There exists in Palau a network of protected areas, created by Republic of Palau Public Law No 6-39, known as the Protected Areas Network (PAN). At the initiative of State governments, traditional leaders, and individuals have independently protected areas within their boundaries that have environmental or ecological significance. The national government of Palau supports the States' efforts to protect their lands and waters and encourages sustainable development of state lands.
These efforts are aligned with the Micronesian Challenge, a commitment made by the Chief Executives of the Republic of Palau, the Republic of the Marshall Islands, the Federated States of Micronesia, the Territory of Guam and the Commonwealth of the Northern Mariana Islands, and endorsed by The Republic of Palau's National Congress called the Olbiil Era Kelulau in House Joint Resolution No 7-60-10.
The Micronesian Challenge is a challenge to place at least 30% of nearshore marine and 20% of the forest resources across Micronesia under effective conservation by 2020. The Republic of Palau believe that the States' efforts will be strengthened with the creation of a PAN Management Committee, which consults with the Ministers of Natural Resources, Environment and Tourism (MNRET).
In order to support the efforts of the States to protect their resources and to attain the goal of the Micronesian Challenge, and to facilitate states' ability to access available international financial and technical resources, the Olbiil Era Kelulau believed that it was in the best interest of the Republic of Palau to create a single source of funds to channel international donations to existing and future protected and sustainably developed sites of the Republic.
All sites that join the PAN are eligible to apply for PAN funds, which will be used by each PAN site to manage its own resources in accordance with system wide goals and objectives for conservation and sustainable development. Sites that join the PAN shall not be controlled by the National Government, the state governments will continue to have ownership and governance of the PAN sites within their boundaries.
The Republic of Palau found that tourists and visitors were willing to contribute to the protection of the natural resources they travel to the Republic to see. An environmental protection fee ("Green Fee") enables the PAN Office through a PAN Fund to provide funds to sites within its network for environmental protection and for sustainable development. This arrival fee does not prevent states from levying separate fees for tourists' visits to sites within state boundaries regardless of whether the site has joined PAN.
On March 2012, PAN Fund officially opened it's doors for the 1st time to carry out it's legislative mandate and mission.