by specifics on measurements to Another approach to measuring environmental be of operational use. Is Vietnam’s development sustainability is the Environmental Performance N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 23 Figure 1.5. Vietnam: Gross and net savings, 1999–2008 Source: Adapted from World Bank 2010g. Index (EPI).19 This measures countries’ Vietnam has high scores in some areas like performance level relative to their established forestry and agriculture. In the former, the score environmental policies targets. There are two is related to forest cover change and growing core objectives of environmental policy: stock change, and as discussed in the forestry environmental public health and ecosystem chapter, Vietnam has invested heavily in vitality. Under these core objectives, the EPI is reforestation. However, this does not prevent the based on the weighted scores for 10 policy goals quality of natural forests from degrading. In based on their underlying indicators: the agriculture, the score is related to water use environmental burden of disease, water intensity in agriculture, subsidies, and pesticide resources for human health, air quality for human regulations. Vietnam receives much lower EPI health, air quality for ecosystems, water resources ratings in sectors like fisheries, climate change for ecosystems, biodiversity, forestry, fisheries, (carbon dioxide (CO2) emissions per kilowatt- agriculture, and climate change. hour, industrial greenhouse gas (GHG) emissions intensity), air pollution effects on ecosystem, and Vietnam is ranked eighty-fifth among 163 marine protection. countries in the 2010 EPI rankings, with a score of 59. Some of the highest-ranking countries are Against this backdrop of overall sustainability Iceland, Switzerland, and Costa Rica, in concerns and the targets set in the SEDP, the decreasing rank order, with 94 being the highest specific theme of this VDR is natural resources score. Countries with the worst environmental management. As documented in prior VDRs, performance are Sierra Leone, Central African there is much progress to note by way of growth Republic, and Mauritania, in increasing rank and poverty alleviation, but there are also order, with the lowest score being 32. Regional remaining institutional weaknesses that hamper comparisons can be made with the Philippines development and diminish the quality of growth. (66), Thailand (62), Lao PDR (60), China (49), The main question that the VDR poses is Indonesia (45), PNG 44), Mongolia (43), and therefore: How can natural resources be used Cambodia (42). Hence, in that comparison, efficiently to alleviate poverty in a manner that Vietnam does reasonably well. is environmentally and socially sustainable? An N AT U R A L R E S O U R C E S M A N AG E M EN T 24 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW examination of that question entails addressing Climate Change several sub-themes that will run through the different chapters (“the three Esâ€?): A cross-cutting theme that is of relevance throughout this report is climate change. All the incentives for efficient utilization to chapters include some mention of its relevance. promote economic growth This theme has attracted an enormous amount holistic management for environmental of attention, and there is an impressive body of sustainability recent publications that deal with it.22 Hence, this report provides only a very succinct overview. community rights, participation, and benefit sharing for social equity. It has been estimated that the cost for Addressing such broad issues requires a clear developing countries of adaption to climate structure for the report. This report is focused on change is on the order of $75–100 billion per year a subset of the EPI—natural resources—rather from 2010 to 2050.23 This is a large sum, but small than environmental health, which is dealt with in comparison to the size of the economy. More- only marginally. The remainder of the report is significant impacts in the very long term cannot organized in the three main themes just be ruled out. But these would have to be viewed identified. These are further broken down into in the larger perspective of fundamental social five sectoral chapters on land, water, forests, and economic change over such time periods. marine, and mineral resources. The choice of For Vietnam, a recent national study concluded sectors is pragmatic: our counterpart institutions that the impact of climate change on real GDP by tend to be organized along sectoral lines, as is the 2050 would be on the order of a 1–3 percent loss competence of resource persons. Furthermore, compared with the baseline of no climate the resources available for the report are limited, change. 24 and so is the time we have to prepare the report. Not explicitly shown in the figure are some Climate change will add another complication to themes that cut across chapters, such as climate natural resource management, increasing over change, governance, and institutional analysis. time and involving aspects of mitigation and adaptation. Much is uncertain about the long- Several potential topics are not addressed in term impacts of climate change, but clearly chapter format, if at all. There is no dedicated temperatures will rise, perhaps by 2–4°C by the chapter on coastal zone management, although end of this century. The mean sea level rise by the substantive issues pertaining to it—land use 2100 is projected by different sources to be about planning, sea level rise, salt intrusion, mangrove 18–70 centimeters, and 100 centimeters or more restoration, and so forth—are discussed in the is conceivable in a high-emissions scenario and relevant sectoral chapters. Solid waste is not when considering the effects of land ice melting. treated in its own chapter, but it clearly has Precipitation forecasts differ considerably among implications for water pollution, which is models, but annual totals are expected to discussed as part of the water chapter. Urban air increase everywhere in Vietnam, with a tendency pollution is not yet reaching the same level of for drier weather in the dry season in the south concern as water pollution, but it is documented and wetter weather in the wet seasons in the that urban air quality in Vietnam is characterized north. It is not clear from localized models if the by high levels of particulate matter, often frequency and intensity of cyclones in Vietnam exceeding annual Vietnam standards and World will change, but global analysis suggests that Health Organization guidelines.20 The available warmer seas are likely25 to fuel more-intensive information about indoor air pollution is typhoons. 26 insufficient for a treatment here.21 N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 25 Vietnam is not a significant emitter of as atmospheric CO2 concentration will affect crop greenhouse gases in the global perspective. productivity in ways that could be both positive According to the World Resources Institute, and negative. In the absence of adaptation Vietnam emitted about 177 million tons of CO2 measures, yields will likely be reduced for rice, equivalents (CO2e) in 2005, the latest year for maize, cassava, sugarcane, coffee, and vegetables. which internationally comparable data are All predictions are quite sensitive to climate available.27 That put Vietnam at rank 35 in change projections, and as these currently vary absolute emissions in the world, with about 0.5 significantly, crop yield estimates similarly need percent of the global total. The emissions per to be considered as very tentative.30 capita stood at about 2 tons of CO2e, which ranked Vietnam one hundred and eleventh in the This information needs to be interpreted in a world. The GHG emissions are expected to larger context. This includes considering changes increase considerably over time. 28 in diets and consumer preferences with falling demand for rice, market liberalization, trade Even small emitters can contribute to global (which will expose Vietnam to lower-cost efforts to stem climate change through cost- competition), and conversion opportunities to effective mitigation measures that have domestic aquaculture and more salt-tolerant varieties. co-benefits as well, for example due to lower These forces are likely to be of more importance energy costs and reduced air pollution. The in the next few decades in determining the global cost of addressing climate change will development of Vietnamese agriculture. Similar decrease substantially if all countries join hands arguments can be raised for water management in seeking out the least costly investments. and urban planning. This is not to dismiss the However, this will also require very significant climate change concerns, which are real and transfers from industrial countries to the lower- legitimate. Investments in long-lived income countries implementing such measures. infrastructure—ports, major roads, hydropower, The relevance of mitigation in relation to natural irrigation systems, and flood protection, as well resources management lies primarily in the forest as in mangrove rehabilitation, climate-resilient sector. The system of REDD, reduced marine protected areas, and agricultural deforestation and forest degradation, could research—all need to incorporate long-term potentially generate significant income if projections for climate change. Land use international agreements are reached. The planning needs to consider suitable locations for potential contribution from mitigation in urban expansion. Even in the short run, there are agriculture is expected to be limited. The gains to be made from investing in resilience to potential in other sectors is outside the scope of counter climate variability and extreme events. this report.29 Strengthening of disaster risk management is a natural entry point for long-term adaptation.31 The natural resources management climate change agenda for Vietnam is primarily one of Natural Resource adaptation, with the most relevant sectors being agriculture and water management—including Management for urban flood management. Sea level rise and salinity intrusion are happening and are Sustainable Growth increasing, with a significant impact likely by Some common threads in this VDR are efficiency, 2050, particularly on rice-growing land and also environmental sustainability, and equity. This on important lowland and coastal towns and section highlights how these themes tie the cities. Changes of rainfall and temperature as well chapters together. N AT U R A L R E S O U R C E S M A N AG E M EN T 26 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW Efficiency Water is sometimes considered a “freeâ€? good or a gift of nature. While rain falls without charge, Economic theory teaches us that economic nature does not unfortunately provide the efficiency is dependent on complete, exclusive, storage, canals, pipes, and taps for free. Hence, transferable, and enforced property rights. These prices of irrigation water and urban water “model conditionsâ€? are of course not fulfilled in services need to gradually reflect the economic real world economies, but a movement toward cost of provision. Otherwise, operation, them is generally helpful in enhancing efficiency. maintenance, and future capital investment will Vietnam is clearly on its way toward defining not be undertaken. A vicious circle of poor private property rights and allowing markets to service and low willingness to pay will remain. determine prices for the exchange of property, Private investors who could provide efficient goods, and services. Each chapter in this report services will shy away if they cannot cover their addresses reforms that could enhance efficiency. costs. But as such services will have a natural monopoly, they will also have to be carefully The land chapter documents important regulated by the public sector. Vietnam needs a progress in creating more-efficient land markets. strategic development plan for urban water However, it also points to significant challenges supply with priorities clearly established for that remain in providing Land Use Rights reducing non-revenue water and the provision of Certificates (LURCs) to all stakeholders. The new infrastructure. Greater priority should be government is preparing a new Land Law, which provided to towns under district control. presents an opportunity to address conditions that affect tenure security. Agricultural land Integrated planning based on improved data would benefit from more secure tenure to collection also has an important role to play. The encourage investment and enhance productivity. access of competing interests to water is best Allocation across land uses could also be more addressed at the river basin scale. The water efficient if the current restrictions regarding rice chapter points out that river basin planning can cultivation were lifted. For urban land, the be a very powerful integrating measure for water chapter discusses improvements in management management. It can break down the to reduce the high number of disputes and to administrative divisions between governments enhance transparency. Clarification and and between sectors. refinement of the state’s recovery powers for economic development purposes could also As for forest management, the chapter points provide greater security. Land prices based on to the need for reforms to enhance the efficiency market signals rather than administrative of plantations through more consolidated decisions would guide land allocations towards leasing arrangements. Furthermore, the potential its highest value use. All these measures can of forests held by State Forest Enterprises could contribute to enhancing the efficient use of land. be more efficiently used by allocation of forests to communities or leasing to investors with The water chapter points to the ongoing work on resources to enhance productivity. There is a new National Target Program for water considerable room for improving plantation management and the revision of the Water Law as productivity through better plant material and two strategic opportunities to enhance water species-sitting. It is recommended that the forest management. From an efficiency perspective, extension system and nursery advisory centers there is a need to better define user rights to water should be strengthened in support of these through a licensing system. This would create a reforms. The forest chapter also highlights a more secure situation for water users and mitigate concrete example of a successful smallholder the tendency for the over extraction of water. group management scheme. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 27 The marine chapter deals with the fact that in the long run or about the environmental costs capture fisheries are based on a fugitive, of growth. An economy can achieve high growth common property resource, where exclusive rates and profits while liquidating its natural property rights are difficult to define and enforce. capital and polluting the environment. The real This also relates to marine biodiversity. costs do not show up in the traditional system of Nevertheless, the chapter provides hopeful national accounts, and the environmental examples of co-management schemes where damage may not have (a direct) market price. But communities have been given defined property ultimately such costs show up in the economy as rights. This has provided incentives for more- well, as human health is damaged and long-term efficient management that limits overfishing and resources are exhausted. For example, the the associated dissipation of rents in fisheries. In economic burden of indoor and outdoor air this context, it is important that government pollution and of poor water, sanitation and subsidies are reformed not to further increase the hygiene amounted to 1–4 percent of GDP in a pressure on this resource but rather to provide sample of 11 developing countries.32 A alternative means of supporting the families of sustainable economy requires that pollution fisherfolk. Making more-efficient use of marine does not exceed the absorptive capacity of the resources also entails moving up the value chain environment, that renewable resources (fish, by gradually improving the entire chain of forests, and so on) are harvested at no more than capture, storage, processing, packaging, and their reproductive level, and that the profits from marketing. Vietnam has been very successful in nonrenewable resources are invested in other this regard so far and needs to build on that forms of resources (such as human capital). experience. The land chapter points out that the basic The mineral resource chapter documents the principles of the environment impact assessment rich mineral endowment of Vietnam and the (EIA) should be applied to all planning dominance of oil, gas, and coal in current development proposals, as an integral part of the exploitation. It argues that the mineral wealth of basis for approval at higher levels. A strategic the country could be used more efficiently under environmental assessment (SEA) should be done a regime with flexible “resource assessmentsâ€? for the national and sectoral land use plans for rather than the current model of prescriptive 2011–15 and in line with the Law for Master Plans. The former would be more open to Environment Protection 2005.33 Vietnam has market-driven exploration and adjustments to progressive legislation on EIA and SEA, but localized information. In finalizing the new further efforts are needed to strengthen Mineral Law, the government could strengthen implementation capacity. These assessments security of tenure and establish objective criteria offer an opportunity to take into account the for evaluation of mine title applications. Vietnam expected impacts of climate change on land could do more to mobilize private sector resources. The land chapter illustrates the involvement in mineral exploration. Clarifying conflicting projections with respect to institutional mandates in the minerals sector is agricultural impacts, but the downside risk also a step in the right direction. dominates. It argues in favor of planning for greater resilience through investment in crop Environmental research and water management. Sustainability The water chapter illustrates that water Using imperfect measures of efficiency such as pollution has reached serious levels. To address financial profits and GDP growth does not tell us this, current laws and regulations—which are anything about the sustainability of the economy often progressive—need to be properly N AT U R A L R E S O U R C E S M A N AG E M EN T 28 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW enforced. The already existing SEA and EIA contributing to such pressure need to be system needs to be more effectively removed. The efforts to secure export markets for implemented to close the gap between theory marine products are linked to the quality of and practice.34 The same applies for the use of environmental management. This includes financial instruments to encourage more efforts to extend eco-certification through the effective treatment of polluted water. Effective Marine Resources Council and other certification enforcement of these provisions will also create avenues. Expanding and funding the emerging incentives for investment in cleaner technology system of Marine Protected Areas that is under over time. Vietnam’s water management is way is an important initiative that deserves full closely linked to that of other Mekong River support from the international community. Near- states, as a major part of its water enters into the shore mariculture may also provide an attractive country from them. The threats to delta sediment option to combine environmental protection deposition in the Mekong River from the massive with private and community-level incentives. The hydropower expansion plans upstream will have chapter also highlights a few priority species that to be carefully studied and discussed within the are particularly worthy of protection, such as sea Mekong River Commission. turtles, dugongs, sharks, and marine species that are attractive in the international aquarium trade. Much of terrestrial biodiversity is harbored in the nation’s forests. The forest chapter argues for With respect to environmental sustainability, the reform of the current strict forest classification mineral resources chapter notes that Vietnam system into one where “protectionâ€? objectives has had best-practice legislation on the books could be integrated into “productionâ€? forests. It is since 2005. For example, all mineral Master Plans also recommended to consolidate the currently require a strategic environmental assessment. fragmented management of the Protected Areas However, there is a need to close the gap system. The piloting of payments for forest between good theory and insufficient practice in environmental services needs to be scaled up to this area through capacity building programs for provide further incentives for conservation. The government staff and logistical support for potential to tap into new and possibly significant mining inspections. Capacity building is in financing through Reduced Emissions from particular needed for provincial authorities Deforestation and Forest Degradation Plus where mining activities are strong. The (REDD+)35 needs to be captured. However, this application of fees charged to mining operators will require improved data capture and analysis, for environmental damage also requires more along with monitoring of the forest resource to effective implementation. meet international requirements. Long-term climate change impacts on forest biodiversity Equity also need to be considered to counter habitat changes that will affect biodiversity, increased Equity is not only about income distribution— forest fires in drought-prone areas, and forest which is relatively equal in Vietnam—but also pests. about equal access to information, services, participation in decision making, economic The marine resources chapter highlights a opportunity and benefit sharing. series of reforms required to project fisheries and marine biodiversity. Improved data collection As the land chapter discusses, progress in land and capacity for analysis are needed to enhance management has provided an equitable planning in this sector. But the overall picture reallocation of agricultural land from that emerges is that the pressure on the fisheries cooperatives to farmer households. Vietnam has resource needs to diminish, and subsidies conducted one of the largest land titling programs in the world. However, unequal access N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW 29 to information can have a critical impact on the Environment could be strengthened to provide ability to make good use of land markets. An a single consistent process with respect to important aspect of gender equity is the Land allocation and planning of forestland. Law provision of registering both spouses’ names on the LURC. It will be important to bring all Marine resources are under severe pressure in LURCs into compliance with this provision. It is Vietnam, and relatively poor in-shore fishers are recommended to develop a national policy on particularly vulnerable in the increasingly compensation and resettlement based on the competitive hunt for fish catch. This is yet principle of market price compensation. another argument for strengthening their property rights. The marine chapter provides The water chapter highlights that access to some examples of successful co-management in clean water and improved sanitation is highly fisheries. Equitable sharing of benefits is an unequal. Concerted efforts are needed to raise important feature of this approach, and legal the standards of water supply and sanitation reform is needed to support this development. facilities, especially in rural communities. Not only investments in hardware are required; the The chapter on mineral resources proposes the chapter points to the need for raising awareness establishment of community development about environmental health to ensure behavioral agreements, with reference to successful change to match the investments. It also international experience. These can ensure local highlights that integrated water resource communities of appropriate benefit sharing. management provides the opportunity for Addressing the insufficient database on mining communities to participate. It can provide the would also contribute to efforts to enhance the integrating framework for water-dependent social impacts of mining. Finally, joining the socioeconomic development planning and for Extractive Industries Transparency Initiative poverty reduction interventions. There is provides an opportunity to demonstrate publicly considerable scope to increase food production, how the mining sector is contributing to the tax enhance livelihoods, and reduce poverty in base of the country and therefore to the benefits existing irrigated areas. The preparation of a of the national population. long-term irrigation subsector reform and financing plan is important and could contribute A Reform Agenda to participatory planning and implementation. Vietnam is already engaged in a dynamic reform The forest chapter advocates reforms to further process, and much of what is proposed here is strengthen community involvement in forestry. well in line with the directions set out by the This entails a particular focus on mountainous MoNRE 2010 Plan of Action.36 This report aims to areas where some of the poorest people in build on and reinforce that momentum. In very Vietnam live. Coastal zones, with their potential broad summary, this reform agenda for natural to rehabilitate and expand mangrove forests, also resources management involves: deserve focus. Co-management arrangements require a clear policy framework and the A public management focuses on better formalization of the role of community administrative coordination and enhanced representatives. Longer-term leasing data gathering, analysis, and public arrangements, when appropriately coupled with dissemination to support functioning payments for forest environmental services, markets and efficient public decision should be encouraged. Cooperation between the making. This will contribute to economic Ministry of Agriculture and Rural Development efficiency, environmental sustainability, and the Ministry of Natural Resources and and social equity. N AT U R A L R E S O U R C E S M A N AG E M EN T 30 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW The assignment of clear and more secure CECOD (Centre for Environment and Community long-term property rights and an increase Development), KIET (Korea Institute for Industrial in the use of market prices to provide Economics and Trade), and KECO (Korean incentives for investment, growth, and Environment Corporation). 2010. Vietnam: Industrial decentralized solutions. This is fundamental Development and Environmental Management. Hanoi and Seoul. Processed. for greater efficiency. Cira, Dean, and Stephen Karam. 2010. “Urbanization Enhancement of environmental regulatory in Vietnam: A Spatial Perspective on Urban Strategy.â€? implementation to close the gap between SEDP Workshop Presentation at the Viet Nam theory and practice; assigning values to the Academy of Social Sciences, April 1. environment where markets fail to do so; scaling up of co-management schemes in Clausen, A., H. Vu, and M. Pedrono. 2010. “An Evaluation of the Environmental Impact forestry and marine resources and of Assessment System in Vietnam: The Gap between payments for environmental services; and Theory and Practice.â€? Environmental Impact the integration of climate change in public Assessment Review, doi: 10.1016/j.eiar.2010.04.008. planning. These are fundamental to environmental sustainability. Dusik, J., and J. Xie. 2009. Strategic Environmental Assessment in East and Southeast Asia: A Progress Review Community benefit-sharing schemes, fair- and Comparison of Country systems and Cases. World market value compensation for property Bank Discussion Papers. Washington, DC. expropriation, improved information EIU (Economist Intelligence Unit). 2010. Country access, transparency in governance, and Report: Vietnam. London. public participation. These are fundamental measures to ensure equity in natural FSPS (Fisheries Sector Programme Support). 2009. Briefing Document on the Current Status of Vietnam’s resources management. Fisheries Sector. Processed. Hanoi. GoV (Government of Vietnam). 2009. National Target Program (NTP) to Respond to Climate Change. Official Decision No: 158/2008/QD-TTg, December 2, 2008. REFERENCES Hanoi. ADB (Asian Development Bank) and CAI (Clean Air GSO (General Statistics Office) 2008. Result of the Initiative)–Asia. 2006. 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World Commission on Environment and Hanoi. Development. 1987. Our Common Future. Oxford University Press. Oxford and New York. World Bank. 2005a. Going, Going, Gone…The Illegal Trade in Wildlife in East and Southeast Asia. Hanoi. N AT U R A L R E S O U R C E S M A N AG E M EN T 32 CHAPTER 1 : NATURAL RESOURCES MANAGEMENT—AN OVER VIEW CHAPTER 2 LAND MANAGEMENT L and management37 in Vietnam has gone through dramatic changes since the start of the economic reform process in mid-1980s. The equitable reallocation of agricultural land from cooperatives to farmer households in early stages of the on-going economic reform process established a solid foundation for rapid economic growth and poverty reduction. This has been followed by one of the largest land titling programs in the world. The fundamentals have been put in place for land management in a transition economy, and progress has been impressive. However, the land reform policy remains incomplete and there are still considerable gaps between the land policies and their implementation in localities. Furthermore, the future challenge is how Vietnam can stimulate a more-efficient use of scarce land resources, promote an environmentally sustainable land management—especially in the face of climate change—while paying due attention to social equity. This is a formidable agenda, and this chapter focuses largely only on matters of efficiency, with secondary treatment of environmental sustainability and equity. Climate change is addressed more holistically as part of the strategic overview in Chapter 1. To address future challenges, a reform agenda is proposed as a contribution to the ongoing policy and institution development efforts led by the Vietnamese government. The proposed five reform areas do not fall perfectly into the three categories of efficiency, environmental sustainability, and equity, as each reform area may contribute to more than one category. The efficiency reform agenda includes enhancing land use rights and modernizing land administration as the basis for more-efficient land markets. Strengthening land and property taxation is also necessary as incentives for more efficient land use and instruments of fiscal improvement. Environmental sustainability will require improving land use planning to regulate environmental impacts from various forms of land use and to integrate climate change concerns. Finally, there is an important equity agenda in community land allocation and titling, and improving land acquisition and compensation. Vietnam’s rapid and sustained economic growth area of about 33 million hectares and a and poverty reduction in the last two decades population of 86 million (in 2009), Vietnam’s land have been rooted in land management reforms. endowment is one of the world’s lowest on a per In rural areas which account for three-quarters of capita basis. Less than 0.3 hectares of agricultural the total population and the vast majority of the land per person is available.38 However, high land poor, agriculture is the main livelihood for more fertility combined with favorable climatic than half of the country’s work force. In rapidly conditions and labor abundance allows Vietnam growing urban areas, greater tenure security to secure national food security and compete represents a prerequisite for sustainable successfully in a number of important improvement of housing and environmental agricultural commodities, including rice, cashew, conditions. coffee, rubber, and pepper. The land use intensity in Vietnam tends to be Land Resources and high, particularly in wetland rice agriculture and human settlement centers. The on-going Dynamics economic reforms since the early 1990s have “Tấc đất tấc vàngâ€? (an inch of land is worth an inch been accompanied with further intensification of of gold) is a very popular Vietnamese proverb land uses. First, most of suitable lands have been about the value of land resources. With the total put under utilization, raising the areas of production and conservation forestland and Figure 2.1. Vietnam: Land use, 1993 and 2008 Source of data: GSO 1994 and 2009. agricultural land in the expense of the so-called Land allocation played the primary role in unused land. This led to unprecedented changes providing farmers’ access to agricultural land in among land categories and subcategories as North and Central Vietnam, where collectivized summarized in Figure 2.139). However, the total agricultural land was redistributed to farmer land area devoted to rice has been topped at 4.1– households in the late 1980s–early 1990s at the 4.2 million hectares since 1993 and any beginning of the on-going economic reform considerable increase would be associated with process.40 State land allocation is still one of the large investments and environmental costs. most critical steps for firms and other Second, within each category land uses have also organizations to get access to land.41 intensified. For example, the average number of paddy crops has increased to almost 2 per plot- According to the General Statistics Office, 72 year. Average yield of paddy per hectare reached percent of the total land area had been allocated 4.9 tons per hectare in 2006-7–higher than Asia’s to land users by 2009. However, the progress was average yield of 4.2 tons per hectare according uneven among land categories. Almost all to the FAO. Third, there was also the accelerating agricultural and residential lands but only 78 conversion of agricultural land into higher-value percent of forestland and 45 percent of nonagricultural land, especially at the urban nonagricultural lands had been allocated or fringe. During 1993–2008 almost half a million rented. The distinctive feature is that, compared hectares of agricultural land was converted into with many other developing and transition urban, industrial, or commercial land. countries, in Vietnam cropland has been allocated quite equitably among farmer Equitable access to land and secured land tenure households.42 have been vital factors behind Vietnam’s rapid and sustained economic growth and poverty However, the state’s formal recognition of the reduction in the last two decades. Access to land land user’s rights through the issuance of Land is obtained through land allocation by the state, Use Right Certificates (LURCs), which are family heritage or grant, land market absolutely necessary for secured tenure and transactions, and land reclamation. The former formal land transactions, including legal means the assignment by an authority of the protection of land use rights and access to formal land usage(s) of specific land plot(s) to particular credits, is much slower. (See Figure 2.2.) By 2010, land user(s), often through an administration act. almost 31.3 million LURCs had been issued, N AT U R A L R E S O U R C E S M A N AG E M EN T 36 CHAPTER 2 : LAND MANAGEMENT Figure 2.2. Progress of land allocation and issuance of LURCs in total and by category, December 2009 Source of data: GSO 2009 and MoNRE report 2009. covering only half of the total land area (and the industrialization and the economic total number of land parcels), with the categories transformation into a market-oriented economy, of nonagricultural land other than residential covering comprehensively all the legal, land use land and forestland lagging behind. The issuance planning, land finance, and land administration of LURCs with both spouses’ names—an systems. Decree 84 in 2007 helps address issues important initiative to promote gender equity— associated with the implementation of Land Law also lags behind the government’s schedule. 2003. The current land policy framework places Hence, at this point only about 30 percent of the an emphasis on the role of state and pays less LURCs granted are with names of both spouses. attention to the promotion of the participation Still, this marks significant progress.43 of other stakeholders in land management or to effective and sustainable use of land. Policy and Institution Institutional Setting Settings The institutional arrangements for land Land Policy management are characterized by multiple institutional actors with segmented mandates. There has been a significant evolution in the land Land Law 2003 does separate the state policy framework in Vietnam over the past 50 management and public service provision and years. (See Table 2.1.) A comprehensive policy establish a unified and decentralized system of framework for land management in a transition state land administration and management at all economy was established in the last two levels, from central to commune. However, the decades. Land Laws 1987 and 1993 paved the system continues to evolve. way for reallocating cooperative land to farmer households for their long-term use and Concerning the state land management, the land recognized a range of their land use rights. The policy formulation and implementation Land Law of 2003 supports the country’s N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 37 Table 2.1. Vietnam’s land policy evolution, 1945–2007 Year of introduction and geography Main policy changes introduced 1952–58 in North and 1956–74 in South Redistribution of land from landlords to the poor and landless famers and reduction of land taxes 1958–1975 in North Collectivization and nationalization of land 1975–80 Gradual collectivization and nationalization in the South 1981–92 Establishing the whole nation’s ownership over land resources and reallocating cooperative land to farmer households for their long-term uses under contract arrangements 1993–98 Formalizing the longer-term land use rights (sale, transfer, lease, inheritance, and mortgage) and the right to receive compensation in the case of state land reacquisition; granting of LURCs 1999–2002 Extending land use rights to include renting and broadening rights for project investors 2003 Recognizing spouses’ equal land use rights; promoting development of property markets in urban areas; setting up unified and decentralized land management system, and establishing the principle of land compensation on the basis of “market-based price of landâ€? 