Friday, 21/9/2018
Investment in natural capital, biodiversity conservation and development to build a "green economy" model in Vietnam
21/8/2018 10:6' Send Print
Artwork. Photo: VNA

The close relationship between conservation and development of natural capital and "green economy"

According to the United Nations Environment Program (UNEP), natural capital is natural assets used for production and consumption, including organisms and physical components of nature, such as soil, water, minerals and fossil fuels. Goods and services provided by natural capital are of important value to human life and development, such as food, water, air, cultural and spiritual services, and support to regulate geobiological cycle. Natural capital and ecosystem services provide significant economic benefits. (1) Therefore, natural capital has always been the foundation for socio-economic development and ecological security in order to achieve the goal of sustainable development of the country.

As natural capital comes under many threats, such as increasing population, development patterns, unsustainable consumption, environmental pollution and resource exhaustion, (2) the United Nations Conference on Sustainable Development or Rio+20 organized in June 2012 called on "the world community to shift to the global "green economy" to save the planet and mankind,” emphasizing that the "green economy" on the one hand brings happiness to people and social equity, and on the other hand significantly reduces environmental risks and ecological crisis.

"Green economy" characterized by sustainable growth of economic component, including renewable energy, low-carbon transportation, clean technology, advanced waste management system, energy saving, sustainable agriculture-forestry-fishery, capacity to maintain and increase natural capital of the Earth.

Vice versa, natural capital will contribute to sustainable protection of socio-economic development achievements. Ecosystems, such as watershed forests, wetlands, mangrove forests, and sand dunes, provide valuable regulatory services that help respond to impact of weather extremes, such as typhoons and droughts. Studies have shown that ecosystem-based approaches, such as conservation and restoration of forests, wetlands, and peat soil, conservation of the sea; application of environment-friendly agricultural practices are a cost-effective response to climate change. (3)

According to the United Nations Educational, Scientific and Cultural Organization (UNESCO, 2011) "Green investments" in forestry and agriculture sectors will help reverse the current decline in forest land, regenerate about 4.5 billion hectares of this important resource over the next 40 years. Investments in green agriculture will increase productivity, produce more food, while helping reduce land for agriculture and livestock production by 6% and improve the quality of agricultural land by 25% by 2050. In addition, investments to increase water supply, expand water access, and improve water management will provide more than 10% of global water resources both in the short and longer terms, contributing significantly to maintaining underground water and surface water resources.

Biodiversity, an important natural capital source for socio-economic, environment development, and "green growth" of Vietnam

Vietnam is located in the eastern part of the Indochinese Peninsula, in the tropical northern hemisphere near the equator, having tropical monsoon climate, subtropical climate and high altitude temperate climate. The diversity of topography, landforms, landscapes and climate has created rich biodiversity in Vietnam, including the diversity of ecosystems, species and genetic resources. (4) Vietnam ranks 16th in the world in terms of genetic diversity. Many gene sources are used in agriculture, industry and healthcare. To date, more than 14,000 gene sources of plants and animals have been conserved and preserved for conservation and economic development. As of May 2018, Vietnam have nine World Biosphere Reserves, two natural World Heritage Sites, eight Wetlands of International Importance (the Ramsar site) and six ASEAN Heritage Parks.

Although not yet regularly recognized, Vietnam's biodiversity has contributed significant value to national economy, particularly to agriculture, forestry, fisheries and health. Biodiversity is the basis of food security of the country; maintenance of gene sources, animal breeds and plant species; supply of construction, raw and pharmaceutical materials. (5)

Biodiversity does not only provide direct material benefits but also contributes to greater social needs. High biodiversity ecosystems provide great value to the entertainment industry in Vietnam, with growing forms of ecotourism, promising high economic values, significantly contributing to raising public awareness on the importance of biodiversity and natural conservation. About 70% of tourism growth comes from coastal areas with natural ecosystems rich in biodiversity. Though Vietnam’s endemic species, and unique ecosystems are of high scientific value and contain special advantages for tourism development, they have not yet been properly evaluated and exploited.

Ecosystems also play an important role in regulating climate through carbon storage and rainfall control, air and water filtration, waste degradation in environment, mitigation of natural disasters, such as landslides or storms and floods. The value of carbon sequestration of Vietnam’s forests is remarkable, especially natural forests. In particular, key biodiversity areas and corridors of biodiversity with high forest cover, such as the Northeast, Northwest, Central mountainous areas and the Central Highlands have the highest total biomass carbon stocks. Vietnam's coastal mangrove forests help reduce approximately 20%-50% of damage caused by storms, sea level rise and tsunamis. Particularly, the mangrove forests along dykes act as a green shield, reducing 20%-70% of wave energy, ensuring sea dyke safety, saving thousands of millions of VND which should have been used for sea dyke maintenance and repair.

