Estimate the Impact of Payments for Environmental Services on Local Livelihoods and Environment: An Application of Propensity Scores

Abstract

Payments for environmental services (PES) are usually considered as a useful tool to both protect the environment and generate multiple income streams for mountainous households who receive the payments, and thus, it has been widely implementing in many developing countries so far; however, the impact of it on local livelihoods and environment has been questioned. Therefore, the article aimed to evaluate the Vietnamese PES scheme’s effect on both environment and local livelihoods by surveying 282 households living in Quang Nam, Vietnam, and utilized the propensity score matching (PSM) technique to investigate the intervention policy’s influence. Furthermore, to evaluate PES’s effect on the environment, the article used Normalized Difference Vegetation Index (NDVI) as a measure of the photosynthetic level of forest trees. The calculation of NDVI relied on satellite images downloaded from the Moderate Resolution Imaging Spectroradiometer. The results indicated that (a) the natural forest status has been improved during PES implementation compared with that of pre-PES period regarding total forest areas, percentage of forest coverage, and vegetation cover; and (b) PES-participants have got a significantly lower income than nonparticipants regarding total annual income, agricultural income, and hired labor income. The limitation is that the impact of interventions on livelihoods and the environment is determined by the mutual combination of implemented programs rather than only the PES regime. So, we highly recommend that the future study separate the PES scheme’s actual impact to precisely evaluate the PES project’s effect on financial and environmental outcomes.