2007 Recognizing the land use rights of the users who do not have legal documents, promoting FDI in property development, setting up transparent procedures for compulsory land conversion and compensation, and settlement of land-related complaints and disputes supervision are concentrated at the central level. point for the administration of land resources, as But this role is distributed among a large number well as water and mineral resources. MoNRE’s of central agencies (such as the administration of General Department of Land Administration, natural resources, justice, construction, which was reestablished in 2009, is responsible agriculture, finance, and planning and for daily land resources management. The land investment) according to their general mandates. policy implementation responsibilities have been Among them, the Ministry of Natural Resources greatly delegated to provincial, district, and and Environment (MoNRE), established in 2002, commune people’s committees supported by represents the government’s designated focal their provincial/district departments for natural N AT U R A L R E S O U R C E S M A N AG E M EN T 38 CHAPTER 2 : LAND MANAGEMENT resources and environment and their commune These tend to make any livelihood benefits that cadastral officers, respectively. farmers gained short-lived unless they can switch to more suitable options.44 The environmental Land-related public services are provided by challenge is exacerbated by climate change. (See Land Registration Offices (LROs). By the end of Box 2.1.) While we give some attention to this in 2009, provincial LROs had been established in all the current chapter, a more holistic perspective provinces, while district LROs had been set up in is provided in chapter 1. one-third of the districts. But there are no uniform organizational, staffing, and service Third, to maintain and enhance principles of standards set up for LROs. It has been also widely equity in land use, it is vital that the public has recognized that the land management full access to relevant information and that institutions lack the capacities to meet increasing acquisition and compensation policies are fair demands from land users and to govern the and transparent. sector effectively. This leads to considerable gaps between land policy and its practical There are also more specific, short-term issues to implementation. be addressed urgently in three subsectors: Issues Agricultural Land There are three strategic medium- to long-term The agricultural land use rights are still development challenges facing land limited due to the rigid land use management. designation predetermined by the state, relatively short tenure period (20 years), First, the rapid growth experienced in the past and land use ceilings (2-3 ha/household), was based on an extensive use of natural inducing suboptimal use of agricultural resources, including land. There is now little land. “unusedâ€? land. To support future growth, land Underdeveloped rural land markets pose must be used more efficiently, and to obstacles for further agricultural accommodate the pressures of urbanization and productivity gains and inhibit labor the dynamics of the rural sector, efficient land mobility toward the higher wage non-farm markets will be essential. sector. Increasing concerns among policy makers Second, there is a need to put in place a more and a part of the public that land market sustainable land management system, liberalization in rural areas leads to particularly for the most fragile ecosystems such increasing landlessness, negatively as sloping land in the Northern Mountains and mangrove forests. There is emerging evidence of affecting the poor. land degradation due to unsuitable agricultural and land management practices. For example, Forest Upland water logging and nutrient imbalances are There are competing demands for preventing further land productivity gains in agricultural and forest uses from existing intensive irrigated rice plantation in the lowlands users (including ethnic minorities, local of Vietnam. Forest clearing and arrested crop farmers and dwellers, recent migrants, and succession, particularly when it is associated with State Forest Enterprises) and conservation the shift toward drier regeneration, lead to losses needs. Processes to resolve these of biodiversity in favor of Imperata grasslands competing demands in economically, and to soil erosion in the Northern Mountains. socially, and environmentally sound ways are underdeveloped. There are problems N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 39 Box 2.1. Climate change and agriculture Assessments of climate change impacts can be done using a set of models for changes in temperature, rainfall, river basin flows, and crops simulation, to estimate the impacts on crop yield. The main conclusions were that: Climate change impacts are region-specific and depend on which scenarios are chosen. The scenario chosen by MoNRE implies little damage or even improvements in crop production. Temperature increase is the main negative factor impacting crop yield. Country-wide rice yield decreases are estimated to 10–20 percent without carbon dioxide (CO2) fertilization, but less than 10 percent accounting for this factor. The MoNRE scenario, however, results in rice yield increases when CO2 fertilization is considered. Sea level rise and salinity intrusion could seriously affect about 500,000 hectares of rice cultivation area by 2050, affecting some 7 percent of the national production. These results should be interpreted along with other factors influencing rice production (as discussed more in Chapter 1). This study does not predict the impact for a specific year of extreme weather events and inundation. However, the study uses a baseline period of 1978–2007, so the impacts of historical events are implicit in the baseline. The policy conclusion is that Vietnam needs to prepare for a variety of outcomes from climate change by planning for greater resilience in land management. This includes land use planning for sea level rise and saltwater intrusion; development of drought-, heat- and pest- resistant crop varieties; salt- and immersion-tolerant paddy varieties; improved conservation of water; irrigation; and better cyclone and flood forecasting. Source: Adapted from Zhu 2010. with interfaces between formal and Urban Land customary land management. The existing Vietnam faces the challenge of how to policy framework constrains the allocation integrate the widespread informal property of land to communal groups such as ethnic market in a formal framework without minorities who have long histories of losing the beneficial characteristics that community occupation of certain areas. have made informality the preferred Illegal or quasi-legal occupation, channel. The informal sector plays the displacement of long-term occupiers, and predominant role in urban land and the effect of new claimants in areas housing provision. The widespread traditionally occupied by communities informal property market operates (often ethnic groups) are leading to an relatively well to allocate urban living space increase in land disputes. but fails to provide affordable housing for The centralized approach to land use low-income groups, upgrading of services planning and land allocation/land and long-term urban expansion, and classification and fragmentation among address of environment issues. agencies in charge of various related issues Increasing demand on urban and peri- lead to difficulties in the application of urban land has created a speculative land efficient and equitable arrangements at the price boom in major cities that has not local level. been met with sufficient development of new peri-urban areas or densification of N AT U R A L R E S O U R C E S M A N AG E M EN T 40 CHAPTER 2 : LAND MANAGEMENT existing areas. This is inhibiting provision of rights in place and protecting private land rights. affordable housing and upgrading of services. Second, it is necessary to address significant limitations in the current land use rights, Poorly managed urban growth erodes the including restrictions on land use purpose and tax base and creates environmental duration, agricultural land use ceilings, right to hazards. Stringent planning and building compensation, and the government’s recovery requirements have encountered powers. Although the current tenure period of widespread evasion of the standards. agricultural land is expected to finish in a couple of years, unclear criteria and procedures for Ultimately these strategic challenges and short- extending the duration of land use rights term issues are interlinked in terms of causes, contribute to a perception of insecurity. On the consequences, and/or potential actions. An other hand, a simple mechanical extension of the exhaustive treatment of them all is not possible existing land tenure would not reflect here. To address the most immediately urgent considerable changes in the farmer households’ issues and those that have a good prospect of characteristics (such as size and labor force and seeing successful solutions, a limited group of occupation) which were the criteria for ensuring issues has been chosen. the equitable outcome of the land reallocation process two decades ago. Efficiency Reforms The restrictions on land use by the government’s Greater efficiency in land uses and land markets pre-determined land use purpose (especially on can be supported by enhancing land use rights, riceland) and the maximum areas of agricultural allowing market forces to play a greater role in land that households can hold prevent them land resources allocation, improving land from responding effectively to market signals administration, and enhancing land taxation. (such as switching from rice to higher-value crops or productions such as aquaculture).46 The Enhancing Land Use Rights existing tenure types do not cater for the multi- Securing complete and enforced land users’ purposes and functions of land resources as well rights is critical for increasing economic as complexities of a modern land market. The efficiency of the land resources utilization and separation of land and property rights, governed management. Land law reforms have by separate legislative regimes and institutional significantly broadened and strengthened the settings, is affecting the security and certainty of “bundle of rightsâ€? associated with land holdings, “rightsâ€? in the practice. Decision 88/2009/TTg on which, to extent, makes legal land users de facto the issuance of joint certifications of land use owners, despite the formal land ownership rights and ownership of properties attached to remaining in the state’s hands. But the rights are the land and the following implementation still incomplete and not always enforceable. Thus, circulars are a step in the right direction to there is an important policy agenda on clarifying address the latter issues. and enhancing the rights, and simplifying how they can be used and asserted. The government is preparing a new Land Law for a more mature market economy to be First, raising the general public’s limited considered in 2011–12. The opportunity to awareness about land policies, completing the remove various restrictions that affect tenure first land registration, and developing the security should be pursued. This is related to the capacity of the legal support systems to address type of user, type of use, duration of use, land disputes all are vital for putting land use payment of fees, amount of land in possession, N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 41 year assigned, and so on. Agricultural land should over the world since 2006.48 The main reason is be converted to longer and more secure tenure that the urban land market is rapidly expanding to provide greater security and to encourage but slowly maturing. Efforts to extend the formal capital investment, including investment in market for land have met with limited success, improving land fertility. This concerns agricultural and the absolute majority of land transactions production land, forestry production land, remain outside the formal sector. The urban land aquaculture land, and salt production land. market is more focused on investment in land Government should also consider removing the and property for commercial purposes being limit in the size allowed per household. A valid supported by evolving government policy and concern here is that the labor market needs to be legislation. But until recently there has been able to absorb the increasing number of landless limited public or private sector investment people. Hence, transformation needs to be occurring in the construction of affordable gradual. In urban land, it is essential to introduce housing for the majority of people. more-appropriate condominium tenures, and their management regimes are required to In contrast, the development of land markets in prevent future disputes. Clarification and rural areas remains less intervened upon by the refinement of the state’s recovery powers for government and fairly stable. Moreover, as it economic development purposes will provide helps address some inefficiencies created during greater tenure security. To ensure the full security the equitable cooperative land redistribution, the of land tenure, it is recommended to eliminate rural land markets produce positive impacts in the provision in the Land Law 2003 that “the terms of both efficiency and equity. This is People’s Committees which have authorization despite raising landlessness among the rural to issue LURCs also have right to revoke issued poor.49 Furthermore, poverty has been falling LURCs.â€? The right to revoke LURCs could be put among the landless, and this is more profound under the authority of the court only. where there are higher returns to schooling, Furthermore, new tenure types, such as marine greater equality in land and non-land inputs, and and infrastructure tenures, should be also more opportunities for farm household to take considered as part of the development of the up new opportunities in the labor market. In new Land Law. general, the emerging land market appears to be a positive factor in rural poverty reduction, and Developing Land Markets there is no proof that the rising rural landlessness has put a brake on overall poverty reduction. In There is a notable evolution of the formal fact, it is estimated that land market transactions mechanisms providing access to land through account for one-fifth of the rural poverty market transactions. Firms felt the risk of losing reduction in 1993–2004.50 land to expropriation was considerably reduced in 2008 compared with 2006. However, surveys The existing level of government control over the of firms continue to show that businesses face land and real estate markets is constraining their significant constraints in acquiring land assets.47 more-efficient operation. In particular, interventions in urban markets not only affect The lack of transparency represents the main the market transparency, they also limit the constraint to the market efficient function as it availability and affordability of land for imposes unnecessary risks and costs while businesses and households. Tools to estimate preventing fair competition among actors. future demand for land and housing are required, Although the country’s real estate transparency and the state would benefit from exploring how index shows gradual improvements, Vietnam has it can facilitate more-optimal use of land and remained one of the least transparent markets how to influence the current high price for real N AT U R A L R E S O U R C E S M A N AG E M EN T 42 CHAPTER 2 : LAND MANAGEMENT estate. The criteria and method to help local development of the real estate market and to authorities and businesses identify locations of more clearly define the role of government and potential investment projects are still not clear, other stakeholders is a priority in this area. In while procedures and conditions for land parallel, a unified Real Property Registration allocation and land rental by the state are very System capable of supporting secondary complex. In this respect, compulsory auction of markets and new forms of tenure should be land resources, especially public land, has been developed with close links to the Land proved as an effective tool for more transparent Registration System under development. To treat allocation of land. (See Box 2.2.) land and property (including buildings) as one entity, regulations to ensure the interoperability An appropriate road map to guide the and data synchronization are critical. Next, the Box 2.2. Using auctions to sell public land Peru uses public auctions to sell public land with great success. The terms of the bidding are made public for at least 90 days. Bidders must prequalify, pay a deposit, and present a business plan for the use of the property. These plans are also made public. Auctions of more than 200,000 hectares of public land have brought in more than $50 million in investment. This has created a large number of jobs and contributed to the Peru’s emergence as a major high-value agro-industry exporter in the last 15 years. Source: World Bank 2010d. government should consider the consolidation and subsequent updating changes. To help of all its land- and property-market-related expedite the work and keep costs at a reasonable policy, legislation, and institutional arrangements level, the government should consider into one substantive area of responsibility of alternative approaches and methods of cadastral either an existing institution or a new one. survey and mapping, the most costly part of the work, in line with the actual need for cadastral Modernizing Land data accuracy. For example, the data accuracy applied to agricultural land in vibrant peri-urban Administration areas is unlikely needed for agricultural land in Although remarkable improvements to the rules remote areas where land market transactions are and regulations governing land tenure have much less likely (see Box 2.3).51 been achieved, large investments in land administration are still needed urgently to In the long term, improvement of governance complete the issuance and reissuance of LURCs and service delivery capacity of the land or joint Property Ownership and Land Use Right administration is vital for its sustainability, as the Certificates and to update and digitize land acceptance of its clients remains low. The profiles to lay down the foundation for the policy incidence of registered transactions is estimated implementation. This requires allowing land at one-fourth of the total number of land users to exercise their rights more transactions at most. Concerning the issuance of comprehensively but also improving the LURCs, the survey under the governance module provision of land administration services and of the Vietnam Household Living Standards state management of land resources. It will also Survey (VHLSS) 2008 found significant room for reduce land transaction costs, as many LURCs improvement. (See Figure 2.3.) were issued without proper cadastral surveys N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 43 Box 2.3. Low-cost and participatory approach in land administration Recent years have witnessed the emergence of low-cost and participatory tools, for example Mozambique’s 1995 Land Policy, followed by the 1997 Land Law and 1998 Regulation and Technical Annex on voluntary registration; and Tanzania’s 1999 Village Land Act,. These tools allow the land registration to respond more effectively to local peoples’ perceptions of existing rights and needs. In this approach, land registration documents and secures existing rights by defining boundaries of areas of land belonging to a household or community and establishing an accountable and representative structure for local administration. To take full benefit of this approach, the community should be able to manage basic land administration processes; the boundaries should be recorded and the records be integrated with the regular land administration system. A clear governance structure is required for internal land management and interactions with outsiders, and relevant secondary rights (seasonal grazing areas and watering sources) should be recorded and protected. An advantage of this approach is that it can quickly cover large areas, be tailored with flexibility to local needs and linked to local land use plans to provide documentary evidence on secondary rights. In Mexico, more than 100 million ha of rural land (two thirds managed by communities and one third by individuals) were titled in slightly more than a decade. Each household received a certificate to three types of land: the house plot, one or more parcels of individually cultivated land, and a proportional share of community land. This process also established an open and accountable internal village structure that entails a clear separation of powers, supervised by a specially formed office of the agrarian ombudsman. Source: World Bank 2010d. Figure 2.3. Difficulties when applying for land use rights certificates Source: Analysis of the Governance Module, VHLSS 2008, September 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T 44 CHAPTER 2 : LAND MANAGEMENT Further, despite some recognized improvements to their supervising agencies and downward to since 2006, LURC issuance is still ranked among the people they serve should be strengthened. the top three public services with serious and For the former, streamlining and optimizing land very serious corruption. The 2008 VHLSS administration processes and increasing the indicated that 86 percent of households think uniformity in working procedures and standards there is corruption in the issuance of LURCs. across vertical levels are both critical. For the Companies seem to be experiencing less latter, it is essential to develop an effective corruption with LURCs: 37 percent of enterprises capacity development program focusing on interviewed under the 2009 World Bank promoting greater transparency through unified Enterprise Survey answered that informal organization, streamlining working procedures, payments or gifts are expected or requested carrying out staff training, and modernizing when they apply for LURC. working facilities, especially the land administration information system, particularly While the severity of corruption remains at district land registration offices. It is also moderate, several provinces are seemingly falling important to outline creative communication into a “corruption vicious circleâ€? when the highest and awareness raising programs along with level of corruption is associated with the lowest proactive community participation accompanied percentage of households believing that by strengthened monitoring and evaluation and corruption has improved. As mentioned in the by complaint and dispute resolution. In this 2010 Vietnam Development Report (VDR) on respect, special attention should be given to modern institutions, this is linked to devolution disadvantaged groups, particularly ethnic within the land administration, which has led to minorities, the poor, and women, to ensure that significant gaps between policy and local their concerns are heard and duly addressed and implementation actions to be addressed. The that equitable access to land administration decentralization provides local authorities, information and services are provided. particularly Provincial People’s Committees, with greater autonomy in land management without Strengthening Land and clear accountability. On the other hand, increasing land conversion, cumbersome Property Taxation multistep land allocation and registration In Vietnam, land and property taxes are still to be procedures, and double land pricing systems developed. Recently the Law on Non-agricultural applied before and after land conversion create Land Taxation was enacted by the National rent-seeking opportunities for some government Assembly, but it will not be effective until 2012, officials and land developers at the expense of and the preparation of its implementation genuine land users and the government.52 guidelines is ongoing. (See Box 2.4.) A significant tax base exists in the urban property MoNRE should address these issues in a market, but effective tax rates and revenue comprehensive and systematic manner. The collection are low, as only a small proportion of ministry may update the long-term Program for land transactions are being registered and Development and Modernization of Land taxation is not applied to improvements, such as Administration and Management (2006–20) that buildings. There is no value-based property it developed in 2008 to provide insight into the taxation system in place. Valuation is significantly government’s views on the future of land affected by the lack of sales evidence, and there administration, as recommended in 2010 VDR. In is an emphasis on using land taxes as a blunt terms of the sector’s governance, the policy instrument to control speculation and the accountability of the land administration upward land market without fully considering the N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 45 Box 2.4. Transparency and corruption in land management Two forthcoming studies show how the procedures for granting LURCs and features of the system of land allocation and land acquisition create conditions favorable to corruption. The first study examines the two sets of processes in a systematic way, following the “process flowâ€? from the first availability of information through the various document filings and official decisions. At each stage it examines two sets of questions: Does the institutional setup create large economic “rentsâ€? or profit opportunities that would be available only to those with privileged access or information? And are the institutional arrangements in place to prevent or deter corruption? The study argues that some rents are generated at several stages of the “process flow,â€? notably in the differences between prices paid by investors, official prices used for compensation, and the true market prices. In addition, in many stages of the “process flowâ€? officials are permitted to make decisions in ways that provide little recourse for those affected by the decisions. When transparency is in short supply, such a system opens the door wide for corrupt practices to flourish. The second study focuses specifically on transparency and examines the degree to which transparency provisions already in Vietnamese law are being implemented in practice. Many land-related documents are required to be public information, either on Web sites or in some other unspecified format. By visiting the Web sites of all provinces and key ministries, the study was able to ascertain how the Web-based transparency provisions are implemented in practice. To understand the degree to which other information is made public, the research team visited 12 provinces, 24 districts, and 117 communes and requested to see the information that is required to be public. The team also asked for information that, although considered important for transparent land management, is not currently required to be public information. These checks were not intended to examine compliance with the law but rather to seek out proactive offices that seem to place a premium on transparency. The results were very uneven. Although nearly 90 percent of the visited Web sites contain information regarding “List of procedures and forms related to Certificates for Land Use Rights,â€? only about one in three had the required information a citizen would need to file a complaint. The results of the spot checks were still more uneven. At the province level, some mandatory information such as detailed land use plans were only available at half of the provinces, and information was generally even harder to find at the commune level. On the positive side, the study found that some nonmandatory information such as criteria for land allocation or land allocation decisions was made available at some offices at all three levels of government. Source: Embassy of Denmark, World Bank, and Embassy of Sweden 2010; Nguyen Ngoc Anh et al. 2010. implications on the overall land market or state property tax collection. finances. The use of the state pricing framework Vietnam’s Non-agricultural Land Taxation Law as for taxation, land allocation, and compensation currently approved seems to reach its objective for land recovery results in a high number of to enhance state management of land and disputes. There is no tax payable on land used for houses and to promote more-effective use of infrastructure, and the land rental price by the land. In particular, it ensures that the state has state differs from the market rental price. Hence, updated and accurate recording and tax data, a considerable share of local budget has to rely including land quotas on all housing units, on land sales and rent instead of land and residential land, nonresidential land, and exempt N AT U R A L R E S O U R C E S M A N AG E M EN T 46 CHAPTER 2 : LAND MANAGEMENT categories. It gives government at each level the foundation for financing local government and incentive to ensure this information is accurate infrastructure development, placing more and well maintained, although income attention to the redistribution function of the tax. redistribution appears not to be the main Viable options to rapidly establish land valuation objective. The law’s approach is very simple to services throughout the country are needed. In administer and simple to explain, focusing on the longer term, the possibility of removing all making a formula for the tax base as well as land and property transfer taxes and introducing valuation procedures that will be easy to annual land taxes should be considered, taking administer in a blanket fashion and that will have into account its likely impacts on the formal land widespread popular acceptance. market and the benefits and costs. There may, however, be some potential for Environmental economic distortions due to the desire for simplicity, particularly in the use of the Sustainability Reforms government-determined land prices as the Even efficient land markets will require valuation metric for the tax. International practice regulation to safeguard environmental would suggest moving toward a system in which sustainability concerns. A primary instrument in valuations are based on the market-based values this regards is land use planning. The long-term of similar land parcels in similar locations on an considerations of climate change are also annual basis instead of a five-year basis. Land pertinent here. markets and market values can shift significantly in one year. It is also important to ensure that the use of the tax revenues will be mostly localized Advancing Land Use Planning and visible in terms of local infrastructure and Compared with other aspects of land services to improve the taxpayers’ incentives and management, relatively few substantive changes peoples’ political support of the tax policy. have been introduced in land use planning since the start of doi moi. Land use planning has In particular, to ensure effective implementation remained largely an internal government of the law, the relationship between land taxes exercise, characterized by unclear relationships, and government finance at all levels and the hierarchy, timing, and linkages between different ongoing effectiveness and sustainability of the types of plans such as the Socio-economic formal land market should be clarified and Development Plan, Land Use Plans, Urban strengthened. In the medium term, it is necessary Development Masterplans, and various sectoral to explore the role of land taxation as a sustainable plans, especially at the provincial and district Box 2.5. Seven principles for efficient, equitable, and environmentally sustainable land management 1. Respecting existing land and resource rights 2. Ensuring food security 3. Ensuring transparency, good governance and proper enabling environment 4. Consultation and participation 5. Responsible agro-business investment 6. Social sustainability 7. Environmental sustainability Source: World Bank 2010d. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 47 level. First, to reach its ultimate objective, land attention is paid to economic, social, and use planning and land management in general environmental dimensions (see Box 2.6), with should follow the seven princes formulated by necessary differentiations in terms of content FAO, IFAD, UNCTAD and other development and purpose between the provincial, district, and partners (see Box 2.5). commune plans. To effectively reflect and respond to conflicting demands for scarce land Second, the current land use planning resources, public consultation during the methodology should be renovated to ensure due planning process is critical to ensure any decision Box 2.6. Case study: Competing land uses, impacts, and repercussions for more-integrated natural resource management in Dak Lak Province Buon Triet reservoir was built in Lak District, Dak Lak Province, in the late 1970s. It covers 125 hectares, holds around 19 million cubic meters of water, and 95 percent of its littoral area is covered by natural forest in the Nam Ka “protectedâ€? forest reserve. The area’s land use plan has multiple purposes: forest conservation combined with irrigated rice farming, aquaculture, potable water supply, fishery, eco- tourism, and transport by boat. But competing demands for agricultural and forest uses from existing users (including ethnic minorities, local farmers and dwellers, and recent migrants) and the management have resulted in illegal changes in the intended land uses. This led to extensive deforestation. Parts of the Nam Ka forest reserve along the reservoir shoreline are being burned to make way for coffee and maize production. The resulting land degradation was accompanied by the deterioration of water quality. In addition to food safety issues, the forest destruction has driven away wildlife and potential eco-tourists. Current efforts to resolve these competing demands focus on developing locally adapted solutions and processes for a holistic management of the natural resources. This includes the establishment of a fishers association to work closely with irrigation, fisheries, and forest sub-departments in the Department of Agricultural and Rural Development and a fisheries co-management group consisting of the Irrigation Department, the Commune People’s Committee, fishers, intermediaries, and local police, taking into account the ecological baseline survey in 2009 and 2010. However, it has also been recognized that poor households will continue to break the law as long as viable income generating alternatives are not provided for them. Addressing this requires not only changes in the current land management practice but also an in-depth revisit of the area’s existing socio-economic development strategy and associated land use plan. Source: Adapted from a contribution by Michael J. Akester. N AT U R A L R E S O U R C E S M A N AG E M EN T 48 CHAPTER 2 : LAND MANAGEMENT is made when most people and stakeholders are plans for 2011–15 and toward 2020, at least at aware of the changes being considered. This will the “inter-provincial and inter-regional levelsâ€? as also help limit the situation when the “people in requested by the Law for Environment Protection the knowâ€? have more access to the land than 2005.53 Again, these plans and assessments other people and can acquire the most valuable should take into account the expected impacts land. As unveiled through the survey under the of climate changes on land resources.54 governance module of VHLSS 2008, some 60 percent of interviewees stated that they were not Finally, an effort should also be made to adopt an consulted about their commune land use plans, integrated spatial planning approach that while 77 percent said they had very little or no provides a more sustainable use of land and information about the plan. other resources linked to land. The framework should incorporate broad zoning at the In pursuit of national food security objectives, the provincial level, supported by a detailed land use government has set a target of keeping 3.6-4.0 plan at the district level and a hierarchical-based million hectares under rice plantation until 2020. land classification system. Such a planning tool This target seems not to have been based on would include multi-stakeholder consultations, considerations of future (domestic and cross-sectoral economic, social, and environment international) market demands and the possible analyses, and joint problem identification and negative impact of land use controls on farmers’ solving. Work is needed to provide a road map welfare due to potential overproduction. In this that identifies how to rationalize and align the respect, it is a critical to conduct an analysis of existing legislative, policy, and institutional food security scenarios. The scenarios should frameworks to support this new land use take into consideration the expected impacts of planning approach. Further, integrated spatial climate changes on land resources available for planning is impossible without making available food production, changing yields and risks, and data and maps derived from land administration, the costs and benefits of agricultural climatic environmental management, urban changes adaptations. Donors and the development, agricultural and forestry practices, government are collaborating in this respect with infrastructure and other services. In addition to an analytical report to be delivered in the early MoNRE’s implementation of the Environment 2011 in support of the government’s preparation and Land Information System, investing in a and finalization of its food security program and broader National Spatial Data Infrastructure land use plan for 2011–15 and toward 2020. A (NSDI) will also help reduce duplication in data more flexible land use management regime collection and maintenance and improve data allowing farmers to convert their land from rice consistence and reliability across the sectors as to other crops and vice versa—based on market shown in many countries. Under the NSDI, demands and considerations of profitability, designated data custodians (for example MoNRE) comparative advantage, and risk management— produce and maintain key datasets such as the would also achieve national food security geodetic/geospatial framework and the cadastral objectives with lower financial, economic, social, base, and other agencies can access these core and environment costs. datasets and utilize them to underpin their sector applications through assigned and accepted Third, the basic principles of environment impact protocols. assessment should be applied to all planning development proposals, as an integral part of the Equity Reforms basis for approval at higher levels. In particular, the strategic environmental assessment should More attention should also be given to equity be done for the national and sectoral land use concerns. Concerning this as well as environmental sustainability, it is essential that the N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 49 new Land Law also recognize “communityâ€? as an through direct interventions. Thus, the gaps eligible forestland user and thus bridge the gap between customary and statutory rights can be between the current Land Law and the Forest narrowed but always remain, as the rights are Protection and Development Law.55 The long based on different justifications. tradition of Vietnamese communities, particularly ethnic minorities, to manage their land— In this respect, customary titling should be especially communal forestland and unused carried out with necessary precaution. In land—has been confirmed by several pilots and particular, it is proposed that customary titling is gradually acknowledged in various legal conducted for the communities already documents (also discussed in the forest chapter of managing forest or “unusedâ€? land de facto first this report).56 Results so far indicate that before a wider implementation in new areas. A communities welcome the allocation of the land careful policy design is also required. First, the and forest resources to them and can manage legal framework should be revised. Second, their forestland and forests well after the institutional setting, guidelines, and funding in allocation. Facilitating titles to communities for support of the community management land and forest utilization would help confirm capacity development are to be set up. Finally, their existing rights and alienate potential illegal lessons from existing pilots are to be distilled or quasi-legal occupation or claimants. Allocation through impact assessment and disseminated to to communities is often socially more acceptable stakeholders.57 and economically more viable than allocation to individuals. Clear allocation to communities and In addition, government needs to develop their management responsibilities lead to more mechanisms capable of providing greater access responsible use of the economic and to land for small and medium-size enterprises environmental potential of the forest areas by the and the poor and vulnerable. In the short term, communities and other stakeholders concerned, priority can be given to the reallocation of increases in investment, and thus greater underused land holdings by the state-owned economic benefits. For the state, the enterprises which control more than 4 million ha environmental functions of the land and forest are of forest land. Their existing preferential access to secured with lower allocation costs than the land and continuing large-scale holdings limit allocation to individuals. the availability of land while their leasing to private firms contributes to the amount of land However, there are also risks associated with held under informal tenure. Unlocking these improper community land titling, such as important land resources is an effective way to continuing and new conflicts, reduction in forest make their usage more efficient and equitable.58 areas after the land allocation, and greater follow- up costs. There may be a number of policy In the longer term, equitable outcomes of options, depending on the extent the customary government land allocation and land markets are law is taken into account. Legalizing customary impossible without more proactive participation claims in full accordance with customary law is by all stakeholders involved. Stakeholder likely to ensure higher acceptance by customary consultations and research should be groups but might conflict with the state’s undertaken to assess what additional policy objectives of land allocation (land mobilization, measures, legislation, or operational changes are for example, or forest and biodiversity required to support the maturing market and conservation). Other options follow customary encourage greater participation in the formal practices to a lesser extent and may result in market. This work should focus on assisting the lower acceptance but give the state a greater state to achieve an appropriate balance between chance to achieve its land allocation objectives managing the land resource in support of the N AT U R A L R E S O U R C E S M A N AG E M EN T 50 CHAPTER 2 : LAND MANAGEMENT whole society, and particular attention to the and the investor, along with preparation of a poor and vulnerable. compensation and resettlement plan and consultation with affected land users before the Improving Land Acquisition and recovery decision is made. The policy should address the case of compulsory acquisition being Compensation denied for investment projects that are Land acquisition and compensation are noncompliant with approved land use and important for equity. Administrative complaints identify clearly in what cases the state can use its regarding land account for 70 percent of the power to acquire the land. Further, to put into disputes, complaints, and denunciations the place the principle of land compensation on the government receives every year. The direct basis of market prices, it is necessary to develop reasons are related to the government’s legal and institutional frameworks for the compensation and resettlement (70 percent), provision of land valuation services through violations of land legislation by government staff independent valuation services. The experience and organizations (10 percent), and gained in Ho Chi Minh City could be very relevant administrative decisions on land dispute in this respect. The policy should also make the settlement (9 percent). Overall, about half of the recovery process and dealings with public lands complaints or denunciations expressed more transparent and should work to identify dissatisfaction with the implementation of the taxation and financial mechanisms to reduce the land compensation policy and procedures.59 budgetary reliance of local governments on land conversions and the sale of land.60 The current approaches to recovery and reallocation are slow, not transparent, and Further, there is a need to improve the current unpredictable, with rent-taking behavior land-compensation-related grievance redress common, skewing the availability of urban land mechanism. The ongoing efforts toward the and frustrating investors. At the same time, promulgation of the new Land Law and the Law existing constraints on the urban land market, on Complaints and the Law on Denunciations along with the budgetary imperatives of local provide an opportunity. Efforts in this direction governments, stimulate excessive reliance on should focus on promoting people’s right to conversion as a way to open up new land, express their grievance, raising public awareness leading to inefficient forms of urban growth. about the right, channels for grievance filing, Conversion relies heavily on smallholders or redressing, review, investigation and resolution, residential households. and an effective grievance monitoring system . It is also recommended to strengthen the Decrees 84 in 2007 and 69 in 2009 set up quite necessary implementation capacities of Project transparent procedures for compulsory land Management Units of public investment projects conversion and compensation. They provide with large land acquisition and compensation guidance for compensation at market prices and works through establishing their specialized coverage of income recovery costs. MoNRE is Grievance Redress Unit and project working with the donor community to consider complementary grievance channels and several options and develop guidelines to monitoring system and through allocating improve the Decree implementation. sufficient funds to meet requirement of the Furthermore, the development of a National grievance redress process. In a broader context, Policy on Compensation, Assistance, and setting up arbitration councils at district, Resettlement is recommended and should be province, and central levels with the participation based upon a more equitable distribution of of representatives from government authorities, benefits between current land users, the state, professional agencies, and mass organizations N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 2 : LAND MANAGEMENT 51 would provide potential parties with an ———. 2005. Does Rising Landlessness Signal Success opportunity to resolve complex administrative or Failure for Vietnam’s Agrarian Transition? Washington, complaints in an independent manner. In the DC: World Bank. long term, these can be replaced with Scherr, Sara J., and Satya Yadav. 1996. Land Degradation administrative tribunals, as done in many other in the Developing World: Implications for Food, countries.61 Agriculture, and the Environment to 2020. Food, Agriculture, and the Environment Discussion Paper 14. Washington, DC: International Food Policy Research Institute. EFERENCES Truong Thien Thu and Ranjith Perera. 2010. Davidsen, Soren. 2010. Integrity in Land Management in “Intermediate Level of Property Rights and the Vietnam: Report on a Joint Danida-WB-SIDA Study. (To Emerging Housing Market in Ho Chi Minh City, be published.) Vietnam.â€? Land Use Policy. In press. Embassy of Denmark, World Bank, and Embassy of Wezel, A., A. Luibrand, and Le Quoc Thanh. 2002. Sweden. 2010. Assessing Risk Factors for Corruption in “Temporal Changes of Resource Use, Soil Fertility and Land Management—A Process Flow Approach. Draft. Economic Situation in Upland Northwest Vietnam.â€? Hanoi. Land Degradation & Development 13 (1): 33–44. Foerster, E., and U. Apel. 2004. Customary Land Use in World Bank. 2001. Vietnam: Delivering on its Promise - Viet Nam. Report of a World Bank-commissioned study. Vietnam Development Report 2002. Joint Donor World Bank in Vietnam. Report to the Consultative Group Meeting Dec 2001. Hanoi. General Statistics Office. 1994 and 2009. Statistical Yearbooks of Vietnam 1994 and 2008. Hanoi: Statistical ———. 2009a. “Policy Note: Improving Land Publishing House. Acquisition and Voluntary Land Conversion in Vietnam.â€? Hanoi. General Statistics Office. 2010. Vietnam Household Living Standard Survey. Hanoi: Statistical Publishing ———. 2009b. Vietnam Development Report 2010: House. Modern Institutions. Joint Donor Report to the Consultative Group Meeting, December, Hanoi. Government of Vietnam. 2004. Vietnam Household Living Standards Survey. Hanoi. ———. 2010a. “Climate-Resilient Development in Vietnam: Strategic Directions for the World Bank.â€? Jones Lang LaSalle. 2006 and 2010. Global Real Estate Discussion Paper. Washington, DC. Transparency Index. Online Bi-annual Reports. ———. 2010b. Report on measures of land price MoNRE (Ministry of Natural Resources and determination for compensation and resettlement in Environment). 2009 Statistics on Issuance of Land Use Vietnam (Draft). Hanoi. June 2010. Right Certificates. Hanoi. ———. 2010c. Report on improving the grievance Nguyen Ngoc Anh, Nguyen Duc Nhat, Tran Thanh Thuy, redress mechanism in compensation and resettlement in and Kirby Prickett. 2010. Survey Report on Information Vietnam (Draft). Hanoi. June 2010. Disclosure of Land Management Regulations. DEPOCEN. Hanoi. ———. 2010d. Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits? Nikolic, Nina, Rainer Schultze-Kraft, Miroslav Nikolic, Washington, DC. Reinhard Böcker, and Ingo Holz. 2008. “Land Degradation on Barren Hills: A Case Study in Northeast Zhu, Tingju. 2010e. Climate Change Impacts and Vietnam.â€? Environmental Management 42 (1): 19–36. Adaptation in Vietnam: Agriculture and Water. International Food Policy Research Institute. Ravaillion, Martin, and Dominique van de Walle. 