Vietnam’s Payment for Forest Ecosystem Services (PFES) scheme has the goal of protecting remaining natural forests by providing financial support to people involved in forest protection. However, studying the case of Dak Lak province in the Central Highlands region of Vietnam shows that even after eight years of PFES implementation, achieving this goal remains a challenge. Although PFES does provide a stable income source and higher payments than state forest protection programs, enables the mobilization of more personnel resources for patrolling forest and relieves a great burden on the state budget in terms of investment in forest protection and development, forest cover in Dak Lak province is still decreasing, mainly due to conversion for other land uses, especially commercial agricultural and industrial crops. These drivers are rooted in national socio-economic planning aimed at boosting economic growth and in local people’s need to sustain their livelihoods. In addition, our paper shows that illegal logging is still widespread in Dak Lak. Weak law enforcement in areas of forest managed by state forest authorities and state companies also contributes to deforestation. However, these drivers are neither fully recognized nor addressed, and instead, the blame for deforestation is laid on local communities. PFES alone cannot protect forests in Dak Lak province. It needs to be backed up by political commitment to address underlying drivers of deforestation, improved social programs to help local people diversify their income sources, and clarity over land use.
