Regional Environmental Technical Assistance 5771
Poverty Reduction & Environmental Management in Remote Greater Mekong Subregion (GMS) Watersheds Project (Phase I)

Review of Policies and Institutions related to
Management of Upper Watershed Catchments

Lao PDR

By

Esa Puustjarvi

CONTENTS

1. Introduction

The review of policies and institutions related to management of upper catchments in Lao PDR relies on the general analysis framework developed at the sub-regional level, and presented in the Regional Report of this study. Country reports are presented in a form, which allows for reading them as stand-alone documents. However, a general discussion on the issues and conclusions, as well as detailed sub-regional comparisons can be found in the Regional Report. As the structure of country reports and that of the regional report is largely the same, and the discussion relevant to various issues can be referred to by looking up the corresponding sub-heading.

Topics such as health, education, and gender have been excluded from the scope of this report, as they are covered under other assignments.

2. Socio-economic status

2.1. Country level

The population of Laos has expanded from 2.7 million in 1970 to the level of 4.5 million in 1997. Population density is 19 persons per sq. km, which makes it the most sparsely populated country in the sub-region. The rate population increase is slowly declining, and it is currently estimated at 2.6 %/a, which is at the higher end of scale in sub-regional terms. Large-scale urbanisation has not yet taken place, and it is estimated that 83 % of Lao citizens still live in the rural areas. The main population group is Lao, which accounts for 53 % of population. Other major groups are Khmu (11 %), Phutai (10 %) and Hmong (7 %), while the other 44 groups have 3 % or less of the total population within each group.

The indicators for human development show improvements, but the overall level of progress remains modest. Between 1960 and 1995 life expectancy rose from 40 years to 52 years, adult literacy rate increased from 32 % to 57 %, and infant mortality dropped from 155 to 102 per thousand live births. However, in all these regards Lao PDR ranks among the least developed countries in the sub-region.

In economic terms Laos has posted impressive achievements after economic liberalisation in the 1980’s. The average annual growth of GDP for the ten-year period 1988-1987 was 6.8 %. Fastest growth was recorded by industries (13.8 %) followed by service sector (6.6 %). Growth in agriculture was estimated at 4.5 %, which is a rather modest level given the initially very low productivity in Lao agriculture (Table 1). In 1997, agriculture accounted for 52 % of GDP, which is among the highest proportions in the sub-region. Industries and service sectors represented 21 % and 25 % of the GDP, respectively.

Table 1: GDP growth by sectors in Lao PDR

Source: National Statistics Centre Lao PDR

Per capita income in 1997 was estimated at USD 350, which puts Lao PDR in the middle group in the sub-region. However, measured by Purchasing Power Parity (PPP) the per capita income was higher reaching USD 2 571 which is comparable to that of China (USD 2 935) and almost twice that of Cambodia (USD 1 110). Based on headcount index 46 % of the population was estimated to live under national poverty line in 1992-93. Distribution of income is rather even. Measured by Gini coefficient (0.30), equality of income distribution in Lao PDR was highest in the sub-region.

Measured by the Human Development Index (HDI) developed by the UNDP, Lao PDR remained in the category of "low human development" countries. It ranked 136 among the 175 countries for which the Human Development Index is computed. At the sub-regional level Laos has the second lowest rank surpassing only Cambodia.

2.2. Upland Development

For the purposes of this study the upland area was considered to comprise the northern provinces of Lao PDR (Phongsaly, Luang Namtha, Bokeo, Luangprabang, Huaphanh, Oudomxay, Xayaboury, Xiengkhuang) as well as two provinces in the South-East (Sekong, Attapeu). This classification corresponds to the most common classification into regions used in Lao PDR except for the southern provinces, which are usually grouped into one region. However, since the southwestern and southeastern provinces are quite distinct in terms of their socio-economic characteristics, an attempt was made to separate them whenever possible.

Upland regions have the lowest population levels. It is estimated that population density in the north is 15 people per sq. km. The southeastern region is the least populous area with an average density of 8 people per sq. km. Rather surprisingly, the level of population growth was also lowest in these regions (Table 2). Probable explanations include outmigration to lowlands or a high infant mortality rate.

Table 2: Population of Lao PDR in 1995

Source: Population Census 1997

Poverty assessments in Lao PDR are based on headcount index. The results are available for three regions only, where the two southern groups of provinces have a combined indicator value. The assessment suggests that incidence of poverty is highest in the south and lowest in the central region.

However, the data on GDP per capita shows that the two southern groups of provinces are somewhat different. The southwestern part reaches a GDP level almost equal to that posted in the central region, whereas the southeastern group records a much lower level (Table 1). As there is usually quite a strong correlation between GDP per capita and poverty incidence, it is probable that in the south poverty is concentrated in the southeastern provinces.

Table 3: Incidence of Poverty and GDP per Capita in Lao PDR in 1992-93

Source: Social Development Assessment and Strategy 1995, project staff calculations

The differences in terms of infrastructure depend on the type service. Regarding road infrastructure the disparity between regions is minor. However, electricity supply is available to a very low proportion of households living in the upland areas. In the north and southwestern regions only 12% and 5 % of households, respectively, have this facility (Table 4).