2001. Washington, D.C Breaking Up the Farm: Welfare Outcomes of Vietnam’s Massive Land Privatization. Policy Research Working Paper 2710. Washington, DC: World Bank. N AT U R A L R E S O U R C E S M A N AG E M EN T 52 CHAPTER 2 : LAND MANAGEMENT CHAPTER 3 WATER RESOURCES V ietnam is not secure in its water resources: more than 60 percent of water flow comes from other countries, shortages now occur in many rivers over the long dry season, and some aquifers have a limited life. In the short wet season, many people are killed and enormous damage inflicted. Water pollution continues to get more severe. In the face of the pressures from the economic boom, Vietnam needs further reform to achieve greater efficiency in water use, improved environmental sustainability, and enhanced equity in access to water services. Water resources development has provided many benefits for human life, health, and environment. But institutional and legal arrangements need greater clarity. Despite great efforts, about half the population does not have an adequate water supply. Sanitation coverage is worse. New approaches will be required to meet future food security and to effectively maintain infrastructure that is dilapidated. Water rights are not defined, leading to inefficient and unsustainable investments and to stress on water sources. Climate change is adding to these already serious challenges. Approval and implementation of a new National Target Programme (NTP) on Water Resources will be critical. A similar strategic approach is also needed for the coastal zone. Dealing with efficient water use must focus on the efficiency of water supply and use in all subsectors, a water rights framework, and river basin plans to set out water allocation rules. Improving social equity requires increased investments for pro-poor rural development, irrigation diversification, and a strengthened ongoing NTP II, particularly on the sanitation side. Environmental sustainability will require a focus on pollution from untreated urban wastewater as a priority. For industrial pollution, the emphasis should be on far stronger use of existing measures and a more strategic approach to pollutants and their cause. Water moves significantly across land and over annual water is very misleading. There are long time. Prolonged droughts severely limit water and severe dry seasons, during which only about availability, at times extending over many years; 20–30 percent of the yearly water is available. By severe wet season storms can bring devastation. international standards, in the dry season and at Water also transports nutrients and sediment current development levels, about half of the 16 through the river basin and exports these to the major river basins are currently experiencing coastal zone. Catchment activities can increase irregular or local water shortages. or decrease this movement and its quantity and quality—affecting both river and coastal It is a different story in the short wet season. morphology and ecosystems. This chapter must Vietnam’s geography and topography make the be considered in terms of these critical country extremely vulnerable to typhoons, interactions. storms, and floods. Heavily populated areas such as the Red and Mekong River deltas and the Water Resources in Vietnam Central Coast are especially vulnerable. Each year hundreds of lives are lost, and there is enormous The Water Sector Review (WSR) has shown the damage to livelihoods and infrastructure. limits of Vietnam’s water resources:62 77 percent of surface water occurs in only three river basins Water quality in upstream river reaches is still (Figure 3.1) and more than 60 percent of the total relatively good except for some locally surface water flow originates in other countries. polluted areas. However, in the downstream While the total annual surface water exceeds the reaches, especially for rivers flowing through international standard for having adequate industrial zones and large urban areas, the water,63 making such assessments based on quality gradually deteriorates as wastewater N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 55 Figure 3.1. Major river basins N AT U R A L R E S O U R C E S M A N AG E M EN T 56 CHAPTER 3 : WATER RESOURCES discharge pours into the rivers, largely collected each day is treated.67 Where they exist, untreated. Some river sections are now most urban drainage systems combine storm classified as “dead riversâ€? unable to support water and untreated domestic wastewater. any life. 64 Ponds and canals in urban areas have become sewage storages and drains. Although Vietnam has made rapid progress in improving its water supply situation, many rural Vietnam has large quantities of good-quality areas are not covered. Some 41 million rural groundwater used to provide water for living people do not have a supply that meets “cleanâ€? (groundwater provides about half the domestic water standards set by the Ministry of Health supply) and for various economic uses. But there (MoH). Only 8 percent of people receive piped are areas of concentrated extraction where water water in their homes or yards, 82 percent have use is unsustainable. In Hanoi and in parts of Ho access to water from improved sources outside Chi Minh City, water levels have fallen about 30 the house, and 10 percent still depend on meters from natural levels. Overexploitation also unimproved drinking water sources.68 Progress occurs in the Central Highlands and in the in providing access to sanitation and hygiene has Mekong Delta,65 and some aquifers now have a been especially difficult. A recent survey69 limited life. There is very poor information on the revealed that while about half of rural people quality or quantity of groundwater to ensure have some sort of sanitation facilities, only 18 sustainable use. Groundwater is also very percent have access to latrines that meet MoH vulnerable to pollution, and some important hygienic standards. sources are now severely polluted and may not recover. Use of Water for Economic Provision of Water Services Production The pace of Vietnam's urbanization and Nationally, more than 80 billion cubic meters industrialization has been beyond the capacity of water are used each year. Figure 3.2 of the water supply and sewage systems to cope. indicates the current sectoral allocation. By Figures on water supply and sanitation coverage 2020 this is expected to increase by about half are the subject of dispute and should be seen as with particularly sharp rises for industry and rough indications. Nevertheless, they do tell a urban use.70 story. Around 14 million people out of the 22.5 million living in cities have access to clean water. Agriculture’s share of the gross domestic However, less than 60 percent have a house product (GDP) is declining, but output is connection; the remainders get their water from expanding and the sector remains a key shared standpipes or wells. Basic water services contributor to the economy and employment. are generally far less available in district towns. Vietnam has become a top exporter of rice, The current standard of service is poor in terms coffee, cashews, and pepper. Agriculture of both quality and volume, with water losses sector GDP value has doubled in real terms being very high.66 since 1993; it provides employment to about 70 percent of rural households. Paddy Sanitation in the major cities is said to be production accounted for almost 80 percent available to almost all of the population, but this of the country’s gross food crop production figure includes access to a “sanitary latrine.â€? In value in 2006. Between 1990 and 2008 the provincial towns, 75 percent of households are area under rice grew by about 20 percent, but not connected to any form of local or central national production almost doubled, to about sewerage system; they use a septic tank. Less 38 million tons. 71 (See also Box 3.1.) than 10 percent of the urban wastewater N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 57 Figure 3.2. National surface water allocation (percent) Source: ADB 2010b. Hydropower provides about a third of the total Relatively speaking, industries do not use a lot of national power capacity of more than 26,000 water. But wastewater discharge from the megawatts. Hydropower in the Red-Thai Binh booming industrial sector and from craft villages and Dong Nai River basins accounts for over 50 is causing serious pollution. Nearly 70 percent of percent of the internal hydropower capacity. industrial parks are located around Hanoi and Ho Under the power Master Plan VI,72 about 26 more Chi Minh City, and many industries are state- reservoirs are planned, some of which are now owned. Environmental improvement is lagging, being built. While hydropower has many and few industries have effective wastewater advantages in electricity generation, there are treatment. Less than half of the facilities have also many disadvantages that are only now being central wastewater treatment systems. The craft appreciated, particularly in a Mekong River village subsector has also witnessed phenomenal context. This will be critical in the future as the growth, especially around Hanoi. More than projected level of development of hydropower 40,000 enterprises are located in craft villages, potential is going to be extremely high in with around 80 percent of those being small Vietnam. family businesses. Almost all village households Box 3.1. Inland fisheries and aquaculture Inland capture fisheries landings are estimated at about 200,000 tons in official statistics—almost certainly an underestimate. Inland fisheries, particularly in floodplains and rice fields in the Mekong and Red river deltas, provide an important source of aquatic products for rural people’s nutrition and seasonal income. Although there is a dearth of statistical data, several studies indicate that inland fisheries are of considerable importance for poor people in many parts of Vietnam, not only full-time fishers but also households that have fishing as a component of wider livelihood strategies. Accordingly, a study by the Tropical Biology Institute of Ho Chi Minh City documented annual yields in 2001 as high as 430 kg/ha from a 45,000 ha area in Can Tho and Kein Giang Provinces in the Mekong Delta. Considering that the Mekong Delta has a flooded area of about 1 million ha during the rainy season each year, the contribution from floodplain fisheries in that part of the country would far exceed the current estimate of inland fisheries in Vietnam. Based on fish consumption estimates, MRC has estimated that production in the delta areas of Vietnam could be as much as 300–900,000 tonnes/year. 73 N AT U R A L R E S O U R C E S M A N AG E M EN T 58 CHAPTER 3 : WATER RESOURCES Inland fisheries are threatened by pollution, including the use of agrochemicals and flood control projects that close off breeding habitats and nurturing grounds for resident and migrating fish and other aquatic species. These threats are particularly significant for poor households that depend on the fishery. Actions to assure the sustainability of inland fisheries include further assessment of its importance to the national economy and to local farmers and poor inland fishers in relation to trade- offs, such as flood control for agriculture; identification of appropriate management measures, such as appropriate gear and closed fishing seasons in selected areas; and establishment of sanctuaries to protect key breeding and nurturing habitats and to sustain or improve productivity and biodiversity conservation. Aquaculture has grown significantly in recent years, averaging over 12 percent annual growth since 1990. The area under all aquaculture has now reached nearly 1 million hectares, with a total output of over 1 million tons—over a third of all aquatic production. Aquaculture production mainly comes from freshwater aquaculture, especially for river catfish, while the export value mainly comes from marine and brackish-water aquaculture (most of this income is generated within the Mekong Delta). Small- scale producers dominate the subsector, with pond areas of under 0.1 hectares. Aquaculture and the associated fisheries processing industries can contribute to significant water source degradation through water use and pollution. Aquaculture contributes more than 40 percent to total fishery production. In terms of production, the freshwater subsector remains dominant, with approximately 65–70 percent. The production of Pangassius catfish exceeded 1.2 million tons in 2009, exporting about 600,000 tons worth $1.4 billion. Brackish water aquaculture (mainly shrimp) contributes around 220,000 tons and more than 40 percent to the overall value of production. Crab farming and limited farming of marine fish and mollusks, in particular, provide the remainder. Environmental concerns relating to aquaculture development in Vietnam include: Localized water pollution from concentrations of freshwater and marine cage farms and lack of consideration of carrying capacity The need for more care to be taken with introduction of new exotic species, due to risks of disease and impacts on aquatic biodiversity The significant loss of mangroves and wetlands from conversion of coastal areas and estuaries to shrimp farming Aquatic animal disease outbreaks, water pollution, and salinization caused by poorly planned and managed shrimp farming in sandy and agricultural areas The dramatic recent rise in the use of trash fish in marine and freshwater aquaculture; such environmental interactions need careful consideration in the promotion of aquaculture in Vietnam and should be addressed through better environmental planning and management practices and capacity. Aquaculture is essential to meet future demand for aquatic products. While aquaculture has expanded to supply domestic and export markets, issues concern the available limited capacity in the country to promote and guide its sustainable development in fresh, brackish, and marine environments. The main concerns are related to quality and sufficiency of seed and feed supply, disease control, and management of environmental impacts, including understanding of carrying capacity of sea and inland water areas, extension services, and marketing channels and quality control systems. More emphasis can also be placed on using aquaculture for poverty reduction. The quality of the product has been a concern in some export markets, and anti-dumping cases have revealed the vulnerability of the sector to external factors related to international trade. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 59 Climate change will affect aquaculture, but in different ways for the main subsectors. A cost-benefit analysis for 2010–50 indicates that even without climate change, the catfish industry will face difficulties. These are expected to be exacerbated by climate change. In contrast, shrimp aquaculture shows good profitability for another couple of decades even with climate change. Source: Ministry of Fisheries and World Bank, 2005, FAO Web sites, Nguyen Van Trong 2008, and . WorldFish 2010. use their houses as production sites, with waste involved, and in some subsectors the discharged directly into the surrounding government is slowly transforming its functions environment.79 from that of operator to regulator. But the regulatory framework needs considerable Major Issues Concerning strengthening to facilitate this move effectively. Some state-owned enterprises involved in Water Resources commercial production activities are inefficient operators with very poor environmental Management performances.82 In the past decades, there have been important achievements in the exploitation of water Another key institutional issue is whether resources and in the prevention of harm caused subnational government is capable of effectively by water. However, for a long time there has been fulfilling its devolved roles in water resources insufficient awareness of the significance and management and the provision of essential importance of water for human life, health, and services and whether effective instruments are in the environment.80 This section sets out some of place to hold it accountable for doing so.83 the issues that have resulted. Accountability in the delivery of these functions is important, as subnational governments have Institutional, Legal, and Policy roles that are inherently in potential conflict: simultaneously to stimulate and promote Context development and to protect the environment The creation of the Ministry of Natural Resources and the natural resource base. and Environment (MoNRE) in 2002 separated the function of state unified management from the Vietnam has not yet effectively developed and functions of exploitation and use of water implemented sustainability-based approaches resources for economic purposes. However, for water resources management. The National MoNRE is still working towards assuming this Assembly’s Science, Technology and oversight function. While international support Environment Committee84 concluded that the could be strengthened, the roles of other current legal framework is sufficient to take agencies in the water sector could also be more action against pollution and resource clearly defined to avoid overlap and to promote degradation. However, development and more effective coordination. The hierarchy of enforcement of the regulatory framework is laws governing both public and private inadequate. participants is not clear, consistent, or complete.81 There is little planning or coordination between In particular, Vietnam has found it difficult to the sectors, leading to unintended, unfunded, integrate the management of natural resources and unmitigated impacts between sectors. within river basins and coastal zones and to address relationships between these areas. The private sector is becoming increasingly Vietnam has initiated some measures for both N AT U R A L R E S O U R C E S M A N AG E M EN T 60 CHAPTER 3 : WATER RESOURCES river basin and integrated coastal zone Sustainable Water Supply management (ICZM), but there are currently no strong government-led programs in these areas. and Sanitation Services There are no processes to reconcile the large Despite enormous gains, and given the pressures regional differences when defining “naturalâ€? and of urbanization and industrialization, it is not “acceptableâ€? environmental and natural resource surprising that Vietnam is struggling to ensure conditions. This also has an international water supply and sanitation for its people. The dimension, particularly in the Mekong River, public sector dominates, leading to overlapping where the massive sediment load that supports roles and responsibilities and a poor focus on and rehabilitates the Cuu Long delta is under service delivery. Inappropriate design standards threat from the mid-river dams now being lead to higher capital costs and have an adverse considered.85 Another institutional issue is the impact on tariffs, affordability, and acceptability. lack of reliable and accurate water data and Sanitation is still considered a private good, information for decision making, which is a key requiring support to mobilize and thus maximize factor constraining effective management.86 the benefits of a new water supply. Poor sanitation causes human distress, as well as Water Security considerable economic losses, estimated at 1.8 Vietnam faces a very uncertain water future, as it percent of GDP.87 Total investment requirements is heavily reliant on international rivers, dry- run into many billions.88 season water availability is already showing areas of shortage and conflict, and climate change will Urban drainage is also a major and worsening accentuate these effects. Already some current issue for the rapidly expanding major cities and water use is unsustainable. The WSR found that towns. One of the most critical water under the existing population and economic management challenges in Ho Chi Minh City is development levels, during the dry season six the increased need to both protect low-lying river basins are classified as “moderately stressedâ€? parts from storm surges and high tides and to and four others are classified as “highly stressed.â€? ensure drainage of polluted rainwater and The Dong Nai River basin, providing about a third sewage. Intense rainfall that besets Hanoi often of national GDP, is of particular concern. The total leaves major parts of the city paralyzed. Rapid reservoir active storage volume (about 37,000 urban expansion is not taking drainage into million cubic meters) is less than 5 percent of the account. total average annual surface water discharge, with about two-thirds of this in two river basins. Sustainable Agriculture and The lack of formal rights to water is a concern. Irrigation Services Although the Law on Water Resources creates a Irrigation-based agriculture has been pivotal in framework for this, limits to the amount of water alleviating poverty, providing food security, and that can be extracted have not been established boosting rural growth. But the rapidly growing and rights are not defined. New entrants are population, with increasing affluence, will require continually eroding the supply. Many much more food and different foods. This will organizations also believe that their water require better and more sustainable development confers unfettered rights to the management of existing irrigated lands, since water. The current system is one of perceived but opening up new areas is constrained by lack of unspecified water rights, with sharing rules land and water. Agriculture productivity remains dominated by the most powerful. relatively poor, however, its infrastructure is old and dilapidated, and it is reliant on state budgets and foreign development assistance to keep the N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 61 systems going. With the irrigation services fee Pollution and Degradation abolished since 2008,89 systems are quite likely to be deteriorating. It is therefore crucial to Rapid urbanization and industrialization—with monitor the implementation of this new fee untreated domestic, hospital, and industrial policy to ensure that adequate budgetary wastewater, poor urban drainage, an expansion allocation is provided to support system O&M. in tourism, and the use of rivers, lakes, and ponds Otherwise necessary remedial interventions as dumping grounds for most solid waste—has would have to be taken. The large-scale, centrally seriously affected water quality. Much of the managed irrigation schemes are not designed to untreated wastewater is illegal.91 Economic provide the reliable, flexible and equitable year- losses, mainly due to the health impacts and the round water service that modern farming cost of protecting humans from pollution of methods require. 90 water resources have been estimated to hundreds of millions of dollars per annum. 92 Financing and Assets The National Assembly’s Science, Technology, and The water sector has survived on subsidies and Environment Committee has reported on the official development assistance, which is not difficulties with institutional and regulatory sustainable. The pricing policies that are applied arrangements, lack of resources, inadequate are neither efficient nor fair, leaving grossly planning of urban areas and industrial zones, lack inadequate financial resources to of funding for infrastructure, and lack of maintain/replace infrastructure. The subsector investment in toxic waste treatment facilities. In capital requirements are enormous. Yet agencies addition, community concern about pollution is established to provide water services are far from increasing, perhaps brought to a head by the financially self-sufficient, largely as a result of much publicized Vedan case of extreme and illegal decisions to curtail charges, particularly at pollution in the Thi Vai River. 93 (See Box 3.2.) subnational governments. The abolition of the irrigation services fee has serious implications, Storms and Floods given the water scarcity situation and the fact that irrigation uses about 80 percent of water Almost 60 percent of Vietnam’s total land area resources. This was considered serious enough and over 70 percent of its population are prone by the international development partners for to cyclones and floods, which are often more the Poverty Reduction Support Credit to issue a pronounced where river basins and coastal zones trigger requiring technical guidelines for more meet. Over the past 20 years, natural disasters efficient water use in irrigation. have caused the loss of over 13,000 lives and annual damage equivalent to an average 1 Box 3.2. The Vedan water pollution case Vedan Vietnam is a monosodium glutamate maker. Investigations in September 2008 found Vedan had illegally dumped into the Thi Vai River more than 100 million liters of untreated wastewater per month since 1994, killing farmers’ fish and shrimp in ponds and ruining farmland. MoNRE suspended the plant’s wastewater discharge license and fined the company about $15,000. The ministry also demanded another $7 million from the company in overdue environmental fees. The company paid the fine and fees. The company has also offered to pay total damages to farmers in Ho Chi Minh City, Dong Nai, and Ba Ria-Vung Tau provinces. Court action against Vedan is under way. Source: MoNRE. N AT U R A L R E S O U R C E S M A N AG E M EN T 62 CHAPTER 3 : WATER RESOURCES percent of GDP. Moreover, there are growing Strategy on Disaster Management, the National concerns about the impact of climate change on Target Programme (NTP) for Rural Water Supply the frequency and intensity of climatic hazards. and Sanitation, and the NTP to Respond to Strengthening disaster management is a priority Climate Change.95 for the government. In November 2007, it approved the National Strategy for Natural Other critical measures are also under Disaster Prevention, Response and Mitigation to development. First, MoNRE is finalizing an NTP on 2020, with a balance of structural and Improvement of Efficiency for Water Resource nonstructural measures. Nonstructural measures, Protection, Management and Multipurpose Use such as community-based disaster risk (hereinafter termed the draft Water NTP), which is management measures, which have been based on the main integrated water resources implemented in Vietnam since early 2000, will be management (IWRM)–related activities increasingly important. Indeed, the government recommended in the WSR. The total cost of the has approved a community-based disaster risk NTP over 10 years is estimated at almost 10 management program that is expected to thousand billion VND (approximately $500 support more than half of the country’s million). Nearly 60 percent of this is to establish a communities. water resources monitoring system. Approval of this NTP, and its support and implementation by Climate Change the government with assistance from the international development partners, will be Climate change will bring more varied rainfall critical for Vietnam being able to embrace locally patterns and sea level rise.94 Annual total rainfall appropriate elements of IWRM. Second, the is expected to increase everywhere—perhaps by Ministry of Natural Resources and Environment as much as 10 percent in the Red River Delta area is currently revising the Law on Water Resources. by 2050. In contrast, during the dry months, The revised law is due to be submitted to the especially in the southern regions (including the National Assembly for approval in 2011. The Mekong Delta), average rainfall is expected to following reform measures are aimed at building decrease, perhaps by about 20 percent. Rising on these provisions. sea levels will greatly affect the Mekong Delta and Ho Chi Minh City, parts of the Red River Delta, and also a significant coastal strip, Efficient Water Use including small estuaries. The mean sea level rise Clear and unambiguous specification of water by 2100 is projected by different sources to be rights96 contributes to the efficient use of the about 18–70 centimeters, and 100 centimeters or resource. Under the revised Law on Water more is possible through the impacts of high Resources a greatly strengthened water rights emissions and the melting of land ice. Without and sharing framework is being developed. This adaptation action, a one-meter rise in sea levels needs to be taken up and implemented so that would cause more than 9 percent of total land all water users operate within a consistent surface to be inundated, with an even greater framework. Establishing rights—their term, their share of the population affected. coverage, their relationship to other rights, and how they can be changed—is critical to business The Reform Agenda security and planning in industrial countries. One of the most important tools for implementing a Vietnam has already put in place some key water rights framework is the licensing system, measures for the more effective management of and a strengthened licensing system is being water resources, including a strengthened Law developed for the revised law. This would allow on Environmental Protection, a Law on Dikes, the the government to issue rights and also protect National Water Resources Strategy, the National the community values of water sources by N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 63 providing the tool to manage the potentially based on wet/dry seasons and climate damaging activities of water users. An effective change, and upstream water use scenarios licensing system is also one precursor to a water (including for hydropower), and rights trading system, although it may be many implementing adaptation and response years before Vietnam is ready to take its water plans rights framework to this level. Signing bilateral and multilateral agreements on cooperation and exchange Planning for the sustainable use and of water resources data and information, development of water sources is an important water resources protection, maintenance of aspect of defining rights to water and protecting environmental flows, and mechanisms to community values. Resolution of competing resolve water use disputes and conflicts in interests or conflicts over access to water is best international rivers addressed at the river basin scale. River basin planning can be a very powerful integrating Harmonizing and regulating water sources measure for water management. It can break for efficient water use and development of down the administrative divisions between water-saving models; completion of water governments and between sectors. It provides allocation plans for priority river basins and the opportunity for communities to participate. It ensuring the maintenance of can provide the integrating framework for water- environmental flows in rivers; large and dependent socioeconomic development medium reservoirs operated to ensure planning and for poverty reduction multipurpose use and water resources interventions, in the context of sustainable water efficiency. resource use. The same is true for groundwater Vietnam needs a strategic development plan sources. for urban water supply with priorities clearly established for reducing non-revenue water Many measures for dealing with water scarcity and the provision of new infrastructure. are included in the draft Water NTP: Greater priority should be provided to towns Finalizing the legal and policy systems, the under district control, as they provide standards and norms, and the economic alternative destinations for rural-to-urban instruments for water resources migration but they lack financial resources management aligned with the socialist- and capacity. In addition, a program is oriented market economy required to strengthen the business practices and financial basis of water supply companies. Completing water resources scenarios for Central to this is higher but realistic and 13 priority and international river basins, affordable tariffs. As the creditworthiness of Box 3.3. Improving urban water services: A case study from the Philippines The Philippine government privatized the state-owned utility for water supply and sewage in Manila in 1997 in response to a crisis situation. A 25-year concession was awarded to Manila Water Company. Since then, the company has almost doubled service coverage to 600,000 households and achieved significant improvements in water quality and availability. Water loss is down from 63 to 35 percent. The results were achieved while maintaining financial profitability. Source: World Bank 2010b. N AT U R A L R E S O U R C E S M A N AG E M EN T 64 CHAPTER 3 : WATER RESOURCES the sector improves, access to longer-term Resource-focused measures are those that look local financing will become important. A at the management of the water source. The staged progression should be envisaged over most overarching of these is natural resource the next 10 years from the current reliance on planning. River basin, groundwater, and ICZM development assistance through mixed planning can effectively set out actions for the financing to a sector built on local capital management of water pollution in rivers, lakes, markets. Therefore, the preparation of an wetlands, aquifers, or coastal areas by identifying urban financing plan is also crucial. (See also all possible pressures and options and Box 3.3.) integrating the consideration of water quality with water quantity and land use activities (via There is considerable scope to increase food spatial or land use planning). The decisions of production, enhance livelihoods, and reduce one province can have an effect on another, poverty in existing irrigated areas.97 Irrigation leading to inefficiencies and inequities. This management companies currently have little or suggests a lead role for central government in no incentives to satisfy customers/consumers these planning initiatives. (who have little information and even less choice), and performance standards are low The draft Water NTP proposes the development (such as water delivery and application rates per and implementation of plans for water sources unit of output). Decision taking and policy protection in 13 priority river basins, as well as making are almost entirely top-down, and the groundwater protection plans for the main urban state’s role remains dominant in terms of targets areas, the Red and Cuu Long delta areas, and the and objectives setting. Therefore, the preparation central coastal areas and highlands. Other of a long-term irrigation subsector reform and measures focused on the resource could include financing plan is crucial and must be the first step the identification of water source quality toward creating a long-term viable industry base. objectives and the classification or zoning of This strategy would deal with financial water sources, including the identification and sustainability; modernization needs and service protection of sensitive areas. orientation; water productivity improvements; land tenure arrangements; multiple uses, roles, The draft Water NTP does not, however, extend and functions; and environmental targets. to the coastal zone. Yet the coastal zone is facing similar problems as river basins. The cause of Increasing the efficient use of water will benefit these problems can be traced to the same from the development of measures to assess and underlying problems that have beset river basin measure changes in the economic value of water management.98 And as with river basin use for different purposes and from a sound management, there is no simple solution to water accounting/audit system to support policy these complex problems, although the decisions, river basin management and planning, Netherlands-funded ICZM projects earlier this and irrigation systems improvements. Auditing decade will provide a lead as to what may work and benchmarking will also play a strong role. best. Vietnam needs to develop a flexible, integrated, and participative strategy to ensure Environmental Sustainability that the management of its coastal zone is environmentally and economically sustainable, To address water source degradation issues, as well as socially equitable and cohesive. The measures are required that focus on both the strategy must build on existing programs, resource itself and the many activities that use complemented by focused new activities, many water and affect the water source. of which will mirror activities in the river basin, and by support for coordinated ICZM action at all N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 65 levels. And mechanisms must also be found to 64/2003102 (thoroughly handling polluting integrate ICZM and river basin initiatives and to establishments) and better implementation of deal with sea level rise at the local level. Decree 67/2003 (wastewater discharge fees), which so far has been inconsistently and Activity-focused measures are those directed at ineffectively applied, will be at the center of any activities that use or affect the water source or response. But this could be augmented by a the coastal zone. The activity of most concern in more strategic approach that focuses on the Vietnam is pollution. Currently it is illegal to pollutants that cause the greatest concern and pollute water sources, however a major portion the industry subsectors that produce those of wastewater is dumped into waterways without pollutants.103 Control plans for each of the any treatment. This poses a very grave danger to highest priority industry subsectors should be human health. Addressing pollution from prepared by linking the discharges with ambient untreated urban wastewater (domestic, concentrations and establishing least-cost hospitals, and urban industrial) is therefore, a solutions. priority.99 Effective price signals are important to convey to water polluters that there is a high cost The more strategic and stronger use of other to their activities. management tools will also be important: strategic environmental assessments for a wide The scale, complexity, and cost of improving range of planning activities; much stronger use urban sanitation on any significant scale are of environmental impact assessments; beyond the scope of provincial and city establishment of resource quality objectives and governments and will require more innovative registers of activities that have an impact; options. Considering the limited resources and wastewater discharge licensing; promotion of the enormous needs, step-by-step improvements environmental management systems for in urban sanitation and wastewater treatment are industries; and adoption of best-management more appropriate than building up expensive practices. wastewater treatment plants and extensive separate collection systems in only a few areas. Protecting sensitive lands will play an increasing Effective reform requires a strategic approach, role. The Mekong Delta needs particular carefully setting priorities for capital expenditure attention as the country’s largest granary and needs based on a review and ranking of the seafood source, but it faces a difficult future— provinces, districts, communes, and projects. especially under climate change projections. In Choices will depend on the socio-geographic the first five months of 2010, seawater environment, population density, and levels of penetrated deep into the delta (up to 50–70 water usage, affordability, institutional kilometers), affecting thousands of hectares of arrangements, and access to skills.100 rice and causing a severe shortage of fresh water.104 Of more long-term concern is the loss of Vietnam’s environmental report for 2009 sediment deposition from the Mekong River—so reviewed the performance of industrial zones fundamental to the regeneration and very and painted a grim picture of the extent of existence of the delta—that would result from pollution, the effects on communities, and the the construction of the mid-river dams currently flouting of laws and regulations. Efforts to deal being considered. The Red River delta will with industrial pollution have failed, mostly increasingly face similar problems. Vietnam because of the ineffective application of existing should also identify its major environmental laws and regulations.101 Strengthening the assets, such as wetlands and heritage areas, and implementation of existing government establish measures to protect them as a means decisions, including a revamp of Decision of protecting biodiversity. N AT U R A L R E S O U R C E S M A N AG E M EN T 66 CHAPTER 3 : WATER RESOURCES Equity greater focus on behavioral change under the new NTP and on decentralized and community- Water development projects (for irrigated based drinking water supply systems, especially agriculture, for example) have played a major role in remote areas. in poverty alleviation by providing food security, protection from flooding and drought, and Since water supply itself is insufficient to expanded opportunities for employment. But dramatically reduce disease, sanitation and poor communities also suffer the greatest health hygiene behavior changes need much greater burden from inadequate water supplies. Thus, emphasis under the new NTP. The measure of growing scarcity and competition for water are a success should not only be the coverage major threat to future poverty alleviation. In very (ownership) of sanitation facilities but also the dry areas, increasing numbers of the rural poor access, use, and upgrading of the facilities, are coming to see entitlement and access to changes in hygiene behavior, and self-sustained water for food production, livestock, and demand for more facilities.108 In addition, uniform domestic purposes as more critical than access and appropriate health standards for both water to primary health care and education.105 supply and sanitation (rural and urban) are required. In order to bridge the gap in wealth creation, increased investments in water-related projects Natural hazards have a major impact on all for pro-poor rural development will be essential. communities, and the central region’s river basins Better rural infrastructure will attract more bear the brunt of the damage. Flooding generally private investment and thus help counter causes the biggest losses, and dealing with migration to towns and cities, reducing pressures flooding issues has to be considered on a fully there and inequities between urban and rural integrated river basin and coastal zone basis. populations. A key element will be agricultural Central Vietnam should be the priority for the modernization and diversification away from preparation of natural hazard management traditional paddy rice. Locally adapted irrigation plans, with a focus on nonstructural measures, technologies have succeeded in raising yields including community-based disaster risk using whatever surface water, wastewater, and management approaches.109 groundwater was available. There are opportunities for investors to identify successful A major social concern for water resources initiatives and direct funds toward schemes management relates to the social impacts of dam emulating farmers’ methods.106 construction, including relocation of communities and loss of cultural values. In A priority must be to build on the successes of Vietnam, the proposed hydropower projects the current NTP (rural water supply and have provided a focus for dealing with this issue. sanitation) and to accelerate progress under a In a positive move, the concept of “benefit new NTP. On the water supply side, greater sharingâ€? is being examined110 and is likely to be efforts are needed to increase local capacity for formally adopted by the government. This is a operation and maintenance and to find ways to significant development, given the large number elicit genuine support for the scheme. People are of new hydropower dams being planned. often reluctant or unable to pay for water supply and, after schemes have been built, people either do not use them at all or use them sparingly, Measures to Support the Reform supplementing them with water from Agenda unimproved sources, resulting in an unintended overcapacity of the system.107 This suggests a This chapter has shown that the economic boom that Vietnam is experiencing is far outstripping N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 67 the capacity of the support infrastructure, implementation of IWRM approaches and governance, and management of water for key technical areas (such as wastewater resources and the environment. To redress this, treatment)116 and to facilitate the reform agenda just outlined, Stakeholders: involvement of stakeholders the following initiatives are recommended. Many in river basin planning and involving of these are aligned with the draft Water NTP. farmers in irrigation scheme decision Institutional arrangements: making The evolution of the market economy Education: water education programs requires the role of government to carefully targeted to community behavior. change. Governance needs to be separated from day-today-management and implementation and from a direct implementing role to a role as national “market overseerâ€? 111 REFERENCES The performance of subnational ADB (Asian Development Bank). 2009. Water—Vital governments is central to the for Viet Nam’s Future. Manila. effectiveness of IWRM and ICZM and to water service delivery, as much of the ———. 2010a. Water and Sanitation: Sector practical implementation is in their Assessment, Strategy and Roadmap. Draft Summary hands; accountability requires Report. Manila. transparency and public access to ______. 2010b. 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Climate Change Impacts and MRC (Mekong River Commission). 2010. MRC SEA Adaptation in Vietnam: Agriculture and Water. for hydropower on the Mekong mainstream. Economics of Adaptation to Climate Change. Final Impacts Assessment (Opportunities and Risks. report. Discussion Draft. Vientiane, Lao PDR. ———. 2010b. Sustaining Water for All in a Changing Nguyen Van Trong. 2008. Vietnam: Working toward Climate. World Bank Group Implementation Progress the Production of Safe and High-Quality Aquaculture Report of the Water Resources Sector Strategy. Foods. Taiwan: Food & Fertilizer Technology Center Washington, DC. for the Asian and Pacific Region. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 3 : WATER RESOURCES 69 CHAPTER 4 FOREST MANAGEMENT V ietnam’s forest landscape has changed dramatically over time: overexploitation and conversion to other uses have eroded the forest resource and depleted its biodiversity. Almost two decades of afforestation programs have reversed the decline in forest cover, but degradation of natural forests continues. And while species of fauna and flora new to science are still being recorded, the number endangered is growing. Devolution in the forest sector has provided local people with use and management rights. However, rates of poverty in forested areas remain high, particularly among ethnic minorities in the remote uplands. The economic contribution of the forest sector to the gross domestic product is low, but it would be significantly higher if environmental services were taken into account. The dramatic growth of the wood industry has brought economic benefits, yet demand for timber motivates illegal trade, which poses a threat to forests in the region and the future of the industry. To address these issues, a comprehensive set of reforms are outlined in this chapter. These include more-effective devolution of forest protection and development to private actors, with incentives for sustainable management; enhancing forest law enforcement and governance mechanisms to improve social equity and environmental sustainability; and information and forest management systems to provide robust bases for policy formulation, planning, and multiple-use management. Not only are these reforms necessary for reasons of efficient utilization, greater social equity, and environmental sustainability, they also address many of the conditions necessary to benefit in the future from international transfers for carbon sequestration services. Figure 4.1. Area of forest by type, 2005 Source: MARD 2008. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 71 Vietnam has some 16 million hectares (ha) of semi-evergreen broad-leaved forests, semi- officially designated forestland, of which about deciduous and dry deciduous forests, mixed 13 million ha are actually forested.117 The evergreen coniferous forests, and mangroves. remainder consists of bare land and denuded hills.118 Of the forested land, about 10 million ha The forest landscape has changed dramatically are classified as natural forests (although very over time. (See Figure 4.2.) Several decades of mixed in structure) and almost 3 million ha are intense exploitation and conversion saw forest plantations.119 (See Figure 4.1.)120 cover decline from 43 percent in 1943 to about 27 percent in 1990, but then approaching 40 percent Forestland is managed according to one of three in 2009. The loss of mangrove forests has been and functional categories: special-use forests (SUF), continues to be particularly acute, from 400,000 which cover almost 2 million ha; protection ha in 1943 to less than 60,000 ha in 2008.122 forests, at almost 5 million ha; and production forests, about 6 million ha.211 The country’s In 1992 the government commenced a series of complicated topography and climate explain its ambitious afforestation programs to promote diversity of natural forests, ranging from sea level tree planting on “barren hillsâ€?123 and to protect to over 3,000 meters, including evergreen and and enrich existing forests.124 Planting, mainly Figure 4.2. Vietnam forest cover, 1983 and 2004 Source: World Bank 2005. N AT U R A L R E S O U R C E S M A N AG E M EN T 72 CHAPTER 4 : FOREST MANAGEMENT with fast-growing and often exotic species, and enormous opportunities for fraud and corruption protection to assist regeneration of natural at various levels.133 Following a national review, forests has increased forest cover to almost 40 the program was amended in 2007134 and a new percent.125 The estate now comprises natural Policy on Production Forest Development135 was forests (assorted in terms of species composition, introduced to provide subsidies for growing structure, and quality) (see Figure 4.1) and timber and support for forest infrastructure and reforested areas of low biodiversity value.126 And extension services. despite the increase in area, degradation, in particular of natural forests, continues. The new Directorate of Forestry under the Ministry of Agriculture and Rural Development (MARD) is Institutional Perspectives responsible for developing forest policy and providing oversight and guidance for Policy Perspectives implementation. Line agencies at provincial and Vietnam’s Socio-Economic Development district levels are responsible for administering forest Strategy 2001–2010127 provides several protection and development. However, development objectives for the forest sector: decentralization efforts in the sector remain rather increase overall forest cover to 43 percent, nominal. Furthermore, development of effective complete the allocation of forestland to socialize forest policy is surely constrained by the lack of high- forestry development and promote forestry- quality and consistent data.137 based livelihoods, stabilize cultivation practices and prevent the destruction and burning of Economic Perspectives forests, and accelerate commercial reforestation The forest sector contributed just 1 percent of to provide material for domestic and export- gross domestic product (GDP) in 2005.138 But this oriented industries. These objectives are does not include forest product processing and elaborated within the five programs of the unrecorded forest product consumption. Vietnam Forestry Development Strategy 2006– Furthermore, public goods such as 2020,128 which sets ambitious targets for forest environmental services provide a value by some development and for management, policy, and estimates several times greater than the timber institutional reforms. The cost of achieving these resource—when including the value of soil is estimated at $400 million annually over the 14 protection, water regulation, and carbon years of the strategy. However, current sequestration provided by natural forests.139 In investment levels from public and private addition, researchers have shown that the sources are only $50–60 million annually.129 average value of non-timber forest products in Acknowledging this shortfall, the strategy Vietnam’s natural forests is about 2 million VND introduces market-based approaches to sector per hectare140 (in total some $1 billion). financing—strengthening incentives and the enabling environment for private actors. Forestry consumes 20–25 percent of public expenditure in agriculture/forestry, while it The government’s main policy for forestry contributes only 4 percent to the output of that investment since 1998 has been the Five Million sector.141 However, this figure does not reflect the Hectare Reforestation Programme (also known as full value of forest services, and the larger part of Program 661).130 This has had mixed results investment under Program 661 has been in non- compared with its ambitious targets.131 Although commercial forestry for protection and the target for protection forest (3 million ha) was conservation. Furthermore, the benefits of largely met, the one for production forest (2 forestry investments are seen in the longer million ha) was not.132 Also, weak planning, term—between 5 and 15 years (or more), budgeting, and control provisions presented N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 73 depending on species and production objective. actors and lays down principles for determination of payments and an institutional Potential exists to improve productivity of the mechanism for handling the transactions. sector: average plantation yields at 4–12 cubic However, weaknesses in forest law enforcement, meters per ha per year are at least 50 percent less governance, and monitoring will need to be than their potential.142 Some 3 million ha of overcome to fully realize the potential of such forestland remains bare, and local people often pilots and to ensure that forests are maintained lack the resources necessary to put their land into and their biodiversity protected. production;143 natural production forests are either closed for harvesting or exploited under a Vietnam’s wood processing industry has grown quota system that removes the incentive for dramatically146 (see Figure 43), with exports of sustainable management. $2.8 billion in 2008.147 The industry enjoys competitive advantages as a contact Timber production consistently dominates other manufacturer, a sector of the global furniture interests as it is easier to quantify than industry characterized by low profit margins biodiversity conservation and environmental resulting from intense low-cost competition and protection functions. But nascent markets for indirect access to markets.148 Some firms are ecosystem services exist, with national piloting upgrading toward their own design of payments for forest environmental services manufacturing, but much work is still to be done (PFES), and private piloting of carbon-financed to build a long-term, internationally competitive forest protection.144 These efforts have received wood processing industry.149 The challenge for a recent boost with the issuance of a Decree on the pulp and paper industry is even greater, with the policy for PFES.145 This defines the market imported paper from Indonesia cheaper than Figure 4.3. Turnover of forest sector enterprises, by type of activity Source: General Statistics Office. N AT U R A L R E S O U R C E S M A N AG E M EN T 74 CHAPTER 4 : FOREST MANAGEMENT that produced by the most efficient mill in indicating sizable use of imported wood Vietnam.150 (particularly plantation-grown eucalyptus and acacia) from well-managed forests.157 Adding output from wood-based products, the total contribution of the forestry sector to GDP Strong market demand from the industry for rises to over 5 percent.151 This is a notable cheap raw material motivates illegal trade from achievement for an industry that currently both domestic and external sources (with imports some 80 percent of its raw materials.152 imports of logs from Lao PDR and Cambodia Domestic sourcing remains a struggle for this being particularly controversial),158 and industry: private investment in timber weaknesses in forest law enforcement and plantations is difficult,153 and farmers allocated governance mean that such trade can flourish.159 land are less willing to grow sawlogs, and they New legislation that bans illegally sourced timber tend to produce different products at different and wood products in Vietnam’s main markets times.154 (the Lacey Act in the United States and Due Diligence Regulations in the European Union) Of the 2,500 wood processing enterprises in could soon have a major impact unless the Vietnam, some 500 export wood products.155 government and industry take appropriate Only about 200 of these have Forest Stewardship action, such as putting in place the systems and Council (FSC) chain of custody certificates,156 controls necessary to conclude a Voluntary Box 4.1. New rules for woods-based exports: EU Partnership Agreements and the US Lacey Act In July 2010, the European Parliament approved the EU Timber Regulation (formerly known as the Due Diligence Regulation). This requires timber traders to exercise “due diligenceâ€? when selling timber on the EU market and prohibits the sale of illegally harvested timber in the EU. It is expected that the regulation will become applicable in all EU member states in 2013. Timber from FLEGT (Forest Law Enforcement and Trade) partner countries will be considered to meet the requirements of the Timber Regulation: the FLEGT Voluntary Partnership Agreements (VPAs) with these countries establish procedures that ensure that only timber products derived from legally harvested timber are sold on the EU market. In August 2010 the EU and Vietnam agreed to start negotiations for a FLEGT VPA. Implementing the FLEGT VPA will enable Vietnam’s timber producers to adapt to the EU legality requirements and will improve the position of Vietnamese timber on the EU market. A common element to all VPAs is that producing countries put in place credible control systems to verify that timber is produced in accordance with national laws. This implies: A commitment to ensure that the applicable forest law is consistent, understandable, and enforceable and that it promotes sustainable forest management Development of technical and administrative systems to monitor logging operations and identify and track timber from the point of harvest and point of import to the point of export A commitment to improve transparency and accountability in forest governance Checks and balances built into the tracking and licensing system, including the implementation of an independent monitoring system N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 75 Development of procedures to license the export of legally harvested timber. Vietnam is a regional and global wood processing hub. It has the United States, EU, and Japan as its main end markets for timber products and is thus highly sensitive to the legality requirements of these markets. Vietnam is also dependent on the imports of raw timber from many other timber producing countries. Next to the EU Timber Regulation, a number of other consumer countries have similar legislation or are in the process of developing legislation against the trade in illegally harvested timber: the United States was the first to take such measures by amending the Lacey At in 2008 to make it illegal to import, trade, or transport illegally harvested wood and wood products. The Lacey Act places the burden of proof of illegality on the U.S. government, and it covers all types of wood-based products (including pulp, paper, and furniture). The amended act includes import declaration requirements for information on: The scientific name of any plant (including the genus and species names) contained in the importation The value of the importation and the quantity, including the unit of measure, of the plant The name of the country from which the plant was taken. If this information is not available in a producer or processing country like Vietnam, access to the U.S. markets will be denied. Also, Australia is in the process of developing legislation against the trade in illegally harvested timber, while Switzerland is introducing an import declaration. A growing number of countries have developed public procurement policies that aim to avoid using illegally harvested timber in public projects. Source: EC 2007; EFI 2008, 2009; EU 2010; ITTO 2010. Partnership Agreement with the European had little direct beneficial impact on the incomes Union, which the government has started to of the poor. 163 negotiate (see Box 4.1). New forest and land laws issued in the wake of Social Perspectives doi-moi initiated the devolution of forest use and management rights to non-state actors.164 (See An estimated 25 million people live in or near Figure 4.4.) Since then the area of forestland forests, including many ethnic minorities living in allocated to local people has expanded from mountainous and remote areas where poverty almost nothing to 3.5 million ha in 2006.165 rates are high. The poor tend to have a higher Forestland allocation has generally been a top- reliance than the non-poor on forest resources down process, however,166 and outcomes have for meeting their basic needs, for obtaining “gap- been afflicted by inefficient and inequitable fillerâ€? income between agricultural harvests, and allocation167 of mostly degraded or bare land.168 for providing a “safety netâ€? in the event of This is exacerbated if local institutions, through emergencies.160 Despite significant achievements which people can voice concerns and share in poverty alleviation in the country as a whole, information, are lacking,169 and access to and high rates of poverty in areas with natural forest understanding of policies and laws are remain, particularly in the remote uplands.161 The deficient.170 contribution of the forest sector to poverty alleviation is unclear. Despite large investments After 10 years of piloting community forest in Program 661, the evidence suggests that it has N AT U R A L R E S O U R C E S M A N AG E M EN T 76 CHAPTER 4 : FOREST MANAGEMENT Figure 4.4. Forest tenure change in Vietnam between 1995 and 2009171 Source: Nguyen Ba Ngai et al. 2009; Nguyen Ba Ngai, personal communication, 2010. management (CFM), revision of the forest law in benefit sharing mechanisms—a situation that is 2004 provided for the allocation of forests to beginning to be addressed with the preparation communities. But CFM remains a pilot process,172 of a decision on piloting of these mechanisms. with few areas of mostly poor forestland The reform of state forest enterprises (SFEs) has allocated with support of donor projects in released relatively little forestland for allocation selected provinces. CFM is yet to become a to households.175 This process commenced in mainstream initiative. It is a model with potential, 1999 but continues at a very slow pace that however, for implementing Reducing Emissions reflects the depth of underlying complications from Deforestation and Forest Degradation Plus and intransigencies. Although SFEs have been (REDD+),173 particularly in light of the changed to become state forestry companies conservation activities at village and commune (SFC) to be established and operate under the level, and it is promoted as such by MARD and Enterprise Law,176 many remain dependent for donors. 174 their survival on subsidies and fees from Program 661.177 Proven business models for restructuring The Vietnam Forestry Development Strategy the SFCs are needed, to provide for sustainable 2006–2020 seeks to promote socialization of the management of forests and benefits for the local forest sector, encouraging non-state actor tenure and wider economies. and resource access. Most forestland, and the best forests, remain under state control, however, Biodiversity Perspectives leaving local people disadvantaged by a lack of co-management opportunities and unclear In 1992 the World Conservation Monitoring N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 77 Centre evaluated Vietnam as one of the 16 most been lost from most. Many now suffer a biologically diverse countries in the world.178 (See continuing decline in quality rather than extent Table 4.1.) Species new to science have been of habitat, and the unrestricted and widespread discovered over the past 20 years.179 However, practice of infrastructure development within the number of species becoming endangered is them threatens their viability.187 increasing. Now more than 300 plant species are at risk, with populations declining mostly due to The protected area system suffers as a result of deforestation and shifting cultivation,180 and physical and administrative fragmentation. (See about 400 species of fauna are at risk, mostly as a Box 4.2.) The former makes it difficult to conserve result of habitat loss and hunting.181 biodiversity and results in high per-hectare management costs,188 and the latter weakens the The area of natural forests of high biodiversity authority and effectiveness of management, as has declined considerably. Only about half a responsibilities are divided across ministries and million ha of primary forests remain—scattered between administrative levels. A more unified in the Central Highlands, the southeastern protected area system is needed to avert the risk region, and northern Central Vietnam—and of more SUFs becoming paper parks.189 primary mangrove forests have almost vanished.185 Vietnam has 128 SUFs, which Despite comparatively high levels of funding (at comprise its protected area system.186 Most are least for the centrally managed national parks), small and fragmented, and some also include SUFs face major financial problems, which areas of agricultural and residential land. The translate into serious management constraints.190 large charismatic bird and mammal species have These are intensified by institutional problems191 Table 4.1. Species richness and threat status in Vietnam in 2005 Taxonomic group Species in Percent of global species Nationally Globally Vietnam 182 foundin Vietnam threatened183 threatened184 Mammals 310 8 78 46 Birds 840 9 83 41 Reptiles 286 5 43 27 Amphibians 162 4 11 15 Fish 3,170 11 72 27 Invertebrates 72 not evaluated Plants 14,000 6 309 148 Fungi 7 not evaluated Algae 9 not evaluated Source: World Bank 2005. N AT U R A L R E S O U R C E S M A N AG E M EN T 78 CHAPTER 4 : FOREST MANAGEMENT Box 4.2. Responsibilities for protected area management Responsibility for protected areas is divided among several agencies. MARD and its provincial departments are responsible for all special-use forests, and the Vietnam Environment Protection Agency within the Ministry of Natural Resources and Environment (MoNRE) is responsible for Ramsar wetlands. Within MARD, the Directorate of Forestry has responsibility for the overall management of the SUF protected area system, and direct responsibility for the management of six national parks. The provinces manage the other national parks as well as all nature conservation areas and cultural-historic- environmental sites. Agencies responsible for managing these areas are the Departments of Agriculture and Rural Development, the Departments of Science, Technology and Environment, the Forest Protection Departments, the Fisheries Departments, and the Departments of Culture and Information; arrangements vary, depending upon the type of SUF and from one province to another. SUF management boards have authority only within a park or reserve. In the buffer zone, management decisions are made by district and commune People’s Committees, State-Forest Enterprises, provincial Departments of Agricultural and Rural Development, and the Department of Land Administration. and limited inter-agency cooperation.192 development. Illegal logging, overexploitation, Engagement with local communities mostly and forest fires are major causes of forest involves contracting for forest protection—a degradation and often precursors of mechanism that (moderately) compensates for deforestation. The indirect or root causes are loss of access rather than incentivizes related to the speed and type of economic management.193 Co-management—the sharing growth, changes in markets, and broader issues of management functions, benefits, mandates, of governance and policy. 194 and responsibilities between management boards and local people—does not yet exist in Global drivers of change in the forest sector SUFs. include changes in international market demand for forest goods and services, including climate Vietnam’s legal system incorporates a large change mitigation, with potential for both number of globally accepted principles on adverse and beneficial impacts: environmentally sustainable management, and REDD+ (see Box 4.3) offers an incentive for it is one of the few countries with a biodiversity changing the way forest resources are law. In practice such provisions are minor used—curbing carbon dioxide emissions considerations in land use and infrastructure through paying for actions that prevent planning decisions. Also, effective law forest loss or degradation—but there are enforcement is hampered by weak cooperation concerns that use and management rights between agencies and by deficiencies in of forest-dependent communities could be interpreting and applying ordnances. weakened. Responsible timber traders are active in Major Issues in the Forestry promoting supply chain and forest Sector management reform, while others are driving illegal logging. The main direct causes of deforestation are conversion to agriculture and infrastructure Vietnam has a good potential for plantation N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 79 development, the opportunity for productive The Reform Agenda natural forest management, and the basis for a dynamic wood industry. But performance and Issues affecting the sector are inextricably linked sustainability across the sector is hampered by to and affected by polices and events in other low productivity of planted forests and by weak sectors196 and other countries.197 Clearly the incentives and support to put allocated land into process of policy reform needs to be coordinated production. Devolution has been driven by across affected sectors, with implementation quantitative target-oriented planning, with less better coordinated among relevant agencies. Key importance placed on process quality that could priorities for the future should be to: have delivered greater social equity through good forest land use planning, more democratic Disentangle private sector and state and transparent land allocation process and functions, with the key role of forest sector decision making, and post-allocation support institutions being to facilitate forest and services to new forestland-holders. management by private actors (see Box 4.4) Decentralize implementing authority and Forest development in Vietnam has focused on build capacity for service delivery at lower achieving centrally set targets, in particular for levels afforestation. Sustainable management is piloted Devolve use rights and management but not wholly practiced in natural forests, and responsibilities, ensuring that poor forest- these continue to be degraded as threats to dependent minorities and communities are species, habitats, and a well-functioning forest able to derive real benefits from ecosystem intensify. Vietnam might end up as a management of allocated forestland country dominated by stands of acacia, pine, and eucalyptus—with a great loss of biodiversity and Reform forest policies and management a heightened risk of climate induced calamities systems to create adequate and effective (such as storms, fires, and insect infestations) in incentives for private actors to sustainably more vulnerable monocultures.195 manage forests198 Box 4.3. National REDD + Program In 2005 a plea was made to consider existing forests as a mitigation measure under the United Nations Framework Convention on Climate Change (UNFCCC). At the 13th Conference of the Parties to the UNFCCC, a decision was adopted that called on Parties to develop proposals for the establishment of a mechanism for Reducing Emissions from Deforestation in Developing Countries. Over time this mechanism has evolved to include five eligible activities and it is now referred to as Reducing Emissions from Deforestation and Forest Degradation in Developing Countries; and the role of Conservation, Sustainable Management of Forests and Enhancement of Forest Carbon Stocks in Developing Countries (REDD+). The REDD+ mechanism is likely to become part of the new climate agreement as of 2013. In the meantime there are several initiatives to help developing countries establish national REDD+ programs; the Government of Norway is particularly active in supporting REDD+ establishment. Vietnam was the first country to implement a national UN-REDD Programme ($4.3 million) and part of the first group of countries to be accepted for funding through the Forest Carbon Partnership Facility of the World Bank ($3.6 million). MARD is currently developing its National REDD Program, with support from the UN- REDD Program. N AT U R A L R E S O U R C E S M A N AG E M EN T 80 CHAPTER 4 : FOREST MANAGEMENT Strengthen governance and law system and agree upon standards for data enforcement mechanisms necessary to collection, measurement, and compilation, underpin sustainability in order to make information comparable in time, space, and across organizational Bring the role of forests in greenhouse gas boundaries. mitigation and climate change adaptation into full play within strategies and planning Clear roles and responsibilities for data of relevant sectors collection, compilation, and publication between ministries and agencies need to Facilitate policy consultation and learning be established, and capacities from pilot initiatives together with key strengthened. stakeholders to efficiently identity solutions and implementation arrangements. Modern information technologies should be introduced for reporting, monitoring, and compilation processes and to facilitate public dissemination and analysis. Governance and Institutional In addition, improved systems and capacity for Reforms forest inventories and monitoring will be Reliable and adequate information (in terms of necessary to provide the information basis for disaggregation, frequency, and transparency) is managing forests sustainably (see Box 4.5), to needed to provide an appropriate basis for policy assess performance linkages for PFES and REDD+ decisions and to improve implementation payments, and to identify social and effectiveness. To improve data quality and environmental outcomes. consistency in the forestry sector, the following recommendations should be taken into account: Interagency cooperation is a primary condition to enable effective forest law enforcement. Such Effective coordination among ministries cooperation needs to improve dramatically to and agencies is required to develop a deal effectively with the forest crime challenge, Box 4.4. Evolution of forest sector institutions Government forestry departments traditionally integrated multiple public and private functions. Challenges of reduced public expenditure, mounting expectations of different stakeholders, and increasing conflicts over the use of forest resources are stirring public agencies to rethink their roles. The evolution in focus can be loosely described as moving from policing the forests to managing them to facilitating management by others. In some cases, reform has been superficial, limited, for example, to changes in ministerial responsibility or to structural but not functional change. Strategies used in more successful transitions to an enabling role have included: Separating policy and regulatory functions from management functions Entrusting wood production and processing to an independent commercial government entity or privatizing all commercial activities Decentralizing and devolving management responsibility to the local level, usually as part of a larger program of political and administrative decentralization. Source: FAO 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 81 Box 4.5. Forest information management MARD has embarked on an effort to integrate data and information on forest resources, management, and economic activities. The Forest Information Management System (FOMIS) has been an early attempt at collating, integrating, and publishing such information. This is being strengthened, with support from the FOMIS project, to provide a more professional basis for the management of data that underlies FOMIS and to enhance opportunities for application in forest management, such as for the elaboration of provincial forest development plans. The 4th National Forest Inventory (NFI) will be completed in 2010. A new approach to the NFI has been developed through the National Forest Inventory and Monitoring Program (NFIMP), which will see information management based in MARD rather than the Forest Inventory and Planning Institute, as in the past. The new NFIMP is expected to be endorsed by the government before the end of the year. The National REDD Programme is developing a system for Monitoring, Reporting, and Verification (MRV), as required by the UNFCCC. The MRV system will collect data on forest resources from participants in the REDD+ mechanism, as well as from secondary sources such as the NFI. The MRV system will generate the reports upon which Viet Nam will receive funds for reducing emissions and enhancing removals. A benefit distribution system to deliver payments to participants will use the MRV as its primary “evidenceâ€? of performance. The MRV is expected to provide information for other uses as well, as it is likely to become the most comprehensive database on forest resources and users. MARD would like to see all three systems—FOMIS, NFI, and MRV—integrated into a single source of information on forest resources in Vietnam. which will require strengthened cooperation at imported. Government and the private sector all levels: should put in place effective due diligence measures for sourcing raw material. This will Systems of cooperation are needed require an agreed definition of legal wood, between MARD, the Ministry of Justice, and systems for verification of legal origin and the General Department of Customs to compliance, and effective chain-of-custody identify changes needed in the legal management. In addition, enforcement efforts framework. should be focused on the point-of-sale of illegal New local-level approaches are needed, forest products—sawmills, wood processors, and such as revised institutional working export points. The basic elements of this relationships between the Forest Protection approach would require a licensing system for Department and enforcement agencies. wood processors and traders, an enforceable requirement to demonstrate legality of raw Interagency cooperation at the material, systematic and concerted inspection by international level can prevent imports of trained forest enforcement and customs officials, illegally sourced timber and wildlife; and strong legal sanctions for the unlawful systems need to be in place for sharing data possession of wood. A similar approach should and working jointly with counterpart be also applied to combat illegal wildlife trade, agencies in exporting countries. focusing on markets and restaurants selling Sustained access to international markets for the wildlife products. wood processing industry will require procurement of verified legal timber originating A very preliminary (and likely conservative) from well-managed forests, whether domestic or estimate of REDD+ revenues, based on low- N AT U R A L R E S O U R C E S M A N AG E M EN T 82 CHAPTER 4 : FOREST MANAGEMENT resolution remote sensing estimates of forest along with actions to address leakage that could cover change over the period 2000–05 and result from the demand for raw material having a Intergovernmental Panel on Climate Change negative impact on forests in neighboring carbon density estimates, suggests that Vietnam countries. Policy incentives need to be designed could earn some $80–100 million a year199 so that adequate reward is given to the provision provided international agreement is reached of non-market benefits of forests. under the UNFCCC. REDD-preparedness is happening and pilots are being planned, but this Introduction of a multiple-use management could only be realized if the government takes approach will require district and commune-level steps to ensure that REDD+ is implemented support for forest planning, monitoring, and effectively. This will involve developing a extension. This will require reform of the forest comprehensive REDD+ strategy to generate and protection force to become a more technical sustain emissions reductions at the local level, supporting agency for forest development, able developing the necessary capacity to measure to facilitate the shift from state to private forest and report on emissions reductions, and putting management through cooperative action that in place a benefit distribution system that meets supports implementation by those who hold the expectations of the international community forestland. in terms of equity, transparency, additionality, performance, and accountability. (See Box 4.6.) Efficiency Reforms Effective implementation of REDD+ will also Appropriate solutions for forestland require actions to ensure permanence of forest accumulation that improve raw material supply carbon storage by strengthening forest law and deliver benefits to local people are enforcement and governance mechanisms so necessary. This could be in the form of leasing that tenure is assured and forests protected, arrangements to enable enterprises to lease Box 4.6. The Forest Carbon Partnership Facility (FCPF) in Vietnam The REDD+ agenda drives an important reform process. Analyses conducted in the framework of the preparation of the Readiness Preparation Proposal for submission to the Forest Carbon Partnership Facility highlighted six recommendations to reduce deforestation and forest degradation. First, it calls for assessing current sectoral development plans both nationally and provincially to identify plans which are likely to lead to high forest loss. Second, it calls for secure forest use rights to households, or communities, with the expectation that this will provide incentives for them to protect the forest area assigned to them. Third, it calls for modifying a number of policies including, for example, the current logging ban and the system for granting permits for afforestation on degraded forest lands’, including the process of classification of degraded land. Fourth, it recommends proper execution of high quality EIAs which would help mitigate development projects which are likely to occur in high forest loss. Fifth, it recommends providing support in certain areas, such as more intensive agricultural cultivation, encouraging production of higher-value crops and vocational training for off-farm income opportunities. One area of particular importance concerns alternatives to slash and burn agriculture. Sixth, it calls for financial transfer mechanisms which would enable forest-using communities to have real and reliable incentives. Source: GoV 2010b. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 83 blocks of forestland from multiple landholders; blueprint for more integrated development of outsourcing arrangements (such as material forests and the processing industry. This implemented by VINAFOR200), in which would identify a limited number of locations enterprises contract with farmers to plant and where substantial areas of plantations could be grow material primarily for their consumption; or developed consistent with raw material a refined outsourcing arrangement (such requirements. Also, incentives and the enabling pioneered by LASUCO201), where farmers also environment should be strengthened to have the possibility to become shareholders in encourage private investors that can bring the the processing facility they supply. (See Box 4.7.) best available technology and resources to the sector. It is not realistic to assume that Vietnam’s timber consumption can be met from domestic Key objectives of the SFE reform process203 are sources.202 But the wood processing industry still to be fully realized; most enterprises have just could drive the development of (certifiable) well- changed their titles without many changes in managed forests—especially plantations. nature.204 Urgent reforms are needed to unlock Formulation of a national Wood Production and the potential of these forests. This could be Industry Development Plan could provide a achieved by allocating to communities to Box 4.7. Smallholder group management scheme Smallholders growing trees on allocated land often seek an early return with the production of low- value small-diameter wood sold through agents to the chip and pulp industry. The potential exists to better coordinate and manage this resource, providing benefits in terms of sustainability of the forest and better income for local people. One such example has been developed in Quang Tri province, where the World Wide Fund for Nature (WWF) has facilitated the establishment of a Smallholder Group Management Scheme. This has just received FSC certification awarded in recognition of responsible management in accordance with globally established social and environmental criteria. The smallholder group started off with 125 households, with individual plots ranging from 0.5 to 8 ha, which formed themselves into five village groups each with an elected leader. Additional farmers can apply to the group and be admitted after an internal assessment of the applicant’s compliance with the group’s management regulations. Under the group scheme, individual household members manage their forestland in accordance with a simple forest management plan aiming at the improvement of the economic and environmental value of the stands. The implementation is supported and monitored by a Group Manager (currently WWF, but in the future the Forestry Sub-Department within Quang Tri DARD). This has improved coordination and management, resulting in tangible benefits: Coordinated management, harvesting, and marketing, with the possibility to offer larger volumes and negotiate directly with potential buyers Joint procurement, leading to cost savings for inputs such as seedlings Planting of native trees to enhance the environmental functions of buffer zones along water bodies Potential group investment in processing and loans to group members for forest stand improvement. N AT U R A L R E S O U R C E S M A N AG E M EN T 84 CHAPTER 4 : FOREST MANAGEMENT The forests now planned for harvesting were established on bare land with assistance from KfW some 10 years ago. With the sale of larger-diameter timber, the smallholders will realize two types of premium: one from selling sawlogs directly to the value-added processing industry, and the other from certification, which is providing a 10–20 percent price improvement. The group provides a focus for training and advisory support and potentially the basis for a public- private partnership with a responsible buyer from the furniture industry. It also offers a model that could be replicated in other areas. In collaboration with the IKEA company, WWF is exploring opportunities to expand the scheme to more than 7,000 ha in Quang Tri by 2012, with private investment rather than donor funding, and in so doing contribute to the government’s target of 30 percent of production forests being certified by 2020. Source: Tim Dawson (consultant to the VDR) and Sebastian Schrader (WWF). support local livelihoods, leasing to users in a Equity Reforms position to invest properly in forest management and protection, or forming new social enterprises Community-based forestry can provide more- between existing SFCs and local stakeholders. sustainable and beneficial means of management and protection than current The potential exists to improve the productivity practices in certain situations by, for example, of planted forests. Gains could be achieved from providing a means to develop the local economy the more rapid deployment of clones, hybrids, in mountainous areas, protecting and and new species and provenances; the policies developing coastal mangroves for the benefit of and legislation on plant material need to be local people and the environment, or conserving reviewed to ease and speed deployment of biodiversity through co-management within superior material. Also, species-site matching SUFs. (See Box 4.8) To achieve these outcomes, a should be improved through a system for site “basketâ€? of community-based management classification that takes account of soil type, methodologies, providing improved individual, vegetation with indicator plant species, community, and co-management rights and microclimate, and water availability. responsibilities, should be available to be Furthermore, a network of decentralized implemented according to social and nurseries should be established to promote both environmental needs and the strictures of exotic and local indigenous species, while existing forest ownership and classification nursery advisory centers should be set up as arrangements. This would require: living extension centers where planters can Lessons learned from piloting community purchase material and obtain advice. There forestry to be absorbed and appropriate needs to be a major coordinated effort in national policies developed that can enable research, training, and extension to support allocation of (more) suitable forestland to improvements in the quality and productivity of local communities forest resources and viable management Formalization of co-management systems. This will require greater coordination arrangements, enabling representatives of and collaboration between research institutes local communities to have a role within the and forestry-related service agencies, management boards of SUFs and appropriate investment in forestry research and protection forests and providing extension, a research agenda driven by the needs community members with rights and of forest users, and participatory techniques to responsibilities to meet their needs while ensure that proposed technologies are tested on maintaining forest management objectives the basis of criteria that are important for users. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 85 Clear benefit sharing arrangements that the quality of the process—measured in terms of help meet local needs and in turn provide equity and transparency—as experienced by the incentive for protection and sustainable recipients. This could be ascertained through management—the current (short-term) surveys. contracting of forest for protection to households should be replaced by long- Environmental Sustainability term performance-based financing, such as that piloted under the PFES scheme Reforms Commitment from leadership to put in A multiple-use forest management approach is place a policy frame at the national level needed to ensure that a better balance is struck and technical guidelines at provincial levels among the economic, social, and environmental in line with national decentralization services that forests should provide. Instead of efforts, along with technical and financial strictly classifying forests as protection, support to local communities for production, or special use, the functional aspects implementation. of all three should be blended within site-specific forest management plans. These would gradually The forestland allocation process should be replace the current uniform management improved to overcome past problems of prescriptions and the quota system. Combining inefficiency and inequity. This should include an “productionâ€? with “protectionâ€? would increase the appropriate solution between MARD and the incentives and benefits for households and MoNRE to merge the forest allocation and communities to actively engage in forest forestland allocation processes, providing single management and protection. Furthermore, the uniform guidance on participatory forestland use initial inventories and forest function mapping planning and allocation. Also, performance of the would provide baselines against which to allocation process should not just be measured monitor changes, thereby supporting in terms of area allocated but, more important, in sustainable forest management, PFES, and REDD Box 4.8. Community-based mangrove management Mangroves have been lost from much of the coastline of Thanh Hoa province (as elsewhere in Vietnam). In Hau Loc District, protection of remaining mangroves had been financed by Programme 661 using the Border Army for enforcement activities. Seeing the importance of mangroves in sustaining coastal residents’ livelihoods and contributing to the reduction of disaster and climate change vulnerability, CARE facilitated the development of a community-based approach to mangrove management. Local people have received training and guidance in hands-on activities in order to assume management responsibilities. They collectively run the nursery, selecting and sourcing seeds of recommended varieties for the area’s varied local conditions, such as mudflats or sandy sea-beds; and they work together in preparing and planting the mangroves in groups of 50 to 700 people at one time. Thus far, nearly 250 hectares of mangroves have been re-established. Mobilizing community-wide labor has been key to the high plantation survival rates. This has extended the existing mangrove area and increased the storm protection afforded to more than 6,000 people in the six project villages and to some 2,300 people from neighboring villages. In addition the community formed a protection team to report and stop activities that harm the mangroves and a youth-led Green Team with more than 160 members active in planting, beach cleanup, and raising awareness on the value of mangroves and environmental protection. N AT U R A L R E S O U R C E S M A N AG E M EN T 86 CHAPTER 4 : FOREST MANAGEMENT After nearly three years, the communities asked the Hau Loc District People’s Committee for the full rights to plan, manage, protect, and sustainably use the mangroves. In October 2009, they were awarded these rights for five years, incorporating rules and regulations, which the villages had negotiated with local government under the framework of national legislation and regulations. A study sponsored by CARE explored opportunities for replicating this co-management approach on a larger scale by other donors and in future for mainstreaming it by government, such as within the new national program on mangrove reforestation and rehabilitation. Source: Nguyen Van Anh and Morten Fauerby Thomsen (CARE). processes. The prerequisites for this approach will management oversight are administered by a include: central organization, replacing the current multi- agency arrangement. Improving the quality of forest inventory as a basis for forest management planning SUFs need to be adequately financed and effectively managed. This will require a definition Identifying social, environmental, and of criteria for SUF funding that takes account of economic forest functions and demarcation biodiversity value rather than just staff number and mapping of production and protection and SUF size; an enabling environment, so that zones SUF management boards can generate income Elaborating management plans that from biodiversity offsets, PFES, and leasing; contain specific management prescriptions capacity building for managers, technical, and for the forest zones and their inherent field staff for more effective implementation of forest functions forest and biodiversity legislation; and integrated management approaches that provide for co- Delegating provincial-level implementing management in collaboration with local authority, with capacity strengthened to stakeholders, incentives to strengthen protection support the process. through benefit sharing arrangements, and Closing natural forests to all harvesting is not an buffer zone management arrangements that effective measure for sustainable forest complement and reinforce protection activities. management, and the existing quota system discounts the basis for sustainable forestry: Much of Vietnam’s important biodiversity is harvesting based on growth and yield in a found outside the boundaries of SUFs. To address defined and permanent forest area. Under a this, there is an urgent need to improve system of multiple-use management of natural integration of biodiversity conservation and forests, the national harvesting quota system environmental protection measures into should be replaced with a scientific approach management of production and protection based on assessment of forest status and forests. The multiple-use management approach dynamics in order to determine sustainable would provide for this better, as biodiversity yields. This will unlock the potential of natural values would be identified at an early stage of forests to contribute more to local livelihoods planning and as zoning and management and the wider economy, and it will increase the prescriptions would enhance protection efforts. incentive for sustainable management. This approach is also highly relevant in the changing climate, as critical sites would be Management of the protected area system needs protected and relevant environmental functions a major institutional rethink, so that policy, would be maintained (see Box 4.9). planning, and regulatory decision making and N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 87 Box 4.9. Climate change and forestry in Vietnam A recent study of the forestry sector concludes that sea level rise, higher temperature, unpredictable rainfall and extreme climatic events will impact the boundaries of forests, the distribution of species and biodiversity. Very limited research is found to support quantitative conclusions, but the risk of forest fires, pest and diseases in forests are predicted to increase. However, some forest species can also benefit from higher levels of CO2 and reach higher standing volumes. 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Hanoi: GFA Consultants. ---------. 2005b. Vietnam Environment Monitor 2005. Vietnam Forestry University. 2005. Forestry, Poverty Biodiversity. Hanoi. In partnership with MoNRE and Reduction and Rural Livelihoods in Vietnam. Report Sida. prepared by Xuan Mai and Ha Tay for the Forestry ———. 2009. Vietnam: Aligning Public Spending with Sector Support Program. Strategic Priorities in the Forestry Sector. Rural Vietnam News. 2009. “Timber Industry in Need of Development, Natural Resources and Environment Major Reform.â€? 13 March. Department, East Asia and Pacific Region. Washington, DC. Vu Tan Phuong, Pham Duc Chien, and Hoang Viet Anh. 2010. Economics of Adaptation to Climate ———. 2010a. Wildlife Consumption in Vietnam: Change: Forestry Sector of Vietnam. Final Report. Reforming Policies and Practices to Strengthen Ministry of Agriculture and Rural Development. Biodiversity Conservation. Project Identification Forest Science Institute of Vietnam. Hanoi. Form. Washington, DC. WCMC (World Conservation Monitoring Centre). ———. 2010b. Socialist Republic of Vietnam—Forest 1992. Development of a National Biodiversity Index. Law Enforcement and Governance. Washington, DC. Discussion Paper. Cambridge, U.K. Wunder, Sven, Bui Dung The and Enrique Ibarra. Wode, Bjoern, and Bao Huy. 2009. Study on State of 2005. Payment is Good, Control is Better: Why the Art of Community Forestry in Vietnam. Hanoi: GFA Payments for Forest Environmental Services in Consulting Group and GTZ. Vietnam Have so far Remained Incipient. Bogor, Indonesia: Centre for International Forestry _________World Bank. 2005. Vietnam Environment Research. Monitor: Biodiversity. Washington, DC. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 4 : FOREST MANAGEMENT 91 CHAPTER 5 MARINE RESOURCES A lmost half of Vietnam’s provinces are located by the sea. In these coastal provinces, marine capture fisheries and coastal aquaculture account for a significant share of income and employment. Total annual catch in marine fisheries has increased almost fivefold in the past 30 years. Meanwhile the domestic market for fish and fish products is also expanding rapidly, with the people of Vietnam now obtaining about half of their dietary protein from seafood. With this exceptional growth, a major price has been exacted, however. The marine resource base is deteriorating due to overexploitation and excessive fishing capacity, habitat loss, weak coastal planning, pollution, and other impacts. Major intersectoral deficiencies, jurisdictional overlaps, and policy gaps further compound these problems. A lack of efficiency is seen in the decreasing catch per unit effort due to overcapitalization in the fisheries sector or the loss of the services provided by coral reef and other marine habitats. Equity concerns arise from illegal fishing and poorly enforced regulation of fisheries. The documented declines in the abundance of marine species and in habitat extent and quality have serious consequences for the continued sustainable use of marine biodiversity and overall environmental quality in the marine realm. The poor system of data collection and lack of integrated coastal planning are overarching problems prevalent throughout the sector. Marine resources pose a very basic "commonsâ€? problem, where various individuals all seek to exploit a shared resource that lacks some form of property rights, resulting in overexploitation with the costs borne by all users. Individual fishers, buoyed by government policies encouraging continued investment, have a strong incentive to increase their harvest. No individual has any incentive to exercise restraint, especially when regulatory and enforcement systems have little impact in controlling or managing the industry. Ensuring sustainable, more-efficient, and more-equitable use of marine resources in Vietnam will require an innovative, integrated approach using a mixed strategy of regulation and market-based measures. A relative emphasis on non-state actors and private sector engagement is implied. Where government support and capacity development is warranted, these should generally be targeted at the provincial and/or district levels. For fisheries, a reform agenda should foremost develop and implement a program to steadily decrease the reliance of fishing households on a depleting resource. Intimately linked to this is the objective to institutionalize co-management and the use of rights-based measures in fisheries. Improving the standard of data collection and monitoring is also fundamental to such a strategy. Finally, more effectively applying marine spatial planning tools such as marine protected areas in managing marine resources for their sustainable use and conserving specific marine species and habitats of special concern is required.205 Many of Vietnam’s more than 20 distinct engine of primary productivity. Together, these ecosystem types206 along the 3,200-kilometer many varied marine species and habitat types in coastline are regionally unique in their Vietnam not only form an impressive array of oceanographic properties. At the species and biodiversity, they also serve as a foundation for habitat level, Vietnam is a reservoir of diversity, human economic development and livelihood home to over 11,000 known species. Offshore in attainment for millions of coastal peoples, as well the East Sea, northward undercurrents and as contributing significantly to national food southward countercurrents coalesce to form security and the dietary protein intake of intense upwellings of nutrient-rich water, an Vietnamese peoples.207 N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 93 Fueled by rising demand and driven by the In 2009 total annual capture fisheries production increased coastal population base, the marine passed 2 million tons for the first time, an fisheries industry has become the cornerstone of expansion greatly aided by government Vietnam’s coastal development, accounting for programs. (See Figure 5.1.)212 nearly 6 percent of gross domestic product and Fisheries management in Vietnam is under the with exports in 2009 valued at over $3 billion, Ministry of Agriculture and Rural Development making it the third leading exporter in the (MARD). Under MARD, the Department of country.208 Fisheries provide a direct or indirect Capture Fisheries Exploitation and Protection source of livelihood to approximately 4 million (DECAFIREP) is responsible for fisheries resource people, and some studies estimate that up to 12 management, vessel registration and licensing, million people are partially dependent on marine monitoring, control, and surveillance. Major fisheries. 209 strategy and other documents for MARD include the Vietnam Fisheries Law (2003), the Five Year Approximately 130,000 powered fishing vessels Master Plan for Fisheries Sector Development are currently registered and operate within 2006–2010, and the Master Plan on Vietnam’s Exclusive Economic Zone (EEZ), with Development of the Fisheries Sector till 2010 and many more unpowered small unregistered craft Orientations Toward 2020 (MARD 2006). in use for subsistence fishing.210 These vessels concentrate in near-shore areas, with an Although the sector has received relatively little estimated 85 percent of total harvest caught in bilateral or multilateral agency support over the an area of only 11 percent of the nation’s EEZ. past decade, this has still played an important With a wide variety of engine sizes and hull role, providing about one-third of public lengths and with an array of (often resources. The support provided by the interchangeable) gear employed, marine capture government of Vietnam in terms of finance, fisheries in Vietnam are not readily classified into human, and material assets is small compared “small scaleâ€? and “industrialâ€? sectors; instead, they with the sector’s contribution to the gross are more conventionally categorized as either domestic product. Investment and investment- inshore or offshore. 211 related technical assistance have accounted for Figure 5.1. Total catch and engine power in Vietnam’s marine fisheries, 1981–2009 Source: MARD 2010. N AT U R A L R E S O U R C E S M A N AG E M EN T 94 CHAPTER 5 : MARINE RESOURCES the bulk of support, creating an imbalance land-sea uses, leading to increased risks of between investment and maintenance/ contamination and vulnerability to climate operation funding in the sector.213 The main change. program assisting the sector at present is the DANIDA-funded Fisheries Sector Program Various studies indicate that almost all inshore Support (FSPS) Phase II and NORAD Fisheries Law areas are overexploited. Catch per unit effort has Phase II. steadily declined. (See Figure 5.2.) Studies on catch composition have documented a decline Major Issues for the Marine in average fish size, as well as the “fishing down the food webâ€? phenomenon, in which top Sector predators are systematically overfished, resulting Marine resources are under tremendous pressure in a marine ecosystem dominated by mostly from the impacts of overfishing; overcapacity; lower-value species.215 illegal, unreported, and unregulated fishing (IUU); habitat loss and degradation; and other Given that poverty is still a major issue for coastal trends. Driven by Vietnam’s strongly production- fishing communities,216 Vietnam’s inshore fishing based policies combined with a general lack of community is in a precarious situation. For the past management planning within a largely offshore—where national policies continue to unregulated open-access system,214 and further promote the development of fisheries to reduce exacerbated by the high level of vulnerability pressure on the inshore resources—sustainable characteristic of coastal fishing communities, levels of production and capacity are still these issues pose great challenges in terms of unknown. There is no mechanism to ensure that achieving sustainable marine fisheries and the phenomenon witnessed in past years—with sustainable livelihoods. Further complications large boats ending up fishing inshore instead— arise from a coastal planning process designed is not repeated. to stimulate economic growth with conflicting Figure 5.2. Total engine power and yield in Vietnam’s marine fisheries, 1981–2009 Source: MARD 2010. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 95 The management of resources in the marine nevertheless important factors to be considered realm is extremely complex. This chapter aims to in a comprehensive strategy aimed at securing highlight a few of these issues as priorities, based sustainable fisheries and livelihoods. Box 5.1 on urgency, feasibility, or strategic opportunity summarizes key factors contributing to the for positive change. Other issues that are not overexploitation and degradation of marine given prominent treatment in this chapter are fisheries resources. Box 5.1. Key issues and constraints for Vietnam’s marine capture fisheries • Overcapitalization and overcapacity in capture fisheries, aggravated by a lack of regulations preventing bigger offshore vessels from fishing inshore. • Control over the fishery is severely constrained, both by the “open accessâ€? system and an overall lack of enforcement and monitoring of activities. • Survey data are weak and insufficient to provide a foundation for sustainable fisheries or an ecosystem-based approach to management. Communication mechanisms between central and provincial levels related to data management and processing are ineffective. • Communication mechanisms between central and provincial levels related to data management and processing are ineffective. • Destructive fishing methods (dynamite, cyanide, etc.) continue to be used in coral reef habitats, decimating key rearing, nursery, and foraging habitats. • Marine spatial planning tools, such as no-take marine reserves and fisheries refugia, are not widely implemented or comprehensively applied in fisheries management planning. • The harvest of marine species of concern (such as sea turtles, sharks, and juvenile fish of commercial value) remains high, either as a directed catch or as “bycatch.â€? • “Trash fishâ€? landings have increased, driven by an increasing demand from feed industries and leading to large-scale ecosystem impacts. • Subsidy programs continue to encourage the use of fuel-inefficient and badly designed wooden fishing vessels. Past and current investments (and subsidies) aimed at offshore expansion have been mostly ineffective in meeting key targets and often exacerbate the overfishing problem. . • The quality of fish landed is often poor (due largely to poor vessel design and lack of post- harvest onboard technology). • There is a general prevalence in fisheries management of production volume as an indicator of success as well as an inconsistency between the strategic orientation of the national fisheries sector and (economic-based) harvest strategies at the provincial and district levels. Source: Compiled from Pitcher 2006 and Pomeroy et al. 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T 96 CHAPTER 5 : MARINE RESOURCES Fishing Overcapacity and as a result of a steep decline in orders from the EU for species such as tunas, swordfish, squid, Resource Inefficiency and crabs. The increased costs of fishing combined with declining yields suggest declining benefits from Lack of Data and Formal fisheries.217 As a result, competition has intensified—between small-scale fisheries and Reference Points large-scale fisheries and between fleets, national The lack of detailed or verifiable stock vessels, and foreign fishing vessels—further assessment data and appropriate management exacerbating the problem. In response to this reference points continues to confound fisheries challenge, Vietnam aims to reduce the number management. Where data on fish landings are of fishing vessels in the country by 50 percent.218 compiled, they tend to be by commercial group The overall policy is outlined in Vietnam’s Master and not by species. This makes attempts to Plan on Development of Fisheries Sector till 2010 establish reliable biomass estimates (and and Orientation toward 2020 (MARD 2006). A therefore Total Allowable Catch estimates) a national Catch Documentation Scheme related dubious approximation at best. DECAFIREP has a to the exporting of marine capture fish products good fisheries management software package to the European Union (EU) has also been (VietFishBase). But the coastal province established. However, the efforts to manage enumerators are unable to record and send the fishing capacity are still in their early days. necessary data from all coastal provinces on a regular basis. Poor data capture also leads to an Illegal, Unreported, and inability to manage fish stocks in contiguous provinces. Unregulated Fishing Studies suggest that IUU fishing by national as Figures for maximum sustainable yield (MSY)— well as foreign vessels is widespread and currently estimated at about 1.7 million tons— increasing in Vietnam’s EEZ. This is characterized are likewise unreliable.222 Separate from the MSY, by the increased use of prohibited gear or the economically optimal level of exploitation is methods, the large number of unregistered the level of catch that provides the maximum net vessels, lack of catch documentation, and economic benefits or profits to society (MEY). generally poor capacity in fisheries Because costs rise with increasing effort, the MEY administration.219 The issue has also become a is necessarily lower than the MSY and would be a major policy imperative, given the growing level more appropriate indicator for more-effective of international scrutiny related to IUU and planning and management in the fisheries current and emerging trade restrictions, as sector.223 exemplified in the European Commission (EC) IUU fishing regulations introduced in 2010. 220 Vulnerability and Equity A strategic response to the IUU issue must also Several studies have documented high levels of recognize that capacity at MARD and provincial vulnerability in coastal communities.224 For Departments of Agriculture and Rural example, in the face of overexploited resources, Development Sub-departments to provide catch local fishing households have to work harder to documentation or improve overall statistical make the same income; they lack the capital or management systems pertinent to IUU is credit to invest in new gear or occupations; there extremely limited. As witnessed in January 2010, is a high level of risk for fishing households in when the EC regulations came into effect,221 this terms of income stability and outlook; and there poor capacity translated into economic impacts remains generally poor access to markets or new N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 97 technologies for these communities, as well as a loss of critical spawning, rearing, and foraging heavy reliance on intermediaries to sell fish.225 habitats from destructive fishing methods such Socioeconomic indicators are generally below as particular types of bottom trawling, dynamite national targets or averages—particularly and cyanide fishing, and illegally sized net average household income, poverty rates, and meshes is directly evident. Drivers such as coastal education levels.226 There is also vulnerability to development, pollution, and coastal aquaculture extreme weather events and the long-term have also taken a heavy toll on marine impacts of climate change, which will bring rising biodiversity. The general absence of sea levels and increasing saltwater intrusion. comprehensive and integrated coastal Extreme weather events damage boats, living development planning and weak management quarters, coastal vegetation, and aquaculture of economic activities in coastal areas have facilities. Above all, they take lives. consistently limited efforts aimed at the conservation and sustainable use of a coastline Co-management in capture fisheries is in its early that supports a rising population.228 Coastal stages in Vietnam. There is a legal framework for development has led to widespread destruction peoples' participation in a range of management of adjacent coral reefs, sea grasses, and areas227 at the commune level. This has led to mangroves through sediment loading and significant (but still insufficient) financial support pollution. Coastal tourism has been largely to a Capture Fisheries Co-management Task unregulated, with impacts not only from Force for the planning and implementation of construction but also from the growing level of pilot projects with a view toward nationwide marine tourism activities along the coast.229 dissemination. Legal reforms allowing fishing rights to be assigned under fisheries co- Marine environmental quality has also been management scenarios have been slow to negatively affected by poor natural resource develop. management upland, such as deforestation that leads to increased runoff, soil erosion, and Supply Chain Inadequacies sediment loading in rivers, streams, estuaries, and ultimately the ocean. The ramifications of such The supply chain for seafood in Vietnam has not impacts are widespread. For example, the been effectively designed for sustainability. development of harmful algal blooms has had Problems include limitations in traceability, poor major implications for overall food safety, export coordination, lack of clarity around the roles and marketing, and profitability in the seafood sector. responsibilities of different actors in improving management, and lack of branding or eco- Indicators that marine biodiversity is in decline certification. Buyers and processors have almost are widespread. Twenty-five percent of Vietnam’s no direct links to producers, resulting in a major coral reefs are classified as being “at very high gap in supply chain management. Supply chain riskâ€? from degradation and habitat loss—the partnerships (such as contract systems) and highest rate of more than 10 countries surveyed fishery cooperatives—essential for better in Southeast Asia.230 Sea grass beds are similarly validation and more-sustainable exploitation of declining, threatening the livelihoods of the the resources—are largely lacking. communities who depend upon them. Mangrove forests, central to the biodiversity of The major issues just outlined related to marine marine and estuarine ecosystems as a natural capture fisheries have clear consequences for the nursery for a wide range of finfish and shellfish, maintenance of marine biodiversity—indeed, continue to decline, from 400,000 ha in 1943 to fisheries are the major driver of negative 59,760 ha in 2008, with primary mangrove forests environmental impacts in the marine realm. The having virtually vanished.231 The number of N AT U R A L R E S O U R C E S M A N AG E M EN T 98 CHAPTER 5 : MARINE RESOURCES productive sea turtle nesting beaches in Vietnam Ascension by Vietnam into the Western and has declined significantly. Dugongs—a Central Pacific Fisheries Commission as a herbivorous marine mammal that is listed as full member nation. “vulnerableâ€? on the International Union for Conservation of Nature’s Red List—have virtually Reducing Capacity for Environmental disappeared from Vietnam. Sustainability and Greater Efficiency The government of Vietnam, with support from the Food and Agriculture Organization, has The Way Forward drafted a National Plan of Action (NPOA) on Improving Data Collection and fishing capacity reduction that identifies Resource Assessment management priorities for various interventions. Effective data collection, analysis, and resource While the NPOA provides an important assessment is a cornerstone of fisheries foundation for addressing overcapacity, it will be management. New capacity is urgently needed essential to select the most appropriate at provincial and district levels for data collection, interventions, based on an understanding of the monitoring, information sharing, administration, social ecology of fishing communities, and with and enforcement to support of a variety of key an emphasis on the active participation of fishing policies and measures (such as capacity communities as well as a focus on household (as reduction, co-management, IUU, offshore opposed to individual fishers). Approaches need fisheries management, and so on). Specific areas to go beyond “alternative income generationâ€? of effective intervention could include the projects that assume (inappropriately) that following: fishers are willing and able to leave fishing;232 they need to focus on improving the enabling Expanding the application of VietFishBase economic environment together with job software on a provincial basis, linked diversification and vocational training together through a network; the opportunities. This will allow fishing households comprehensive application and inter- to reduce their dependence on a depleting networking of VietFishBase would help resource.233 The critical contribution that co- determine which provinces are being management may provide in achieving capacity effective in data capture and analysis and reduction goals should also be recognized, and help resolve the confounding problems of such approaches should be integrated into the institutional non-linkages and lack of chain Plan of Action. Thus a strategic agenda for of command in fisheries monitoring, addressing capacity reduction could include the control, and enforcement to aid decision following: making Increased financial and human resources at Concerted efforts to adequately train provincial and district levels to improve provincial fisheries staff (and provide data collection and local administration additional required resources) in aimed at implementing the NPOA enumeration, onboard observer programs, and dockside monitoring and the use of New governance arrangements at local software applications levels that use a form of rights-based measures, such as limited entry and/or Further development and expansion of territorial use rights). onboard Observer Programs aimed at collecting data on catch rates and impacts Stronger programmatic linkages between on sensitive species as well as providing coastal fishing communities and national opportunities for detailed biological poverty alleviation and/or job sampling diversification programs N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 99 Related to above, detailed livelihood and Co-management frameworks should recognize job diversification strategies at the district that a legal framework on fishing access rights level focused on improving the broader granted to local fisheries associations would enabling economic environment as a support better governance of the sector and means to reduce the dependence of address various management constraints, households on fishing including lack of compliance with regulations and the lack of bargaining power for coastal Development of job diversification fishers. It is recommended that the co- strategies that link into mariculture management framework initiated under FSPS be development, particularly those industries continued and scaled up through further pilots that are labor-intensive yet comparatively and a concerted effort to institutionalize the less harmful to the environment (see Box 5.2) framework within MARD as standard practice Improved interministerial and nationally. The expansion of co-management interjurisdictional linkages to ensure initiatives should be initially concentrated on a cooperation and coordination for these few selected areas where opportunities for initiatives. synergies and success are highest. A recommended course of action would include Expanding and Institutionalizing the following: Fisheries Co-management Continued support for the Capture National policies endorsing co-management Fisheries Co-management Task Force as a strategy for managing fisheries have (established under FSPS II) and the Co- existed for over a decade. However, co- management Network under MARD to management has yet to become monitor and evaluate progress and institutionalized in Vietnamese fisheries, facilitate future planning and despite several documented successful implementation of further pilots examples of fisheries co-management. (See Provincial and district-level support for the Box 5.3.) Box 5.2. Low on the food chain but high on the value chain? The option of industrial scale nearshore mariculture using “low-on-the-food-chainâ€? species—such as seaweeds, holothurians, bivalve (mussels and oysters), and gastropod (abalone) mollusks—offers a potentially innovative and effective tool for linking capacity reduction with job diversification. As they are labor-intensive, these floating systems, inherently less detrimental to the environment,234 would take advantage of high productivity and could provide employment for fishers displaced from capture fisheries. Employment would involve transporting inputs and final produce to and from local ports, transporting personnel, guarding, laying moorings, maintaining systems, cleaning production units, and harvesting. These floating systems would act as de facto Marine Protected Areas, as guards would ban fishing, especially the illegal dynamiting and use of cyanide and chlorine plus electricity. Anecdotal evidence, combined with fisheries co-management sanctuary studies, suggests that biodiversity and abundance both increase in these systems, thereby improving artisanal fisheries in the surrounding areas. Prior to encouraging investment, however, market surveys need to be carried out to assess the impact of several thousands of tons of product on long established markets. These surveys should also look at the cost- benefit of adding value by sun-drying, smoking, extracting chemicals like agar and carrageen, and so on. N AT U R A L R E S O U R C E S M A N AG E M EN T 100 CHAPTER 5 : MARINE RESOURCES establishment of more fishing Support at the national level (in MARD) for organizations and to facilitate new co- improving the legal framework for co- management pilots in priority areas management and application of rights- displaying a strong potential for success based measures, as well as elaboration of (suggested priority areas include Binh Dinh, implementation guidelines to be used Quanh Nam, and Nghe An) across all coastal provinces Box 5.3. Successful examples of fisheries co-management in Vietnam The fisheries co-management model developed at Tam Giang Lagoon in Thua Thien-Hue province235 is widely regarded as one of the most advanced in Vietnam.236 Initiated in 2005, the model provides for a variety of fishing access rights and mechanisms for shared decision making and co-management (including the establishment of local fishing associations). Legally, Decision no. 4260/2005/QD-UBND promulgated by the People’s Committee of Thua Thien Hue enables the issuance of fishing rights and has been described as “very innovative both for Vietnam and Southeast Asia as it provides for a whole new management structure for coastal resources in the country and a model for other areas in the country.237â€? The numbers of fishing households, fishing effort, species, and catch sizes are largely decided by fishers. The model in particular provides an innovative approach for using zoning and allocating fisheries rights to user groups. The Management of Natural Resources in the Coastal Zone project238 in Ao Tho B, Soc Trang Province, has enjoyed demonstrable success in piloting the establishment of mangrove co-management and in testing the national fisheries co-management framework. Initiated in 2007 with the Forest Protection Sub-department of the province, the pilot aimed at developing solutions through participatory methods to solve various conflicts between economic development and sustainable coastal zone management. Specifically, a co-management system was developed that not only enabled the participatory planning of mangrove forests (into protection, rehabilitation, and sustainable use zones) but also controlled access, allowing only members of the local co-management group to catch fish. Fishing techniques and gear are also strictly regulated, and a simple yet effective monitoring program has been established. Preliminary findings indicate that the project has been successful in protecting local habitats and livelihoods, in reducing the workload of authorities, and in the equitable sharing of benefits. 239 Established in 1997, the Rang Dong Fisheries Cooperative has evolved into an excellent example of how rights-based fisheries management can provide incentives for resource users to protect their local resources and gain long-term, sustainable economic benefits. The cooperative was formed at the provincial level to manage the natural fishery resources in 900 hectares for both raising breeding clams and growing them out in intertidal areas for harvesting. Access to the clam fishery is restricted to its members, and the mud flats are policed by uniformed staff. Approximately 40 percent of the mud flats are left unexploited, in order to ensure sustainable brood stock, environmental conservation, and product quality. The clam fishery—increasingly destined for export to niche markets in Europe—has been economically successful.240 In 2009 this clam fishery was the first in Southeast Asia to receive full environmental certification under the Marine Stewardship Council (MSC). Buoyed by the success of the Rang Dong example, 10 additional clam cooperatives have been established in recent years. The strong management system in place to protect the clam beds and control their harvest was essential for achieving this certification.241 N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 101 Parallel activities at selected marine management measures (such as adoption protected area (MPA) sites aimed at of fisheries best practices, use of more establishing rights-based measures for environmentally friendly fishing gear) with local fishing communities (suggested optimizing value; shifts from the current priority sites include Con Dao and Nui model of quantity-based targets toward Chua). more value-based approaches can also help generate employment and thus link to Market-based Access and Eco- capacity reduction strategies; cost-benefit certification Strategies analyses would be required to ensure that The growing interest in key export markets for market demands can be met and that risks more sustainably harvested seafood (especially during the value addition can be mitigated among retailers, buyers, and exporters) provides opportunities for incentives for improved Expanding the eco-certification agenda in management across the supply chain and for Vietnam, including exploring new shifting generally toward value-added and opportunities for MSC certification. sustainability-based (as opposed to production- Reforming Fisheries Subsidies based) models. Strategies for enhancing The government has extended significant sustainability, adding value, and improving subsidies to fisheries.243 These can be justified if efficiency through market access could include: they provide public benefits that the market Establishing public-private partnerships would otherwise undersupply. But subsidies are (PPPs) aimed at building capacity in PPP as also a financial drain on the public coffers and a viable means of financing and can further distort markets. In practice, some of maintaining projects aimed at managing the fisheries subsides have gone to traditional and sustaining capture fisheries resources “public goodâ€? investments of fisheries information systems and storm shelters. But Implementing fisheries improvement there have also been tax breaks, as well as fuel projects incorporating a step-wise subsidies of some $90 million in 2008—the latest approach of “continual improvementâ€? and year for which data are available. using positive incentives (including improved access to markets, extension Despite the best intentions of subsidies aimed at programs for environmentally friendly gear expanding offshore fishing or at re-establishing and techniques, and the establishment of profitability in the short term (for example, fuel direct sourcing arrangements) across the subsidies), the overall impact of these programs supply line on long-term efficiency, equity, and sustainability Improving traceability systems nationwide, in the sector can be expected to be negative.244 with an emphasis on traceability for Subsidies such for vessel upgrades, credit, and environmental sustainability and other assistance aimed at expanding offshore regulatory compliance; activities could fisheries will likely spill over into more fishing include dissemination of guidelines, inshore unless protection of those areas can be communications, and training programs improved, further damaging already depleted across the supply chain, using and fish stocks. This circle of events can push poor promoting good examples (such as Ben Tre fishing households further into poverty as the clams) resource they depend upon is further depleted. The sustainability of further offshore fisheries Continuing to support training and expansion is also questionable. extension services in post-harvest techniques aimed at linking improved Therefore it is recommended that fisheries N AT U R A L R E S O U R C E S M A N AG E M EN T 102 CHAPTER 5 : MARINE RESOURCES subsidies policy in Vietnam be reconsidered. A reducing impacts on species of special concern recent report co-authored by the Vietnam (and their habitats) and reversing the decline of Institute of Fisheries Economics and Planning key populations. makes several progressive recommendations for reprioritization of fisheries subsidies programs. Marine Protected Areas (See Box 5.4.) MPAs, while not a cure-all, can provide very useful tools for addressing sustainability issues Sustainable Use of Marine locally and for testing approaches for sustainable coastal development, including the application Biodiversity of spatial planning for fisheries enhancement, In general, the legislative framework in Vietnam site-specific protection of habitats, establishment provides a basis for the conservation and of local co-management schemes, development sustainable use of marine biodiversity. But the of eco-tourism, and the integration with coastal effective implementation of legislation is development planning. Vietnam is embarking on frequently constrained by unclear and an ambitious national marine protected area overlapping institutional jurisdictions, weak plan245 with a shortlist of 16 MPAs already interagency cooperation, and capacity approved by the Prime Minister, most recently limitations. Moreover, the approach to under Decision 742/QD-TTg to adopt national conservation interventions in Vietnam has MPA system planning to. To date four MPAs—Nha tended to be opportunistic and independent Trang Bay, Cu Lao Cham, Phu Quoc, and Con rather that strategic and coordinated. However, Co—have been officially designated, together a number of opportunities for the improved with two National Parks with marine components management of marine biodiversity can be (Con Dao and Nui Chua). identified, including the wider and more effective application of MPAs along with marine species The new capacity developed through the protection and conservation programs aimed at Livelihoods and Marine Protected Areas Program Box 5.4. Key recommendations for the reprioritization of fisheries subsidies Reform of fisheries information management, including licensing and statistical management systems. Strengthening the monitoring, control and surveillance of fisheries activities. Promotion of community-based fisheries co- management as a means to reduce fishing efforts and promote more responsible fisheries while reducing interventions and expenses of government. Support for ecosystem-based fisheries management including establishment of MPAs. Providing scientific research to support more efficient and sustainable fishing. Implementing environmentally friendly technologies (e.g. by-catch reducing gear) and other programs (such as Observer Programs) aimed at promoting fisheries Best Practices Source: VIFEP and WWF 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 103 opens new avenues to expand the MPA network socioeconomic, and governance results, in Vietnam and improve management and their importance has been re-affirmed effectiveness. Investments in MPAs since the by their mention in the recent Decision on early 2000s have led to important insights into MPA systems planning their application for biological conservation and Link national job diversification strategies sustainable livelihoods. These lessons are critical, to livelihood programs aimed at reducing as past reviews of MPA management dependence on fishing for communities in effectiveness at preliminary pilot sites have and around MPAs documented a variety of key shortcomings. (See Box 5.5.) Investing in training (for MPA site and network staff and other relevant provincial A suggested strategic way forward for MPAs in and national government staff) in planning Vietnam includes the following: and management, building upon progress and lessons to date and using management Developing operational management effectiveness guidelines already developed plans for selected new MPAs; suggested and introduced;247 such training should be priority sites include Cu Lao Cao and Phu expanded to include local stakeholders and Quy islands, where feasibility has been include programs for certification in MPA established; other new MPA processes management should first undergo feasibility studies based on clear biological, socioeconomic, Systematically applying “reef resilienceâ€? 