Forestland allocation is an important policy of Vietnam with a direct impact on 24 million people. The policy aims to allocate forestry land to improve local livelihoods, as well as to improve the environment. However, the forestland policy has only been partially successful, because up to 70% of the 8.1 million ha allocated has not been used for afforestation.
There are many potential reasons explaining the low afforestation rate. The fundamental reason, however, is the poor economic incentive for afforestation. This study analyzes the economic factors that influence afforestation decision making at household level and identify the threshold income that induce plantations. Moreover, possibilities to increase afforestation through payments for environmental services (PES) are explored.