Opening Remarks for Kickoff Workshop for the development of a Payment for forest Environmental Services (PfES) in Lao PDR - Feasibility Study

Dr. Thoumthone Vongvisouk, Deputy Director-General, Department of Forestry, Ministry of Agriculture and Environment

Distinguished colleagues:

Just a few weeks ago in July, a monumental event took place. The International Court of Justice issued a ruling in response to the UN General Assembly on “Obligations of States in respect to Climate Change”. The ruling declares that countries have a legal obligation under international law to reduce greenhouse gas emissions and protect the climate system. This means that now, states’ failure to act on climate change can be a violation with potential ramifications. 

This ruling is a milestone in its clear and direct acknowledgement of damages from climate change that transcend country borders. This ruling is all the more significant because it was initiated by a group of students from a small island state of Vanuatu.

In Lao PDR, we are also seeing the damages of climate change, which are to a large extent the result of actions and inaction of other countries. Erratic weather events and disasters, and loss of agricultural productivity will first affect the poor and marginalized, and eventually all of us. 

The lack of finance is a key constraint for climate action globally. The challenges posed by climate change force us to think seriously and innovatively about what we can do. But as we are about to kick off this workshop today, we have an opportunity to think innovatively about financing solutions. And in that context, domestic Payments for Environmental Services, or PES, is one such opportunity that is within our reach. 

In Viet Nam, Payment for forest Environmental Services (PfES) was being piloted when I was working there back in 2015. Similar to Laos, this was triggered by budget constraints. A decade later, it is eye-opening to see that domestic PfES mechanism is returning the biggest incomes, eclipsing international climate finance. 

The context of Lao PDR will obviously not be the same as Viet Nam. But there is significant scope and opportunity to learn and adapt this experience and to tailor it to our specific circumstances. Discussions and consultations like the one we are having today will be key in designing the right PfES for Lao PDR.

For our country situation, the recent merger of the Ministry of Agriculture and Forestry and the Ministry of Natural Resources and Environment has the potential of bringing about a more coordinated approach to PfES. I also welcome the recent reports from our FAO team of the enthusiasm of the Ministry of Finance to explore the potential fiscal benefits of a PfES scheme. The feasibility study being discussed today will be critical in charting positive direction for policymaking in this area.

The interest of both the Ministry of Agriculture and Environment and the Ministry of Finance in this initiative reflects the cross-disciplinary significance of climate finance. It is with this in mind that we are proud to include PfES as part of our portfolio of technical support to the Government under the UN Joint Programme on Green and Climate Finance, which aims to promote a whole-of-government approach to the mobilization of green and climate financing. It is our expectation that the Climate Finance Hub proposed under this Joint Programme will promote sustained cooperation between financial, environmental, industrial and forestry sectors that is needed to see initiatives like PfES succeed.

This initiative holds much promise, and it is within our ability to study it, adapt it, and make it work in our unique country context. I wish you successful deliberations today and look forward to a positive outcome of this kickoff workshop, so that Laos can soon begin to generate much needed development finance for climate adaptation and national development. 

Thank you.