248 and governance objectives246 management and design criteria at existing and future MPAs, aimed at mitigating Supporting small-scale MPAs at local levels, anticipated impacts from coral bleaching (a specifically Trao Reef Locally Protected Area whitening of corals) arising from prolonged (Khanh Hoa) and Tam Hai Locally Protected rises in sea temperature Area (Quang Nam); while not formally part of the currently proposed MPA network Integrating the fisheries co-management from MARD, these sites have a high model and legal framework for rights- potential to deliver biological, based measures being developed by MARD Box 5.5. Lessons learned for MPA planning and management to support sustainable use of marine biodiversity in Vietnam For MPAs to be effective they should include significant coverage of “no takeâ€? areas as well as other highly protected areas with a designation based on biological management criteria. MPA operational management needs to be strategically applied to protecting spawning populations and enhancing recruitment of commercial fish species locally and regionally. This also implies the long-term monitoring of fishery indicators and assessment of fisheries benefits at the MPA sites. Delivery of the benefits of MPA establishment (particularly fisheries-related benefits but also other economic benefits, such as eco-tourism) to local communities is paramount for success. This implies greater involvement of local fishers in the planning and management of MPAs, the application of co-management approaches, and the use of exclusive fishing rights for local communities as part of the MPA design. N AT U R A L R E S O U R C E S M A N AG E M EN T 104 CHAPTER 5 : MARINE RESOURCES Livelihood projects aligned with MPAs should focus on job diversification. Individual “alternative income generationâ€? projects tend to have limited effectiveness or conservation impact. It is critical to ensure that target groups are adequately identified. Mechanisms for better intergovernmental coordination and cooperation at MPAs would help ensure strategic alignment with coastal development and tourism planning. Source: McEwin et al. 2008. with MPA management (suggested priority longline fisheries Observer Program250 to a sites are Con Dao and Nui Chua MPAs). level where at least 10 percent of all longline vessels have trained onboard Species Conservation observers using standard protocols for The protection and conservation of marine species identification and for monitoring species of special concern remains an urgent and recording catch rates of sea turtles, issue in Vietnam. While past investments from the sharks, and juvenile tuna donor community in programs aimed at protecting and conserving endangered species Introducing national, provincial, and district such as sea turtles and dugongs have been educational campaigns aimed at raising significant, they have proved insufficient in awareness and changing attitudes of the reversing population declines. More recently, the Vietnamese population, especially younger declining status of various shark species in the generations, regarding marine wildlife region has become a growing concern and may trade, particularly the illegal trade in sea have far-reaching consequences both turtles. economically (as an important seafood commodity) and environmentally (as a top predatory that helps maintain functional and balanced marine ecosystems). REFERENCES Asian Development Bank. 2000. Coastal and Marine Suggested priorities would include the following: Environmental Management in the South China Sea Scaling up sea turtle beach protection at (East Sea), Phase2. Project ADB5712-REG. Manila: priority sites (Con Dao, Nui Chua, and Phu WWF and GEG Consultants. Quy) and implementing comprehensive Burke, Laurette, Liz Selig, and Mark Spalding. 2003. training in nesting beach management at Reefs at Risk in Southeast Asia. World Resources these and other key areas based on Institute report for U.N. Environment Programme– application of the (successful) model at Con World Conservation Monitoring Centre. Cambridge, Dao UK. Expanding experimental trials of circle Creel, Liz. 2003. “Ripple Effects: Populations and hooks249 in longline tuna fisheries as a Coastal Regions.â€? Policy Brief. Washington, DC: Population and Reference Bureau. September. means to gain support for their use and with a view to securing political Dang Van Thi, Tran Thi Lien, Raakjaer Nielsen, and commitment and regulatory measures Frank Riget. 2002. “Results of Bottom Trawl Surveys aimed at mainstreaming the use of circle Carried Out in Vietnamese Waters (20–200 m) in hooks (as well as turtle de-hookers and 1996-1997.â€? ICLARM Quarterly 25 (1). turtle rescue techniques) GSO (General Statistics Office). 2009. Statistical Data of Agriculture, Forestry and Fisheries. Hanoi. Linked with above, expanding the current N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 5 : MARINE RESOURCES 105 Hassan, R.B.R., R. Ali, Nguyen Lam Anh, Dang Ho Hai, Nguyen Thi Dieu Thuy and Keith Symington. 2008. S. Fujiwara, K. Shiomi, and N. Seman. 2001. “Pelagic Sustaining Fisheries and Alleviating Poverty in Stock Assessment by Hydroacoustic Method in the Vietnam: A Socio-economic Review and Case Study. South China Sea, Area IV: Vietnamese Waters.â€? In Hanoi: WWF Vietnam. Proceedings of the SEAFDEC Seminar on Fishery Pitcher, Tony. 2006. “An Estimation of Compliance of Resources in the South China Sea, Area IV: Vietnamese the Fisheries of Vietnam with Article 7 (Fisheries Waters. Management) of the UN Code of Conduct for McEwin, Angus, Nguyen To Uyen, Tham Ngoc Diep, Responsible Fishing—Vietnam.â€? Evaluations of Ha Minh Tri, and Keith Symington. 2008. Sustainable Compliance with the UN Code of Conduct for Livelihood Strategy: Vietnam Marine Protected Areas. Responsible Fisheries. Fisheries Centre Research Published by “Sustainable Livelihoods in and Reports 14(2). Vancouver: University of British around Marine Protected Areas,â€? Ministry of Columbia. Agriculture and Rural Development, A component Pollnaca, Richard B., Robert S. Pomeroy, and Ingvild of Danish Development Cooperation in the H. T. Harkes. 2005. “Fishery Policy and Job Environment Programme (2005–10). Hanoi. Satisfaction in Three Southeast Asian Fisheries.â€? MARD (Ministry of Agriculture and Rural Ocean & Coastal Management 44 (2001) 531–44. Development). 2006. Master Plan on Development Pomeroy, Robert, and Rebecca Guieb. 2008. “End of of the Fisheries Sector till 2010 and Orientations Assignment Report on Lagoon Co-management Toward 2020. Promulgated by the Prime Minister System for FAO/IMOLA Project, Thua Thien Hue, along with Decision no. 10/2006/qd-ttg of 11 Vietnam.â€? At January 2006. Hanoi. h t t p : / / w w w. i m o l a h u e . o r g / p d f / p o m e r o y - _______. 2010. Capture Fisheries Annual Report guieb2008-en.pdf. (1990–2009). Department of Capture Fisheries Pomeroy, Robert, Nguyen Thi Kim Anh, and Ha Xuan Exploitation and Protection. Hanoi. Thong. 2009. “Small-scale Marine Fisheries Policy in Ministry of Fisheries and World Bank. 2005. Vietnam Vietnam.â€? Marine Policy (33): 419–28. Fisheries and Aquaculture Sector Study—Final Report. Schmitt, Klaus. 2009. Management of Natural Hanoi. Resources in the Coastal Zone of Soc Trang Province. Morgan, Gary, Derek Staples, and Simon Funge- Soc Trang City, Vietnam; Deutsche Gesellschaft für Smith. 2007. Fishing Capacity Management and IUU Technische Zusammenarbeit. Fishing in Asia. Publication 2007/16. Bangkok: Food Sumaila, Ussif Rashid, and Daniel Pauly (eds). 2006. and Agriculture Organization. Catching More Bait: A Bottom-up Re-Estimation of Nasuchon, Nopparat. 2009. Coastal Management Global Fisheries Subsidies. Fisheries Centre. and Community Management in Malaysia, Vietnam, Vancouver: University of British Columbia. Cambodia and Thailand, With a Case Study of Thai Tietenberg, Thomas. 2008. Environment and Natural Fisheries Management. Division for Ocean Affairs Resource Economics (8th edition). Reading, MA: and the Law of the Sea Office of Legal Affairs, New Addison-Wesley. York: United Nations. VIFEP (Vietnam Institute of Fisheries Economics and Nguyen Chu Hoi. 2003. “Key Directions of the Planning) and WWF Vietnam. 2009. Fisheries Sustainable Fisheries Development in Viet Nam.â€? In Subsidies, Supply Chain and Certification in Vietnam. Review of International and National Efforts Towards UNEP Framework Document. Hanoi. Addressing the Main Sectoral Concerns Regarding the Seas of East Asia. Partnerships in Environmental Management for the Seas of East Asia (PEMSEA). Ministry of Fisheries. Hanoi. N AT U R A L R E S O U R C E S M A N AG E M EN T 106 CHAPTER 5 : MARINE RESOURCES CHAPTER 6 MINERAL RESOURCES T he mining of solid minerals in Vietnam has grown rapidly in the past five years, driven principally by the exploitation of coal. Excellent geological potential exists for development of other mineral deposits, such as bauxite, nonferrous metals, and industrial and construction minerals. Compared with many other countries, Vietnam has made significant progress in managing the development of its mineral resources. In spite of the expansion of the sector, however, Vietnam is not yet achieving the true value of the contribution that its mineral endowment could make to economic development. This chapter identifies the opportunities for improvements of Vietnam’s management of its resources in terms of three main themes: efficiencies in providing access to mineral resources and effective sector administration and environmental sustainability, management of environmental and social impacts, and equitable distribution of benefit streams. The chapter proposes a “reform agendaâ€? that addresses these opportunities. This includes enhancing efficiency in the minerals sector by planning for minerals development using the “resource assessmentâ€? model, reinforcing security of the legal regime and granting of mine titles, encouraging exploration for new mineral deposits by the private sector, strengthening the institutional reforms in the mining sector, and giving due attention to the strengths and weaknesses of State Owned Enterprises. In terms of environmental sustainability, it will be important to close the gap between theory and practice in the Environmental Impact and Strategic Environmental Assessment processes and to tighten regulations and administration of environmental fees and financial sureties. With respect to the equity theme, the main reform proposals are to establish community development agreements, measure the economic contribution of mining on a nationwide and project basis, and adopt the principles and implement the Extractive Industries Transparency Initiative. Development of mineral resources can and does The Mining and Quarry Industrial (MQI) sector in contribute to the wealth of nations and to overall Vietnam includes petroleum, construction goals of economic development and poverty materials, coal, industrial minerals, mineral water, reduction. Achieving positive results is not easy, and some base metals.252 The sector has grown however, and governments, private sector rapidly, contributing 11 percent of gross companies, and civil society face numerous domestic (GDP) in 2005, up from 5 percent in challenges to ensure sustainable development. 1995253. (Oil and gas are not considered in this Some governments fail miserably in overcoming chapter since this industry operates mainly the challenges and fall victim to the “resource offshore, and the environmental ramifications of curse.â€?251 Other governments use their natural these operations are entirely different from solid mineral wealth to much better effect and are minerals.) Excluding oil and gas, the size of the achieving sustained growth with equity in the solid minerals segment of the MQI sector relative sector. This chapter argues that the Socialist to the overall economy in Vietnam would put the Republic of Vietnam is in between these two country on a par with Ghana, which derives 6 extremes: some of the mineral wealth of the percent of GDP from gold mining along with 45 country is being developed and is contributing percent of its export earnings and 12 percent of to economic development, but Vietnam could do the government’s tax receipts254. much better in terms of achieving efficient access to the resources, improving environmental This chapter does not attempt to cover all the oversight, and distributing the benefit streams current issues in this sector;255 rather, it focuses from minerals development in an equitable on the main themes of this report: efficiency, manner. environmental sustainability, and equity. The N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 109 Annex provides a case study on how these three resources. Vietnam’s geological features are themes interplay in the development of coal. similar to those of Lao PDR and the southern part of Yunnan province in China. In each of these Vietnam is reasonably well endowed with some locations significant investment in exploration 60 mineral commodities and produces many of over the last 5–10 years has resulted in the them, such as coal, bauxite, gold, copper, zinc, tin, discovery and development of several world- copper, chromite, manganese, titanium, barite, class copper, gold, nickel, and tin mines. ilmenite, limestone, and phosphate. By far the most important mineral commodity produced is In Vietnam, however, expenditures on coal: in 2009, some 44 million tons of coal were exploration seem to be going in the opposite produced, of which 50 percent was exported.256 direction. From a peak of $63 million spent on Some minerals, such as chromite, ilmenite, barite, exploration in 2008, total exploration in 2009 was and zinc concentrates are exported; however, only $4 million.257 Second, Vietnam could achieve most of the mineral commodities are processed higher value added from its minerals production and consumed locally, including limestone (for by encouraging beneficiation and processing of cement), refined copper, fertilizer materials raw minerals258. Even though enhanced (ammonia, urea, and phosphate), rolled steel, processing is mandated in the Minerals Law and refined tin, and zinc. by the Politburo policies, in reality many mines in Vietnam still export raw ores.259 Achieving greater In spite of the growth of this sector and the value added through beneficiation and country’s excellent minerals endowment, MQI additional processing is not easily done, however. solid minerals are heavily dominated by coal, and Small-scale mining companies lack the capital not enough exploration is being conducted to and technology to beneficiate their ores, and develop new deposits and diversify the they are in any event more interested in selling production base. For instance, metallic ores and raw ores quickly for profit. And a nickel smelting other minerals are not growing as fast, and facility, for example, could cost $120 million or expansion of these commodities is a major more. International market conditions need to be challenge for the future. There are a number of taken into consideration, as the marginal cost of reasons for this, including lack of new additional processing may not be compensated investment; the modest size of investments, by greater access to markets at higher value. which may lack economies of scale; shortages of Governments have had mixed success devising required infrastructure, especially power and incentives for enhanced beneficiation. In general, transport; antiquated mining equipment and fiscal and other investment incentives for techniques; and poor efficiencies and mineral producers to beneficiate have had limited loss in extraction due to outdated mining success in achieving higher value added, and technologies. In addition to not producing these incentives also could involve substantial optimum benefits, the sector could, in some costs to the state treasury. instances, actually cause harm to economic development. This occurs because of short- and long-term environmental damage as well as Efficiencies in Providing aggravating social tensions related to development of extractive industries projects Access to Resources and distribution of benefit streams. Commodity “Master Plansâ€? Development of the MQI is guided through Two issues are particularly vexing. First, more can “master plans.â€? These are drafted by the and should be done to mobilize private sector government to cover 10–15 years and they drive investment to explore and discover mineral the exploration, exploitation, and processing of N AT U R A L R E S O U R C E S M A N AG E M EN T 110 CHAPTER 6 : MINERAL RESOURCES different minerals. The plans generally focus on of Industry and Trade, MoNRE, and/or the state- mineral deposits that are considered “essential owned company (Vinacomin) in Hanoi) and may reservesâ€? that may be developed and exploited not sufficiently reflect the realities of the market on a large industrial scale. Approval for or local conditions. The master plans take the development and monitoring of exploitation of analytical approach of “what we haveâ€? rather than these large mineral deposits in the master plan is the more rigorous market analysis approach of the responsibility of the central authorities, “what the consumer needs.â€? In practice, public principally the Ministry of Natural Resources and comment and consultation with local Environment (MoNRE). Smaller deposits, not communities and companies during the specifically identified in the master plan, are preparation of the master plans is a mere controlled by the provincial authorities. There are formality and does not normally result in currently 13 approved master plans for 39 meaningful changes being integrated into the minerals, among them gold, copper, nickel, iron, master plans as a result of these consultations. chromium, manganese, lead, zinc, bauxite, and Finally, while the newest regulations for master titanium, with visions generally extending to plans require a Strategic Environmental 2020 and 2025. The main content includes the Assessment (SEA), the master plans that have development targets, demand forecasters, been approved to date and prior to the July 2006 exploration plans, mining and processing do not deal with highly salient topics, such as planning, and investment capital required. (See involuntary resettlement, possible the list of master plans in the References.) contamination and environmental pollution, in- migration, local multiplier effects, alternative Master plans used in Vietnam are “dirigisteâ€? in land use patterns, effects on household incomes, nature and tend to simply list projects and and induced health effects. production targets. They are contrary to the current development paradigm of encouraging The first item on the reform agenda for the private sector investment and competition. And mining sector is to plan for minerals they can actually stifle new ideas and innovative development using the “resource assessmentâ€? proposals. For example, if an exploration model. The use of master plans to program the program proposed by a private company for a industrial development of specific mineral commodity or in an area is not noted in the deposits is highly unusual in terms of master plan, the proposal would be difficult for international practice and reflects an attachment the government agencies to accept. The master to the past heritage of central planning. There is plans are only issued every several years and the nothing inherently wrong about planning for experience in the solid minerals sector is that the sector development; indeed, “resource plans are updated on an ad hoc basis rather than assessmentsâ€? can be highly useful to assist in land regular basis. Experience in the solid minerals use planning, plan for infrastructure investments, sector is that the plans cannot be amended easily and develop integrated growth poles or resource or within a reasonable amount of time. Thus, corridors. A proper resource assessment also some companies having viable projects not considers all the benefits directly from the noted in the master plan have had to wait at least project or induced as well as all of the costs, two years for the plan to be updated or have including long-term environmental costs and exercised other options, such as directly alternative land uses, recording of benefit intervening with the highest political authorities, streams, and special topics such as gender and to have the projects authorized. climate change issues (for example, the emission of methane, which is a powerful greenhouse gas) Other significant drawbacks are that the plans associated with sector development. are prepared by government agencies (Ministry N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 111 Granting of Mine Titles and noted in the “master planâ€? for the commodity, then special dispensation and permission must Concessions be obtained.263 In many cases, the master plan Foreign or domestic companies wishing to invest does not have complete or independently in large-scale exploration, development, and corroborated exploration estimates on the exploitation operations in Vietnam follow a two- reserves of the deposit, which means the track process to obtain the mine title under the government must rely on reserve estimates from Mineral Law and to set up an entity by obtaining the company, and these can be understated so Investment Certificate for each specific project that the company can illegally export greater under the Investment Law. quantities of ores without paying the relevant royalties and taxes. The basic legislative instrument that governs minerals exploration, extraction, and processing A relatively new issue in Vietnam since 2005 is is the Law on Minerals of 1996 (amended by the that the measures to decentralize government Mineral Law of 2005), as supplemented by decision making has led to the rapid proliferation various Decrees and Circulars of the government of small-scale mining licenses granted by agencies responsible for mining.260 This Law provincial authorities. This has led to a chaotic derives from fundamental Politburo policy situation and lack of proper oversight of directive 13-NQ/TW (1996). The government is in operations in some provinces. For example, over the process of amending the Minerals Law and is 3,495 licenses were granted by provincial and/or conducting extensive discussions with various municipal authorities from 2005 to 2008 stakeholders on the subject. compared with a total of 926 licenses granted by the central ministry in the previous 12 years.264 In addition to the Minerals Law, the Investment261 While decentralization of the authority could Law applies to investments in the mining sector. present the advantage of bringing the In particular, this law seeks to attract foreign administrative burden closer to the potential direct investment in order to mobilize sufficient investor, it has proved in practice difficult to capital for this capital-intensive sector, to attract implement due to the lack of administrative advanced technology to exploit minerals capacity and review procedures of the provincial efficiently, and to promote the transfer of foreign authorities. advanced technology with spillover impact on the human capital base.262 Several other legal An issue frequently considered by governments is obligations and authorizations of the appropriate whether or not to provide for the auctioning of authorities apply to investments: rights to land mineral properties. On the one hand, an open and use, forestry clearance procedures, construction competitive tender, transparently and professionally permits, work permits (for expatriate employees), conducted, of mineral properties in theory would exchange control, accounting practices, water result in the government achieving the best market use, loan agreement registration, environmental value. On the other hand, experience in many rehabilitation program, permit for using countries shows that successful tender of mineral hazardous materials and equipment, and others. properties is mixed. The fundamental determinant is that the government should possess and provide for The procedures to register the investment, obtain potential bidders sufficient geological data to mining titles, and receive the various establish proven and probable reserves. Without this authorizations are tedious and time-consuming, information, bidders would not have enough data and it can give rise to the possibility of to establish a fair market price for a deposit or inappropriate practices and favoritism by provide a viable development plan. The latest authorities. If the proposed mineral deposit is not amendments to the Minerals Law in Vietnam N AT U R A L R E S O U R C E S M A N AG E M EN T 112 CHAPTER 6 : MINERAL RESOURCES provide for tenders to be conducted for mineral tax regime pertaining to minerals development is deposits. The dispositions in the law will need to be competitive and fair. completed with detailed regulations and procedures in order to successfully conduct tenders. IIt is also important to encourage exploration for new mineral deposits by the private sector. At It is important, therefore, to reinforce security of present, only the geological survey unit within the legal regime and the granting of mine titles. MoNRE conducts basic research and exploration The processes of mineral title acquisition, for minerals resources. Vietnam could do a better registration under the foreign investment job to mobilize investment from private sector regime, and compliance with other legislative companies in this regard. (But see Box 6.1.) This instruments corresponds to the practices in will require a clear legal mandate and security of many countries and provides the foundation tenure within the mining law that adheres to upon which the state allocates mineral resources internationally accepted principles of “first come, to third parties and ensures that investments first servedâ€? in the issuance of exploration correspond to contractual and legal licenses as well as automatic progression to an obligations.265 In finalizing the reforms to the exploitation license for the company in the event Minerals Law, the government, in consultation of a discovery. Also, regulations will have to be with private companies and other parties, should modified to allow foreign companies to invest in work to strengthen security of tenure, provide “grass rootsâ€? or preliminary exploration without realistic time frames for development of the requirement to identify a specific project or resources, establish objective criteria for investment. Additionally, regulations will need to evaluation of mine title applications, establish be adopted to put into operation the dispositions clear mandates for intervention of government in the amended Minerals Law pertaining to departments, provide for judicious use of tender tender operations. Exploration by its nature is and auction mechanisms that reflect the realities expensive and risky; the state has every interest of the international market, and ensure that the in maximizing private capital and risk taking in Box 6.1. Contributions of a mining project: The case of Ban Phuc Nickel The Ban Phuc nickel project is the only foreign investment enterprise currently licensed in Son La Province. During the first phase of the construction period, the company employed 298 people, 184 of whom were local workers from within Son La. The creation of jobs is a significant contribution to the socioeconomic development of the Bac Yen district, a mountainous and difficult area. During construction, BPNM has been paying an average of $1.9 million per month to Vietnamese contractors/suppliers. Of this, Son La based contractors or suppliers receive approximately 20 percent or $350,000 per month. In addition to the 298 company employees, BPNM has provided income for 240 Vietnamese contractors or suppliers, 10 of whom are based in Son La province. The construction of Ban Phuc Project has created new opportunities for local and national Vietnamese employees to achieve good income and improve their living standards. On average, employees at Ban Phuc Mine earn $210 a month. This is a significantly income for local people around the mine, where a year ago they could earn only $60 a year from small-scale farming and supporting activities. In addition to salary, BPNM also provides its employees with Social Insurance and Health Insurance coverage, safety equipment and instruments, and safety training for local workers. Finally, approx VND 3 Billion per month are paid to Son La in taxes. Source: Ban Phuc Nickel Mines 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 113 return for access to the data and information on controls approximately 95 percent of the potential geological resources. country’s hard-rock minerals production. The members of Vinacomin’s management board are Effective Sector state employees, and the Chairman and General Director are appointed by the government. Administration and Vinacomin enjoys preferential treatments by the government: for instance, it is not necessarily Environmental subject to the same level of appraisal as foreign Sustainability companies for new investments. This presents a Effective management of the mining sector is a significant challenge to the efficiency and function of clear and non-over-lapping mandates transparent administration of the sector. between the various institutions intervening in the sector at the central and provincial levels. In Most countries designate a single lead agency for Vietnam, MoNRE266 is the principal central administration of the sector, with support from government agency responsible for geological other agencies on related matters such as survey work, mine title administration and exchange control, investment authorization, maintenance, and review of environmental planning, labor relations, and others. While in the assessments. In addition to MoNRE, the Ministry past in Vietnam the sector was administered by of Industry and Trade (MOIT) plays a key role in both MoNRE and MOIT, the revisions to the the development of master plans for various Mineral Law under consideration—but not yet commodities as well as approving the usage and adopted—will designate MoNRE as the lead export of minerals in collaboration with other agency for sector administration. This is a positive state-owned mining companies and agencies. development as it will allow requisite procedures The Ministry of Planning and Investment is and expertise for sector oversight to be housed responsible for investment certificate registration in one agency, which could improve efficiency and investment capital of companies. In the and effectiveness of administration. However, provinces, local government assisted by district currently investors also have to work directly with agencies modeled on the central government several different agencies for various issues and counterparts also intervene in the mining sector, permits at the ministry level in the central particularly in the authorization and issuance of government and at the department level in the permits for quarry and small-scale mining provinces. Particularly at the provincial level, operations. significant capacity improvements will have to occur to build expertise to ensure that the In the case of Vietnam, there is a continued procedures are properly and expeditiously strong role in the mining sector (as well as other carried out. heavy industries) of state-owned enterprises (SOEs). Prior to 2005, the principal mining Government ownership and operation of enterprises were the Vietnam National Minerals enterprises in the extractive industries is a Corporation (VIMICO) and Vietnam National Coal declining practice, especially for non-petroleum Corporation (VINACOAL).267 In that year, however, resources. Even though some countries with a state holding company was established: successful mining industries have SOEs (Codelco Vietnam National Coal-Minerals Industries Chile, for example), experience has Corporation (Vinacomin), which now directly demonstrated a number of drawbacks to this owns and operates coal and metals mines in approach. (See Box 6.2.) Mining companies Vietnam and/or retains on behalf of the state owned and administered by government shares in joint ventures with private mining bureaucrats rarely achieve the efficiencies of companies. Vinacomin directly or indirectly private companies managed by professionals N AT U R A L R E S O U R C E S M A N AG E M EN T 114 CHAPTER 6 : MINERAL RESOURCES Box 6.2. Mining concessions: The case of bauxite A considerable degree of controversy surrounds the Prime Minister’s Decision 167/QD-TTg (2007) on the master plan for bauxite and the government’s announcement 2728/VPCP-QHOT (2008) relative to a bauxite-alumina project in Dak Nong and Lam Dong provinces proposed by BHP Billiton, a very large Australian company. This company has since abandoned its interest in the project. But Russian, and European companies are now said to be interested, and two Chinese plants are now operational. Bauxite development illustrates some of the weaknesses in the present system identified in this report: concession and mine title issuance procedures, monitoring and oversight of government institutions, inadequate community consultation, and possible-large scale environmental damages that have not been fully assessed or understood. A number of issues will need to be more fully understood if this project moves forward, including pricing of bauxite and a cost-benefit analysis of processing to alumina, cross-border implications (if any) with Lao PDR and Cambodia, specific environmental considerations (red mud and tailings management), the roles and responsibilities of central and provincial agencies, personnel development, ethnic minorities, and the reporting and management of revenues and benefit streams. Source: Decision No. 167/QD-TTg of the Prime Minister dated 11.1.2007 approving the master plan for exploration, exploitation, processing bauxite for the period from 2007 to 2015; VOV News 2008. reporting to stockholders. Even if the companies In light of all this, it is important to pursue and are given clear goals and objectives, they are still strengthen the institutional reform. The subject to considerable political pressures. proposed designation of MoNRE as the lead Accountability and accurate financial reporting agency for the minerals sector is a step in the are oftentimes compromised by political right direction and will help to clarify today’s imperatives. Mining SOEs oftentimes incur confusion in mandates and responsibilities. As significant losses that require subsidies from the reformed and with enhanced capacity and central state budget. logistical resources, MoNRE can more effectively coordinate planning for resource development, And it is important to note that there is an evaluate the geological resources of the country, inherent conflict of interest in the role of the state and oversee and monitor various mineral as shareholder in an SOE and impartial referee to developments and operations. Much adjudicate disputes between the company and institutional strengthening and capacity building citizens who may be affected by the company’s needs to occur at the provincial level, especially operations. Finally, because of the close with a focus on smaller mining and quarry connections and ties of the SOE with other operations. government agencies, private companies are at a competitive disadvantage when it comes to The strengths and weaknesses of state-owned receiving mine titles and developing mines. This enterprises need attention. The role of SOEs in has the net effect of reducing introduction of the mining sector in other countries has new technologies and processes for the sector as advantages and disadvantages. In Vietnam, well as exploration for additional mineral Vinacomin is the principal SOE and, as such, plays resources. Since Vinacomin gets its licenses a pivotal role in mining operations and potential directly from the central ministry, provincial developments. The government should be authorities cannot inspect or manage what cognizant of potential weaknesses in the Vinacomin does on its concession area. dominant role of Vinacomin to ensure that a “de factoâ€? monopoly is not created and that N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 115 competition is allowed. Further, clear distinction between well-intentioned and well-structured between the roles and responsibilities of line legal instruments on environmental protection ministries (MoNRE and MOIT) and Vinacomin and the ability of the government to administer needs to be established. Financial flows from the laws. In Vietnam, the agencies responsible for operations need to be recorded and reported evaluation of EIAs lack appropriate using not only Vietnamese accounting standards methodologies, guidelines, normative and practices but also international financial regulations,270 and proper templates to review reporting and accounting practices. This will the impact assessment submissions from serve the interests of transparency and companies.271 This weakness in internal staff prudential financial management as well as capacity is remedied in part by requesting review enhance the ability of Vinacomin to mobilize by the Appraisal Council, consisting of outside funding on the international markets. academics and experts from other ministries. Monitoring and follow-up on compliance with Theory versus Practice: The environmental regulations is also very weak, especially at the provincial level, because of too Environmental and Social few and inadequately trained staff as well as logistical and funding bottlenecks. Impact Assessment Process Vietnam’s law and various regulations and Because companies recognize that the decrees pertaining to the environmental and government capacity to evaluate EIAs (and the social protection reflect, in many respects, best SIAs within them) is weak, there is a tendency to practice for mining as well as other sectors. The prepare EIAs to simply conform to the letter of fundamental environmental legislation is the the law rather than to integrate the findings of Law on Environmental Protection of 2005, as the studies into mine planning and design. For supplemented by various decrees and instance, in Quang Ninh province, inspections by circulars.268 This body of laws requires an the district office of natural resources and Environmental Impact Assessment (EIA, which environment found that only 38 out of 68 coal includes a chapter on social impacts, an SIA) for mines have produced EIAs and that few all industrial-sized mining projects, with the companies have up-to-date versions (as required assessments evaluated and approved by the by the law) even if an initial report was MoNRE or the provincial department. In recent prepared.272 The situation is even worse for small- years, MoNRE has reviewed around 30 EIAs for scale operations, which do not file EIAs at all and, mining projects of a large industrial scale.269 even if they did, would not comply with the Environmental impact assessments for small stipulations. mining projects are evaluated at the provincial level, though the reviews by the provincial The reform agenda therefore includes closing the authorities are much more problematic due to gap between theory and practice in the EIA/SEA lack of understanding of the specifics of mining Process. In order to put the environmental review projects. In addition to specific requirements for process into effective operation, the government projects, the law requires Strategic needs to put into place training and capacity Environmental Assessments (SEAs) be included building programs for relevant government staff, in all commodity “master plansâ€?; to date, to develop appropriate templates and criteria for however, no SEA has been approved since this evaluation, and to provide logistical and other disposition took effect, though Vinacomin is said support for site visits to mining operations. The to be close to submitting an SEA for coal for necessity for capacity building is especially approval. needed for certain provincial authorities where As in many countries, there is a large gap mining activities are strong. N AT U R A L R E S O U R C E S M A N AG E M EN T 116 CHAPTER 6 : MINERAL RESOURCES Physical Environmental and patterns and preferences, disturbances to social and family hierarchies, loss of traditional Social Impacts livelihoods or other economic activities, Mining activities are well known to have dependence on unsustainable infrastructure, and significant impacts on the physical environment. social behaviors. Negative social impacts on Waste management, tailings impoundment, soil livelihoods in communities surrounding mining pollution, acid drainage, and air and water areas have been seen, for example, in Lao Cai, pollution are some of the ongoing issues with Binh Dinh, Thai Nguyen, Son La where industrial any mining operation. mining activities are being conducted. These impacts are reasonably well studied and In Vietnam, the physical environmental impacts understood in many countries, though are particularly evident in the coal mining sector. governments and companies are generally not (See also the Annex.) The impacts are evident in as far along in dealing with the social aspects as both the large and small-scale (and oftentimes they are the physical environmental aspects. This illegal) operations. Some 285 million tons of is true for other countries as well as Vietnam. waste rock and soil were discharged by coal in 2008.273 Dust pollution from the coal mining Vietnam requires an environmental protection operations are determined to be five times the fee to be collected, which varies from $0.02 to permitted standards at the mine site and over $9.00 per cubic meter or ton of ore mined.276 The three times the permitted standards in the fee for solid minerals goes to the provincial state residential areas. This has significant health budget, which is supposed to use it to support impact on residents of the coal mining areas and protect the environment of the province. In (Quang Ninh province, in particular). Some some provinces, fees for clean up and studies274 suggest that 60 percent of the people rehabilitation are collected. But it is difficult to in Vietnam who suffer from silicosis and chronic assess the future cost of cleanup, so the fees bronchitis come from the coal mining areas. collected at present may not be sufficient for the task in future. The fees are also supposed to be The land acquired for the mine site, waste dumps, used for prevention activities, yet most of the and facilities can be significant: at four coal funds are spent on remedying existing pollution mines, more than 3,000 hectares have been problems and land degradation. For instance, acquired; if this is virgin land it may not have a some titanium mining enterprises in Binh Dinh large cost, but prime agricultural land would province have paid only a portion of the fees have a significant cost. Wastewater, the result of required as per the mining plans, and the local washing the coal or discharge from tailings People’s Committee used the money to simply impoundment facilities, is a serious problem in rehabilitate a small portion of the road from the the coal mining centers. In Dong Trieu district, main highway to the mining site, rather than half of the 25 reservoirs are judged “acidicâ€? based establish mechanisms to prevent the on ph levels of less than 3.5 compared with the deterioration in the road surface in the first standard of 5.0–5.5. Rice yields in some localities instance. have decreased significantly in some localities: 30 quintals per hectare instead of 45 in years past.275 Vinacomin, the largest coal producer in Vietnam, recognizes its environmental responsibilities and Mining also has significant “socialâ€? impacts on requires its operating units and subsidiaries to set communities within the “footprintâ€? of the mining aside 1 percent of total expenditures for development. Some of these include in- production of services and goods to be migration, “haveâ€? versus “have-notâ€? dynamics in dedicated to cleanup and environmental villages, changes to household expenditure protection at its operations.277 While this N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 117 approach is useful, it would be more appropriate use of the area. Currently, there are no legally to require precise environmental management binding rules for companies to make plans of each operating unit—plans that would contributions for “in-kindâ€? support, for instance be costed and implemented on an annual basis, for schools, dispensaries, and infrastructure. adjusting for price and operational cost However, the proposed revisions to the Minerals considerations. This is the approach used in most Law now require that companies make a countries with large-scale coal mining contribution to infrastructure development in operations. local communities. In addition, many companies have internal policies related to corporate social Many governments require companies to post responsibility. These policies guide company financial sureties or otherwise reserve and put operations in the countries where they operate aside funds to cover the costs of cleanup and and provide guidelines for company closure of mining operations in addition to paying contributions to local communities. (See Box 6.3.) for the costs of any environmental remediation Finally, communities may benefit from some of during exploitation. In Quang Ninh province, the the tax payments in the form of special social approval of rehabilitation and reclamation plans target programs: education (scholarships for for coal mines had not been approved as of poor students) and other in-kind direct supports. January 2010 and hence no bond has been In addition, communities receive the normal posted. Government agencies at the central and benefits of