ADB Approves $10 Million for Responsible Forestry Project in Lao PDR

The project aims to curb forest degradation, strengthen climate resilience, and improve livelihoods for communities that depend heavily on forest resources.

The Asian Development Bank (ADB) has approved $10 million in financing for the Responsible Forestry Project Phase I in the Lao People’s Democratic Republic (Lao PDR), marking the bank’s first forestry-sector investment in the country in ten years. The project aims to curb forest degradation, strengthen climate resilience, and improve livelihoods for communities that depend heavily on forest resources.

Financing Structure and Purpose

The funding package consists of:

• $5 million concessional loan from ADB’s ordinary capital resources

• $5 million grant from the Asian Development Fund (ADF), which supports low-income and vulnerable countries

This combined financing will help Lao PDR tackle long-term environmental challenges and design a scalable model for sustainable forest management.

Protecting Ecosystems and Strengthening Community Livelihoods

Forests cover 62% of Lao PDR’s land area and support major economic sectors, while more than 65% of the workforce relies on forest resources for livelihoods. However, decades of unsustainable logging, land conversion, and weak governance have led to severe degradation—estimated to cost the country nearly 19% of GDP annually.

ADB Country Director for Lao PDR Shanny Campbell stressed the urgency of new investment:“By promoting responsible forestry and empowering communities, we can drive sustainable growth, protect ecosystems, and create opportunities for women and rural families.”

Key Objectives of Phase I

Phase I will lay the groundwork for a long-term, multi-phase forestry recovery programme by:

• Conducting detailed assessments and feasibility studies for Phase II

• Strengthening collaboration between government agencies, private investors, and local communities

• Supporting the development of commercial plantations and community-based conservation initiatives

• Empowering rural households, especially women, to participate in and benefit from forestry activities

• Enhancing institutional capacity to manage forests sustainably

The phase will also explore opportunities for ecotourism linked to conservation, helping diversify income and reduce pressure on forest resources.

Importance of Private Investment

Public funding is not sufficient to reverse years of degradation. ADB aims to use this project to unlock private-sector participation in reforestation, sustainable timber production, and nature-based enterprises, helping shift the forestry sector toward a climate-resilient, community-centred model.

Asian Development Fund’s Broader Impact

The ADF—ADB’s grant mechanism for the poorest countries—has made significant contributions across Asia and the Pacific. Between 2021 and 2024, ADF resources helped:

• 384,000 people escape poverty

• Generate around 500,000 jobs

Lao PDR’s new forestry initiative directly aligns with ADF’s mission to improve resilience and strengthen opportunities for vulnerable populations.

The Responsible Forestry Project aims to set a strong foundation for future investments, positioning Lao PDR to revive its forests and build a greener, more sustainable rural economy.