In the decentralization of forest management, the state devolves forestland use right to communities. What if the state devolves the right directly to individual households, not to communities? Does this policy work and within this policy what devolution mechanism works better in terms of forest conservation? This paper addresses these questions using the context of mangrove forest in Viet Nam. Mangrove forest areas in Viet Nam have experienced a substantial decline during the last century. Since 1994, a devolution policy has allowed mangrove forests to be assigned to households for protection and management. Households were allowed to convert part of the mangrove forest areas into other uses that bring private benefits. It is not clear whether the devolution policy provided sufficient incentives to households for not over-converting mangrove forest.

We collect and analyse commune-level data and household-level data. At commune level analysis, we used fixed effects instrumental variable (IV) regression to examine whether the devolution of forestland right to households helps conserving mangrove forest areas of communes. At household level analysis, we apply Tobit IV regression to evaluate the performance of two devolution mechanisms with regard to farms’ mangrove coverage as well as household violations of the regulatory level of mangrove coverage. Our analyses indicate that the devolving forestland right from state to households increases forest coverage. We find that comparing to the land use certificate, the contract-based allocation of forestland from the state to households results in higher level of forest cover and less violation of coverage regulation. Interestingly, increasing coverage regulation result in higher actual mangrove coverage and higher violation. Higher payment that households received from the devolved forestland right would improve forest coverage. Market conditions, such as market prices and alternative livelihood, do not affect mangrove coverage and household’s violation of regulation. The findings indicate that the current devolution policy should be redesigned to more effectively conserve mangrove forest.