Lao PDR: the Health, Environment, and Sustainable Economic Recovery Nexus

In responding to the COVID-19 pandemic, the development community faces perhaps the biggest challenge in its history. This can be seen in client countries like the Lao PDR: with mounting difficulties as extended lockdowns and border closures interrupt its economy, Laos must confront policy decisions and consider if it can afford to continue its path toward greener growth.

The World Bank Group is currently deploying its largest ever crisis response. How we tailor this relief to address the specific needs of countries like Lao PDR is critical. Can we help countries overcome COVID-19-induced challenges and deliver their immediate goals of restoring jobs and economic growth, while also making progress on long-term goals like decarbonization? Can we support efforts to emerge from this crisis with a greener, more inclusive, and more resilient planet?

Laos offers an interesting case study, presenting a strong argument for green growth as a fundamental tool in bouncing back from COVID-19. A new World Bank report, Environmental Challenges for Green Growth and Poverty Reduction: A Country Environmental Analysis for the Lao PDR (CEA) analyzes the environmental challenges most closely linked with poverty reduction and shared prosperity in the country. It suggests that green growth offers the best opportunity for sustainable and inclusive recovery, and longer-term, resilient development.

Rethinking development

Laos enjoyed sustained economic growth in the two decades before COVID-19. Yet even before the coronavirus emerged, its government recognized that this growth was fueled by natural resources and that a new economic model was needed to reduce poverty, conserve the environment, and strengthen resilience to natural disasters and economic shock.

These aspirations shaped the country’s National Green Growth Strategy, adopted in 2019. The strategy followed moratoria on logging and mining, accentuating a shift to environmentally protective policies. Evidence suggests that Laos would do well to continue these prudent policies as it pursues economic recovery. Published in the week of International Clean Air Day, the new CEA analyses research showing that any activity which exacerbates pollution could rather set back the economy further.

Death and loss from environmental health risk factors

In the CEA we examine the environmental challenges most closely linked with poverty reduction and shared prosperity in Laos. It shows that pollution is a major public health risk, responsible for one in five deaths, and slows economic growth. Air pollution, both outdoors and inside the 93% of households that rely on solid fuels for cooking, results in increased respiratory and heart disease, and other illnesses that end up causing an estimated 7,000 deaths annually. In addition, inadequate water supply, sanitation, and hygiene cause diarrhea and other ailments that claim around 2,000 lives every year.

Lead exposure is another significant and largely ignored environmental health risk. Young children are particularly vulnerable and can suffer lifelong consequences from lead exposure, including neuropsychological impacts such as impaired intelligence, measured as a loss of IQ.

Low-income and vulnerable groups are especially burdened. Women are more significantly affected by household air pollution because they spend more time indoors and are traditionally responsible for cooking. Practically all deaths associated with WASH are among children under five, and almost 75% of the costs associated with lead exposure stem from its effects on young children. Moreover, pre-existing health conditions such as heart or respiratory problems, which make people more vulnerable to COVID-19, can be caused or worsened by airborne or land-based pollution.

By causing premature deaths and increased illnesses, pollution shatters lives, constrains children’s opportunities to attend school, and limits adults’ productivity. The CEA finds that the health effects caused by pollution have an estimated cost equivalent to 15% of GDP.

Economic cost of forest loss and degradation

The CEA also looks at the depletion of Lao natural resources in recent decades. Until recently, forest loss and degradation cost the country nearly 3% of GDP per year. The government has taken steps to invest in forest landscapes as a long-term economic asset, and it is this kind of forward-thinking that can protect Lao people economically, from natural and climate hazards, and in terms of food and health security.

The alternative is continuing to promote activities that reduce the capacity of ecosystems to provide essential services. While activities like logging, hydropower, and mining offer short-term financial rewards, they rob populations of opportunities to meet their own needs, while also increasing vulnerability to extreme weather events and climate change. The CEA finds that human influences on the Mekong Basin’s natural characteristics, coupled with climate change, are expected to increase flooding and drought this century, while rice production will suffer from rising temperatures.

Feasible and technically sound solutions

The CEA was developed through continuous dialogue with the Lao Government, which reiterated that its economy rests heavily on natural resources and that threats to these assets, and to the well-being of the Lao people, demand well-designed, proven interventions that can yield long-term results. How can we assist?

In the CEA we suggest 25 interventions to reduce the most significant environmental health risks, including those that particularly affect women and children. There are also recommendations for protecting natural resources while bolstering food supply and the rural economy, and for responding to increased natural disasters.

A unique opportunity

Across the globe, the COVID-19 pandemic has arrested economies, so fundamentally changing our world that many see this moment as an opportunity to reset or reform our societies.

The CEA assesses the efforts the Lao government has already taken, with World Bank support, to steer the economy to a green pathway, and identifies opportunities for accelerating this transition. As decision-makers mull alternatives for recovery, and engage the private sector, civil society, and other stakeholders to implement them, I hope work like this CEA can show that COVID-19 has only strengthened the need for greener growth.