UNCCD 2nd Scientific Conference

1. Ministry of Planning and Investment
National Economic Research Institute
Economic Valuation of Land uses in
Oudomxay province, Lao PDR
Presented By:
Souphith DARACHANTHARA
Deputy Director General
Tel. 856-02-55422983
E-Mail. souphith@yahoo.com
9-12 April, 2013
Bonn, Germany
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2. Introduction
 Poverty alleviation is the overarching goal in Lao
PDR’s five-year National Socio-Economic
Development Plan (NSEDP)
 Availability of forest and land resources and cheap
labour have attracted large flows of foreign
investments into Lao PDR, particularly to the
agricultural sector
 Maize and rubber are two of the more important
commercial crops in terms of land area
 In 2010, maize expanded rapidly and exceeded
200,000 ha, while rubber area reached 250,000 ha
 Land expansion is at the expense of forests and
smallholder mixed farming systems, leading to
degradation of soil and water resources
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3. L
- uangnamtha
P
- hongsaly
Lao People Democratic Republic
Namor
District
Road Natoi Nahom
Land area: 236,800 km2
River Total population: 6,385,057 (2011)
District border
province: Vientiane Capital & 16 provinces
Province border
GDP : 7,9% ($US 1,069 in 2010/2011)
Upstream village
Downstream village B
- eng
Poverty rate: 24% (2010/2011)
Borkeo District
Phakheo
Hun District
Phothong Nahom
Donna
L
- uangprabang
Huayhok
Chomlengyai Study site
Xayaboury
Study site: Oudomxay Province
Conservation forest: 70,753 ha Maize area: 26,000 ha
Protected forest: 606,023 ha Rubber area: 30,000 ha
Production forest: 220,699 ha Upland rice area:
9,246 ha
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4. Objective
 Generate information on the costs and benefits of
four land use systems, (NTFP collection, and
plantation for upland rice, maize and rubber)
 Determine how high REDD+ incentives would need
to be in order to solicit a positive response from
farming households do not convert forests).
 Compare the costs and benefits of land use on
how commercialization of agriculture can support
the NSEDP goals of rural poverty alleviation and
sustainable development.
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5. Analytical framework
 Household surveys in 3 districts of Oudomxay
province
 Four land uses are assessed: Rubber (smallholder
plantation and contract farming systems), Maize,
Upland Rice, Forest/NTFP
 REDD+ costs and revenues are considered only
for the Forest/NTFP land use
 Costs of health impacts caused by environmental
degradation and over use of pesticides and
herbicides are included
 The study assumes a time frame of 30 years,
which is the normal cycle for a rubber plantation
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6. Analytical framework
 A simple cost-benefit framework is used to estimate Net
present values (NPV) derived from a 1 hectare from
each land use practiced
 The classical optimal utility model, the household’s
decision to deforest for another land use, d, depend on:
 Where if d=0, households will not deforest; and if d=1,
households will deforest
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7. Results of the study
 Rubber plantation is the most profitable land use
option
 Land use systems of upland swidden rice farming,
maize plantation and forest/NTFP generate losses
over the long-term
 The opportunity cost of labor is the largest share of
incurred costs, but this is not factored into the
farmer’s rational decision-making process
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8. Research results (cont.)
 NPVrubber > NPVf, REDD for all the PCO2 scenarios,
indicating the rational farmer will decide to convert
forest lands into rubber plantations,
 REDD+ incentive would need to be at least US$ 15
per ton CO2-1 (generating NPV of USD 665 and
BCR of 2.61) in order to compete with a 2+3 rubber
contract farm.
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9. Policy oriented recommendations
 The expansion and development of maize and
rubber plantations has to be accompanied with
specific environmental mitigation measures to
prevent degradation of soil and water resources.
 The REDD+ incentives, when provided at
appropriate levels, can be an effective mechanism
to support forest conservation and ecosystem
service maintenance
 Decisions on conversion of forests and
development of commercial agriculture should be
based on proper cost-benefit analyses that
integrates environmental costs and enables
comparison between land use options
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10. Conclusion
 Maize and rubber plantation has improved cash
incomes for the household, but they exposed the
area to environmental risks (soil depletion and
water contamination)
 Upland rice swiddens and collection of NTFPs are
currently sustainable land uses, but are
increasingly vulnerable under the pressure of
expanding maize and rubber plantations into old
fallow and secondary forests.
 The REDD+ incentive can be an important
mechanism to compensate farmers for maintaining
ecosystem services and forgoing alternative
agriculture land use.
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15. Thank you for your attention
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