Environmental Impacts of Trade Liberalization in the Wood and Wood Products Sector of the Lao PDR

This research paper examines the environmental impacts of trade liberalization on the wood and wood products sector in the Lao PDR. It analyzes how regional demand, particularly from China, and integration into trade agreements like ASEAN and AFTA influence forest decline, biodiversity loss, and the transition from low-value raw log exports to high-value processed wood products.

• The Government of Lao PDR (GoL) has shifted policy to discourage the export of raw logs and low-value sawn wood in favor of downstream processing and high-value finished products. A ban on raw log exports was implemented in 2001, and efforts to reduce sawn wood exports were ordered in 2004. Despite these measures, high-value exports like furniture remained very low, between 1.7% and 3.2% according to 2006 data, and informal log exports have continued to increase.
• Lao PDR is experiencing rapid forest cover decline due to logging and the clearing of forests for plantations. Forest canopy density of 20% or more covered 47% of the country in 1992, falling to 41.5% by 2002. Projections suggest forest cover could approach 30% by 2020. This decline results in the loss of biodiversity and watershed protection, disproportionately affecting the poorest populations who rely on forest resources.
• The wood-processing industry's installed capacity significantly exceeds the Annual Allowable Cut (AAC), creating a risk where investors may pressure authorities for more raw materials at the expense of sustainable management. Furthermore, the system is complicated by provincial authorities issuing logging permissions for revenue beyond the Prime Minister's annual quotas, and timber is often sourced from unauthorized national protected areas.
• Trade liberalization presents three primary environmental effects: scale effects, where rising regional demand (especially from China) may accelerate forest decline and the conversion of native forests to plantations; structural effects, which could positively shift the industry toward high-value domestic processing and reduce the burden on forests; and technology effects, where Foreign Direct Investment (FDI) could either introduce efficient, sustainable technologies or outdated, environmentally harmful processes.
• Forest certification offers a pathway to sustainability and access to premium international markets. Pilot projects under the Forest Stewardship Council (FSC) in Savannakhet and Khammouane provinces led to the certification of approximately 50,000 hectares of natural forest in 2003. However, the sector lacks chain-of-custody (CoC) verification, meaning most certified timber cannot be marketed as such upon export.

APA

Sayakoummane, S., & Manivong, V. (2007). Environmental Impacts of Trade Liberalization in the Wood and Wood Products Sector of the Lao PDR. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/rtea_lao_wood.pdf

Chicago

Sayakoummane, Sousath, and Vongxay Manivong. Environmental Impacts of Trade Liberalization in the Wood and Wood Products Sector of the Lao PDR. International Institute for Sustainable Development, 2007. https://www.iisd.org/system/files/publications/rtea_lao_wood.pdf.

Wikipedia

{{cite report |last1=Sayakoummane |first1=Sousath |last2=Manivong |first2=Vongxay |title=Environmental Impacts of Trade Liberalization in the Wood and Wood Products Sector of the Lao PDR |publisher=International Institute for Sustainable Development |date=December 2007 |url=https://www.iisd.org/system/files/publications/rtea_lao_wood.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sayakoummane2007environmental, author = {Sayakoummane, Sousath and Manivong, Vongxay}, title = {{Environmental Impacts of Trade Liberalization in the Wood and Wood Products Sector of the Lao PDR}}, institution = {International Institute for Sustainable Development}, year = {2007}, month = dec, url = {https://www.iisd.org/system/files/publications/rtea_lao_wood.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }