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First national round table

14 September 2001

Protected areas and economic development

Phan Thu Huong, Director, Department of Science and Environmental Education, Ministry of Planning and Investment

  1. Integrating environmental concerns into investment planning
  2. Protected areas in socio-economic development plans
  3. The use of local funds for the implementation of environmental work
  4. The use of economic tools to support protected areas

1. Integrating environmental concerns into investment planning

The project "Vietnam Capacity 21", funded by the UNDP, originated from the framework of the programme "Agenda 21", which was approved in Rio de Janeiro in 1992 at the United Nations Conference for Environment and Development.

"Vietnam Capacity 21" focused on planning and investment. It helped Vietnam to effectively initiate the consideration and integration of environmental protection into investment planning and decision-making. The project was supported by IPF of UNDP and the Swiss Agency for Development and Co-operation (SDC). The project started in 1995 with the aim of promoting national capacity to establish linkages between environmental concerns and investment decision-making and consequently the consideration of environmental issues in investment planning.

In Vietnam, many sectors have recently raised environmental issues. There are different environment protection action programmes, including the environmental action plans for the whole country and programmes for specific sectors. There are also a number of strategies for environmental protection and protection of conservation areas. However, on a day to day basis there is weak integration of these programmes and strategies into real national and local socio-economic development plans. The implementation of the project " Vietnam Capacity 21" greatly raises environmental awareness among planners and investors and creates comfortable conditions for discussion between planners, investors with environmentalists.

A great effort has been made to integrate the implementation activities of this programme with administration reform policy of the government of Vietnam and the Vietnam Communist Party. The initiatives for reform in investment policy and planning have been initiated with sharing power and duties in the approval of the investment plans. Environmental aspects shall be carefully considered before the approval of concrete strategies, plans and investment projects, which attracted only little concern in previous years.

For the first time, the draft of the joint-circular (inter-ministerial) between the Ministry of Planning and Investment and the Ministry of Science, Technology and Environment is ready for approval. The approval of this document will prove the linkage between the planning and investment sector with the environmental sector not only at macro levels but also at micro levels, including sectoral and provincial levels. It can be sure that environmental aspects will be considered in practice before the approval of plans and strategies and thus will reduce conflicts between development and the environmental protection thereby ensuring national sustainable development. Furthermore, socio-economic development planners will pay appropriate attention to investment projects focusing on environment protection or putting environmental protection issues from the environmental protection action plans, strategies into short, medium and long term socio-economic development plans of sectors or localities. Through the sustainable development network, the following documents will be disseminated, applied and amended properly before official approval for use in the planning and investment sector:

  • Guidelines for integrated investment - environmental development planning;
  • Guidelines for integrated regional environmental development planning;
  • Guidelines for incorporating environmental considerations into urban planning;
  • Guidelines for reform in the environmental development planning system;
  • Guidelines for community participation in sustainable development;
  • Guidelines for environmental studies in development planning;
  • Guidelines for implementation of the urban environmental plan;
  • Guidelines for preparation of the urban environmental plan;
  • Guidelines for preparation of the plan for the improvement of the urban environment.


2. Protected areas in socio-economic development plans

The socio-economic development plans for specific time periods for sectors and localities are always developed based on the sectors and locality’s demands, the state budget and other financial sources.

The Government has authorised the Ministry of Fisheries and Ministry of Agriculture and Rural Development to be the focal points for marine and forest protected areas. Therefore, protected areas development plans shall be included in annual, 5-year or long-term development plans of these sectors. In compliance with Ordinance No. 52, the state budget can be allocated to only those investment projects within the framework of the approved annual and 5-year plans and the projects should have sufficient data on the design capacity, time for implementation, total budget amount required (including domestic and ODA fund).

