Incentives to conserve and restore mangroves through organic shrimp certification

Published: February 2019
Last edited: February 2019

The Naturland standard requires each farm to have at least 50% mangrove cover while other organic standards require strict compliance with forest policy. Farmers who can demonstrate compliance then have the option of selling their certified shrimp to the Minh Phu Seafood Corporation, Viet Nam’s largest shrimp exporter.

 

The project also successfully supported Cà Mau in piloting a Payment for Ecosystem Services (PES) system. This system provides an incentive for mangrove conservation and restoration by paying farmers an additional 500,000 VND (£17.77) per hectare of mangrove for providing ecosystem services.

 

Besides payments for farmers, Minh Phu also invested in its own ICS team, a supply chain from farm to factory, and financial incentives for collectors, collecting stations, and payments to support the FMB with monitoring.

 

In this PES system, the processor pays the farmers for the ecosystem goods and services they provide, and mangrove cover is monitored by a third-party. This direct payment approach has been accepted by Ministry of Agriculture and Rural Development.

 

The project has also encouraged other processing companies to establish their organic farming area with different payment schemes, these companies include Seanamico, Seaprimexco in Ca Mau.

Classifications

Category
Sustainable financing
Sustainable livelihoods
Scale of implementation
Local
Phase of solution
Implementation
Monitoring
Entirety

Enabling factors

  • Existence of international certification standards
  • Market demand for certified products
  • Multi-sector collaboration
  • Investment and funding
  • Experience in PES concepts
  • Policy support from local government
  • Support from other projects of IUCN and SNV, technically and financially to fill in some gaps of the project
  • Commitment of Minh Phu seafood Corp without upfront turnover from the organic shrimp

Lessons learned

  • A Payment for Ecosystem Services (PES) works when the processor and ultimately the international consumer of organic shrimp are the buyers of the ecosystem services. The farmers themselves cannot be the purchasers of the services, as they would be both buyer and seller of the same services;
  • A PES based on organic certification with a direct payment system between the shrimp processor and the farmer and an independent third-party auditor is more efficient than a proposed alternative indirect payment system of shrimp processors paying into a forest development fund;
  • Although scientific calculations have shown that the PES value of mangroves is 10 times higher than the current amount being paid to farmer, the actual incentive must be set at the level that is viable for the seafood processor and consumer. This is balanced against the profit-based incentive for the farmer to maintain the forest cover.
  • The distribution of incentive payments must be clear and transparent, and carefully supervised, thus the participation of local government is critical.