Table 4: Infrastructure

Source: Brown 1998, Statistical Yearbook 1995

In social terms the upland areas are clearly disadvantaged. Highest rates of maternal and infant mortality are found in the upland regions. Adult literacy rates for men and women living in the uplands are below national averages (Table 5).

Table 5: Social indicators in 1995

Source: Population Census 1995

Human Development Index, which is computed for three regions, shows the same consistent pattern. The most disadvantaged region is the north followed by the south (Table 6). If the index were computed separately for the southeastern region, it would most probably score below national average.

Table 6: Human Development Index for regions of Lao PDR

Source: UNDP 1998

2.3. Remote watersheds

Data that would be specific to remote watersheds is scant, but a few proxy indicators are available. The Lao Social Indicator Survey carried out in 1992/93 provided data on child health with a breakdown between lowland and mid/highland groups. It shows that lowlander children enjoy significantly better health conditions than those living in the mid/highlands (Table 7).

Table 7: Selected social indicators by ethnic group in 1992-93

Source: Lao Social Indicator Survey 1992/93

3. Environmental status

A number of studies have been conducted in order to assess the rate of deforestation in Lao PDR. Unfortunately the study methodologies used in the investigations differ considerably, which makes comparisons rather difficult. The most recent estimates on the present forest cover range from 53 % (1995) established by FAO to 40 % (1997) derived by the Forest Cover Monitoring Project (FCMP) (Table 8). The latter study provides also an estimate on rate of deforestation, which is put at 54 000 ha/ a corresponding to a decrease of 0.55 %/a. The FAO study provides comparable data on countries in the GMS regions, and their analysis shows that Lao PDR has the second highest forest cover in the region after Cambodia (cf. Regional Report).

Table 8: Estimates for forest cover in Lao PDR

Source: FCMP MRC/GTZ 1999

Further classification of non-forest areas based on satellite imagery remains approximate, as the methodology is not able to make a clear distinction between wood and shrubland and areas under shifting cultivation. However, based on 1997 data, the area of wood and shrublands was estimated at 39.8 % of total land area, which equals the forest area (Table 9). Areas under shifting cultivation and permanent agriculture were assessed at 8.6 % and 5.4 % respectively. The available data did not permit an assessment of development trends.

Table 9: Actual land use in Lao PDR in 1997

Source: FCMP MRC/GTZ 1999

Based on estimates provided by the FCMP study the extent of forest cover varies considerably depending on the region. The two upland areas are also quite different from one another. By far the lowest cover is found in the north, where only 21 % of land area is forested. In contrast, the coverage is exceptionally high in the southeastern part of the country (Table 10).

Table 10: Regional estimates for forest cover in Lao PDR

Source: FCMP MRC/GTZ 1999

Detailed studies on the causes of deforestation are lacking, but FCMP data shows that during the period 1993-97 areas covered with forest were converted to following land uses: wood and shrubland (25 %), shifting cultivation (63 %) and permanent agriculture (12 %) (Figure 1). In Lao PDR conversion of forest to wood and shrubland is usually caused either by forest fire or clearcutting of sites for future hydropower reservoirs. Shifting cultivation and expansion of commercial agriculture appear to be the main direct causes of forest area loss, while logging is usually an accelerating factor. Clearing of dense forest is rare. Almost all deforested areas (95 %) had been degraded before they were cleared.

Figure 1: Pattern of Forest Clearing in Lao PDR in 1993-1997

Source: calculated from data provided by FCMP MRC/GTZ 1999

The degree of degradation in forest quality cannot be fully established based on available data. The main tool of analysis, interpretation of satellite imagery, does not allow for estimating the loss of commercial species, which is probably the most serious form of degradation. However, measured in terms of disturbance in canopy cover, degradation is quite advanced. Only 16.9 % of the remaining forests can be classified as "dense". On the other hand, the current pace of degradation of the dense forests is moderate. The average annual loss is approximately 4500 ha, which represents an annual rate of 0.28 %/a of the remaining dense forest. The main threat is a further deterioration of disturbed forest areas (Table 11).

Table 11: Forest Loss and Degradation in Lao PDR in 1993-1997

Source: FCMP MRC/GTZ

Protection Forest generally represents areas, where watershed protection is the primary objective. However, areas with significant functions of watershed protection are found also under Conservation Forests. All protected zones (protection and conservation forests) cover 7.1 million ha which represents 63.4 % of total forest area (Table 12).

Table 12: Classification of forest land into forest categories in 1989

Source: NOFIP 1996

Watershed classes 1,2 and 3 represent 74 % of total land area of Laos. In the north their share is larger and in the south smaller than the national average. Degradation of watersheds is severe. In 1993, only 11 % are covered with dense forest and 44 % lack any forest cover (Table 13). The situation is particularly serious in the north, where dense forest is found only on 3 % of the area under watershed classes 1,2 and 3, and 73 % of the area is classified as non-forested.

