A comparative study of transaction costs of payments for forest ecosystem services in Vietnam

- We measured transaction costs (TC) incurred by two coordinating organizations of two PFES schemes in Vietnam.
- We employed an analytical framework to explain the differences in the TC of the two PFES schemes.
- TC variations between the two schemes can be explained by number of ES providers, forest ownerships, and payment frequency.

Two payments for forest ecosystem services (PFES) schemes under one common legal-institutional coordination mechanism but different historical-institutional background and organizational design are analyzed to measure and explain their transaction costs (TC). Data on TC related to payment transfers and conditionality compliance are collected using a combination of in-depth interviews with local PFES scheme coordinators, site visits, and secondary data analysis. The two PFES schemes show substantial differences in TC despite the fact that they emerged from the same legal-institutional framework due to differences in participation rates, types of forest ecosystem services providers, and payment characteristics.