Distributional risk in PES: Exploring the concept in the Payment for Environmental Forest Services program, Vietnam

The distribution of monetary benefits is a central element in PES schemes and arouses 'distributional risk' if felt as unjust by the beneficiaries. The paper defines the concept of distributional risk, proposes a framework surrounding the phenomenon and explores their utility in an analysis of distributional decisions in eight Vietnamese communities that participate in a national forest PES program. This program shares a distributional principle with many PES schemes worldwide, paying out on a per hectare basis, implying that the biggest forest owners get most. Up till now, the communities successfully counterbalance this consequence by asserting the village level as the de facto distributor, able to apply their own principles of justice and partially reframing the disbursements as remuneration for work done for the forest rather than forest ownership. We recommend to legally institutionalize this practice, reaping other advantages as well, such as reduced transaction cost.