Environmental situation Economic growth at the expense of the environment

    Laos is currently experiencing a rapid economic transformation. Large-scale projects in the agriculture, mining and hydropower sectors are intended to ensure stable growth. However, they come with serious environmental and social consequences. Tensions between economic growth, destruction of the natural environment and efforts to find sustainable strategies are a major theme in discussions around the future of landlocked Laos.

    The Mekong river in Laos

    For many years now, the Lao government has been focusing on the large-scale expansion of hydropower. A large portion of the electricity generated is exported to the neighbouring countries of Thailand, Viet Nam and Cambodia. However, the construction of dams on the Mekong River is increasing concerns about environmental impact and fuelling geopolitical tensions.

    Downstream, Thailand, Viet Nam and Cambodia are concerned about risks to their revenue from fishing and agriculture. Environmentalists are warning of incalculable risks for the fragile Mekong River ecosystem. As part of a regional project, Germany is working with the Mekong River Commission to develop guidelines on cross-border use of the river. This includes creating a common early warning system for floods and droughts.

    Loss of soil and forests

    For a long time, the government pursued a “land-to-capital” strategy, which robbed many smallholder families of their livelihoods and led to considerable environmental damage. For example, the use of large amounts of pesticides and fertiliser at plantations (which are often run by foreign investors) has led to massive land degradation.

    According to FAO figures, forest loss in Laos was 34,500 hectares per year on average between 2010 and 2020, the main causes being illegal logging, the construction of dams and roads, and the establishment of rubber and banana plantations. In its latest Development Plan, Laos has set itself the goal of bringing the share of forest area back to 70 per cent by 2025 through reforestation efforts. According to this document, forests currently cover 62 per cent of the country's area.

    A policy of “green growth”

    Progress in developing the country will essentially depend on how well Laos succeeds in balancing economic growth with the sustainable use of environmental resources, and in ensuring that the growth is pro-poor. The country has now committed itself to a policy of “green growth”. It has ratified the Paris Agreement and adopted ambitious Nationally Determined Contributions (NDCs).

    As at: 16/02/2026