Linking Regional Land Use and Payments for Forest Hydrological Services: A Case Study of Hoa Binh Reservoir in Vietnam

Abstract

We have calculated the economic value of forest hydrological services for Hoa Binh Hydroelectric Plant in Vietnam, which is a major power supplier for the capital Hanoi. Our valuation is based on measurements over a six-year period from 2001 to 2006 in 240 permanent sample plots in different vegetation types distributed throughout the watershed. We have synthesized the information with GIS, and carried out simulations with derived empirical models for different land use, electricity price and payment proportion scenarios. Our findings indicate that the economic value of forest hydrological services for electricity production ranges from 26.3 million USD to 85.5 million USD per year; and that the longevity of the hydroelectric plant can be prolonged by about 35-80 years, depending on the state of forest cover in the watershed.