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Utilizing Laos’ Forests for Poverty Reduction

Laos' forestsLaos’ forests may be the key to reducing poverty in the country. The World Bank and the Ministry of Agriculture and Forestry created a new program titled the Lao Landscapes and Livelihood Project. The project, running from 2021 until 2027, seeks to help reduce poverty and kickstart the economy in Laos. The project will cost roughly $57 million and aims to alleviate the economic hardships of the COVID-19 pandemic through the preservation of Laos’ forests.

History of Poverty in Laos

Over the past 30 years, poverty in Laos has decreased dramatically. Poverty went from 46% in 1993 to 18% in 2019, coinciding with rapid growth in GDP. Much of this is a result of farming reform as farmers “moved from subsistence rice cultivation toward the commercial production of cash crops,” increasing income for farmers. However, poverty reduction has recently been slowing down in Laos with a lack of new jobs to drive economic growth and rising inequality.

Additionally, the COVID-19 pandemic is causing even more employment uncertainty. There has also been a sharp decline in tourism due to COVID-19 restrictions and border closures. Workers have to deal with job informality and fluctuations in demand as well. However, remittances, an income source for about 15% of households between 2013 and 2019, contributes to poverty reduction in Laos.

The Role of Forests

There are several ways that the government can ignite poverty reduction, including improving infrastructure and investing in education. However, the Lao Landscapes and Livelihood Project looks toward one of the main sources of income: Laos’ forests.

Much of Laos’ poverty is present in the country’s rural areas, specifically in the central provinces, which are home to an abundance of forests. The main goal of the project is to utilize Laos’ forests to increase investment in sustainable forest management and preserve the country’s “natural capital” while creating employment opportunities that will help reduce poverty. About 70% of Laos is covered in forests and nearly 70% of the population lives in these forest-dense areas. This means that forests can play a key role in igniting economic growth in Laos.

Although the economy improved consistently in the past few decades, Laos’ natural resources have not. The deterioration of natural resources makes “vulnerable rural people more susceptible to floods and droughts while jeopardizing their access to food, fiber, fresh water and income.” This degradation prompts preservation efforts to protect the forests while improving the livelihoods of the people living around them.

Lao Landscapes and Livelihood Project Goals

The project focuses mainly on encouraging economic growth, which slowed during the pandemic. There are three main areas of focus for the project: conservation, tourism and production. Conservation and production relate to new jobs through investment in sustainable practices and facilities. As there is more societal pressure to obtain “good wood,” or environmentally friendly wood production, more companies are willing to invest in sustainable ways of producing wood. Consequently, this may result in nearly 300,000 new jobs in Laos.

Tourism also grows through the protection of the abundant biodiversity in Laos’ forests. Biodiversity is one of the most important, yet quickly disappearing parts of the environment. Therefore, biodiversity protection will not only help the environment but will also attract tourists who wish to see the various plant and animal species that are native to Laos, spurring economic growth.

Looking Forward

The Lao Landscapes and Livelihood Project is one part of the 2030 National Green Growth Strategy. The project intends to utilize the forests of Laos to promote economic growth while also reducing poverty by aiding the federal government in passing legislation and designing policies to align with these priorities. The project also prioritizes gender equality, with roughly 50% of the jobs allocated to women. Overall, the project will ultimately help put Laos back on the right track to continued economic growth and reduced poverty.

– Ritika Manathara
Photo: Flickr

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The Progress of Laos’ Growing Economy

Laos' Growing Economy
Laos is growing rapidly thanks to high economic growth since the early 2000s. Its GDP growth rate has hovered around 7 percent since 2000, which makes Laos one of the fastest-growing countries in Asia. The infrastructure and tourism sectors have developed at a fast rate since 2017, which makes poverty reduction a possible side effect. As an economy grows, poverty tends to decline. Poverty in Laos was 46 percent in 1996 and around 23 percent in 2015. This cut in the poverty rate is partially due to Laos’ growing economy. Key sectors such as agriculture, tourism and infrastructure continue to be strong focus areas in Laos’ development.

A Commercialized Agriculture Industry

Agriculture remains important to Laos’ growing economy. About 70 percent of all workers have employment in the agriculture sector. Although the service sector is growing while agriculture is declining, the agriculture industry remains an important contributor to its GDP and the main source of employment for many Laotians. Most of the cultivated land consists of rice, and, as is common in developing countries, the main type of work is subsistence farming. There is a shift toward commercializing the agriculture industry, though, and this emphasis remains important in increasing wages and pulling more Laotians out of poverty. The Ministry of Agriculture and Forestry’s Agricultural Development Strategy 2011-2020 outlines the goals in increasing productivity and transitioning the industry toward commercialization.

Rural Infrastructure Growth

Infrastructure, which includes bridges, roads, schools and hospitals, remains an important foundation to a country’s livelihood. Without the necessities, a country may have difficulty helping its people and increasing its development and trade. Laos’ infrastructure is developing at a fast rate. Infrastructure growth remained around 8 percent for 2017, 2018 and 2019. While infrastructure is growing, there are still issues in rural areas that people tend to overlook. Electrification is about 80 percent in rural areas, though the country could resolve this in the future. The challenge to electrifying rural areas relies on navigating the rough and mountainous terrain of Laos. While Laos is growing rapidly, a higher emphasis on rural infrastructure development could help pull more Laotians out of poverty.

The Rising Tourism Industry

The tourism industry in Laos has grown fast since the 1990s. In 1995, about 350,000 international tourists visited Laos, yet that number grew to more than 4 million in 2018. Tourism contributes almost $2 billion to its GDP, so Laos has big stakes in the industry for its current and future economic well-being. China and neighboring countries, such as Thailand and Vietnam, comprise most of the tourists visiting Laos.

The tourism industry is yet another reason why Laos is growing rapidly. More than 100,000 jobs are related to tourism, and many expect that number to grow to 121,000 by 2028. The tourism industry grew by 9 percent in 2019, and Laos’ goal for 2020 is to reach 5 million international visitors. Job growth and GDP growth are two major effects of the rise of tourism in Laos, but there is also the effect tourism has on infrastructure. Hotels, resorts, entertainment venues and parks receive revenue and expand thanks to tourism growth.

Future for Laos’ Growing Economy

Laos’ high economic development could simultaneously transform its economy and continue to reduce its poverty. Poverty in Lao reduced by half while it was developing its economy since the 1990s. Thanks to its key sector developments, Laos is growing rapidly and poverty is continuing to decline. Rapid economic growth since 2000 shows that it may become a developed country in the near future, even though it is one of the least developed countries in the world currently. According to the U.N.’s Economic and Social Council and due to meeting two of the three criteria for development, Laos will leave the Least Developed Countries list by 2024.

– Lucas Schmidt
Photo: Flickr