The Environmental Impacts of Trade Liberalization in the Hydropower, Mining and Construction Material Sectors of Lao PDR

This 2007 research paper examines the environmental impacts of trade liberalization and foreign direct investment (FDI) in the hydropower, mining, and construction materials sectors of Lao PDR. It analyzes how economic growth and regional trade agreements, such as AFTA and ACFTA, drive resource extraction and infrastructure development, while highlighting the gaps in environmental governance and the need for stronger implementation of Environmental Impact Assessments (EIAs).

• Foreign direct investment (FDI) in Lao PDR's mining, hydropower, and construction materials sectors grew rapidly between 2004 and 2006, driven by regional trade agreements (AFTA, ACFTA) and high global demand for energy and minerals.
• The hydropower sector is a primary economic driver, with Lao PDR estimated to hold approximately 81 percent of the total hydropower potential in the lower Mekong basin south of China. While seen as a clean energy source, large-scale projects cause significant environmental damage, including the flooding of high-biodiversity areas and the logging of entire valleys.
• The mining sector has seen a dramatic increase in importance, expected to represent nearly 10 percent of the national GDP by 2006, up from 0.56 percent in the late 1990s. Key environmental risks include water pollution from hazardous waste, such as cyanide spills, and land degradation from open-cut mining.
• The construction materials sector, particularly cement, relies heavily on Chinese investment and government protection via quantitative import restrictions. These protections are expected to be abolished following AFTA commitments in 2008, forcing the industry to become more competitive or find niche markets, such as energy-efficient 'green' building materials for China.
• Lao PDR faces a significant gap between the approval of Environmental Impact Assessments (EIAs) and the final project decision-making process. While the Science, Technology and Environment Agency (STEA) approves EIAs, there is insufficient coordination to ensure recommendations are acted upon or that projects are disallowed based on these assessments.
• Forest cover in Lao PDR has declined from approximately 70 percent in the 1960s to 40 percent, a trend exacerbated by the clearing of land for mining operations, hydropower dams, and supporting infrastructure.

APA

International Institute for Sustainable Development (n.d.). The Environmental Impacts of Trade Liberalization in the Hydropower, Mining and Construction Material Sectors of Lao PDR. https://www.iisd.org/system/files/publications/rtea_lao_hydro_mining_construction.pdf

Chicago

International Institute for Sustainable Development. The Environmental Impacts of Trade Liberalization in the Hydropower, Mining and Construction Material Sectors of Lao PDR. n.d. https://www.iisd.org/system/files/publications/rtea_lao_hydro_mining_construction.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=The Environmental Impacts of Trade Liberalization in the Hydropower, Mining and Construction Material Sectors of Lao PDR |url=https://www.iisd.org/system/files/publications/rtea_lao_hydro_mining_construction.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndenvironmental, author = {{International Institute for Sustainable Development}}, title = {{The Environmental Impacts of Trade Liberalization in the Hydropower, Mining and Construction Material Sectors of Lao PDR}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/rtea_lao_hydro_mining_construction.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }