China and Vietnam have developed some of the most ambitious payments for ecosystem services (PES) initiatives for watershed conservation and forest management. These include the Sloping Land Conversion Programme in China and pilot projects designed to implement Decision 380 and the subsequent national PES law in Vietnam. This study reviews how these two government-driven initiatives are achieving their environment and development objectives in terms of their institutional arrangements, implementation in practice, and sustainability prospects. Although it remains too soon to determine the effects of these programs on watershed services, early evidence indicates that they are resulting in vulnerable land being retired from cultivation supported, in some cases, by considerable contributions to household income. A review of these initiatives has revealed two emerging questions that are relevant within the wider discussion on PES theory: (1) What is the ideal role for government in an evolving socio-cultural and political context? (2) What are the implications of a lack of voluntary participation in government administered PES schemes? Future prospects for harnessing the substantial political commitment for watershed protection toward more strategic, flexible, and long-term sustainable outcomes hinge on the ongoing responsiveness of these governments to stakeholder needs and objectives.
