Decree 99/2010/ND-CP, which sets the payments, was issued after successful trials in Central-Highland Lam Dong province and northern Son La province that began in 2009.

Vietnam is the first Southeast Asian country to charge an environmental service fee and 77 billion VND (3.9 million USD) has been collected to protect and develop its forests.

The decree stipulates that enterprises that generate hydro-electricity and supply water will have to pay 20 VND per kWh of commercial electricity they produce and 40 VND for each cubic metre of commercial water to minimise erosion, protect the land and regulate and maintain water sources.

Forest-based tourism enterprises will have to pay between 1-2 percent of their total turnover.

The Agriculture and Rural Development Ministry will set the fee for industry and small businesses.

The money will go to watershed forest owners, including organisations, households or individuals who sign contract with the State to provide long-term protection of the forests.

The ministry's ranger department deputy director Nguyen Huu Dung said universal application of the fees would create funds for the protection of environment and ecosystems.

The money would also help improve the quality of services and ensure sufficient water for power generation and tourism.

Forests were crucial to the regulation of water resources and controlling floods, deputy director Dung said.

Ministry assessments show that land encroachment and illegal logging had been remarkably reduced since the introduction of the pilot fees.

More than 8,000 households in Lam Dong province alone have received 8.1-8.7 million VND (413-443 USD) each year from the collection of fees from 203,330ha of forest.

Many households had asked that the protected area be extended./.

Source: Vietnam News Agency