Table 13: Status of watershed classes 1,2 and 3 in 1993

Source: calculated from data provided by FCMP MRC/GTZ 1999

National Biodiversity Conservation Areas account for 12.7 % of total land area. Within them watershed classes 1,2 and 3 represent 79 % of land area, which is close to the national average. As expected, the situation regarding watershed forests is better in NBCAs than on average. Approximately 25 % of watershed classes 1,2, and 3 that are located in NBCAs are covered with dense forest (Table 14). However, 27 % have no forest cover at all, which is a rather high percentage considering that NBCAs are high priority, strictly protected areas. Degradation is most advanced in the north, and the least deteriorated forest environment can be found in the central region.

Table 14: Distribution of vegetation covering watershed
classes 1,2 and 3 under NBCAs in 1993

Source: calculated from data provided by FCMP MRC/GTZ 1999

4. Government Policies

4.1. National level

The Socio-Economic Development Plan until year 2000 recognises that "agriculture and forestry remain the leading sector of the country and the engine to foster socio-economic development up to year 2020, gradually laying down the foundation for the shift towards industrial development". The two cornerstones of strategies concerning upland development are the concentration of development efforts in focal sites and the pursuit to stabilise shifting cultivation. Regarding the remote areas, the Sixth Congress of the Lao People’s Revolutionary Party held in 1996 made the following statement in order to highlight their importance.

The Government’s overall development strategy is based on the common and valid notion that in early stages of economic development agriculture should be accorded priority. Expansion of agricultural production has been found to be a precondition for the development of industrial and service sectors even in the rural areas. However, while this strategy is sound on a general level, the crucial element for its success are the sub-sectors and their capacity to devise efficient implementation strategies.

4.2. Funding for upland development

The Lao Government aims to reduce socio-economic disparities between different parts of the country. The question is whether the present efforts are vigorous enough to reduce the present disparities, and prevent the gap from widening. The dilemma faced by the Government is that poor regions often suffer from low rates of growth, and investments made there may not generate as much tax revenue as spending in richer regions would do. From an equity stand transfers from richer regions to poorer ones would be justified, but the problem lies in the reasoning "wealth can be redistributed only after it has been generated". In Lao PDR, this is a severe problem as the Government’s revenue base is limited, and even distribution of resources over the whole country may shrink the resources available to all regions below a critical level, which is necessary to have any significant impact.

Available data on budget allocations are rather difficult to interpret. Many budget items such as allotments to agriculture and infrastructure contribute to rural development, but a lack of regional breakdowns makes it difficult to assess the actual impact. However, assuming that the allocation to rural development is an indicator of Government’s priorities it appears that some steps have been taken. When drawing up the Public Investment Plan (PIP) for 1996-2000 rural development was prioritised, and its fund allocation was increased from 1.2 % to 9.7 %. This allotment is currently supporting mainly the Focal Site Strategy (cf. ch. 4.3).

On the other hand, it should be noted that the implementation of the Public Investment Plan (PIP) is very much dependent on the availability of external funding. In 1995/96 foreign donors were expected to finance 87.3 % of rural development programmes. So far, mobilisation of foreign funds has been limited and the actual expenditure to rural development (Focal Site Strategy) has been much below the projected level (Table 15). However, it is significant that despite the reduced volume of funding, public expenditure per capita for the disadvantaged upland provinces is above the national average (Table 16).

Table 15: Planned Public Investment Allocations to Rural Development in Lao PDR

Source: National Rural Development Programme 1996-2000

Table 16: Regional allocation of funds for Rural Development in Lao PDR

Source: National Rural Development Programme 1996-2000

Regarding funding available for development of upper catchments the Nam Ngum watershed project opened up a whole new avenue. The Government has, in principle, agreed to divert 1 % of the gross revenue to be generated by Nam Ngum hydropower plant to upstream development. This represents a funding stream totalling USD 125 million over 40 years.

However, while the principle of compensating the upstream populations for benefits accruing off-site is valid, it also necessary to ensure that the level of funding transferred to upstream development matches with the actual level of off-stream benefits. In the case of Nam Ngum watershed detailed calculations on the downstream costs and benefits are not available, which makes it difficult to assess, whether this represents a "fair" amount. The available volume of funding is very large compared to financing available to other similar areas, and it may be questioned whether this represents an equitable distribution of benefits from a national point of view (cf. Box 1). However, the basic notion of compensation remains relevant, and the precedent set by the Nam Ngum project should be followed up in other projects where the off-site benefits make it relevant.

Box 1: Off-site benefits of catchment protection

On the other hand, the discussion on Government investments should not divert attention from the fact that often the most decisive measures for upland development are the changes in the institutional and legislative frameworks. While public infrastructure investments are absolutely necessary and do have their place, the impact of public investment in Lao PDR is limited even under most optimistic scenarios of fund mobilisation. Therefore, the Government’s capacity to mobilise productive and human assets may be of even higher importance considering the overall socio-economic development. In rural areas, the most important productive asset is land, and therefore the progressive features of the Government’s land allocation programme deserve vigorous support (cf. ch. 9).

