Vietnam is characterized by a fast-changing economic and institutional environment.
Policies initiated in the 1990s have induced rapid changes in the agricultural sector. In a
few years, Vietnam evolved from a chronic food shortage state to a net exporter in rice and
a few other agricultural commodities. In the northern provinces, the changes are most
visible in the Red River Delta, where agricultural production in general and rice
production in particular increased sharply.  
Major changes also occurred outside of the delta in the mountainous regions. In this case,
however, the reforms had mixed results because of the biophysical and social diversity.
Today, concerns exist that some regions/communities have been left out of the process of
economic growth.  
There are also concerns about induced unsustainable practices and environmental
problems stemming from the changes. Some of these problems are mainly found in the
Red River Delta, and are specific to intensive agriculture, for example, water pollution
from fertilizer and pesticide use. However, the environmental problems in the
mountainous areas, unlike the delta, are mainly linked to the unsustainable use of sloping
land for agriculture and forestry because of the slower adoption of intensive agriculture by
farmers.
Deforestation and slash-and-burn agriculture are identified by some governmental
organizations as the main causes of the problem. A mix of reforestation programs,
economic incentives (subsidies), technical assistance (improved and sustainable
agricultural practices), and regulations have been used by the Vietnamese government to
reduce these problems through large development projects. Land-use practices such as
forestation, agro-forestry, tree-based land-use alternatives, and agroecologically sound
practices such as conservation agriculture that bring about environmental benefits are
promoted (Gouyon 2002). However, the environmental services these land uses provide,
that is, ecosystem and watershed services, biodiversity conservation, and carbon storage,
are usually unrewarded and are only indirectly connected to economic activities (The et al
2004).
Although some progress can be observed in reforestation, many agricultural households
still employ unsustainable agricultural practices to meet their short-term and medium-
term livelihood needs.  
Payment for environmental services (PES) schemes offer a new approach that focuses
directly on creating a conditional benefit transfer between providers and beneficiaries of
an environmental service. The past few years have witnessed a surge of interest in the
development of PES schemes in Asia, and in Vietnam.