government services, such as security, provincial level also complain that the regulations infrastructure, education, medical care, and other and guidelines in place to administer the services provided by the government. establishment of the bond and sureties are imprecise, confusing, and difficult to follow. The reform agenda should thus include efforts by governments at the central and provincial levels Legislation to address the social impacts of to tighten up on the effective application of the mining is not as well developed as for physical fees charged mining operators for environmental environmental impacts, and the enforcement of damage caused by operations and eventual standards is even weaker. For instance, mines cleanup and rehabilitation of site. Further, the established before the Law on Environment of government needs to adopt regulations 2005 carried out little or no consultation with the concerning the application of the financial surety local communities. The regulations also are silent and bond system required for mining operators, on the nature of the consultations, who should in particular concerning reimbursement of funds be involved, the type of reporting on decisions, not used for cleanup purposes, with regular and the mandates of the participants. In theory, adjustments of the funds to be posted as surety project owners must write to local authorities based on environmental management plans. and fatherland fronts for their comments, according to Decree No. 80. However, the In some countries, Canada for example, mining comments given by local authorities and companies enter into binding Community fatherland fronts have no empirical basis, Development Agreements (CDA) directly with because they have not conducted indigenous the communities in which they operate. These community consultations. agreements specify the mutual obligations of the parties, the community, and the company to Regulations and guidelines on compensation provide and operate certain services, manage levels for local communities for land acquired for company contributions to social and community mining operations or affected by the operations infrastructure, and establish the fiduciary exist, but the compensation rates are oftentimes responsibilities for reporting and accounting of below fair market value for the alternative land funds. These CDAs greatly facilitate company N AT U R A L R E S O U R C E S M A N AG E M EN T 118 CHAPTER 6 : MINERAL RESOURCES Box 6.3. Community social responsibility: The case of Talisman Energy Though active in the oil sector, the community social responsibility profile of Talisman Energy is indicative of what contributions could be achieved from solid minerals in terms of community contributions, even though on a smaller scale. In 2009, Talisman contributed over $6.3 million to community projects. In addition, the company and its employees around the world have also generously contributed $1 million to other charity work, such as United Way of Calgary, or to Haiti relief ($135,000) through Canada Red Cross. In Vietnam, in line with the government’s human capital development programs, Talisman provides scholarships for Vietnamese students and other educational activities. It supports safety standards for employees and communities (landmine clearance for a community in Quang Binh Province and helmets for kids across the country), environment protection (standards and codes in construction to promote energy saving and low carbon dioxide emissions as a means of climate change, mitigation), and community health (Operation Smile and heart operations for disadvantaged children). Globally, each Talisman employee or contractor is entitled to $485 annually to volunteer and support community work. Talisman’s staff members in Vietnam have been actively engaged with the community by coming to Phu Yen to help victims of the Mirinae typhoon, helping children suffering from leukemia hospitalized in Ho Chi Minh City, and helping orphans and disadvantaged children to realize their education. Source: Talisman Energy, CSR Reports. operations and the management of community Despite the lack of such generalized information, benefits, and they should be established in it is possible to discuss some of the salient Vietnam.278 practices in Vietnam in terms of management of fiscal revenues as well as individual company Equitable Development and contributions to wider benefit streams. Distribution of Benefit The current management of fiscal receipts from mining in Vietnam has the characteristics of a Streams centralized planning economy. The Ministry of The benefit streams from any mining operation Finance controls the planning, assessment, include fiscal benefits (taxes, royalties, other collection, and disbursement of tax revenues. On payments) to the central and provincial an annual basis, each central ministry and each government, jobs and direct/indirect/induced of the 63 provinces will set out its operational employment, spin-off businesses and industries plan and budget for the year. This budget is then (both tradable and non-tradable goods and discussed with Ministry of Finance for services), infrastructure provision and usage, and adjustment and approval. All taxes, fees, and improvements in overall living standards and other fiscal receipts flow back to either the conditions. Unfortunately, in Vietnam, as in many central State Treasury or the provincial treasuries. other countries, precise data and information on a nationwide or industry basis of the benefit Budget reforms over the last years have changed streams from mining projects are not available. N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 119 the previous centralized system of Annex. Case Study: Coal disbursements. Presently, local governments decide the disbursement of more than 50 Coal has been mined in Vietnam for the past 130 percent of total annual state budget. In addition, years, beginning under French colonial rule in internal regulations of the State Treasury and 1883. It is by far the dominant mineral Ministry of Finance regulate the limited number commodity produced in the country. Vietnam of taxes that provincial governments can receive produces all varieties of coal, from lowest to directly. For instance, provinces may receive a highest grade: peat, lignite (Braunkohle), sub- credit for 3 percent of the 10 percent value added bituminous through bituminous (Flammkohle, tax collected in the province and retain 100 Gasflammkohle, Gashohle, Fettkohle, Esskohle, percent of environmental protection fees due in Magerkohle), and anthracite (Anthrazit).281 the provinces.279 Mining of coal takes place in 10 provinces and areas,282 principally in the northeastern part of Vietnam is not alone in lacking data on the the country. Extraction is both opencast (60 overall economic and social impacts of mining: percent) and underground (40 percent) mining most countries do not have sufficient data in this methods. Vietnam is the largest producer of regard. Nonetheless, it is clear that these impacts anthracite in Asia; most of the production is are large and consistent over the life of the mine. exported to China. In 2008, some 38,5 million The government should develop templates for tons of commercial coal was produced, of which the reporting of this data, require regular reports approximately 50 percent was exported, and updates from mining operators, and accounted for 0.57 percent of the world coal coordinate these data with that gathered by production, which is very modest. other government agencies as, for example, education and health. The goal should be to Since 2000 Vietnam’s coal industry has undergone collect data not only on a project-specific basis rapid expansion, growing at well over 10 percent but also on a provincial and national basis and to a year. The expansion is primarily due to demand relate this data to development outcomes and for Vietnam’s high-quality exported anthracite, ultimately to the Millennium Development Goals. which commands a premium on the international market. (See Figure 6.1.) Total sales revenues The Extractive Industries Transparency Initiative generated by anthracite exports were $1.4 billion (EITI) was established in 2005 as a means to in 2008.283 Growth in coal production is also due disclose taxes paid by extractive industry to continued high domestic demand for coal as companies and taxes received by governments. an energy source for power generation and The EITI is governed by a board of directors and cement manufacturing. However, exported coal a secretariat in Oslo, Norway. To date, some 38 commands a premium price that is two to three countries have subscribed to the principles of the times the prices paid for domestically used coal. EITI and are in the process of implementing the initiative. Upon successful completion of the The structure of the Vietnamese coal mining steps in the process, countries are certified as industry has undergone significant changes EITI-compliant. This has the great advantage of since 2000. During the colonial period and until demonstrating that the extractive industry sector 1995 coal mining was a monopoly of the state. In is in fact contributing taxes to the government 1995, the Vietnam Coal Corporation was and demonstrating internationally and locally established, which in turn has been owned 100 that good governance procedures are in place for percent by Vinacomin since 2005. Over the past the sector. Vietnam should consider endorsing five years, Vinacomin’s investment has increased and implementing the EITI.280 eightfold and paid-in capital grew four times, but the before-tax profit remained unchanged and N AT U R A L R E S O U R C E S M A N AG E M EN T 120 CHAPTER 6 : MINERAL RESOURCES Figure 6.1. Evolution of Vietnam’s coal industry, 2000–2008 Source: The consumption department of Vinacomin. the profit-to-capital ratio decreased four times.284 improvements in exploitation efficiencies In July 2008, the Prime Minster issued a decree can be achieved at these operations, approving the strategy for coal development for however, through the introduction of new the period 2015 to 2025. This calls for the technologies, and the planned expansion assessment and development of coal resources to new exploitation areas needs the in the Red River basin below a depth of 300 introduction of new and advanced meters and the goal of achieving overall output technologies. Specifically, the planned of coal of 80 million tons by 2025. If the strategy expansion to the Red River valley needs is followed, and assuming international markets additional exploration to prove reserves. remain buoyant, the coal mining sector in Also, the extraction of these resources will Vietnam will expand rapidly over the next 15 prove challenging given the shallow depth years. in river delta environment and the possible disturbances to agricultural surface lands. The case of coal in Vietnam illustrates many of the Particularly, investigations need to be thematic issues discussed in the mining chapter: carried out at this site as well as others in Development of new extraction Vietnam on the introduction of methane technologies and exploration. The gas extraction technologies for both Vietnamese coal industry is reasonably underground and open cast operations. efficient at its traditional extraction, The introduction of these modern processing, and export operations. Some technologies would contribute to the N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 121 country’s actions on the climate change Nationally, the coal industry has created mitigation agenda. It is noted that around 125,000 direct jobs, and employees Vinacomin is working on the gasification of earn roughly 10 times the Vietnamese coal in the Red River basin in a consortium minimum wage.286 It is noted that the coal with LincEnergy (Australia) and Marubeni mines in Quang Ninh province have also Corporation (Japan) since 2008 on a $ 6.5- help create numerous ancillary industries million investment in trial exploitation. and activities that also provide employment and job opportunities. The Inadequate sector supervision. Illegal income from the mines has helped to coal mining has increased dramatically in reduce poverty and increase the well-being recent years. Customs statistics from China of residents. on coal imports from Vietnam are considerably larger than the amounts For instance, near the operations of the Nui declared in official statistics. Some Beo Coal company in Quang Ninh province, Vietnamese estimates are that as much as the percentage of households living below 10 million tons of coal was exported to the poverty line decreased from 7.4 percent China illegally.285 Illegal coal mining and in 2007 to 4.6 percent in 2009, with a target exports are a consequence of to fall below 5 percent by 2010. The rural implementing the licensing and population’s access to clean water supply management reforms provided for in the stood 80 percent in 2010, up from around minerals legislation without adequate 70 to75 percent previously. The percentage capacity and clear mandates of the central of trained and skilled workers in Quang regulatory bodies. This is evidenced by the Ninh province was 42 percent, compared dominant role of the state-owned with the national average of 30 percent. enterprises (Vinacomin) as operators and Finally, given the projections for growth of regulators of the industry. For instance, the coal mining sector, the number of Vinacomin subcontracts with private employed persons will also substantially contractors for some of its excavation and increase and reach around 300,000 transport activities or sublicenses a employees by 2025.287 company to exploit a coal seam and outcrop on its permit area without Pollution and Emissions. 288 Coal mining adequate supervision. In the investment in any country has significant law, coal mining is classified as a environmental impacts. Some of the “conditional businessâ€? so that local significant impacts in Vietnam include: governments could also license private Airborne emissions of methane gas, sector companies and operators. smoke pollution, and dust. Gases emitted Regional disparities in benefit contribute to global warming potential distributions. Coal contributes through CO2, N2O, and CH4. When significantly to the economic development combined with water, “acid rainâ€? can be of the provinces where it takes place but it caused. can also exacerbate regional disparities in Wastewater and other pollutants. When economic development. In Quang Ninh water comes into contact with heavy province (a principal anthracite production metals present in the mined materials or area), economic growth averaged over 12 waste rock, it can contaminate surface percent a year for the period 2006–10, and ground water. In addition, in many which is much higher than many other areas mining takes place close to urban provinces and 1.6 times higher than the dwellings, and rain runoff generally national average over the same period. N AT U R A L R E S O U R C E S M A N AG E M EN T 122 CHAPTER 6 : MINERAL RESOURCES carries large amounts of dust, soil, and environmental Protection fee applicable to mineral contaminants. There are estimates289 of mining 2.4–3 cubic meters of wastewater Decree No. 80/2006/ND - CP dated 9/8/2006 of the created for each ton of coal produced. Government of the Socialist Republic of Vietnam on Tailings and waster rock management. detailing the implementation of some articles of the 2005 Law on Environmental Protection. An estimated 50 million tons of waste rock is produced through coal mining in Decree No. 21/ 2008/ ND- CP dated February 28, Vietnam. Disposal, impoundment, and 2008 of the Government concerning partial management of this waste rock poses a changes in some articles stipulated in Decree No. problem, since disposal areas can be 80/ 2006/ ND- CP dated 9/ 8/ 2006. near populated areas, and slopes and Law on Environmental Protection approved by the dams need to be stabilized. 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Master plans on exploration, mining, processing Decision: 89/2008/QÄ?-TTg of Prime Minister dated and using of bauxite ores in 2007 – 2015 period 07 July 2008 approving the strategy on the coal with reference to 2025 (Decision No.167/2007/QÄ?- industry development plan of Vietnam to 2015 with TTg of Prime Minister dated 01 November 2007); the vision to 2025. Master plans on exploration, mining and using of Decision No. 167/QD-TTg of the Prime Minister minerals for cement production until 2020 dated 11.1.2007 approving the master plan for (Decision No.105/2008/QÄ?-TTg 2007 of Prime exploration, exploitation, processing bauxite for the Minister dated 21 July); period from 2007 to 2015. Master plans on exploration, mining, Decree 160/2005/ND-CP dated 27 December 2005 processing and using of minerals for on making detailed provisions for implementation of production of construction materials until mineral Law and Law on amendment of Mineral Law. 2020 (Decision No.152/2008/QÄ?-TTg of Prime Decree 63/2008/ND_CP dated 13 May 2008 on Minister dated 28 November 2008); N AT U R A L R E S O U R C E S M A N AG E M EN T CHAPTER 6 : MINERAL RESOURCES 123 Master plans on partition, exploration, mining, Nguyen Thanh Ha, Structure of coal consumption processing and using of chromites and manganese from 2010, Trade Magazine, 10 Jan 2010; ores in 2006 – 2015 period with reference to 2025 h t t p : / / t i n t u c. x a l o. v n / 0 0 - 9 4 1 3 6 2 4 4 2 / d a o _ (Decision No.33/2007/QÄ?-BCN of Minister of nguoc_co_cau_tieu_thu_than_tu_nam_2010.html. Industry (nowadays is Ministry of Industry and Official Letter No. 570/TTg-CN dated 11 April 2006 Trade) dated 26 July 2007); of the Prime Minister on surmounting the difficulty Master plans on partition, exploration, mining, in implementation of the Amended Mineral Law on processing and using of tin, tungsten and antimony several provisions of the Mineral Law. ores in 2007 – 2015 period with reference to 2025 Official Letter No. 570/TTg-CN dated 11 April 2006 (Decision No.05/2008/QÄ?-BCT of Minister of of the Prime Minister on surmounting the difficulty Industry and Trade dated 04 March 2008); in implementation of the Amended Mineral Law on Master plans on partition, exploration, mining, several provisions of the Mineral Law. processing and using of gold, nickel and Pham Quang Tu, Professor, comments on VDR molybdenum ores until 2015 with reference to 2025 mining chapter, August 2010 (Decision No.11/2008/QÄ?-BCT of Minister of Industry and Trade dated 05 June 2008); Talisman Energy, CSR Reports, 2009 Master plans on partition, exploration, mining, Vietnam Statistical Yearbook, selected years processing and using of gemstone, rare earth and Vietnam Geology Association, Vietnam Union of uranium ores until 2015 with reference 2025 Science and Technology Associations, Consultancy (Decision No.25/2008/QÄ?-BCT of Minister of on Development, Workshop Report: Mineral Industry and Trade dated 04 August 2008); Development and Sustainable Development, Hanoi, Master plans on exploration, mining and selection May 2010 apatite ores in 2008 – 2020 period with reference Vinacomin, Reports on Production volume of after 2020 (Decision No.28/2008/QÄ?-BCT of Department of Distribution, 2008-2009. Minister of Industry and Trade dated 18 August 2008); Vinacomin, Department of Labor and Salary, 2010 Master plans on partition, exploration, mining, Vinacomin, Mine Science and Technology Institute, processing and using of industrial minerals group monitoring project 2008 (serpentine, barite, graphite, fluorite, bentonite, diatomite and talc) until 2015 with reference to VOV News. 2008. “Lesson 1: economic benefits and 2025 (Decision No.41/2008/QÄ?-BCT of Minister of environmental consequences.â€? At Industry and Trade dated 17 November 2008); http://vovnews.vn/Home/Bai-1-Loi-ich-kinh-te-va- hau-qua-moi-truong/200812/100872.vov. 12 Master plans on partition, exploration, mining, December. processing and using of material minerals group (white limestone, feldspar, kaolin and magnetite) Vu Xuan Nguyet Hong (CIEM) and Nguyen Thi Lan until 2015 with reference 2025 (Decision (ILSSA). 2010. Economic Governance and Policy- No.47/2008/QÄ?-BCT of Minister of Industry and Making Process in Vietnam. June. Trade dated 17 December 2008) N AT U R A L R E S O U R C E S M A N AG E M EN T 124 CHAPTER 6 : MINERAL RESOURCES STATISTICAL APPENDIX Population and Employment Table 1.1 Population Table 1.2 Population by locality Table 1.3 Total employment by sectors National Account Table 2.1 GDP by industrial origin and by economic sector in current prices Table 2.2 A GDP by industrial origin and by economic sector in constant prices Table 2.2 B GDP by industrial origin - growth rate Table 2.3 A GDP deflator Table 2.3 B Change in GDP deflator Table 2.4 National accounts: sources and uses Balance of Payments Table 3.1 Balance of payments Table 3.2 Merchandise exports by commodities Table 3.3 Merchandise imports by commodities Monetary Survey Table 4.1 Monetary survey Budget Table 5.1 State budget revenues Table 5.2 State budget revenues (share of GDP) Table 5.3 State budget expenditures Table 5.4 State budget expenditures (share of GDP) Table 5.5 External Debt Prices Table 6.1 A Monthly change in consumer prices Table 6.1 B Monthly comsumer price index Table 6.2 A Consumer price by commodity groups Table 6.2 B Consumer price index by commodity groups Agriculture Table 7.1 Agriculture production in current price Table 7.2 Agriculture production in constant price Table 7.3 Industrial crop production and yields Industry Table 8.1 Industrial production output Table 8.2 Major industrial products N AT U R A L R E S O U R C E S M A N AG E M EN T 126 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 127 N AT U R A L R E S O U R C E S M A N AG E M EN T 128 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 129 N AT U R A L R E S O U R C E S M A N AG E M EN T 130 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 131 N AT U R A L R E S O U R C E S M A N AG E M EN T 132 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 133 N AT U R A L R E S O U R C E S M A N AG E M EN T 134 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 135 N AT U R A L R E S O U R C E S M A N AG E M EN T 136 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 137 N AT U R A L R E S O U R C E S M A N AG E M EN T 138 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 139 N AT U R A L R E S O U R C E S M A N AG E M EN T 140 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 141 N AT U R A L R E S O U R C E S M A N AG E M EN T 142 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 143 N AT U R A L R E S O U R C E S M A N AG E M EN T 144 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 145 N AT U R A L R E S O U R C E S M A N AG E M EN T 146 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 147 N AT U R A L R E S O U R C E S M A N AG E M EN T 148 STATISTICAL APPENDIX N AT U R A L R E S O U R C E S M A N AG E M EN T STATISTICAL APPENDIX 149 N AT U R A L R E S O U R C E S M A N AG E M EN T 150 STATISTICAL APPENDIX NOTES 1 Using World Bank Atlas methodology. See 19 See Yale Center for Environmental Law & Policy and http://siteresources.worldbank.org/OPSMANUAL/Re Columbia University Center for International Earth sources/OP310_AnnexD_July2010.pdf. Viewed 6 Science Information Network 2010. August 2010. 20 Except for roadside stations, concentration levels of 2 EIU 2010. nitrogen dioxide, sulfur dioxide, carbon monoxide, 3 and lead are generally stable and comply with GSO 2008. Vietnam standards. There is limited information to 4 The Gini coefficient rose from 0.34 (1993) to 0.36 assess the situation for smaller particulate matter (2006); see World Bank 2010f. A value of 0 implies (PM2.5), which has a critical importance in terms of total equality, while a value of 1 signifies total health impacts, or for ozone. The 2005 ambient air inequality. quality standards were signed and due to become a technical regulation in 2009. While there is no 5 UNESCAP and CIEM 2009. nationally legislated air quality index system in 6 MPI 2006. Vietnam, Ho Chi Minh City uses an Air Quality Index based on U.S. Federal Register guidelines. Air quality 7 World Bank 2010d. monitoring systems are expected to improve as the 8 GSO 2010. government implements its plan to expand its Environmental Quality Monitoring Network systems 9 Cira and Karam 2010. as well as when the Ministry of Natural Resources 10 and Environment (through the Center for GSO 2010. See table 2.1 in the appendix for details. Environmental Monitoring) completes its guidelines 11 The Vietnam Development Report 2010 (World Bank and handbook for air quality monitoring in Vietnam. 2009) is also available in Vietnamese. Sources: ADB and CAI-Asia 2006; MoNRE 2008; 12 BTNMT 2009; CAI-Asia 2010; and Dr. Tuan, Center for See CECOD et al. 2010 for specifics. Water pollution Environmental Monitoring, personal is also analyzed in LBCD Consultants Inc. and communication. Experco International Ltd. 2010 and in World Bank 21 An important indicator here is the prevalence of 2008. 13 acute respiratory infections among children under For good overviews, see FSPS 2009 on forests and five years of age, which is 20 percent for Vietnam. MARD 2010 for fisheries. This can be compared with the following 14 World Bank 2005a,b. Biodiversity is treated in its percentages: Timor-Leste (14), the Philippines (10), terrestrial component in the forestry chapter and in and Indonesia (8) (World Bank 2010g). Many factors its marine component in the marine chapter. contribute, but this indicates a potentially significant issue that would deserve discussion. To our 15 See the appendix, table 3.2 for major exports by knowledge, however, detailed analysis of the role of commodity, and table 3.3 for major imports. indoor air pollution in Vietnam is not available. 16 World Commission on Environment and 22 See, for example, ADB 2009a, 2010; GoV 2009; Development 1987. ISPONRE 2009; Monash University 2010; MoNRE 17 See World Bank 2006 and World Bank (forthcoming) 2009; World Bank 2010a, 2010b, 2010c, and 2010d. for a detailed account of the methodology and 23 The estimate assumes a 2 degree C warming. See applications to a cross-country analysis. World Bank 2010d. 18 Comparisons for 2008 are from World Bank 2010x. 24 Monash University 2010. by April 1, 2009, the country was home to 25 85,789,573 persons (an increase by 9.5 million since The term “likelyâ€? is used with reference to the IPCC 1999). The annual population growth was 1.2 (2007) assessment and indicates an estimated percent in the period 1999–2009, representing a probability of >66 percent. IPCC notes that there is decrease by 0.5 percent compared with the previous evidence of an increase in intense tropic cyclone decade and the lowest annual growth rate in the last activity in the North Atlantic since about 1970, but 50 years. only “suggestionsâ€? of the same in other regions, where data quality is lower. In summary, IPCC (2007, 39 Progress of land allocation in Vietnam (million ha). p. 53) therefore lists “intense tropical cyclone activity 40 increasesâ€? as “likely.â€? The decentralized grassroots-level process of redistribution of cooperative land to farmer 26 The government of Vietnam adopted a program in households, its equitable outcomes, and the 2008 to determine the consequences of climate positive welfares impacts are analyzed in Ravaillion change and establish national priorities. This and van de Walle (2001). The land redistribution National Target Program to Respond to Climate gave 15 percent higher consumption for the poorest Change (NTP-RCC) is the country’s guiding and 20 percent lower for the richest compared with document for responding to climate change in the a simulated efficient allocation based on maximizing medium term (2009–15). See also MoNRE 2009 and aggregate consumption. In terms of outcomes for UN-Viet Nam 2009. poverty and inequality, the land reallocation was 27 roughly the same as giving all farm households the WRI 2009. same irrigated land equivalent. 28 SeeWorld Bank 2010b. 41 Truong Thien Thu and Perera 2010 29 But see, for example, the NPT-RCC. 42 A statistical and econometric analysis of data 30 One important factor is what is assumed about CO2- collected through the Vietnam Household Living fertilization. See Nelson et al (2010) for a clear Standards Survey in 1992–93 shows the earlier illustration. decentralized allocation of cooperative land to 31 farmer households had roughly the same average See World Bank 2010b. consumption and consumption inequality impacts 32 See Poverty-Environment Partnership 2008 for a as giving every household the same amount of detailed explanation and specific sources for each irrigated-land equivalent. Further, efforts might take country. place at the grassroots level to protect the poorest and reduce overall inequality, at the expense of 33 Vietnam’s Law of Environment Protection 2006 aggregate consumption. The analysis does not requires agencies responsible for the formulation of confirm the significance of non-egalitarian land land use plans to prepare strategic environment allocations in case relatively well off local cadres assessments (SEAs), at least at the interprovincial or captured the allocation process. The allocation regional levels. entails an equity-efficiency trade-off and has 34 See Dusik and Xie 2009; Clausen et al. 2010. achieved positive values of both the objectives. It also establishes that if a free-market efficiency- 35 REDD+ stands for Reducing Emissions from based land allocation had taken place instead, the Deforestation and Forest Degradation in Developing outcome would have been less equitable (Ravaillion Countries; and the role of Conservation, Sustainable and van de Walle 2001). Management of Forests and Enhancement of Forest 43 Carbon Stocks in Developing Countries. The granting of a Land Use Rights Certificate (LURC) signals completion of the first registration process 36 MoNRE 2010. and the formal recognition of the land user’s rights, 37 providing judicial protection of tenure security and Here and in further in this report, the term “land formal land transactions. In the period 1993–2000, managementâ€? is used in the broad meaning, almost 11 million LURCs were reportedly granted to including two narrower concepts of land 90 percent of farmer households, making this the administration (defined by FAO as the way land largest land titling program in the developing world. tenure rules are applied and made operational) and In comparison, only 8.7 million land titles have been land management (i.e. how the land is used or distributed in Thailand since early 1980s, 1.87 million utilized). in Indonesia between 1996 and 2000, and 1.2 million 38 According to the Vietnam Population Census 2009, in Peru by 2000 (Truong Thien Thu and Perera 2010). N AT U R A L R E S O U R C E S M A N AG E M EN T 152 NOTES 44 For a good discussion on land degradation in 47 World Bank 2009b. developing countries, see Scherr and Yadav 1996; for 48 specific studies in Vietnam, see Nikolic et al. 2008 Jones Lang LaSalle 2006 and 2010. and Wezel et al. 2002. 49 Landlessness stands at more than 12 percent of the 45 For example, in Ho Chi Minh City and Hanoi, land rural population and is particularly acute in the and property prices increased by 40–50 percent in Mekong River Delta and Southern East, where both 2007 but 20 percent in 2009. land and labor markets are more developed (Government of Vietnam 2004). Ravalion and van de 46 LURCs are often issued for a specific government Walle (2005) show that the landlessness tends to be predetermined land use purpose (such as rice higher among non-poor in rural Vietnam as a whole growing land, forestland, or residential land), a and that those non-poor engaged in land deviation from which could be classified as misuse if transactions tend to be better off. there were no pre-approval by concerned 50 authorities. Upon the completion of the land use Ravallion and van de Walle 2005. period (20 and 50 years for agricultural and 51 The government fully understands the importance forestland respectively) the tenure could be of the completion of the issuance of LURCs and has extended if respective land users have the demand set the target to do that in principle by the end of and used the land according to the assigned land 2010 (resolutions 07/2007/QH12 of the National use purpose. There are also ceilings on land Assembly and 02/2008/NQ-CP of the Government). holding—for example, 2–3 hectares of agricultural MoNRE/General Department of Land Administration land per household in the Red River Delta and 4–5 (GDLA) estimates, based on the currently adopted hectares in the Mekong River Delta. approach and methodology, that completing the issuance of LURCs and modernizing the land N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 153 administration system for all provinces would and define how rights are ruled, allocated, and require about $850 million in 2008–15, not including preserved within a community. Customary titling $100 million under the ongoing World-Bank funded can take place in forest and “unusedâ€? land Vietnam Land Administration Project. To meet this dominated by ethnic groups with largely intact timeline, a number of LURCs would have to be traditional social structures. Currently, it is estimated issued on the basis of existing documents and maps that 2–2.5 million hectares of forestland are de-facto and updated with more accurate spatial data managed by communities. references later when adequate survey and 56 mapping capacities are available. In this respect, See Circular 38/2007/TT-BNN on forest allocation. MoNRE/GDLA was advised to consider alternative 57 Foerster and Apel 2004. options. In this respect, the issuance of titles based 58 on the parcel border demarcation agreed to by State forest enterprises or companies manage more concerned land owners, subject to related than 4 million hectares of forestland. Much of this is stakeholders’ proper awareness and participation underutilized, and at least 1 million hectares could used in some countries, could be useful. This be released to local authorities for redistribution to approach has proved to be less costly and less time- local farmers and firms in needs (World Bank 2001). consuming than current GDLA practice (Vietnam Also reportedly, most commercial land in Hanoi is Land Administration Project. Second still in the hands of state-owned enterprises and Implementation Support Mission April 1–10, 2009. government bodies and often rented out to the Aide Memoire). private sector. 59 52 World Bank. 2009b; Truong Thien Thu and Perera World Bank 2009a. 2010; Davidsen 2010. 60 World Bank 2010b. 53 Vietnam’s Law of Environment Protection 2006 61 World Bank 2010c. requires agencies responsible for the formulation of 62 land use plans to prepare strategic environment The Water Sector Review (WSR) in 2007/2008 was a assessment (SEA) reports, at least at the joint project of the government of Vietnam and a interprovincial or regional levels, as an integral number of international development partners. The content of the plan and concurrently with the aim was to help the government and its partners formulation of the plans. The SEA shall include, adopt better management approaches based on among other items, the likely adverse impacts of integrated water resources management (IWRM) and proposed mitigation measures for the plan’s principles, in line with the objectives of the National implementation. The SEAs shall be reviewed by a Water Resources Strategy. The immediate objective council established according to the level of the of the project was to review the state of the water plans and with representatives of relevant national, sector in Vietnam and to establish a common regional, and provincial authorities. Organizations framework to guide development decisions and and individuals have the right to submit their support IWRM initiatives. See requests and recommendations of environmental http://www.vnwatersector-review.com. protection to the agencies that are responsible for 63 The international standard for adequate water per establishing the review councils. The conclusion of person is 1,700 cubic meters a year, with the the SEA review serves as a basis for final approval of possibility remaining of having irregular or local the plans. water shortages with water availability of between 54 World Bank 2010a. 1,700 and 4,000 cubic meters a year (based on the Falkenmark Water Stress Indicators). 55 In legal acts and Vietnamese literature, customary 64 titling is often referred to as “land allocation to World Bank 2007a. communities.â€? A community is defined by the Land 65 The Ministry of Natural Resources and Environment Law as a group of Vietnamese who live in the same (MoNRE) Web site reports that in the Mekong Delta, village or hamlet and have the same customs and unchecked use of bores has been causing land habits or family clans (Article 9.3). Broader, in the subsidence and pollution from damaged bores. The context of Vietnam, customary titling can be level of groundwater in the delta has fallen by 12–15 understood as providing statutory long-term land meters, and groundwater in several areas would be use rights, taking into account long-standing depleted by 2014. principles (called as “customary lawâ€?) and traditional 66 land administration institutions that often operate A total of 68 urban water supply companies provide outside or in parallel with the formal legal system service averaging 21.6 hours per day, with 55 N AT U R A L R E S O U R C E S M A N AG E M EN T 154 NOTES companies supplying 18 hours per day or more. mollusks and crustaceans (http://wwf.panda.org/ Average supply ranges between 80 and 90 liters per about_our_earth/blue_planet/problems/aquacultur capita per day (lcd) to 120–130 lcd in the larger cities e/pollution/). at a low service pressure, compared with a national 76 design target of 120–150 lcd. Unaccounted-for FAO Globefish report 2009 http://www.globefish. water is reported as reduced to 30 percent in 2009. org/pangasius-march-2010.html. These official averages, however, mask 77 See Government of Vietnam 2010 for details. unaccounted-for water values in parts of urban 78 areas as high as 75 percent (ADB 2010a). See JICA 2009 for details. 79 JICA 2009. 67 ADB 2010a. 80 68 Unimproved drinking water sources include Government of Vietnam 2006. unprotected dug wells and springs, vendors using 81 Ibid. carts, bottled water, and untreated surface water. In 82 ICEM 2007. the dry season, water quality in most unimproved sources deteriorates markedly as quantity falls and 83 ADB 2010a. the contaminant load rises, increasing the incidence 84 The MoNRE Web site reports on the findings of a of both water-washed and water-borne diseases (ADB 2010a). study by the National Assembly’s Science, 69 Technology and Environment Committee, which UNICEF, Country Program of Cooperation (2006– found that the cooperation among ministries, 2010) between the government of Vietnam and departments, and local governments in resolving UNICEF, the Water, Environment and Sanitation inter-regional environmental problems remains less program (ADB 2010a). effective due to particularly overlapping regulations 70 ADB 2010b. on the responsibility of state organizations and local governments toward environmental protection. 71 Ibid. 85 More than 11 hydropower dams are being studied 72 Ministry of Industry 2005. by developers for the mainstream of the Mekong. 73 Hortle 2007. The 1995 Mekong Agreement requires that such projects be discussed among all four countries prior 74 Aquaculture accounts for about 17 percent of the to any decision. That discussion, facilitated by the total fisheries workforce. The area under aquaculture Mekong River Commission (MRC), will consider the is nearly 1 million hectares, with a total output of full range of social, environmental, and cross-sector over 1 million tons, over a third of all aquatic development impacts within the Lower Mekong production. However, the productivity of Basin. So far, none of the prospective developers aquaculture is low (250–300 kg/ha) compared with have reached the stage of notification and prior other countries in the region. The brackish shrimp consultation required under the Mekong farming area increased threefold between 1999 and Agreement. While there will be a net economic 2005. Nearly 90 percent of the shrimp farming area benefit for the power sectors in all countries, the is in the Mekong River Delta (FAO Web sites; Nguyen dams are also likely to have wide-ranging economic Van Trong 2008). impacts that are distributed unevenly across the 75 Open net cage fish farms and land-based fish farms lower Mekong Basin communities and countries and can discharge significant amounts of wastewater that differ considerably in their significance between containing nutrients, chemicals, and different locations and groups. The MRC is pharmaceuticals. The nutrients in unused fish feed undertaking a strategic environmental assessment and fish feces can cause local algal blooms, or of the proposed mainstream dams to provide a eutrophication. These blooms lead to reduced broader understanding of the opportunities and oxygen in the water, which in turn can lead to the risks of such development (MRC 2010). production of ammonia, methane, and hydrogen 86 A range of water resource data-related issues in sulfide, which are toxic to many aquatic species. Vietnam were identified in detail by AusAID (2004). Reduced oxygen can also directly kill marine life. In 87 addition, a wide range of chemicals is currently used Financial losses, reflecting expenditure or income in the aquaculture industry, mainly pharmaceuticals losses resulting from poor sanitation, are equal to such as antibiotics and anti-fouling agents such as roughly 0.5 percent of annual gross domestic copper. Some of these chemicals are toxic to product (GDP), while overall population welfare N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 155 losses are equal to 1.3 percent of GDP. The majority cases, 2.4 million cases of scabies, helminthes, of economic losses are shared between health (34 hepatitis A and trachoma and 0.9 million percent), water resources (37 percent), and the malnutrition-related cases per annum. These environment (15 percent). The annual losses per diseases also cause more than 9,000 deaths per year, capita equal $9.38 or VND150,770 (World Bank mostly among children. A second major impact 2006). measured in this study is the economic costs of poor 88 water quality that are only indirectly related to Currently, 170 urban water supply projects, valued health. This study estimated these costs to be more at close to $1 billion, are under way, aimed at than $287 million per year, including costs of providing clean water throughout the country by treating polluted water used as drinking water, 2020 (VIETWATER '10, Brochure, Vietnam Water additional costs for finding improved water, and Supply Association). The Ministry of Construction productivity losses in fisheries. Additional costs add has sought approval for a $494 million project to up to the $780 million that has been quoted by reduce water loss (Viet Nam News 2010). Investment MoNRE 2010. needs to meet the Millennium Development Goals in Vietnam in both rural and urban water and 93 Vedan Vietnam is a monosodium glutamate maker. sanitation by 2020 are tentatively estimated at $600 Investigations in September 2008 found Vedan had million annually, which is roughly four times the illegally dumped wastewater. Court action against annual investment in the last 10 years (World Bank Vedan is under way, per the MoNRE Web site. 2006). 