4.3. Focal Site Strategy

The principal element of the Government’s rural development programme is the Focal Site Strategy. While it is a general rural development programme, the Government plans to focus it increasingly on upland development. The focal sites are envisaged to have a dual function. On one hand, they will constitute growth poles for economic development, on the other, they will be test and demonstration sites for best practices in rural development. The main thrust of the programme is on stabilising shifting cultivation in the upland areas.

In principle, the selection of focal sites was based on two main criteria; relative disadvantage in terms of socio-economic status and high development potential. At the outset, it was foreseen that by year 2000, 450 000 people (12 % of rural population) would be involved in the development activities in the focal sites. Recently, it has been proposed that the number of sites should be reduced to 50. Proposed development activities in the focal sites include a wide spectrum of activities ranging from production and income-generation to development of social services. Infrastructure development figures prominently in the programme, and capital expenditure is foreseen to account for more than two thirds of total expenditure.

In principle, the programme is rational in that it attempts to use the limited funds efficiently by concentrating them in specific locations. However, two issues may hamper its effectiveness. First, the formal selection criteria may not have been rigorously applied in the actual choice of focal sites. This is a serious obstacle to the implementation of the strategy owing to its dependence on foreign funding. While the principle of area-based development is subscribed to by many donor agencies, the shortcomings of the Focal Site Strategy are implied by the fact that the focal sites selected by the Government have often not been considered eligible for donor funding. It should be noted that even in the best of circumstances co-ordination of donor activities would remain a highly complex and difficult task. All funding agencies have their own priorities, which they try to fit in with the Government Policies, and putting the "puzzle" together is often a complicated task. Unless the strategy, which is to underpin the co-ordination effort, is credible and widely accepted, the Focal Site Strategy may not be able to play the role it was envisaged to fulfil.

A second potential problem is that heavy reliance on infrastructure investments as a catalyst to further development may constitute a bottleneck. While the benefits of this approach are apparent in terms of economic development, its application in other areas is effectively hampered by the large amount of investment required. It is probable that with the present scope and resources, a large number of rural will not be able to benefit from the strategy. Therefore, it may be advisable to further diversify the focal sites to include models, which can be applied in sparsely populated areas not benefiting from heavy infrastructure investments (e.g. models based on forest-based production). A more versatile development strategy would be necessary in order to ensure that areas such as remote watersheds would be drawn into the programme scope.

5. Agriculture

Reduction of shifting cultivation is the key objective of the Government’s agricultural policy in the uplands. Previously, developing low land niches for irrigated agriculture was the main strategy to induce a shift away from shifting cultivation. This strategy had more success in the central and southern parts of the country due to a relatively higher proportion of flatter lands. In the northern region of the country, this approach did not prove to be a viable alternative, as the lowland niches are too few to support the entire population. Apart from technical difficulties, the effectiveness of the programme suffered from a top-down implementation strategy.

In recognition of these shortcoming the Government revised its policy, as indicated in documents prepared by officials in the Ministry of Agriculture and Forestry. The approach relying on lowland niches was complemented by an in-situ approach aiming to gradually reduce shifting cultivation. The strategic framework makes frequent references to such key principles as "decentralised decision-making", "partnership between government services and communities", "grafting exogenous technologies onto viable indigenous technical knowledge" and "building on local regulatory systems". The proposed approach is quite progressive and provides a sound basis for development of upland agriculture. Unfortunately, the implementation of the strategy is still in a very early stage. In particular, it seems that the principle decentralisation, which holds the key to mobilisation of local resources, is only slowly taking root in the administration.

One of the main hindrances to implementing the present policy will be the Government’s ability to mobilise funding and staff resources to execute the programme. Given the enormous resource deficit the future refinement of the strategy should concentrate on identifying ways to implement the programme at a lower cost. To this end, formulation of differentiated strategies in terms of their resource-intensity should be explored. In priority sites, a full-fledged development effort in the vein of focal site strategy is probably necessary. In less critical areas, however, where resources are more limited land allocation can be singled out as the key measure, as it provides local people an incentive to make a long-term commitment to resource utilisation.

More attention needs to be paid to the efficiency of public investments. Infrastructure development, especially road construction is seen as the key intervention enabling the development of market-based agriculture. While there is no doubt that an improved market access is necessary, it should be noted that a lack of road access is not necessarily the most critical factor for the viability of agricultural production. Northern Vietnam is an example of an area, where the existing road network is heavily under-utilised. Unless the root problem, e.g. the low yield of agricultural production, can be addressed in an adequate manner, the viability of road investments is put at risk. This may be the case in some areas of Lao PDR as well. Given the dearth of investment funds in Lao PDR lighter options such as motorbike and farm tractor trails need to be carefully considered as an alternative to full-fledged road construction. Lighter roads may also have merit in terms of their effect on the environment, as they would restrict the access of illegal loggers.

