Exploring forest certification systems, livelihoods generation and carbon finance for sustainable forestry in Lao PDR

Thakhek, June 2023: Last month, the United Nations in Lao PDR (UN) convened stakeholders from across sectors for two days in Khammouane Province, to discuss a way forward to further develop sustainable forestry in Lao PDR. The meeting was part of the Sustainable Forest Trade in the Lower Mekong Region (SFT-LMR) Initiative, in the context of broader collaborative efforts between the Food and Agriculture Organisation of the United Nations (FAO) and the United Nations Environment Programme (UNEP) under the UN-REDD programme (i.e., Reducing Emissions from Deforestation and Forest Degradation in Developing Countries).

Forests and forestry are essential for Lao PDR, not least as forests host much of the country’s rich biodiversity. Over the past two years alone, 53 new species were discovered in Lao PDR, 45 of which are endemic. Sustainable forest management will be crucial to ensure the country’s forest cover, which is aimed to reach 70 per cent, continues to provide ecosystem services – crucial to the country’s development and well-being of its people and wildlife.

Sustainable forestry is also a key component of Lao PDR’s ambitious climate targets. The country’s latest Nationally Determined Contribution (NDC), submitted to the UN Framework Convention on Climate Change (UNFCCC) in May 2021, reflects the national target to increase forest cover to 70 per cent of total land area by 2030. Emissions reductions from the forestry and land use sector will be critical to achieve Lao PDR’s plans for 60 per cent greenhouse gas emissions reduction by 2030, and climate neutrality by 2050.

While committed to climate action and environmental protection, Lao PDR also aims to leverage its natural resource endowment for public sector revenue generation, economic development and job creation – amongst others through the timber industry and forestry carbon finance. It is in this context that FAO organised a two-day tree plantation field trip and workshop, bringing together 46 participants from Government, private sector, research and academia, trade associations, and development partners, in order to better understand the challenges and discuss a way forward balancing economic and environmental goals.

Associate Professor, Dr. Somvang Phimmavong, the Deputy Director of Department of Forestry (DoF) who presided over the workshop as its chair confirms: “the natural conditions and climate of the country lends itself to a thriving tree plantations sector, which can contribute mitigating the global challenge of climate change. We also need responsible companies to bring in sustainable high-quality investments into the sector, including in the processing industry with many different high value-added sub-sectors, creating job opportunities and revenue streams.”

Visiting the sites

On the first day, participants took part in a field trip to Mekong Timber Plantations (MTP)’s tree plantations, destined to be used as raw material inputs for the company’s veneer mill. MTP’s plantation are certified against the Forest Stewardship Council (FSC)’s social and environmental standards.

The field trip also included a visit of MTP’s seedling nursery, and lastly of the smallholder plantations in Nano village of Hinbun district, where smallholders are planting acacia and eucalyptus to sell to companies such as MTP, after a rotation of about eight years. At MTP, out-grower contracts are signed with smallholders, which involve offers of seedlings at discounted prices – as a means to encourage ownership. At time of harvest, a first offer of sales should be made to MTP – unless the smallholders are able to find other buyers with better prices – hence ensuring relative bargaining power and an environmentally sustainable livelihood.

Looking ahead

On the second day, a workshop in Thakhek served as a multistakeholder platform to exchange views and discuss how to further develop a sustainable forestry sector. Morning sessions comprised plenary presentations to reflect the broader developments and challenges in the plantation sector: by officials from the Ministry of Agriculture and Forestry (MAF) of Lao PDR on the Ministry’s vision and policies, by the European Union (EU) on its upcoming EU Deforestation-free Regulation (EUDR), by the President of the Lao Rubber Association (LRA) Dr. Bounthong Buahom on the future of Lao rubber industry, by policy expert and researcher Dr. Hilary Smith on forest plantations in Lao PDR, and by Programme for the Endorsement of Forest Certification (PEFC) and FAO representatives Mr. Richard Laity and Ms. Akiko Inoguchi on forest certification systems and forest carbon finance respectively.

Afternoon sessions focused on emerging issues that interface with the plantation sector in Lao PDR, through breakout group discussions on A National Forest Certification System for Lao PDR and Forest Carbon Finance.

Leveraging expertise from Dr. Nguyen Van Bich and his experience from Vietnam, the forest certification group updated an ambitious action plan for accelerated development of a national certification system for Lao PDR over the next two years. If implemented successfully, the plan and national certification system development would enable smallholder forest plantation owners to access forest certification through a simplified process through groups of smallholders, thereby facilitating their access to new markets that demand legal and sustainable timber – including preparation for the EUDR.

In the meantime, the carbon finance group mapped public benefits and risks of tree plantations (afforestation) forest carbon projects, to consider as Lao PDR further develops its institutional arrangement and legal framework on forest carbon. Going forward, the outcomes of the carbon finance session will serve as a foundation for MAF’s development of sectoral (forestry) carbon finance guidelines, in continued collaboration with FAO and UNEP under the framework of the UN-REDD programme.