Lao PDR Wins Support for Environmental Protection and Social Development, Sustainable Development of Natural Resources

July 12, 2005

BANGKOK, July 12, 2005 — On June 30, 2005, the Executive Directors of the World Bank’s International Development Association (IDA) approved a grant of US$4 million for the Lao Environment and Social (LEnS) Project. The project will help the Lao Government and other key stakeholders to improve Lao’s ability to manage environmental protection and social development programs in the country over the long term.

The LEnS project will build on the capacity and policy improvements developed for the Nam Theun 2 Hydroelectric Project to strengthen management across Lao PDR of environmental and social issues associated with the sustainable development of the country’s natural resources. The World Bank’s Board approved Nam Theun 2 on March 31, 2005 following extensive preparatory work and consultations on environmental and social risks and benefits.

Noting the growing contribution of natural resources to Lao government revenues for development efforts, with more than half the country’s GDP generated by the forestry, hydropower, mining, and agricultural sectors, Director for Environment and Social Development for East Asia, Ms. Teresa Serra, pointed out that "Lao PDR has among the highest per capita renewable water availability in the world, over 40 percent forest cover, nearly 20 percent of land area nominally under protection, and prominent biodiversity hotspots. Long-term economic growth will depend on proper utilization and sustainable management of these natural resources, including prevention and mitigation of adverse environmental and social impacts."

Mr. Patchumuthu Illangovan, Lead Environmental Specialist and Task Team Leader for the project added, "Throughout preparation of Nam Theun 2, the Lao Government demonstrated its willingness to carry through reforms to improve environmental and social outcomes. With the LEnS project, the World Bank will support the Government’s efforts to mainstream environmental and social safeguards in infrastructure development, develop an integrated river basin management approach, strengthen biodiversity conservation, and strengthen public understanding and support for environmental management."

Through the IDA Development Grant, the LEnS project will:

  • strengthen Lao PDR’s institutions and instruments for assessment, monitoring, and compliance for environmental and social sustainability, as well as strengthening stakeholder involvement in the process;
  • invest in on-the-ground environmental improvement activities identified in the National Growth and Poverty Eradication Strategy (NGPES), with an emphasis on sustainable biodiversity management, community environmental management and livelihoods enhancements; and
  • operationalize the country’s Environmental Protection Fund (EPF), established with support from the World Bank and the Asian Development Bank, which is expected to fund major environmental investments in the country – including those derived from Nam Theun 2 revenues, scheduled to start flowing in 2009.

Through the EPF, the LEnS project will provide sub-grants to finance activities – such as studies, surveys, training workshops, monitoring and assessment programs – developed by national, provincial, and district government agencies, as well as community groups, mass-based organizations, and civil society.

Covering agencies, institutions, and stakeholders at the national and local levels, with a focus on three provinces in Central Lao (Bolikamxay, Khammouane, and Savannakhet), the LEnS project has three main components:

1. Policy Implementation and Capacity Enhancement (US$1.91 million): to strengthen environmental and social safeguards policy formulation and implementation; environmental assessment, monitoring and compliance of institutions engaged in environmental management; integrated river basin management; hydropower sector sustainability; resettlement management; and environmental education and awareness.

2. Community and Biodiversity Investments (US$1.74 million): to support initiatives to strengthen conservation practices and livelihood improvement activities in and around protected areas (building on the conservation planning approaches developed for the Nakai-Nam Theun National Protected Area and its corridors), and to improve localized environmental conditions through partnership activities with communities, local governments, and civil society organizations in central Laos.

3. Management and Monitoring Support (US$1.15 million): to support the day-to-day operations of the Environmental Protection Fund, including assistance to stakeholders to prepare proposals for sub-grants; developing and implementing a monitoring, evaluation, and dissemination process to assess performance of the project components; and staff training.

With strengthened institutional capacity and policy frameworks, Lao PDR would be "well-placed to reduce poverty and achieve quality growth," noted Ms. Serra. "LEnS is also meant to support pilot projects and generate examples of good practice in natural resource management which can be scaled-up and applied more broadly in Lao PDR."