6. Forestry

6.1. Regulations

In principle, the policy on watershed management is based on strict protection. Regulations allow subsistence use by local communities but exclude any commercial exploitation. The Government is committed to a participatory approach to protected area management, involving people who live in or nearby them. Responsibility for management is delegated to villages through a system of locally negotiated rules that trades continued access to selected non-wood forest products in exchange for assisting law enforcement efforts. The Government is experimenting with various systems of zonation, where the degree of restrictions ranges from totally protected areas to controlled use zones, where the restrictions on resource use have been considerably relaxed. A nation-wide classification system for protected areas is being worked out. In the production forests sustainable management can be practised based on management plans.

The experience gained so far provides anecdotal evidence that as long as food security is not threatened, local villages are able to manage their forest resources in a sustainable manner (cf. IUCN, Lao-Swedish forestry project). A key element of a workable system seems to be that the management practice are based on clear rules (co-management agreements) and objectives providing the local population some level of security in their right to use natural resources. The basic approach seems sound, and the experiments should be continued and expanded.

However, while the emphasis must be placed on developing "positive" policy instruments such as incentives, there will need for some enforcement of regulations. In this regard the main tests for the sustainability of the present models is probably ahead. As elsewhere in the GMS region, the aspirations of local people for a higher material standard of living tend to rise, and this will put more pressure on the natural resources, especially in the protected areas, where forest use is restricted. In order to prepare for this eventuality two issues need to be tackled. First, there is a need to develop an adequate monitoring system for the status of the protected areas and for controlling adherence to regulations. Protected area projects tend initially – and justifiably – to focus on designing the management approach. However, unless some though is given to developing a feasible monitoring system at the outset, a protected area management system runs the risk of being theoretically sound but too intricate to enable monitoring at a reasonable cost. For instance, controlling the sustainable use of non-wood products has proved very problematic, as the initial quantity or quality of the harvest is often not known.

Second, the law enforcement system must be developed so that the most critical areas can be provided effective protection. In Lao PDR this means that the protected areas would have to be prioritised. The protected area system in Laos is very extensive, and it may be questioned, whether attempts to maintain it under strict protection are feasible given the Government’s enforcement capacity. While the most fragile watershed (protected) areas should justifiably be maintained under strict protection, the option of relaxing the restrictions in the less critical watershed (protected) areas might be considered. The possibility of reclassifying some of the protected zones as production zones should also be examined.

6.2. Reforestation

In response to a decline in forest cover the Government has announced ambitious plans of reforestation, but these have not materialised. Bare areas are generally allowed to regenerate naturally. In 1997 the area of re-growth was 305 000 ha, which represents 2.6 percent of total forest area. Based on interpretation of satellite imagery, the area of established plantations is less than 2000 ha. However, some of the donor projects have given increased emphasis on afforestation of watershed sites (e.g. Japan-Lao Watershed Management Project).

The experience from other countries in the sub-region (e.g. Vietnam) suggests that reforestation with natural tree species has not been particularly successful. The reason is simply that local populations consider alternative land uses, such as grazing or shifting cultivation, to provide higher short-term benefits than reforestation. Even, if the local people have land tenure, they seldom opt for reforestation.

More success has been gained with approaches where agroforestry and the cultivation of agricultural tree crops such as fruit trees, coffee, tea and rubber is considered. There is some concern that these crops are not as effective as block plantations in preventing erosion and soil loss, but it should be noted that the disadvantage is insignificant compared to the negative effects bare land would have (cf. Regional Report). Therefore, if restoration of vegetative cover in forest area cannot be achieved through natural regeneration it may be advisable to consider second best solutions i.e. types of agricultural cultivation, which yield fewer environmental benefits, but accommodate better the farmers’ need for short-term returns. The overall net result may be better than in schemes based on reforestation in block plantations. However, in this case individual/household tenure may be more appropriate than community-based arrangements (cf. ch. 9.3).

7. Rural industrialization

The industrial sector is the fastest developing section of the Lao economy posting annual GDP growth figures higher than 10 %. However, the growth is partly due to its extremely small size both in absolute and relative terms. The industrial sector represent less than 10 % of the GDP in Lao PDR. Provincial figures are not available, but the degree of industrialisation in the provinces is apparently very limited and mainly confined to the provincial capitals.

The most promising opportunity for rural industrialisation is probably the development of handicraft industries, which has growth potential even for export. The small number of potential producers is both an advantage and a disadvantage. It may hamper the Lao producers breakthrough to large tourist markets e.g. in Thailand, which require a steady and reasonably large supply. On the other hand, even the maximum production volume from Lao PDR would be relatively small compared to the size of the potential market. Thus, the common bottleneck of handicraft production, the limited size of the end market, is not a major constraint for Lao producers. As handicraft production provides a natural opportunity for upland people to participate in market-based development, it should be explored further as a potential source of non-agriculture income in watershed areas.

