Billions hung on old-growth forest: Confused about ‘spending’ money from carbon credits

Director of the unit Doan Minh Cu disclosed that the Quang Ninh Protective Forest Management Board received over 8.1 billion VND through the sale of carbon credits: "We contribute approximately 10% of the total amount, which exceeds 800 million VND. It is extremely difficult to allocate the remaining amount to expenditure plans. The challenges we have encountered have confined our ability. At present, the organization has transferred the funds to the treasury and is seeking authorization from the appropriate authorities before implementing this financing."

Difficult spending money

Quang Ninh Protective Forest Management Board has been in a state of “no money” for forest protection tasks. Therefore, a number of contract employees from prior years were forced to cease work. Some forest protection officers resigned despite receiving poor salaries due to the absence of specific incentive systems. Although the Board's leadership "wishes" for sufficient funds to cover essential expenses such as forest conservation, achieving this goal is in fact difficult.

The Board obtained an important amount of money from the sale of carbon credits the previous year; however, the treatment of these funds when it came time to spend them was entirely different.

Most of this funding is allocated to households engaged in forest protection, as regulations require. Due to the fact that the unit's personnel are solely civil servants who are reimbursed through the state budget, they are ineligible for assistance from this particular funding source. The majority of the Board's managed forest area has been designated for protection by local communities in accordance with Phase I of the "National Target Program for Socio-Economic Development in Ethnic Minority and Mountainous Areas" for the period 2021-2030. The allocation is in the amount of 400,000 VND per hectare per year.

At present, 1,119 households belonging to ethnic minorities residing in mountainous regions of Truong Son, Truong Xuan (Quang Ninh district), and Ngan Thuy (Le Thuy district) have entered into forest protection contracts with the Board as part of the "National Target Program for Socio-Economic Development in Ethnic Minority and Mountainous Areas." The annual payment for the contracted protection area, which exceeds 39,500 hectares, is more than 14 billion VND. This means that unless new regulations or directives are issued, additional carbon credit funds will not be allocated to local residents.

It is also worth mentioning that the revenue generated from the sale of carbon credits will be used to support the development of sustainable subsistence models in sixteen community villages located within the district. Based on the Board's calculations, an estimated 30% of the allocated funds, or more than 2.4 billion VND, will be disbursed. The remaining more than 5.6 billion VND awaits directives from higher authorities before it can be disbursed.

"We anticipate that a portion of these funds will be utilized to acquire forest protection equipment, including apparel, rain gear, knives, machetes, lights, and motorcycles, among others. An additional portion will be allocated to assist forest protection personnel, including those stationed at checkpoints, stations within the forest, and patrols, in their efforts to better their spiritual and material life," Mr. Cu explained.

Implementation of the funding for the development of livelihood models for the local populace is also fraught with difficulty. In order to adequately assist the local populace, the Board would be obligated to dispatch officers to inspect the models should they receive this funding. However, qualified personnel are insufficient to advise the Board on local development initiatives when working with local authorities. "But if the money is given directly to the communities, there will be little effectiveness, failing to meet the set goals," according to Mr. Cu.

Must stick to reality

More than 4 billion VND has been allocated to the Bac Quang Binh Forestry Limited Liability Company (Bac Quang Binh Company) in carbon credit proceeds. A 10% allocation is made from this sum for administrative management. However, similar to other departments, the organization is encountering challenges in allocating this capital.

Mr. Tran Quang Dam, director of Bac Quang Binh Company and expert in forest protection for more than four decades, stated, "No forestry-related document has ever been implemented without incident." "The gap between execution and reality is enormous."

Mr. Dam asserts that, following the current state of affairs at the forest protection organization, the forest has been preserved under the criteria necessary to sell carbon credits.

"Implementation costs must ensure rationality and should not overlap with other state budget expenditures," according to expenditure guidelines. At present, the state budget and the National Target Program for Socio-Economic Development in Ethnic Minority and Mountainous Areas for the period 2020-2025 provide financial support for the preservation and production of natural forest areas under the jurisdiction of Bac Quang Binh Company. This includes forest protection allocations and assistance for natural forest protection throughout the closure period.

An additional common challenge faced by forest-owning businesses such as Bac Quang Binh Company is that the level of support for forest protection allocations in the provincial budget is equivalent to the support provided by the state budget under the province's current policies.

The state budget provides a support level of 300,000 VND per hectare for forest protection allocations in Quang Binh province under the current policies in effect. Forest proprietors are entitled to an emission reduction payment of 170,000 VND per hectare. The remainder of the budget, which is allocated exclusively to commune-level People's Committees that involve the community in forest management and deduct the 10% management charge, is just over 100,000 VND per hectare.

The lack of regulations governing the carbon credit payment for state-owned forest protection enterprises with decades of experience and hundreds of laborers performing forest protection duties is a source of concern for the leadership of Bac Quang Binh Company and other units in the provinces benefiting from this.