Financial compensation for biodiversity conservation in Ba Be National Park of Northern Vietnam

Terrestrial biodiversity is seriously threatened by an increasing deforestation rate. Financial incentives can stimulate local people to participate in biodiversity conservation. A common approach to derive financial compensation is estimating the opportunity costs arising from the adoption of conservation friendly land-use practices. Assuming that farmers are risk averse, we used a decision-making under uncertainty approach to derive financial compensation for local people living in and around Ba Be National Park, Vietnam. Moderately risk-averse farmers need US$ 228 ha(-1) year(-1) financial compensation for the protection of natural forests in the Ecological Rehabilitation and Buffer Zones, whereas the required compensation reaches US$ 334 ha(-1) year(-1) in the Strict Protection Zone. These compensation payments were derived by comparing financial returns from natural forests with those of the most profitable land use (maize). Compensation amounts decrease to US$ 130 ha-(1) year(-1) in the Ecological Rehabilitation and Buffer Zones and to US$ 218 ha(-1) year(-1) in the Strict Protection Zone, when considering diversification strategy. Derived financial compensations assume that farms comprise 20% croplands and 80% forest. We conclude that compensation amounts vary with farmers' risk preferences, whether or not diversification strategy is considered, and the level of protection of a given area. 2016 Elsevier GmbH. All rights reserved.