The development of agro-industries is another natural "niche" for rural industries, but its development has lagged behind expectations. Only 4 % of approved investment capital are for agribusiness. Some of the principal hindrances are the undeveloped and heavily biased credit facilities as well as the complicated procedures of granting investment licences for foreign companies. Even if these obstacles were removed, it is probable that the emergence of agro-industries would bring major benefits to upland people. Lack of surplus production and the low quality of agricultural output from the uplands makes it unlikely that upland producers would be able to create linkages with food processing at industrial scale. Therefore, the focus of upland development programmes must be, for the time being, on improving and increasing agricultural production, as a precondition for future industrial development.

8. Population Movements

The Government of Laos has implemented probably one of the most extensive resettlement schemes of recent years in the Mekong sub-region. Exact numbers are not available, but sample surveys indicate that during the last two decades one third of the villages in the upland zones of northern and southern Laos may have been resettled. In a few areas more than half of the villages had been relocated.

The twin objectives of these undertakings have been to relieve the pressure on environment and to improve the living conditions for the resettled populations. Another, less pronounced objective of upland resettlements was to integrate ethnic minorities more tightly with mainstream society.

As far as the improvements in living conditions are concerned the available assessments indicate that improved facilities for education figure among the most notable positive achievements in Lao PDR. If environmental status is assessed in terms of area under shifting cultivation, the Government claims to have made significant progress. Reportedly, in recent years the area of shifting cultivation has been reduced by 84 000 ha i.e. by one third of the original area.

Unfortunately, the list of negative ramifications of resettlement is long, and there is a concern that they more than offset the positive accomplishments. For instance, upland populations often suffer from serious health problems in the lowland areas, which they are unadapted to. Government services have been insufficient to counter the increased health risks. Former upland farmers have been slow to adopt new farming practices with the limited technical assistance the Lao Government has been able offer them. In the last few years, the availability of productive agricultural land has become a bottleneck and a major cause of failures for resettlement programs. Integration with cash economy has been difficult, and identification of market niches for newcomers’ products has encountered difficulties, even though some positive examples can be cited. One of the decidedly most negative implications has been the disruption of traditional upland cultures.

The involuntary character of resettlement schemes has been heavily criticised for being ethically questionable as well as on the grounds that it considerably weakens the chances of resettlement being successful. Forced resettlement brings along those people, who do not have the will or capacity to adapt to new physical or cultural environment. This view is supported by findings according to which voluntary resettlements have often proved successful as opposed to involuntary ones. Besides being more selective in the choice of settlers, voluntary migration has a psychological advantage in that people seem to have more realistic expectations.

In recognition of the difficulties in implementing the resettlement schemes the Government’s has scaled down and revised its resettlement programme. It has been incorporated into the focal site strategy under "village consolidation". About half of the 63 focal sites include activities related to village consolidation. In principle, the new programme will be implemented strictly on a voluntary basis. The Government is also committed to rectify the problems associated with past resettlement schemes by providing more generous funding and resources.

The chances of success for the new approach are difficult to judge. Perhaps the most successful example of resettlement, such as FELDA in Malaysia benefited from thorough planning, generous funding and substantial technical support for the settlers. In Laos, a MLSW/UNCHR resettlement plan for repatriation of war refugees, which claims at least reasonable success, is supported by cash outlays, infrastructure development and technical assistance.

In principle, the scheme sponsored by the Lao Government should similarly improve if increased resources are available. However, foreign financing and technical assistance, which the programme is largely relying on, has not materialised. Second, the limited availability of suitable resettlement sites remains a serious a constraint. As long as these problems persist, resettlement should be applied with caution. Even though there may be circumstances, where it is justified on environmental grounds, ensuring the wellbeing of the resettled people should be considered the first priority.

More emphasis should be placed on developing "pull"-factors in the proposed resettlement sites, which would induce voluntary resettlement. This would make it more likely that those making the decision to leave the upland would have the necessary qualities to succeed in the new environment. Also, they would probably have expectations more attuned to the reality awaiting them in the new location.

9. Land Tenure

9.1. Land allocation

The Government of Lao PDR has set a clear policy to allocate land to local dwellers based mainly on customary rights. The policy is exceptional in the region in the sense that areas allocated to local tenure can also include well-stocked forest areas, as opposed to the usual practice of handing over only degraded forests to non-state tenure. Implementation of the land allocation programme has a high priority on the Government’s agenda, and the programme has been set for completion by the year 2000. Even though this target will not be met, substantial progress has been made. To date land allocation has been conducted in more than 3000 villages (out of a total of >11 000 villages). In some districts, land allocation has been followed by land titling activities.

The allocation of agricultural land is based on the concept of permanent agriculture. In the upland areas this complies with the objective of discouraging shifting cultivation. Therefore, the areas allocated to individual families are relatively small, a few hectares in size. On the other hand, there seem to be no proven alternatives to shifting cultivation in the upland areas, and permanent agriculture may simply not be a viable option. When this is true, the effectiveness of land allocation is seriously hampered, because the families are not able to support themselves on the land in their tenure and do not respect the boundaries. In order to formulate a more feasible approach, the option of increasing the land allocation in the upland areas might be considered. The present legislation allows allocations of up to 44 ha per one family. The allocations could be adjusted at least to a level allowing a mix of permanent agriculture and swidden practices.