Although these responsibilities are assigned to these two sectors, these sectors can however, only approve the implementation of projects in groups B and C. The final approval of projects belonging to group A remains under the power of the Prime Minister. As a result of the administrative reform process, the Government has decided to share power and responsibilities (with relevant sectors and local state authorities). The Ministry of Planning and Investment decided to fully implement this policy in the process of the revision and approval of the project proposal. This policy is a result of the administration reform process, however, the matter which needs to be discussed, is the inadequate capacity of the sectors and local authorities to make decisions and to be responsible for their decisions.

At present, the proposed budget for National Parks is more than 400 billion VND, and for marine protected areas is nearly 60 billion VND (this amount is for surveys, boundary demarcation, monitoring, supervision, support to community development and education). Although this amount is not large it is already a big effort from the State. Besides, the state budget, these sectors also receive support funding from local authorities and priority from annual ODA funds.

Therefore, investment for protected areas is always considered in national socio-economic development plans and will increase in the following years.

It should be noted that investment for the protected areas shall not be and should not be separated from the general investment framework of the national socio-economic development plans in order to meet both the conservation objectives and the national economic growth objectives.


3. The use of local funds for the implementation of environmental work

Recently in Vietnam, the urgent need to improve financing mechanisms in order to support sustainable development is more widely recognised. One of the options, receiving attention from many people, is the mobilisation of local funds. This can be explained as follows:

Firstly: Vietnam is shifting from a centrally-controlled economy to a market-oriented economy, which relies more and more on market forces to allocate their resources. This shifting process goes together with the process of transfer of power from the central government to local administrative authorities. In compliance with this process, the roles of local authorities at all levels, enterprises and communities shall become more clearly defined. This process requires new approaches to maintain and improve the quality of the environment towards sustainable development. These new approaches include rearrangement of public financial systems, establishment of new suitable rules and effective and suitable environmental financial mechanisms.

Secondly: Despite the fact that awareness of environmental protection has been gradually raised and more efforts have been made to resolve this issue there are a lot of obstacles in the way to establishing a suitable system to effectively finance environmentally-friendly activities in Vietnam. The most significant obstacles are:

  • The inconsistency and lack of synchronicity of the environmental policy framework and low capacity in the implementation of the environmental law and regulations;
  • The weakness of the bank system leading to a low ability to supply loans causing a shortage of capitals;
  • Low degree of development of the financial market;
  • Low effectiveness of fiscal year management, especially at the local levels;
  • Serious financial difficulties facing enterprises;
  • Limited knowledge of environmental issues among communities and enterprises.
  • Weak co-operation between agencies responsible for environmental management;
  • Insufficient information on the scope and amount of social expenditures caused by environmental damages.

Local funds can be used as effective tools to reduce these limitations. Among these funds, the local environmental fund is the most attractive financing mechanism for environmental protection activities. The reason being that through investment in environment protection, the local environment fund can support enterprises to reduce their financial burdens and speed up environment improvement. Furthermore, with the ability to explore opportunities to have win-win solutions, the local environment fund can be used to encourage the application of clean technology, reducing production expenditures and strengthen companies’ competitive abilities. The local environmental fund also has a significant role in strengthening important environmental institutions, e.g. strengthening monitoring capacity, capacity in preparing, revising and funding environmental protection projects.

Furthermore, the local environmental fund also encourages raising responsibilities among local communities in environmental protection by providing them with direct opportunities for participation in the implementation of environmental protection activities. The local environmental fund can also play a significant role in financially supporting environmentally-friendly activities; supporting local authorities, enterprises and communities to determine general environmental issues, grading priorities, and developing and implementing environmental (protection) projects based on the "win-win" principle.

Subsidies from the environment fund can be used as incentive tools for promoting the effectiveness of other policy tools, e.g. environmental regulations or current economic tools.

The environmental fund can be an effective tool to implement the "Polluter Pays Principle".