94 The impacts of climate change on precipitation and 89 Prior to the abolition of irrigation charges, the water management differ considerably between Irrigation and Drainage Management Companies models. A run of 14 different climate models shows (IDMC) collected an irrigation service fee (ISF). The that Vietnam has about an equal chance of getting aggregate total ISF revenues collected by IDMCs in drier or wetter by 2050 (World Bank 2010a). The 2006 was VND 659 billion and accounted for 58 government has adopted a medium greenhouse percent of the aggregate total expenditures gas emissions scenario for Vietnamese climate incurred by IDMCs in that year. Total revenue earned change projections and planning. According to this by IDMC in 2006 was VND 886 billion and covered scenario, annual total rainfall will increase 78 percent of the aggregate total expenditures everywhere in Vietnam. Under the high emissions (World Bank 2007b). While the irrigation services fee scenario, rainfall is estimated to increase by an was abolished (and land taxes), farmers continue to average of 6.6 percent during this century, including pay irrigation fees to their water user organizations by as much as 10 percent in the Red River Delta area. or more commonly to agricultural service Should this come about, it could lead to increased cooperatives (which operate in all or most risk of flooding and landslides in mountainous areas. communes). In contrast, during the dry months, especially in the 90 southern regions including the Mekong Delta, IWMI, FAO, and ADB 2009. average rainfall could decrease by about 20 percent, 91 The MoNRE Web site reports that more than 3,000 leading to increased drought risks. Vietnam’s violations of the Environment Law occurred during “planning parameterâ€? is a one meter rise in sea levels the first six months of the year, compared with 600 by 2100, which is consistent with a high emissions during the same period last year. More than 1,000 scenario. Without major action, such as dike organizations and 2,000 individuals were found reinforcements, a one meter rise in mean sea levels violating provisions of the law, and a total of VND17 would cause major inundation (UNDP 2009). It is billion ($895,000) in fines were issued. prudent to adopt planning parameters that take 92 into account even an extreme sea level rise. For A total figure for the cost of water pollution is not comparison, it can be noted that the available. However, estimates are available for a sub- Intergovernmental Panel on Climate Change (2007) set of the problem related to polluted water due to projected a global mean SLR of 26-59 cm by 2100, poor sanitation. A study (World Bank 2008) on the basis of thermal expansion of sea water only. estimated the economic losses from health impacts 95 There are also sub-laws dealing with environmental of poor sanitation to be $262 million per year. Much of this—but not all-- is due to the impacts of protection charges on wastewater (Decree 67/2003), polluted water. Health impacts were divided into the urban water supply and drainage (Decrees costs of health care, productivity losses due to 117/2007, 88/2007 & 59/2007), river basin morbidity, and premature death. The study indicates management (Decree 120/2008), and inter-reservoir that sanitation accounts for nearly 7 million diarrhea operation rules (Decree 112/2008). N AT U R A L R E S O U R C E S M A N AG E M EN T 156 NOTES 96 Water rights are specified in terms of a volume or pollution indexes. Thus, significant improvements in share of the water that a right-holder may take. They environmental quality and reductions in industrial may also specify when and at what rate such water pollution could be achieved by focusing pollution can be taken. Water rights include a priority of control efforts on these industrial subsectors. The access that a right-holder has relative to other right- eight industry groups are chemicals industries, holders. Specifying priority of access is one means primary metals industries, food processing, leather by which the year-to-year variability of water and leather products, paper and wood products, supplies is rationed between users and uses. Water textiles, ceramics, and non-metal mineral products rights have a specified duration. Water rights may industry (ICEM 2007). also confer rights to construct the necessary works 104 to extract water, to use water, and to set the timing Various documents on the MoNRE Web site report of the delivery of that water. However, in a number that in the first five months of 2010, seawater had of jurisdictions, separate approval processes are entered areas as far as 50–70 kilometers inland. required to put into effect the necessary works to About 40 percent of the rice production in that extract water, to use water, and to make use of the region has been affected by saltwater, and one-third channel capacity. Finally, water rights also impose of the rural population in the region does not have liabilities on their holders not to injure other right- enough freshwater for daily activities. In some holders. These liabilities are generally intended to provinces, numerous canals have dried up because protect third parties, such as other right-holders or of the prolonged dry and hot season. Meanwhile, the environment. Such liabilities are an important there is also a problem with a lack of seawater for aspect of the enforcement of water rights shrimp production due to the province’s policy to (Australian Productivity Commission 2003). close the seawater supply pipeline to save more than 20,000 hectares of rice in the province. Trying 97 ADB 2010b. to meet both the demand of rice growers for fresh 98 water and the needs of shrimp breeders for Based on EU 2000. seawater has proved difficult. 99 World Bank 2006. 105 Ibid. 100 ADB 2010a. 106 IWMI, FAO, and ADB 2009. 101 The MoNRE Web site reports on the findings of a 107 ADB 2010a. study by the National Assembly’s Science, Technology and Environment Committee that 108 World Bank 2006. reviewed the enforcement of environmental laws in 109 industrial parks and urban and economic zones. The The Quang Ngai Natural Disaster Mitigation Project Deputy Chairman of the Science, Technology and is an example. The project provided and equipped a Environment Committee, Dr. Sc. Nghiem Vu Khai, is provincial Centre for Management and Mitigation of quoted as saying that existing state policies and Natural Disasters and initiated and put into legal documents have laid a necessary foundation operation an effective community-based disaster for pollution treatment and environmental risk management (CBDRM) approach. This protection in urban areas and industrial parks demonstrated a highly successful application of throughout the country. Nevertheless, pollution complementary structural, nonstructural, and stays at a critical level in many areas, challenging community-based components. Flood modeling economic growth and threatening people’s health. convinced the authorities of the value of an This is attributed to the low enforcement of integrated approach to disaster management, environmental laws, for which relevant state bodies where previously the main provincial interest was in and local governments must take the blame. the structural components of projects. CBDRM also demonstrated the value of communities that have 102 Decision 64/2003 on handling polluting been prepared and resourced to manage the local establishments and the regulatory and operational disaster risks through preparedness, safe behaviors, response across government is a significant adequate warning and rescue facilities, and some achievement. But innovations are needed to low-cost local structural measures. Such programs improve performance. In particular, the criteria for can also consider more specific aspects, such as designating an enterprise or area as “most serious dealing with children who have to learn to live with polluterâ€? are not well defined. See ICEM 2007. flooding, for example in the Mekong Delta. Safety 103 programs such as swimming classes and flotation Eight industry groups and a number of their devices may save many young lives. subsectors are consistently ranked at the top of the N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 157 110 119 ADB TA-4689 (VIE) supporting the preparation and MARD Decision No. 2140/QÄ?-BNN-KL. pilot testing of guidelines to introduce benefit 120 sharing mechanisms on hydropower projects in Note that this chapter mostly uses the most recent Vietnam, Final Report, December 2007. data on forest cover (Decision No. 2140); however the most recent data on forest structure is drawn 111 ADB 2010b. from the 2005 National Forest Inventory, hence inconsistencies exist in some figures (for example, ADB 2010a; The Vietnam Development Report 2010 area of plantations) due to the different points in contains a thorough treatment of governance. time of the data sets. 112 The Provincial Competitiveness Index is a ranking of 121 Data source: MARD Decision No. 2140/QÄ?-BNN-KL. provinces based on the competitiveness of the Summary of functional categories: Special use forest business environment. is intended for nature conservation, protection of 113 The National Water Resources Council is chaired by ecosystems and of flora and fauna gene resources, a Deputy Prime Minister and consists of all the water and for historical, environmental, and cultural sites. sector ministries. Protection forest is set aside for protection of 114 watersheds, soil and the environment. Production Water service operators need far greater business forest is the source of wood and non-wood forest flexibility within a regulatory framework that products and is also meant to contribute to protects communities, customers, and the ecological protection. environment. The WSR noted that, through Decree 122 117/2007 on clean water production, supply, and Phan Nguyen Hong and Hoang Thi San 1993; MARD consumption and Decree 88/2007 on urban and Decision No. 1267/QÄ?-BNN-KL, dated 4 May 2009 industrial park water drainage, the government has Announcing the Current Forest Resource now created the legal framework to undertake a Management of the Country (for area of mangroves major and on-going process of reform for the urban in 2008). water sector service providers. The reforms should 123 The widely used terms “barrenâ€? or “bareâ€? hills are a (based on World Bank 2006) aim to ensure the misnomer as most are covered by a dense scrubby service providers have greater autonomy from cover of both woody plants and grasses (McElwee government in day-to-day management and 2009). operation, are progressively commercialized, are accountable and subject to appropriate regulatory 124 Afforestation programs included: Program 327 in controls, have legal requirements to monitor 1992, Program 556 in 1996, and Program 661 in performance against specified performance targets 1998. set by government, undertake tariff reform to 125 improve cost recovery and financial sustainability, MARD Decision No. 2140/QÄ?-BNN-KL. and are oriented to customer needs. The ADB also 126 MoNRE 2009. recommends a program to strengthen the business 127 practices and financial basis of water supply Government of Vietnam 2001. companies (including the systematic introduction of 128 Prime Minister Decision No. 18/2007/QD-ttg, 5 performance indicators, benchmarking, asset February 2007, on Approval of the Vietnam Forestry inventory, management systems, and energy Development Strategy 2006–2020. VFDS efficiency). The overall aim is to make water supply “Developmentâ€? Programs: I. Program on Sustainable companies effective and financially viable (ADB Forest Management and Development; II. Program 2010a). The WSR also recommended that the on Forest Protection, Biodiversity Conservation, and government consider the establishment of single Environmental Services Development; III. Program body governing water and sanitation services and on Forest Products Processing and Trade. VFDS integrate urban water services functions to take “Supportâ€? Programs: IV. Program on Research, advantage of operating and administrative Education, Training, and Forestry Extension; V. synergies and economies of scale. Program on Renovating the Forest Sector 116 ADB 2009. Institutions, Policy, Planning, and Monitoring. 129 117 MARD Minister’s Decision No. 2140/QÄ?-BNN-KL, World Bank 2009. dated 9 August 2010, on the Official Data on Forest 130 Prime Minister Decision No. 661/ QD-TTg, 29 July Land by 2009. 1998, on Objectives, Tasks, Policies and Organisation 118 MARD 2009b. for the Implementation of Reforestation of Five Million Hectare Program. N AT U R A L R E S O U R C E S M A N AG E M EN T 158 NOTES 131 The main targets were to establish 5 million hectares consisting of soil protection at $1,822 million, water of forest (3 million hectares of protection forest and regulation at $3,545 million, carbon sequestration 2 million of production forest) through a series of at $24,364 million, and timber value at $10,757 cash incentives (protection forest) and preferential million. loans (production forest). 140 ADB 2009. 132 Van der Poel 2007. 141 World Bank 2009. 133 World Bank 2010b. 142 In Vietnam the mean annual increment of fast- 134 Prime Minister Decision No: 100/QD-TTg, 6 July growing species under the right conditions is some 2007, on Revision and Amendment of Some Articles 26 cubic meters per hectare (ADB 2001; Fraser 2003; of the Decision 661/QD-TTg (the 5 Million Hectares Katila 2007). Reforestation Program); the main revisions included: 143 revision of targets, reclassification of forests to Local people lack capital, production experiences, reduce protection forests and increase the area of techniques, and information on markets and are production forests, and finalization of land therefore unable to carry out effective production allocation and lease. on allocated land (Vietnam Forestry University 2005); Swan 2010. 135 Prime Minister Decision No. 147/2007/QD-TTg, 144 For example: CO2OL Biodiversity Reforestation 10/9/2007, on Production Forest Development Policy for the period of 2007–2015. (http://www.co2ol.de/CO2OL- Biodiversity.195.0.html?&L=1). 136 For example, current forest policies remain rather 145 centralized, with often overly complex and detailed GoV 2010a. regulations hampering application in the field 146 In 2007 Vietnam was the tenth largest exporter of (Wode and Bao Huy 2009); lower levels remain secondary processed wood products by value (ITTO upwardly accountable, hindering innovation and 2009); it may well be ranked sixth in 2010. efficiency gains that subsidiarity offers, and 147 administrative and service provision capacity for the Vietnam News 2009. forest sector at district and commune levels is 148 This is consistent with the MARD (2009c) finding limited; the state retains direct control of most of from some enterprises that financial effectiveness forests—continuing to manage most of the SUFs (85 was low. percent) and protection forests (70 percent) 149 (Nguyen Ba Ngai 2007); and many aspects of central Ogle and Donnelly 2004. control persist, for example in the form of harvesting 150 Karsentry 2006. quotas and land-use options - household land-use 151 decision making is mostly driven by command-and- World Bank 2009. control measures, much less so by economic 152 MARD 2009c. In recent years Malaysia has been the incentives (Wunder et al. 2005). largest supplier of wood products, followed by the 137 According to Nguyen Ba Ngai et al. (2009), adequate United States, China, Lao PDR, Cambodia, and coordination among ministries for an integrated Thailand. data compilation system does not exist, no 153 According to Nguyen Ba Ngai (2007), appropriate consistent time-series data compilation has been plantation sites—close to consumption markets— done, and in some instances data are simply not are either already allocated or unallocated but available. Also, according to Muller et al. (2006) the consisting of poor sites in scattered locations. Large accuracy of forest data ranges from 65 to 95 percent, and centralized areas are located in remote and depending on factors like the method of data mountainous regions, where transportation collection and compilation, the complexity of conditions are difficult and far from markets. topography, and the homogeneity of forests. 154 138 FAO 2009. World Bank 2009. 155 Vietnam News 2009. 139 Extrapolation based on value per hectare of timber and of forest environmental services for different 156 FSC 2010. forest types derived by ADB (2009) and on forest 157 area from FIPI in 2005 FSC chain-of-custody certification verifies that (http://www.fipi.vn/solieu_ck3/SolieuCK3.htm). products from forests certified as meeting the Environmental service values: $29,731 million, standards set by the FSC for responsible forest N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 159 169 management are not mixed with products from Humphreys and Vu Thi Hien (2008) refer to ethnic uncertified forests at any point in the supply chain. minorities in the Northern Highlands lacking 158 “political capitalâ€?—the capacity to effectively use EIA and Telapak 2008; Forest Trends 2009; World “voiceâ€? to influence decisions in social and political Bank 2010. arenas and, related to this, the lack of local 159 SeeWorld Bank (2010) for a discussion of the institutions through which their voices can be heard malpractice that enable the illegal timber trade to and information shared. continue and flourish. 170 According to Vu Thi Hien, Centre of Research & 160 Nguyen Ba Ngai et al. 2009. Development in Upland Area (personal information, 161 August 2010): During a recent consultation Sunderlin et al. (2008) showed that slightly over 70 workshop on REDD+, representatives of local percent of districts that contained high forest cover authorities and local people from 10 provinces in the also had a high rate of poverty. north of Vietnam agreed that local people have poor 162 Tran Kim Long 2008; Sunderlin and Huynh Thu Ba access to the policy and that dissemination of 2005; Nguyen Quang Tan et al. 2008. policies on forest and forestland to local people is limited (laws and policies just arrive at the commune 163 Vietnam Forestry University 2005; Swinkels and Turk level and not much information is going to 2006. households, even some commune officers do not 164 The Forest Protection and Development Law of 1991 fully know the policies and laws). provided for the involvement of different actors in 171 Data for 2009 show that out of the total of 13 million forest management; the Land Law of 1993 ha of forest, about one third are being used and recognized the rights to lease, exchange, inherit, managed by non-state economic sectors mortgage, and transfer land-use titles; the revised (households approximately 3 million ha; local Land Law of 2003 recognized the legal status of communities 0.2 million ha; the armed forces 0.2 communities in land tenure; and the revised Forest million ha; and joint-ventures and other entities 0.8 Protection and Development Law of 2004 million ha), and two thirds are being used by state recognized legal status of communities in forest entities (state owned enterprises 2 million ha; tenure. protection forest management committee 2.3 165 Nguyen Quang Tan et al. 2008. million ha; special use management committee almost 2 million ha; and people’s committees 2.4 166 Katila 2008. million ha). Source: MARD’s statement of forest 167 status in 2009, as of 31 December 2009, as per Dr. These shortcomings have been well documented: Ngai, personal communication, September 6, 2010. slow and poor forest land use planning (MARD 2009b); inequitable allocation—Kinh migrants and 172 According to MARD (2009c) data, the area of forest prominent ethnic minorities living in district towns allocated to communities was 181,226 ha by end of and commune centres were better positioned to 2007, most of which was poor and young forests. benefit from land allocation programs in contrast to 173 the poorer ethnic communities living in more The full explanation of REDD+ reads: Reducing remote areas (Humphreys and Vu Thi Hien 2008); Emissions from Deforestation and Forest elite capture—overallocation for mass Degradation in Developing Countries; and the role organizations, employees of SFEs, and well-off of Conservation, Sustainable Management of individuals (Sunderlin and Huynh Thu Ba 2005; Forests and Enhancement of Forest Carbon Stocks Nguyen Quang Tan et al. 2008; World Bank 2009); in Developing Countriesâ€? (REDD+). undemocratic and non-transparent land allocation 174 In particular the UN-REDD Programme, based on decisions (MARD 2009a); inadequate collaboration experience built up by GTZ-sponsored projects in between forestry and land administration agencies Dak Lak, Dak Nong, and Son La provinces. (MARD 2009b); shortcomings in benefit sharing 175 arrangements, investment support, and technical World Bank 2010. assistance (MARD 2009b); and unclear rights and 176 Taking the corporate form or a one member Limited awareness of opportunities among recipients Liability Company (with state as the sole (Vietnam Forestry University 2005; Nguyen Quang member/owner) or a Joint Stock Company with the Tan et al. 2008; MARD 2009b). possibility of shareholding by employees and others 168 Swinkels and Turk 2006. (as well as the state) 177 World Bank 2009. N AT U R A L R E S O U R C E S M A N AG E M EN T 160 NOTES 178 WCMC 1992. Vietnam contains all or part of five typically make up 1–2% of total household income Endemic Bird Areas as defined by BirdLife (with a few exceptions). Even if the landowner had International and that the entire country is part of property rights and a significant degree of land use the Indo-Burma Biodiversity Hotspot, whose choice, the amount offered would normally be biological richness is fully detailed in CEPF (2007). insufficient to fully “compensateâ€? the opportunity These are both important and authoritative costs for foregone alternative uses. indicators of biological richness. 194 MoNRE 2009; McNally 2010. 179 New scientific discoveries included 222 species of 195 plants between 1992 and 2002, and four species of FoE 2001. large mammals between 1992 and 2005 (World 196 Examples given by McNally (2010) include the Bank 2005). following: Hydropower developments: ADB (2009) 180 Nguyen Hoang Nghia 2004. carried out a Strategic Environmental Assessment of the Hydropower Master Plan in the context of the 181 See World Bank 2010a for details. Power Development Plan VI. This examined the 182 likely impacts of 21 large-scale dams (with a capacity Dang Huy Huynh 2005. over 4,610 MW) that are planned. It was estimated 183 In categories Endangered, Vulnerable, Rare, and that the land area lost would be around 21,133 ha Threatened, following the Red Data book of Vietnam (including 4,227 ha of natural forests and 1,367 ha (MoSTE 1996; MoNRE 2007). of plantations). The total resource value of the forest 184 lost (including environmental service functions) was In categories Critically Endangered, Endangered, estimated to be $72.4 million. Agricultural and Vulnerable following IUCN Red List of expansion: Current and future polices and plans for Threatened Species (www.redlist.org). the expansion of agriculture (in particular, rubber) 185 MoNRE 2009. point to a large-scale expansion of rubber and to a lesser extent cashew, as highlighted in the first draft 186 Includes 30 National Parks, 48 Nature Reserves, 12 of the MARD Five Year Plan of 2011–2015 as well as protected areas and species habitat, and 38 in Prime Minister’s Decision 750/2009/QÄ?-TTg dated protected landscape areas, with a total area of 2.06 3 June 2009 (on Approving the planning on million hectares, accounting for 6.25 percent of development of rubber tree up to 2015, with a vision physical area of the whole country. toward 2020), which provides for the development 187 Jonathan Eames, BirdLife International, personal of up to 100,000 ha of new rubber plantations in the information, July 2010. Central Highlands on unused land and through clearance of poor natural forest. 188 ICEM 2003a. 197 For example, controls to restrict the import of illegal 189 A review of national experience with protected areas timber in the United States (Lacey Act) and the and development in Vietnam (ICEM 2003b) found European Union (EU FLEGT Action Plan and EU Due that despite achievements, most protected areas Diligence Regulation). remain “paper parks,â€? with little conservation 198 management taking place on the ground. See also Various studies have shown that the level of Polet et al (2006) with respect to PA reform. incentive required for a farmer to protect and develop forests varies, depending on options, 190 Emerton et al. (2006) refer to problems of long circumstances, and nature of the incentive. A study delays and frequent readjustments in public sector by Bui Dung The and Hong Bich Ngoc (2006) found budgeting procedures, recurrent budgets that allow that in areas where there is underemployment and for little more than salaries, and capital expenditure where much paid work is seasonal, resource-poor that mostly focuses on heavy infrastructure, with farmers with limited options to earn money from the little funding for conservation activities. land they work were willing to participate in a pilot 191 payment for environmental services (PES) scheme For example, ranger stations are managed by the where the average payment that households province rather than the SUF. received was approximately VND 230,000 ($15) per 192 Between SUFs, FPD, police, environment police, year for protection of an area averaging 1.5 ha. border army, customs, and other relevant Similar findings were made from recent PFES institutions. piloting where the payment of VND 270,000 ($15) 193 per hectare per year under the scheme, compared Wunder et al. (2005) contend that payments in forest with VND 100,000 ($5) under Programme 661, protection contracts from the state to households N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 161 206 resulted in increases in forest patrolling and a 50 This list includes coral reefs, sea grasses, mangroves, percent decrease in the number of reported inland marshes, estuaries, coastal lagoons, dunes, violations (UN REDD 2010; Peters et Al. 2009). and beaches. However, Phuc Xuan To of Forest Trends contends 207 that a farmer can earn $400 per year with one Per capita fish consumption in Vietnam has hectare of corn; with PES, however, he’ll get about increased 2 kilograms over the last two General $20, and that’s not enough to stop deforestation Statistics Office (GSO) Vietnam Household Living (Phuc Xuan To, Forest Trends, 2010: Standard Surveys (VHLSS) 2006-2008. http://www.ecosystemmarketplace.com/pages/dyn 208 GSO 2009. amic/article.page.php?page_id=7605§ion=new 209 s_articles&eod=1). In contrast, Wunder et Al. (2005) See Ministry of Fisheries and World Bank 2005, p. 3; found that higher payment levels for reforestation Nguyen Thi Dieu Thuy and Symington 2008, p. 2; and tending newly planted forest (up to VND 2.5 Pomeroy et al. 2009, p. 1. million per hectare or $160) seemed to be working 210 This figure is from 2008 when fuel subsidies were well, both because they made a real difference to offered to all registered vessel owners as a response household livelihoods and because they were to increases in oil price increases, resulting in coupled with technical assistance. heightened registration efforts. A final number of 199 Tim Boyle, UNDP, personal information, August 130,000 was the total qualifying for fuel assistance. 2010. However, many vessels can be assumed to have not registered and remain “off the booksâ€? but 200 VINAFOR provides low-interest loans to households operational (including the numerous non- together with guidance for planting; the contract motorized “coracleâ€? boats used in artisanal fisheries, defines the price (in line with the market price at which has been estimated at 30,000 or more). time of sale) and quantity to be sold to VINAFOR, 211 leaving farmers free to use or sell any surplus. Pomeroy et al. 2009, p. 2. 212 Key instruments include Decision No.358-TTg dated 201 Lam Son Sugar Joint Stock Corporation jointly owned by the Vietnam government (37.5 percent), 29 May 1997 on preferential taxation on the employees (32.4 percent), and its farmer suppliers exploitation of marine products in offshore areas, (22.5 percent) (balance uncertain). Decision No. 393-TTg of 9 Jul 1997 containing regulations on investment capital control and 202 Katila’s (2007) analysis of demand and supply utilization, and Decision No. 251/ 1998/ QD-TTg of scenarios for the Vietnamese forest sector rejected a 25 Dec 1998 on the approval of the marine product “self-sufficiencyâ€? scenario because it is unfeasible export program to the year 2005. These policies from an investment viewpoint (there would not be generally supported preferential loans to offshore enough funds for expanding the plantations and fishers to upgrade their vessel capacity and install industry); because there would not be enough modern equipment and efficient fishing gear. quality land available for plantation expansion; and Private businesses (including foreign-invested because it would have negative impacts on the businesses) exploiting the offshore fisheries were national economy and would not be economically given reduced tax reductions during the first three a sustainable option in the long-term, because years of business. Vietnam would be producing on a large scale many 213 products in which it does not enjoy a comparative See VIFEP and WWF Vietnam 2009. advantage. 214 There are no vessel quotas or closed seasons. Under 203 The separation of public and private functions and Vietnam’s “open accessâ€? system, vessels from transformation of remaining SFEs into autonomous, different provinces are permitted to fish in any area commercially viable businesses based on of the country provided the depth is greater than 30 sustainable forest management. meters (classified as the “offshoreâ€? area). Areas under 30 meters depth are generally meant to have 204 MARD 2009c. priority for home province vessels for inshore 205 This chapter focuses largely on marine fisheries, fishing. However, strong competition between given the sector’s role as the largest driver of change neighboring provinces and even local communities, in marine ecosystems and marine-based economies. combined with illegal vessels and poor Aquaculture is given wider consideration in the enforcement, means that vessels are routinely found chapter on water resources, as is the general issue outside of their restricted zones. of coastal zone management. 215 According to Hassan et al. (2001) and Dang Van Thi N AT U R A L R E S O U R C E S M A N AG E M EN T 162 NOTES et al. (2002), trawl surveys of demersal fish estimated 20 percent in early 2010 from postponed shipments 1.1 tons of biomass per square kilometer (compared and a decrease in contracts for export to the with 2.8 tons in the mid-1990s) as well as dramatic European Union. However, the new IUU regulations shifts in catch composition plus low numbers of provided an opportunity for Vietnam to accelerate formerly abundant, large long-lived fish species. progress in meeting international standards on According to Nguyen Chu Hoi (2003) and Nguyen catch documentation and addressing IUU, and they Thi Dieu Thuy and Symington (2008), average fish contributed to the government’s decision to enter densities have greatly reduced, and several common the Western and Central Pacific Fisheries economically valued fish species, such as sardine, Commission, initially as a Co-operating Non- lobster, abalone, scallops, and squid, have member (see significantly decreased in abundance. http://english.vietnamnet.vn/biz/201001/Seafood- 216 prices-drop-under-IUU-effects-889404/). According to 2008 MoLISA data, the rate of poverty in coastal versus non-coastal provinces is almost the 222 Harvest targets are set by provincially led same, but this average hides some interprovincial development plans that emphasize economic differences. Provinces such as Thanh Hoa and Nghe growth targets. Even with better data, estimates of An have high poverty rates and absolute numbers maximum economic and sustainable yield may have of poor people, offset by wealthier provinces such little bearing on harvest levels and controls on as Khanh Hoa and Long An. In addition, some of the fishing unless agreements are reached at a higher coastal provinces do in fact have very high rates of level and unless local enforcement follows. poverty. The issue is that there are likely great 223 disparities in poverty rates within coastal provinces, See Tietenberg 2008. or even within district/communes. See also Nguyen 224 Nguyen Thi Dieu Thuy and Symington (2008) report Thi Dieu Thuy and Symington (2008). several characteristics of vulnerability in Vietnamese 217 At the time of writing, detailed and reliable data on fishing communities, including dependence on profitability were not available. Based on published depleting resources, lack of capital and/or credit to reports, included those referenced in this chapter, invest in new gears or occupations, increased there are strong indications that the fisheries disparity between poorer and wealthier fishing resource is strained and that profitability is households, low levels of income stability, declining, particularly for inshore fisheries. Other decreased competitiveness of local fishers indicative data—for example, the large number of compared with those from “outsideâ€? with better boats that remained onshore during spikes in fuel gear, poor access to markets and/or new prices (until the government started to technologies, and socioeconomic indicators below subsidizes)—suggest very small operating margins. national targets or averages (particularly average This makes job diversification schemes more household income, poverty rates, and education). attractive, particularly for small-scale fisheries, and 225 The intermediary system in Vietnam, while much reinforces the need for good information, which maligned, provides an essential service in that most requires attention and investment. small-scale fisheries would not operate without the 218 Decision No. 10/2006/QD-TTg2006. financial support of the traders. The negative aspects of this system (for example, limiting the 219 See Morgan et al. 2007. ability of individual fishers to gain access to markets 220 directly and/or adjust their activities according to On 29 September 2008, the Council of the European market conditions) will only improve if fishers start Union adopted EC No. 1005/2008 establishing a to organize into producer groups and become more “community system to prevent, deter and eliminate engaged in value chains and markets. illegal, unreported and unregulated fishing.â€? The regulations were set to come into effect on 1 226 See Nguyen Thi Dieu Thuy and Symington 2008. January 2010. Under the Illegal, Unreported, and 227 Unregulated (IUU) Regulation, the importation of Decree No. 79/2003/ND-CP of July 7, 2003, fishery products into the European Community will 228 According to Nasuchon (2009), Vietnam’s coastal be allowed only when the import is accompanied by population is projected to increase to over 30 million a catch certificate, completed by the master of the by 2020 (from around 20 million in 2000). The coastal fishing vessel and validated by the flag state of the population density was approximately 255 persons vessel. per square kilometer in 2005 (compared with the 221 The new legislation had immediate negative overall population density of 246 persons per square impacts for fisheries in Vietnam. Tuna sales dropped kilometer). Creel (2003) estimated that approximately N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 163 1,000 people migrate to Vietnam’s coastal cities each to world markets, subsidies for fuel and vessel day. upgrading have particularly contributed to 229 overcapacity. Vietnam fisheries subsidies up until Coastal tourism in Vietnam is growing rapidly (see 2006 totaled $316,633,000, with only $48,537,000 http://www.nea.gov.vn/html/Baocao_hientrang/VN classified as “goodâ€? subsidies. “Goodâ€? subsidies are _SoE/overview/environmental_management_and_l associated with programs leading to investment in egislation.htm). natural capital assets to a social optimum—that is, 230 See Burke et al. 2003. maximizing economic rent. Alternatively, “badâ€? 231 subsidies include all forms of capital inputs and See the VDR Forest Management chapter for further infrastructure investments from public sources that discussion on mangroves. reduce cost or enhance revenue. (It should be noted 232 See Pollnaca et al. 2005. that the subsidization of fishing is also pursued as a means to maintain at-sea presence and border 233 The realistic scope for alternatives will vary security). substantially along the coast, depending upon the 245 parallel development of tourism, manufacturing, http://en.www.info.vn/science/152- aquaculture, mariculture, etc. environment/4648-460-bln-vnd-earmarked-for- marine-reserves. 234 Farming of such low trophic species tends to require 246 relatively less fishmeal feed (therefore not driving Including likelihood of local stakeholder support overfishing of “trash fishâ€? industries nor likely and feasibility for co-management in addition to the contributing to an overall net loss of seafood MPA’s potential to provide positive benefits for protein, as is typified in the culture of higher trophic marine biodiversity. species) and also far fewer chemical inputs 247 The NOAA-WWF-IUCN marine protected area (MPA) compared with higher trophic species. guidebook “How is Your MPA Doing?â€? 235 Under the project “Integrated Management of (http://www.wdpa.org/ME/PDF/HowMPA.pdf) has Lagoon Activities,â€? funded by the Italian been translated into Vietnamese and applied at government, with technical execution by the Food some MPA sites, though not yet in a systematic and Agriculture Organization. manner across the entire network. 236 248 “Reef resilienceâ€?refers to coral reefs that are able to recover See http://czm-soctrang.org.vn/Publications/ EN/WCD/5.%20Steven%20Swan%20Co- after experiencing a stressful event such as bleaching management%20VN%20experiences%20EN.pdf. caused by elevated temperatures. Through careful planning, MPAs can be designed and zoned in ways that 237 See Pomeroy and Guieb 2008. protect coral communities that are more likely to remain 238 Under German Technical Cooperation support. relatively unchanged in the face of a major disturbance or event such as bleaching. See http://www.reefresilience.org 239 See Schmitt 2009. /Intro_to_Resilience.html. 240 See http://www.mrcmekong.org/Catch-Culture 249 The use of circle hooks in replacement of traditional /vol15_1May09/clams-and-cockles.htm. “J hooksâ€? in longline fisheries has been proved 241 regionally to reduce the mortality of sea turtles by See http://www.msc.org/track-a-fishery/certified as much as 80 percent, while not negatively / p a c i fi c / v i e t n a m - b e n - t r e - c l a m - h a n d - affecting target (tuna) catch rates. gathered/assessment-downloads-1/12.10.2009- Ben-Tre-Clam-Fishery-Final-Report.pdf. 250 Vietnam’s longline Observer Program was launched 242 in 2007 by the Ministry of Agriculture and Rural For example, circle hooks and turtle de-hookers in Development and WWF Vietnam, with an initial longline fisheries and use of bycatch reduction coverage of 10 longline vessels deploying onboard devices in trawl fisheries. observers and incorporating circle hook trials in 243 Sumaila and Pauly 2006; VIFEP and WWF Vietnam selected vessels. The program has provided a new 2009. and important opportunity to collect basic fisheries 244 data (such as catch rates and species composition), See VIFEP and WWF 2009. Studies indicate that as well as encouraging the adoption of circle hooks fisheries subsidies in Vietnam have in many cases as a means of reducing bycatch. The program is now qualitatively affected overfishing, both directly and being linked to efforts aimed at providing market- indirectly. Triggered initially by the economic based incentives (such as price premiums and reforms of “Doi Moiâ€? which sought to expand access preferential sourcing) for tuna vessels using circle N AT U R A L R E S O U R C E S M A N AG E M EN T 164 NOTES hooks and/or observers. See additional 26 legal documents have been prepared http://wwf.panda.org/who_we_are/wwf_offices/vie by government agencies and submitted to higher tnam/?185281/Fisheries-Bycatch-Reduction- authorities for adoption and promulgation. Program-Catches-On. 261 The Investment Law 2005 is the merger of the 251 The Democratic Republic of Congo is an example of Foreign Investment Law 1987 (amended in 1992, a nation rich in mineral resources that has failed over 1996, 2000) and the Law on Private investment many years to translate this natural resource Promotion 1996. endowment into sustainable development. Chile or 262 Botswana have used their mineral wealth wisely and Source: Sustainable Development Impacts of have derived significant development impacts and Investment Incentive: A Case Study for the Mining outcomes. Industry in Vietnam. 263 252 Ministry of Natural Resources and Environment- Decree 27 December 2005 and Prime Minster letter Vietnam Mining Presentation by dated 15 Oct 2008 11 April 2006. in Regional Mining Seminar in Singapore. Oil and 264 Wuhan, “Local permit widespreadâ€?, at Public Security coal contribute more than 90 percent of the Police Online, at http://www.cand.com.vn/vi- production output of the MQI sector annually in VN/kinhte/2010/7/133523.cand dated 08 July 2010. Vietnam. 265 The government has also pursued an active 253 Vietnam Statistical Yearbook, 2009. program to disseminate various documents and 254 World Bank staff estimates, 2009. legal texts to the general public and to conduct sensitization campaigns on the rules and 255 It is important to note that many issues related to regulations of the minerals law. Since 2006 MoNRE mining and minerals development in Vietnam are has dedicated a Web site and on-line training not discussed in this chapter: the role of state, sessions on the minerals legislation. particularly state-owned companies; small-scale and 266 artisanal mining; investment promotion and MoNRE’s various departments are geology, mining, negotiations with large companies; competitive finance, and international cooperation. position of Vietnamese minerals internationally; 267 Other state enterprises in the heavy industries infrastructure considerations for minerals include the Vietnam National Cement Corporation, development; detailed considerations in terms of the Vietnam Chemical Corporation, and the Vietnam mining taxation and fiscal policies as well as tax National Steel Corporation. administration; and overarching issues such the 268 implications of the climate change agenda and Decree No. 80/2006/ND - CP dated 9/8/2006 of the global warming on development of Vietnam’s Government of the Socialist Republic of Vietnam on minerals. detailing the implementation of some articles of the 2005 Law on Environmental Protection; Decree No. 256 MoNRE “Report summarizing the 13 years of 21/ 2008/ ND- CP dated February 28, 2008 of the Implementation of Mineral Law 1996â€?, 2009 from Government concerning partial changes in some MONRE submitted to NA. MOIT “Report on exported articles stipulated in Decree No. 80/ 2006/ ND- CP minerals, 2007.â€? dated 9/ 8/ 2006; Circular No. 05/2008/TT - BTNMT 257 Mining Working Group of Companies, Vietnam dated 08/12/2008 of the Ministry of Natural Business Forum, Position Paper dated 1 December Resources and Environment concerning guidelines 2009. for assessment of strategic environment and environmental impacts and commitment to 258 Recommendation from: Workshop Report: Mineral environmental protection; Decision No. Development and Sustainable Development, Hanoi, 13/2006/QD- BTNMT dated 08/9/2006 of the May 2010. Minister of Natural Resources and Environment 259 concerning issuance of Regulations on Organization An example is ilmenite exploited in central coast of and Operation of an Appraisal Council. Vietnam. Most companies export ilmenite (46 percent Ti2O3), which is the lowest level of 269 Environmental Department, MoNRE. processing in the titanium processing chain. 270 Normative regulations concerning, for instance, 260 A total of 128 separate legal documents (laws, erosion, sedimentation, and ecological diversity. ordinances, decrees, decisions, directives, and 271 circulars) have been promulgated to regulate the Interview with Director of Environmental mining industry in Vietnam. Separately, an Assessments, MoNRE, May 2010. N AT U R A L R E S O U R C E S M A N AG E M EN T NOTES 165 272 282 Bui Quang Binh, “Mining areas of environmental Thai Nguyen, Hai Duong, Bac Giang, Son La, Quang research,â€? at http://www.tuanvietnam.net/2010-06- Nam, Quang Ninh, Nghe An, Lang Son, and several 11-cuu-moi-truong-vung-khai-khoang, 22 May areas such as U Minh Thuong, U Minh Ha, and Red 2009. River Delta. 273 283 Source: Vinacomin. Estimate based on a stripping Nguyen Thanh Ha, Invert the structure of coal ratio (the amount of sterile material to be excavated consumption from in 2010, on Trade Magazine to produce 1 ton of coal) of 7.5 tons. dated 10 Jan 2010 at http://tintuc.xalo.vn/00- 274 941362442/dao_nguoc_co_cau_tieu_thu_than_tu_ Report on the Research project of PhD Dao Danh nam_2010.html and Report on Production volume Phuong, Nguyen The hung, Nguyen The Bau, Doan of Department of Distribution, Vinacomin, 2008- Van Hai, Mine Science and Technology Journal No. 2009. 1/2009. 284 Source: Vu Xuan Nguyet Hong (CIEM); Investment 275 Report on the Research project of PhD Dao Danh from 2005 to 2009: VND 4,100 billion to 33,100 Phuong, Nguyen The hung, Nguyen The Bau, Doan billion; owner’s capital from VND 5,546 billion to Van Hai, Mine Science and Technology Journal No. 19,583 billion; before tax profit: 2005 = 3,130 billion, 1/2009. 2010 = 3,200 billion. Profit to capital ratio has 276 Decree 63/2008/ND_CP dated 13 May 2008. decreased four times over this period. 285 277 Vinacomin reports, 2009. Lao dong newspaper, The fight against illegal coal 278 in Quang Ninh, what does the coal industry say?, World Bank Community Development Agreements No.93 dated 25/04/2008. Project, COCPO, 2010. 286 279 In 2009, the minimum wage in Vietnam is 0.65 Vu Xuan Nguyet Hong (CIEM) and Nguyen Thi Lan million VND/month whereas the average salary for (ILSSA), “Economic Governance and Policy-Making Vinacomin employees is 6.16 million VND/month. Process in Vietnamâ€?, June 2010; Decree Source: Department of Labor and Salary of 63/2008/ND_CP dated 13 May 2008 on Vinacomin and Statistical Yearbook over the years. environmental Protection fee applicable to mineral 287 mining Forecast of human resources demand for coal 280 industry by Department of Labor and Salary of See: www.eiti.org. Vinacomin, 2010. 281 The German classification nomenclature is used in 288 See: Vinacomin, Mine Science and Technology tandem with the English nomenclature, as this is Institute, monitoring project 2008. frequently used in Vietnamese documents. Coals are 289 classified by content of volatile matter expressed as Dao Danh Phuong, Nguyen The hung, Nguyen The a percentage by weight. Thus, lignite contains 45– Bau, Doan Van Hai, Mine Science and Technology 65 percent volatiles; anthracite 7–12 percent Journal, No. 1/2009. volatiles. This correlates reversely to the calorific value, expressed as kilojoules per kilogram: lignite 28,470 and anthracite 35,300. N AT U R A L R E S O U R C E S M A N AG E M EN T 166 NOTES