Getting ready for the forest carbon market: [3] The trading and pricing challenge

Hopes for a "green cash flow" for forest keepers

Lam Dong currently has more than 1.1 million hectares of land designated for forestry, of which natural forest accounts for over 930,000 hectares, making it one of the most important "green lungs" of the Central Highlands and South Central Coast region. With high forest coverage and diverse ecosystems, the province is regarded as having substantial potential for emissions reduction and carbon absorption. Under the LEAF program, Lam Dong achieved roughly 1,829,364 tons of CO2 in reductions during the 2021–2025 period. The province is estimated to have the potential to generate roughly 13 million carbon credits per year.

As Vietnam works to fulfill its commitment to reach net-zero emissions by 2050, Lam Dong's forest carbon potential holds out great promise for attracting green financing through carbon credit commercialization mechanisms. For the units working day and night to manage and protect these forests, revenue from "selling clean air" represents more than just direct financial value, it opens up the prospect of a sustainable economic engine that helps preserve the green expanse of the region's forests.

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Nam Tay Nguyen Forestry Company Limited currently manages roughly 27,200 hectares of forest and forest land, and is one of the key units responsible for managing and protecting large tracts of natural forest in complex border areas. Over many years, the company's dedicated forces have had to continually contend with countless difficulties, from rugged, fragmented terrain and the risk of forest-land encroachment, to a thin ranger and forest-protection workforce, and the adverse effects of natural disasters and climate change. Given the relatively modest budget allocated for forest protection work, the emergence of the carbon credit market is seen as a breakthrough solution, providing an important new source of financing the company can reinvest.

Speaking about the challenge of commercializing carbon credits from the perspective of a direct management unit, Nguyen Ngoc Binh, Chairman and Director of Nam Tay Nguyen Forestry Company, said that technically speaking, forest carbon credits are generated from the volume of CO2 emissions avoided through activities that prevent forest degradation and deforestation and ensure sustainable forest resource management. In theory, the potential of natural forest areas is enormous. But the journey from simply owning forest area on a map to completing the measurements and converting that into a standardized volume of CO2 absorption ready for sale on the international market is a highly technical process that takes considerable time.

Binh expressed hope that the government and relevant ministries would soon complete a full legal framework and issue detailed guidance on trading mechanisms, pricing, and benefit-sharing. Once the market is formally operational, he said, revenue from carbon credits would help supplement operating budgets, fund more modern forest-protection equipment, and raise pay for dedicated forest-protection staff, helping them commit to staying with the work long-term.

Echoing the forest owner's view, a representative of the Lam Dong Forest Protection and Development Fund said that developing forest carbon projects alongside the province's Forest Environmental Services Payment (PFES) policy, which has operated stably for many years, would create a multi-value financing mechanism.

This combined revenue stream would go a long way toward addressing the operating-budget challenge for dedicated ranger and forest-protection forces, while also directly improving the livelihoods of ethnic minority communities living near the forest. When residents see clear economic benefits from protecting forests, they shift from a passive stance to actively taking part in patrols and reporting encroachment on forest resources, easing the financial burden on the state budget.

Bottlenecks blocking the path to carbon commercialization

Even though the potential is clear and forest owners' ambitions are strong, forestry and environmental experts say bringing Lam Dong's forest carbon credits to the international market through credible standards such as Verra or the Gold Standard remains a challenge that still needs to be solved.

The first and most significant challenge lies in the legal framework and benefit-sharing mechanism. Vietnam is still in the process of building and completing a pilot carbon trading exchange. Legal provisions on forest carbon ownership, cross-border trading management mechanisms, and the revenue-sharing ratio among the state, project-developing businesses, forest-owning units, and contracted forest-protection households remain unclear and need to be codified into specific legal documents. This regulatory gap makes both investors and forest owners hesitant to enter long-term cooperation agreements.

The second obstacle involves upfront financial costs and technical capacity for Measurement, Reporting, and Verification (MRV). Demonstrating the additionality and carbon absorption capacity of a given forest area requires modern technologies such as unmanned aerial vehicles (UAVs), artificial intelligence for satellite image analysis, and detailed ground-based quantitative surveys.

Finally, there is the risk posed by natural disasters and pressure for economic development. Lam Dong is frequently affected by climate change, including extreme weather events such as prolonged drought, elevated wildfire risk during the dry season, and pressure to convert land use in border areas. Any incident of deforestation or fire would reduce the registered carbon volume, posing a significant risk to the commercial commitments made in carbon credit sales contracts.