Recently in Vietnam, there have been a number of financing mechanisms supporting environmental protection activities. For example, the national reforestation programme 327, The national environmental protection study project, the national research project on environmental protection, the fund for infrastructure development in Quang Nam province, the urban development and investment fund in Ho Chi Minh city. More recently, The Ho Chi Minh city People's Committee has just approved the establishment of a fund for minimising industrial and handicraft pollution in Ho Chi Minh city (Decision No. 5289/QD-UB-KT). However, none of these mechanisms put environmental protection and local development on the top of their agenda and treated as a direct focal task.

The Hanoi Environmental Fund was established following Decision No. 48/QD-UB of 15 May 2000, with initial support from the project "Environment and Investment" under the execution of the Ministry of Planning and Investment. The pilot phase I was implemented in Thuong Dinh industrial zone. UNDP and the Swiss Government support this project. The objective of this fund is to create favourable conditions for the implementation of the Environmental Action Plan and the Improved Urban Environment Programme as new approaches to integrated environmental issues in the planning process formulated during the project implementation process. The Fund supplies small funds to implement support activities co-ordinating and managing activities, which have been determined as urgent and have direct impacts on the environment quality of the Thuong Dinh industrial zone. This is the first local environmental fund which has been officially established in Vietnam.

In addition, in some other provinces and cities (for example Quang Ninh, Da Nang, Hai Phong) many other local funds are used for environmentally-friendly activities. These funds can have different names, management styles or specific activities, but their final objectives are always to support environmental protection and sustainable development at local levels.


4. The use of economic tools to support protected areas

Like other countries in the world, environmental protection in Vietnam has mainly been implemented using a "Command and Control" mechanism. Within this mechanism enterprises, organisations, individuals must meet concrete environmental standards (Commands). The role of the responsible agencies is to ensure that the mentioned-above agencies comply with concrete environment standards (Control). Although this method plays a very important role in environmental management system, in reality in order to initiate sustainable use of resources and control pollution it should be supported by economic tools that are based on market principles and price mechanisms.

At the beginning of the 1970s, in many developed and developing countries as well, economic tools have been used at both national and local levels to resolve problems related to pollution control and sustainable use of resources, including protected areas.

In comparison with legal tools and regulations, economic tools have many advantages. Firstly, they allow the integration of environmental expenditures into market prices, imposing on both customers and producers. Secondly, economic tools encourage customers not to use products causing environment damages and encourage producers not to use raw (input) materials that damage the environment. Economic tools support the creation of new financial sources, which tend to be used for environmentally-friendly purposes like investment in environmental protection activities, encouraging compliance with environmental law and regulations and support to implement other activities in the framework of the state development plans.

In the nature conservation sector, economic tools can be used not only for creating incentives for natural resource conservation but also for returning management expenditures. The resources often require for protection are forest and aquatic resources like national parks (inland and marine), botanical gardens, cave systems, beaches, water falls, coral reef, etc.

Economic tools which are most often used in nature conservation are financial incentive tools such as financial supports, tax exemption, deductions or other kinds of tax concession and the application of different types of environmental fees. For example, the collection of environmental service fees (visitor’s fees in protected areas) is an effective tool to increase income, which can be used for not only maintaining and operating activities of protected areas but also for the environment protection and improved quality of the local environment. Simply put this kind of fee is one of the measures imposed upon visitors to pay (one part of or complete) management expenditures relating to environmental protection and resource conservation.

In Vietnam, currently, many economic tools are applied to protected areas. The collection of fees from visitors coming to Ha Long Bay is a noticeable example. According to Decision No. 901-QD/UB and 1448-QD/UB, the Management Board of Ha Long Bay is permitted to collect fees from visitors at 30,000 VND for foreigners, 10,000 VND for Vietnamese and 5,000 for children. The collected fee will be used for maintaining and improving the environmental quality and protection of the Bay’s landscape.

Additionally, in many parts of the country, many economic tools have been used in protected areas albeit spontaneously. It is necessary to analyse and assess the experience gained in applying these economic tools and positive lessons learned should be reviewed and replicated widely.