Natural capital in Vietnam is of great value and plays an important role in sustainable development strategy. However, Vietnam's natural capital has declined, and exhausted even lost as economic development plans run for immediate interests without giving attention to or ignoring long-term interests. The plans do not base on scientific judgments, causing serious environmental pollution from urban to rural areas, affecting the health of the community, causing harmful disturbances to ecosystem’s health. Therefore, it is necessary to have solutions for sustainable use of natural capital, biodiversity for green economy, green growth of Vietnam to 2020 and vision to 2030.

Investment in capital, biodiversity in Vietnam: Advantages and Challenges

At present, investment in capital, biodiversity Vietnam has many advantages, namely:

First, Vietnam developed and promulgated mechanisms and policies on natural capital development in "green growth" and increased investment in biodiversity conservation.

On 25 September 2012, the Prime Minister issued Decision No.1939/QD-TTg approving the National Strategy for Green Growth for the period 2011-2020 with a vision to 2050, setting out some concrete objectives, such as restructure and perfect economic institutions in the direction of "greening" existing industries and encouraging the development of economic branches that efficiently use energy and resources with high added value; improve people's lives, build environment-friendly lifestyle by creating jobs from industries, agriculture, "green services," investing in natural capital, developing "green infrastructure.”

The Vietnam Green Growth Strategy aims to promote the process of economic restructuring, effective use of natural resources, reduction of “greenhouse” gas emissions through research and application of modern and suitable "green technology," development of infrastructure so as to raise the efficiency of the economy, respond to climate change, contribute to hunger eradication and poverty alleviation and create motivation for sustainable economic development. In particular, the Vietnam Green Growth Strategy affirms the viewpoint that "green growth" is achieved by increasing investment in conservation, development and effective use of natural capital, reducing "greenhouse effect," improving environmental quality, thereby stimulating economic growth.

The task of "identifying and assessing the value of natural capital and developing a system of natural capital accounting" was also mentioned in Resolution No. 24/NQ-TW dated June 2013 of the Party Central Committee, 12th tenure On proactive response to climate change, enhancement of natural resources management and environmental protection.

Second, internationally, Vietnam has been involved in many initiatives and investments in natural capital and biodiversity.

Vietnam is a member of the Wealth Accounting and the Valuation of Ecosystem Services (WAVES) launched by the World Bank in 2010. Through its partnerships with many international partners, such as UNEP, the Asian Development Bank (ADB), the German Development Cooperation (GIZ), the United States Organization for International Development (Winrock International), among others, Vietnam has initially built capacity to assess natural capital, ecosystem services, payments for ecosystem services; researched to develop forests accounts and roadmap for the development of other natural capital accounts, such as water, land, energy, and others. The Program Reducing emissions from deforestation and forest degradation and the role of conservation (REDD), sustainable forest management combined with livelihood diversification for local people have been implemented in Vietnam.

Collaborative programs to enhance the effectiveness of protected area management, and species and genetic resources conservation have been carried out to facilitate capacity building and share experiences in biodiversity conservation.

Third, attention and investment have been paid to protected areas of high biodiversity values .

Current investment policies for natural capital focus mainly on the establishment and management of protected areas, afforestation and restoration of some ecosystems, such as coral reefs, mangroves forests, especially investment in special-use forest management. As a result, ecosystems of high biodiversity value have been protected and recovered. Over the past half-decade, with international support and government investment, Vietnam has established a system of natural reserves (special-use forests, wetlands and protected sea areas). According to the National Biodiversity Conservation Master Plan to 2020, vision to 2030, Vietnam will have 219 natural reserves with a total area of about 3,067,000ha. However, investment has not yet met requirements of biodiversity conservation and sustainable development.

In addition to advantages, Vietnam has also faced many challenges in enhancing natural capital investment, biodiversity conservation, which include the following main groups:

First, the important role of natural capital, biodiversity conservation in socio-economic development has not been fully aware of by administrations at all levels as well as the whole society, so the value of ecosystem services and biodiversity has not been integrated and effectively implemented in the process of formulating policies, programs and plans for socio-economic development; there remain obstacles in harmonizing conservation with development for maximum interests. Meanwhile, rapidly growing population, high demand for land for economic and infrastructure development, environmental pollution, unsustainable consumption patterns, and climate change are pressures causing strong impact on biodiversity resources.

Second, financial resources limitation, (6) low proportion of expenditures on biodiversity conservation from this State budget line have affected the effective management of biodiversity, an important source of natural capital for "green economy" development in our country. Therefore, investment to reduce pressure on biodiversity has not been paid attention to and so biodiversity has continued to decline rapidly.

