According to government statistics, the country had 41.5% forest cover in 2002, down from 47% in 1992. Other estimates of forest cover are as low as 36 per cent . Forests in Laos have been heavily damaged by logging, roads, bombing during the US war on Indochina and recently hydropower dam construction. Nevertheless, the forests remain an important part of rural villagers’ livelihood systems. Villagers’ main food sources are rice and fisheries, but forests provide important additional products including resin, firewood, medicinal herbs, food and thatching for roofs.
The Lao government has handed over large areas of the country as concessions, many of which are used for rubber plantations, in the South by Vietnamese companies and in the North by Chinese companies.
Industrial tree plantations
Over the past decade, several companies have attempted to develop large scale pulpwood plantations in Laos. All of these plans have one thing in common: they are not intended to provide the raw material for paper production in Laos.
The paper consumption per capita in Laos is among the lowest in the world. In 1980 it stood at 0.31 kilogrammes per person per year and by 2005 it had increased to 0.56 kilogrammes per person per year.
There are no clear figures for the area of industrial tree plantations in Laos because of the lack of any reliable survey data. Even where plantations have been established, many have failed due to poor maintenance.
According to the FAO’s 2005 Forest Resources Assessment, in 1990 there were 4,000 hectares of plantations in Laos. By 2000, the area had increased to 99,000 hectares and by 2005 to 224,000 hectares. Other estimates are far lower – in 2004, the Lao government’s “Forest Strategy to the year 2020” estimated that an area of about 113,000 hectares had been planted of which about 75,000 hectares had survived. But all of these estimates are just that, estimates , as none are based on detailed surveys of rural Laos.
The Forest Strategy 2020 quotes a survey carried out in 2002 , which indicated that growth rates were extremely low (average mean annual increment of 6.2 m3/ha/yr). “Such slow growth rates make tree plantation s non-viable,” the Forest Strategy 2020 comments.
Failed or abandoned plantation projects in Laos are common. In some cases the motivation for obtaining a plantation concession is to log the forest. Once the company has cleared the land a feeble effort is made to plant and then the site is abandoned.
Financial institutions involvement
Despite poor growth rates, lack of reliable data and the fact that establishing plantations is often no more than an alibi for logging the forest, the Asian Development Bank has been one of the main promoters of industrial tree plantations in Laos. In the early 1990s, the ADB part-financed a Tropical Forest Action Plan (TFAP) for Laos, which recommended continued logging and the introduction of industrial tree plantations on logged over and “degraded” forest. Soon after the TFAP was completed, the ADB started looking at the possibility of funding plantations in Laos. The Bank’s Industrial Tree Plantations Project started up in 1993 and was completed in 2003.
According to the Bank’s own reports, the Industrial Tree Plantations Project was a disaster . It created and increased poverty and indebtedness. It led to increased deforestation as forests were cleared to make way for eucalyptus plantations. Loan funds went missing and the Bank started an investigation into corruption in the project. 
These problems were published in ADB reports towards the end of 2005, yet the Bank’s Board approved a second tree plantation project for Laos in early 2006. This project aimed to attract more investment in the plantations, pulp and paper industry in Laos, but by January 2007, negotiations between the ADB and the Lao Government had run aground – possibly because the ADB knew that it was being watched closely by NGOs in Laos and internationally. When the Lao Government asked for more time for negotiations, the ADB declined and cancelled the loan. According to a source, the Lao Government did not agree to the conditions that the Bank wanted to attach to the loan.
But even before the project started, the ADB succeeded in attracting at least one multinational corporation to Laos. In August 2004, the ADB supported a Private Sector Consultation Workshop in Vientiane, “to present the investment opportunities to multinational pulp and paper companies”. Representatives from Japan’s pulp and paper giant Oji Paper were at the meeting and within a few months Oji Paper bought up an existing 154,000 hectare plantation operation in Laos from a company called BGA Laos. One-third of the area is to be planted, mainly with eucalyptus plantations. Wood chips from Oji Paper’s plantations will be exported via the port of Vinh in Vietnam to Oji’s pulp mills in China and Japan.
In March 2006, the Indian Aditya Birla Group announced that it will invest US$ 350 million in industrial tree plantations and a 200,000 tonnes a year dissolving pulp mill in Laos. The Lao government has leased 50,000 hectares to Aditya Birla for 75 years.
