(KPL) The Lao Government, in partnership with the Food and Agriculture Organization of the United Nations (FAO) and other development partners, has launched a feasibility study on establishing a national Payment for Forest Ecosystem Services (PfES) system with the participation of relevant stakeholders.

Mr. Thumthone Vongvisuk, Deputy Head of the Forest Department under the Ministry of Agriculture and Environment, explained: “Establishing a payment system for forest ecosystem services creates a pathway for those who benefit from forest services to compensate those who manage and protect forests. This will create a sustainable conservation model funded domestically. Additionally, presenting this feasibility study is also a step toward creating long-term financial mechanisms for the country’s critical forest ecosystems.”

The initiative seeks to address the decline in forestry sector revenues since the 2013 logging moratorium and the financial challenges of forest conservation, which has largely depended on international support. PfES proposes a transformational model by engaging major economic sectors that rely on forests—such as hydropower, ecotourism, and the water and beverage industries—to contribute financially to forest protection and sustainable management.

This approach draws on Vietnam’s success, where a PfES system generates approximately USD 170 million annually, primarily from the hydropower sector. The Lao PDR and the Socialist Republic of Vietnam signed a Memorandum of Understanding on Forest Cooperation (2024–2028), designating PfES as a priority area of collaboration.

Mr. Bakhodir Burkhanov, UN Resident Coordinator in Lao PDR, underscored the importance of this initiative: “The challenges arising from climate change force us to think seriously and creatively about what we can do, and in such circumstances, domestic Payment for Ecosystem Services systems are among the opportunities within our capabilities. This initiative is within our ability to study, adapt, and tailor to our country’s specific conditions.”

The results of the feasibility study are expected to provide policy options and practical approaches for pilot implementation, ultimately leading to a nationwide mechanism for forest ecosystem service payments. The study will be led by the Forest Department, supported by FAO through the UN-REDD Programme and GIZ, with budget contributions from Luxembourg, the European Union, and other donors.

KPL