Green finance raises forest values

Amid increasingly complex climate change, forests are no longer just an ecological shield but have become an economically valuable resource through green finance mechanisms. After 15 years of implementing the forest environmental service payment policy, Hue has gradually established a mechanism to mobilize social resources for forest management, protection, and development.

Alongside this, the rollout of the Emission Reductions Payment Agreement (ERPA) program for the North Central Coast region and the introduction of Decree No. 180/2026/ND-CP on forest carbon absorption and storage services have opened a new stage of development for forestry finance, tying the value of forests to green economic growth and emission-reduction goals.

A foundation built on forest environmental service payments

Hue is currently one of the leading localities nationwide in allocating natural forests to communities, with more than 23,650 hectares placed under community management. The Hue Forest Protection and Development Fund has signed all 18 entrustment contracts with entities that use forest environmental services and has made timely, transparent payments to forest owners.

From 2014 through May 2026, total revenue from forest environmental services reached nearly 580 billion VND (roughly USD 22.6 million), paid out to more than 700 forest-owner recipients with a disbursement rate of nearly 100 percent. These funds have helped sustain forest patrol and protection forces, fire prevention and firefighting, and silvicultural activities, while providing communities with a lasting incentive to remain engaged in forest protection.

Nguyen Tat Tung, Director of the Hue Forest Protection and Development Fund, said the fund has steadily modernized its management work in recent years through the use of WebGIS, remote sensing imagery, LocusMap, and mobile devices for field inspections and community fund management. Forest environmental service payments are now also made through bank accounts, improving transparency, cutting intermediary costs, and making the process more convenient for residents.

"The fund regularly holds on-the-ground awareness meetings in each locality where residents take part in forest management and protection, introducing and guiding them toward livelihood models suited to local conditions. Many of these models have been adopted by residents and have proven highly effective, helping them develop economically and escape poverty, especially among ethnic minority communities," Tung said.

Toward a green economy

If forest environmental services laid the groundwork for forestry finance mechanisms, the ERPA program has extended the value of forests beyond providing environmental services to directly contributing to greenhouse gas emission-reduction goals. Hue is one of the North Central Coast localities participating in the ERPA pilot with the World Bank, with a total of more than 205,500 hectares of natural forest eligible for payment in the area.

Blup Ham, head of the community forest management group in A Roang 1 village (A Luoi 4 commune), said the village community has 20 members divided into four teams. In 2024, the community was assigned by the A Luoi Protection Forest Management Board to manage and protect 134.82 hectares of forest under contract, receiving nearly 41 million dong (roughly $1,600) in ERPA payments. In 2025, with 120.22 hectares under protection, the community received more than 72 million dong (roughly $2,800).

"The village always draws up an annual forest protection plan, with patrols conducted an average of four times a month, plus additional unscheduled patrols whenever forest violations are detected. We also hold regular village meetings to incorporate training on patrol skills and forest protection for our members. Through the process of contracted forest protection assignments in the area, residents have consistently supported the effort and clearly understand the benefits it brings them in forest management and protection. As a result, the village has seen no encroachment or illegal logging," Blup Ham said.

According to the Hue People's Committee, the ERPA program has been in operation since late 2023, and as of June 30, 2026, total revenue reached 150.15 billion VND (roughly USD 5.9 million). The city approved a plan for the full amount collected and has disbursed 142.77 billion VND (roughly USD 5.6 million), or 95.1 percent.

ERPA has generated substantial economic and social value for Hue. Currently, 105 communities participate in contracted forest protection, creating stable jobs and income for residents, nearly 70 percent of whom are ethnic minorities. Each community also receives 50 million VND (roughly USD 1,950) per year to support sustainable livelihood development, such as growing medicinal plants, developing non-timber forest products, and cultivating under forest canopy, while the funding has also financed clean water systems, lighting, roads, and community activity houses.

According to Hoang Hai Minh, Vice Chairman of the Hue People's Committee, the ERPA program marks an important step in piloting a financial mechanism for transferring CO2 emission-reduction results, helping mobilize international resources for forest protection and sustainable development. It also represents a results-based emission-reduction payment scheme tied to forest carbon absorption and storage, paving the way for the full-scale rollout of forest environmental service payments.

"From forest environmental service payments to the ERPA program, these resources are helping maintain the city's forest coverage above 57 percent, improve forest quality, create jobs, and improve livelihoods for thousands of mountainous households. In particular, the ERPA payment mechanism affirms the role of natural forests as an effective 'carbon sink.' This is a key step for Hue to sustainably reduce greenhouse gas emissions, develop a green economy going forward, and support the government's Net Zero target," Minh emphasized.

After 15 years of implementing forest environmental services and nearly three years of ERPA, Hue's forestry finance mechanism is entering a new stage of development, particularly with Decree No. 180/2026/ND-CP taking effect on July 15, 2026, which for the first time fully regulates forest carbon absorption and storage services.

"Hue will continue to refine its system for monitoring, supervising, and inventorying forest carbon stocks in line with national and international standards, laying the groundwork for participation in the carbon credit market," Hoang Hai Minh added.

$ 1 = VND 26,250 - Source: Vietcombank.