SNV reaches first PES agreement in the aquaculture sector in Vietnam

SNV reaches first PES agreement in the aquaculture sector in Vietnam

SNV works with smallholders, the private sector and local governments to enhance the sustainability of the shrimp aquaculture sector in Southern Vietnam. A memorandum of understanding (MoU) has been signed between SNV and Minh Phu Seafood Corporation to increase farmer incentives for mangrove conservation through a Payment for Ecosystem Services (PES) mechanism.

Shrimp aquaculture is the main driver of mangrove deforestation in Vietnam, which has lost more half of its mangroves over the past three decades. SNV’s Mangroves and Markets (MAM) project seeks to reverse this trend by supporting smallholder shrimp farmers in meeting Naturland’s organic certification standards. Naturland prohibits mangrove deforestation and requires a 50 percent mangrove cover on shrimp farms, thereby contributing to mangrove protection and restoration.  So far, 741 farmers have been certified and it is expected that this number will increase to 1,150 by the end of this year. MAM’s approach to mangrove conservation has been recognized by the provincial government, who plans to upscale certification along the coast.

To increase incentives for farmers to protect mangroves, the MAM project developed a voluntary Payment for Ecosystem Services (PES) mechanism, which provides payments to farmers based on the size of their certified farming area. SNV and Minh Phu Seafood Corporation signed an MoU for the implementation of this system. The agreement contains the following company commitments:

  • Minh Phu will pay certified farms VND 300,000 per hectare per year, through quarterly payments.  This is equivalent to VND 600,000 per hectare of mangrove forest, around USD 30.

  • The company will pay farmers an additional VND 3,000 per kilo of certified shrimp, on top of the market price.

  • For each kilo of certified shrimp purchased by the company, VND 1,000 will be paid to Nhung Mien Forest Management Board to support them in forest monitoring, farm mapping and providing support to farmers.

Added up, certified farmers will receive around VND 9,000 more per kilo of shrimp, compared to non-certified farmers; 6,000 for mangrove protection and 3,000 for the increased value of the shrimp. The agreement creates a significant financial incentive for farmers to invest in sustainable production methods and mangrove replanting and conservation. This market-based PES mechanism, which entails a voluntary direct payment from company to farmer, is the first of its kind in the aquaculture sector in Vietnam. National and subnational governments are discussing the potential adoption of a sector-wide national PES policy.