Stora Enso has commissioned a feasibility study for establishing 35,000 hectares of Acacia and eucalyptus plantations in Savannakhet and Salavane provinces in Laos. The area that Stora Enso is investigating was heavily bombed by the US during the war against Vietnam. Eija Pitkänen of Stora Enso confirms that “Stora Enso will clear all lands it will use from UXO [unexploded ordnance]”. 
Pulp giants UPM and APP are also reported to be considering investing in plantations in Laos.
International aid threatens forests and local livelihoods
The Forest Strategy 2020’s comments on industrial tree plantations in Laos are typical of international aid agency support to tree plantations. The report, which was written with support from the Japanese government, states that “Tree plantation development, although strongly promoted by the Government, is still in its early stage. Given favourable national conditions, including climate and land availability, and growing demand in the region, trees from plantation are expected to play a much larger role in the future.”
The Forest Strategy 2020 anticipates an area of 500,000 hectares of industrial tree plantations by the year 2020. The ADB wants to meet this target by 2015.
However, it is a myth that there is a large area of land available for tree planting in Laos. Most of the land that is suitable for industrial tree plantations is already being used by villagers.
While the ADB and the companies claim to be planting on “degraded” forest, as one observer in Laos points out, “degraded forest is often another word for healthy, recovering forest with wide utility value to villagers and biodiverse in flora and fauna”. The ADB’s own project preparation reports confirm this: “Most villagers expressed the opinion that they have no degraded forest land.” In fact the forests are vital to villagers’ livelihoods. “Most farmers use forest land for harvesting logs and bamboo, collecting fire wood and non-timber forest products. Together with rice production and livestock breeding this use of forest is one of the three important main sources of income,” notes the ADB report. 
Another ADB report notes that “degraded” forest is in fact land that is used by farmers: “in many cases, such lands were reported by farmers to be areas traditionally used for shifting cultivation”. 
However, forests have been cleared to make way for ADB-funded plantations. Villagers have to walk further to collect mushrooms and other forest products and wildlife has been displaced. Although villagers welcome work provided by the plantation company, once plantations are established the company will not employ villagers until the plantations are harvested. ADB-funded eucalyptus plantations in Ban Lao Kha, which were established in 2000 have not grown well. In some places the forest is growing back faster than the eucalyptus trees. In parts of the plantation, the trees have died completely.
“People conclude that the plantations are not for their benefit, but are for the benefit of business,” comments a critic in Laos. “Villagers have lost their land. Eucalyptus plantations are supposed to be reforestation and are supposed to be planted in degraded forests. But villagers say that Eucalyptus plantations have taken away their forests .”
 A report on Voice of America, for example, states that forest cover in Laos declined from 48% in 1992 to 36% in 2007. Songrit PhonNgern (2007) “Laos Cracks Down Hard on Illegal Logging”, Voice of America, 23 May 2007.
For a discussion of the problems inherent in statistics of forest cover, see Chris Lang (2001) “Deforestation in Vietnam, Laos and Cambodia”, in Vajpeyi, D.K. (ed.) (2001) Deforestation, Environment, and Sustainable Development: A Comparative Analysis . Praeger: Westport, Connecticut and London, pp. 111–137.
 Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People’s Democratic Republic, SAP: LAO 2005-17, Operations Evaluation Department Asian Development Bank, December 2005.
Project Completion Report LAO: Industrial Tree Plantation Project, Project Number: 20067, Loan Number: 1295, Asian Development Bank, November 2005.
 Chris Lang and Bruce Shoemaker (2006) “Creating Poverty in Laos: The Asian Development Bank and industrial tree plantations”, A World Rainforest Movement Briefing Paper, April 2006.
 Eija Pitkänen, Vice President, Sustainability Communications and CSR, Stora Enso, email to Chris Lang, 15 May 2007.
 “Tree Plantation for Livelihood Improvement Project: Final Report” TA No. 3794-LAO, MIDAS Agronomics, Champa Lao Consulting, Scandiaconsult Natura, CIRAD Foret, October 2003, page 42-43.
 Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People’s Democratic Republic, SAP: LAO 2005-17, Operations Evaluation Department Asian Development Bank, December 2005, page 36.
World Rainforest Movement