The information on this page reflects some of the main environment issues for Lao PDR and some of the initiatives that the World Bank is undertaking to address them.

Overview

Lao PDR is a landlocked and mountainous country, surrounded by Cambodia, China, Myanmar, Thailand and Vietnam. About 70 percent of the country’s 5.7 million people live on less than US$2 per day. With an average per capita GDP of US$330, it is one of the poorest countries in the East Asia and Pacific Region. However, Lao PDR has a wealth of natural resources: forest cover that is substantially higher than in surrounding countries; the largest per capita volume of (internal) renewable water resources in the region; and considerable mineral resources, such as gold, lignite and copper. Lao PDR is also one of the most biodiversity-rich countries in the region. A relatively low population density and a moderate rate of natural resource exploitation relative to neighboring countries have allowed significant natural and cultivated biological resources to survive.

These natural resources have catalyzed past economic growth throughout Lao PDR, playing a significant role in supporting rural livelihoods and contributing towards the national economy. For example, over 80 percent of the population is engaged in agriculture and fisheries and are, thus, directly dependent on the natural resource base. Timber and hydropower are Lao PDR’s primary exports, accounting for two-thirds of total export value.
 
The Government of Lao PDR recognizes the importance of this natural resource base for economic development and poverty reduction. This recognition is reflected in the country’s current five-year plan and the large number of laws and decrees regarding natural resource management (NRM) that have been enacted. However, unsustainable NRM practices are causing significant environmental damage, and have begun to reverse this favorable situation. For example, forest cover has declined from 70 percent to 43 percent over the last 50 years, largely due to clearing of lowland forest for permanent agriculture and unsustainable logging. Furthermore, rapid urbanization, increasing industrial pollution and highway construction are imposing stresses on the urban environment. Upstream dam construction on and extraction from the Mekong River, which is Lao PDR’s major source of fish and a key transport route, is also threatening long-term sustainable development.

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The Government has attempted to address the deforestation problem with policy initiatives, but has made little progress on the ground. Lack of clarity in procedures for plantation establishment, limited financial resources and human capacity, and weak enforcement are the main obstacles. The World Bank is providing technical advice and assistance on (a) poverty and environment linkages; (b) forest management policy and its application; and (c) the rural development strategy. In partnership with the GEF, the Bank is also helping the four member countries of the Mekong River Commission to agree on water quantity “rules” that will help them to collectively better manage the Mekong River’s shared water resources.

World Bank natural resource-related project assistance focuses on sustainable rural agriculture, hydro-power development and biodiversity conservation. Agricultural development assistance is concentrated in environmentally fragile upland areas. World Bank and GEF support is helping the national branch of the Wildlife Conservation Society to strengthen protected area management in Bolikhamxay Province.

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Institutional and Policy Frameworks

The institutional structure for environmental management in Lao PDR consists of: (i) national committees that guide inter-sectoral coordination among agencies; (ii) national-level ministries and agencies, which have a core role in environmental protection and conservation; (iii) provincial and district entities that have devolved responsibility for environmental protection; and (iv) mass organizations which support the government in promoting public participation and awareness. The Government has formulated a wide array of legislation and regulations for environmental conservation and protection. The Environmental Protection Law (1999), supported by its Implementing Decree (2002), is the country’s principal environmental legislation. It includes measures for the protection, mitigation and restoration of the environment, as well as guidelines for environmental management and monitoring.

However, the capacity of the various institutions to implement and enforce environmental regulations is weak. Capacity constraints at the local level, a lack of practical implementation guidelines, overlapping responsibilities and jurisdiction, insufficient or non-existent budgets, and inadequate disciplinary options contribute to poor implementation of existing legislation and regulations. This process is also undermined by low awareness of the need for environmental protection among the general public.

The World Bank is supporting environmental awareness with Lao Environment Monitors and is helping to build environmental management capacity in both the national environment and agriculture ministries and at provincial and district levels.

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Urban Environment

The Asian Development Bank and Government of Japan are leading efforts to help Lao PDR address these challenges. The World Bank is complementing their efforts with the Poverty Reduction Fund Project, which is funding village-based poverty alleviation and environmental improvements, such as small-scale water supply and sanitation systems.

For more details on our environment-oriented assistance to Lao PDR, visit the Lao PDR Country Page.

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