Third, Vietnam lacks capacity and instruments to achieve the stated strategic goals, especially the target of 3%-4% of GDP of natural capital enrichment, set out by the Vietnam Green Growth Strategy to 2020. For example, the capacity to implement economic development associated with biodiversity conservation and environmental protection such as investment in "green infrastructure" is still limited.

Solutions to promote investment in natural capital, conservation of biodiversity for "green economy" development

In order to effectively promote biodiversity conservation and invest in natural capital, create a solid foundation for the development of a "green economy" model, the following major solutions should be implemented:

First, raise awareness of all levels, sectors, businesses and people on the value of natural capital in building a "green economy" and the importance of conservation and sustainable use of biodiversity. Synchronously transform economic structure, including incorporating natural capital in national accounts and natural capital value in the development strategies, plans and projects. This requires full awareness and strong will of the decision-making levels, as well as innovation in finance, institution, law and policy to develop economic branches and biodiversity conservation.

Second, develop favorable mechanisms and policies to encourage investment in natural capital development, such as policies to mobilize organizations and individuals to implement programs and activities for natural capital conservation, improve the efficiency of resource use and mitigate negative impacts on natural capital. Continue to complete legal documents, management institutions, enhance capacity on enforcement of laws on biodiversity and develop mechanisms and policies to minimize impacts on natural resources and biodiversity; set store by conservation, sustainable use of biodiversity and ecosystem services in production industries that cause great impacts on this resource.

Third, develop a roadmap for implementing natural capital accounting and incorporate natural capital into national accounts, taking into account value of ecosystem services in planning and implementing plans at national, sectoral, regional and provincial levels, considering efficiency of exploitation and use of natural capital in investment project implementation.

Fourth, conduct surveys, assess and make natural capital inventory (including forest, marine and wetland ecosystems) in order to develop appropriate plans and management, balancing conservation and socio-economic development.

Fifth, strengthen international cooperation, scientific research, development and application of advanced technologies in conservation and sustainable use of biodiversity for the development of Vietnam's green economy.

Sixth, strengthen management and investment capacity for biodiversity conservation and development, making use of natural infrastructure for climate change adaptation, ecological landscape approach in management and development of the "green economy" model.

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(1) The total supply of ecosystem services for human well-being is US$124,000 billion a year, by far surpassing the world's gross domestic product (GDP) of $84 trillion in 2012 (Costanza et al. 2014)

(2) To date, 60% of the global ecosystem have degraded, meanwhile greenhouse gas emissions are five times higher than the Earth’s absorption capacity. It is estimated that by 2050, if economic growth cannot be separated from natural resources consumption, 140 billion tons of minerals, ores, fossil fuels and biomass are needed each year (3 times higher than the current consumption). Demand for resources is 25% higher than the Earth's supply

(3) A comparative study on flood protection measures for inundated areas in Vietnam conducted by the World Wide Fund for Nature and the World Bank estimates that if sea level rises by 12 cm by 2020, US$ 138.8 million per person is needed to build sea dykes compared to $1.7 million per person in the case of investment in biodiversity recovery and conservation programs.

(4) Inland ecosystems diversity is represented by forest ecosystems, limestone mountains, inland wetlands, marine and coastal ecosystems with 20 typical marine ecosystems in 9 natural areas. Species diversity includes plants with 13,766 species, inland animals with 10,300 species, microorganisms with 7,500 species, freshwater organisms with 1,438 species of microalgae; 800 species of invertebrates; 1,028 species of freshwater fish, marine organisms with 11,000 species. According to the survey data for the period of 201-2012 of the Institute of Seafood Research, Vietnam’s total volume of marine seafood is estimated at 3,075 million tons

(5) About 20 million Vietnamese people have full or partial income from aquaculture resources and are exploiting and consuming more than 300 species of seafood and more than 50 species of freshwater aquatic products of economic value. Marine biodiversity provides about 80% of the catch from coastal waters and nearly 40% of the protein intake. Fisheries provide the main source of income for about 8 million people and partial income for about 12 million people. About 25 million people live in or near forests and between 20%-50% of their income are from non-timber forest products, including hundreds of medicinal plants, trees giving oil and dyes ...

(6) At present, the Government is implementing the policy of investing at least 1% of the State budget in environmental protection, accounting for only 0.4% of gross domestic product (GDP). Meanwhile, ASEAN countries spend an average of 1% of GDP and developed countries spend an average of 3%-4% on environmental protection (Millennium Development Goals Report, 2013). Expenditures for environmental protection often focus on pollution control activities.

This article was published in the Communist Review, No. 909 (July 2018)

Tran Hong Ha, PhD,Member of the Party Central Committee, Minister of Natural Resources and Environment