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We question whether payments for ecosystem services (PES) programs have the potential to enhance natural resource management in Vietnam, where the state essentially designs and implements the programs. In such settings, the welfare gains achieved through PES programs will be determined by how the state incorporates the programs into national development strategies and aligns them with other land use and environmental policies. We consider also whether PES programs can be relied on to reduce poverty and enhance livelihoods, either alone or in combination with other policy interventions. To these ends, we trace the development of PES programs within the context of forest conservation policies and in relation to watershed management. Taking Vietnam as our case study, we illustrate how PES programs are implemented within the context of a monopsonistic, non-competitive market. We conclude that in the absence of a competitive market structure and with appropriate regulations governments can reshape PES programs so that they function primarily as tools for strengthening state control over natural resources.