Another option for increasing the effectiveness of land allocation is described in a recent policy paper prepared by Dr. Parisak as follows:

"…efforts should be made to concentrate on demarcating village boundaries instead of reallocation fallow lands among individual farmers … Once village boundaries have been delimited, the community and local organisations should be responsible for allocating fallow land to respective groupings and individual farmers according to the customary practice found in each respective village."

The same approach has been put forward in the draft version of National Village Forest Program. It would accelerate the land allocation process considerably, as the state officials would not be burdened with land allocation within the villages, which is a very time consuming process. Speed in land allocation is vital, as the mere demarcation of boundaries is likely to have positive effects. For speed it would also be necessary that land allocation be implemented as an independent process implemented ahead of comprehensive and high-input development approaches with infrastructure investments and extension packages. The implementation of a more elaborate land allocation process should be restricted to priority sites.

There is anecdotal evidence in Lao PDR that mere land allocation has reduced encroachment and illegal logging (e.g. in connection with FOMACOP project). It is also possible that security of tenure will encourage people to make investments of their own accord even in areas, where extension services and market access would not be available. Increased investment and productivity might be undertaken in order to offset the increased demand for land caused by population growth. This, in turn, would be conducive to slowing down environmental degradation. The solutions devised by local populations would not benefit from the latest technological innovations, but the approach could constitute the much needed low-intensity strategy to upland development.

One may doubt the efficiency of the strategy in absence of technical support, and it is acknowledged that the relationship is at best tenuous. On the other hand, the accelerated land allocation is in full compliance with the overall objectives of Government’s land use policy and it is unlikely to have any major negative effects apart from tying up part of the resources available to rural development. While the issue is largely a matter of judgement, it is considered that the potential benefits would justify the risk of the approach not being effective.

9.2. State vs. non-state tenure

All forestland is held by the state, but villages, organisations and individuals are granted user rights (Table 17). In principle, the law permits both village-based as well as household tenure, but in practice the former arrangement has become predominant.

Table 17: Regulations concerning non-state tenure of forest land

Source: Modified from Fox (1997)

The Lao Government has experimented with two principal models of tenure of forest land. Village-based "Village Forest Management" (tested under FOMACOP) and "Joint forest management" (piloted under Lao-Swedish forestry project). The former arrangement relies on a model, where the forests held under village-based tenure are managed independently by the villagers themselves. The villagers retain the proceeds from commercial sales of timber and non-timber forest products apart from a royalty paid to the state. In the "joint forest management model" state has the tenure of forest land. The local population is engaged to implement a forest management plan prepared by state authorities. The local people receive compensation either through wage payment or through an arrangement of profit-sharing. In the latter case the arrangement comes rather close to "Village Forest Management"-model.

The experiment with "joint forest management" is still in an early stage of development (coverage 10 000 ha), and despite some interesting observations it is rather difficult to judge, whether the model is a workable option for state tenure. The "Village Forest Management" model based on community-tenure has been implemented with a more extensive funding (coverage 145 000 ha), and a few positive results are available, even though the long-term sustainability of the model is yet to be tested.

The past experience gained in the GMS countries suggests that non-state tenure of forestland is preferable to state tenure. The principal reason in Lao PDR is the incapacity of state tenure to secure sufficient protection to the forest resource. Local tenure would at least ensure villagers’ interest to fend off external threats.

Another strong argument in favour of non-state tenure is equity. In rural areas of Lao PDR land is the main productive asset. Unless rural populations have access to this key resource, it may be difficult to achieve a balanced and equitable development. Without tenure it is uncertain that they would be able to capture a fair share of the benefits available from forest use. As the experiment with FOMACOP has shown, the income from commercial wood sales is often substantial, and it provides a source of investment funding for village infrastructure. Given the dearth of public investment funds this is a remarkable advantage not only from the villagers’ viewpoint, but as a strategy for economic development in general.

It should be noted that even in areas where there are strong arguments in favour of non-state tenure, there is no conclusive evidence on its sustainability. The traditional management systems are not necessarily able to cope with emerging land scarcity nor with management of production forests, as they were not developed in such an environment. However, granting tenure rights to communities or households, which depend on it for their livelihood, provides at least for the possibility of obtaining their long-term commitment to resource management.

State ownership of forest land is obviously most relevant in areas where the demand for land is low. The low population density in many regions of the Lao PDR suggests that there are large areas where both state tenure and local people’s rights can be accommodated. However, even then it would be necessary to develop strong economic linkages with the local villages in order to ensure that they will receive a reasonable proportion of the benefits. The model developed under "joint forest management’ may well prove a workable institutional arrangement in Lao PDR. However, for full justification of state ownership, the fundamental problems of transparency and accountability of state institutions should be solved in a satisfactory manner.

9.3. Community-based tenure vs. household/individual tenure

The choice between community-based and household-based tenure can be used as policy instrument to guide land use towards different goals. Community-based tenure appears more suitable to promote environmental objectives such as maintenance natural forest cover. As shown by projects such as FOMACOP, it may also a relevant model for managing fully-stocked production forests. Therefore, the current inconsistencies regarding allocation of production forests should be clarified soonest (cf. ch. 9.1).

In most indigenous groups of Lao PDR, community-based tenure is the traditional pattern of land ownership. It conforms to the tradition of collective responsibility, which is characteristic of the social fabric within them. In established communities the feeling of solidarity as well as internal norms may be sufficient to make the community members work for a common goal. The ease of collective decision-making makes community-based tenure effective for activities such as natural forest management or forest protection, which require co-ordinated action in a large area. Individual community members are probably more willing to commit to long-term objectives as a group than individually, since a group decision will ensure the co-operation of all community members in one action.

On the other hand, it is important to note that in areas, where demand for land is high, it may be unreasonable to expect that individual farmers would attach a high priority to maintaining natural forest cover. If a forest area is bare, it is even less probable that farmers would take an interest in planting natural forest species, which yield benefits only in the long term. In such circumstances the focus should be turned to identifying solutions, which are second best from environmental stand point, but which accommodate the farmers’ need for short-term benefits. Suitable options may be found in agricultural production (e.g. cultivation of agricultural tree crops or agroforestry). Household-based tenure can be used as a powerful policy instrument enabling such transition, as they have proven effective in encouraging productive activities. The most convincing example of the effectiveness of this strategy in the sub-region is the "re-greening" of the northern midlands in Vietnam, where formerly degraded forest lands are now covered with various agricultural crops and tree crops.

10. Institutions

10.1. Relevant Government agencies

As elsewhere in the GMS region the number of Government agencies with a stake in watershed management is large. The principal Government agencies include (Table 18):

Table 18: Principal Government Agencies involved in watershed management

The State Planning Committee and the Ministry of Agriculture are considered the co-leading agencies in the planning and execution of rural development programmes. The principal agency responsible for management of upper catchment is the Ministry of Agriculture and Forestry (MAF) and relevant departments within the ministry. At the time of writing this report the organisation of MAF is being restructured. Some of the intended changes have been partially implemented, but definition of tasks and job descriptions for key staff are largely lacking. The status of units relevant to watershed management is unclear.

The unit with direct responsibility for watershed management is the Centre for Protected Areas and Watershed Management in the Department of Forestry. However, it is mainly a technical unit charged with planning, co-ordination, technical backstopping etc. at the central level. Implementation of field projects and policies is the responsibility of provincial administrations. There are plans to raise the status of CPAWM, and make it a division within the department as part of the on-going restructuration of the Department, but so far the plans have not been implemented.

A new unit called "Upland development unit" or "Shifting Cultivation Programme" has been set up and subordinated directly to the Ministry of Agriculture. It is intended to be the executive arm of Government’s upland policy responsible for co-ordination of implementing agriculture and forestry programs. The unit will become operational at the central level, whereas the implementation of field projects remains the responsibility of provincial and district governments.

Most of the main central ministries have provincial services, which are responsible for rural development. Services relevant to watershed management are the Agriculture and Forestry Service, the Communications, Transport, Post and Construction Service and the Health Service. The provincial technical services are organisationally divided into sections associated with sub-sector responsibilities. The services are directly under the control of their respective central ministry, but are partly funded from the provincial government and their activities co-ordinated by the office of the governor of the province. Thus their activities are somewhat influenced by the provincial government priorities.

10.2. Government Capacity

The key function of Government administration in terms of upland development is extension. This is obvious as regards agriculture, but even in forestry it is clear that the Government has inadequate capacity to carry out sustainable forest management or enforce regulations without increased involvement of local population. The forest administration suffers from a shortage of staff and skills, and problems are accentuated by the very limited operational budgets. In practice, the operative activities are dependent on external donor funding. For instance, more than 90 % of the operational budget provided to conservation staff comes from external sources. Hence, local people necessarily become key actors in terms of forest utilisation, but, unfortunately, forest administration is not geared to implementing a people-centred approach. Even if some technical skills may exist in the provincial and district levels of forest administration, extension capacity remains very restricted. Another key function, which is largely neglected within MAF is monitoring the effectiveness of programme implementation.

Even in the agricultural sector staff resources available to upland areas are limited. An initial assessment conducted in 1996 on staffing levels for farming system extension in MAF indicated that a lack of staff is pronounced in the districts of northern upland. Deficit was also found in the southeastern districts, whereas those located in the central and southwestern regions have staff surplus. Staffing at provincial level is adequate, and there may even be some superfluous staff (Table 19). Transfer of staff to district level in the upland areas is an obvious strategy for future development of extension function.

Table 19: Supply demand balance for farming system extension staff