Circular Economy Strategies for Lao

Circular economy strategies for Lao PDR A metabolic approach to redefine resource efficient and low-carbon development Circular economy strategies for Lao PDR A metabolic approach to redefine resource efficient and low-carbon development Colophon

Contact information Acknowledgements Seumkham Thoummavongsa This study beneftted from valuable assistance with data collection, in- Deputy Director General sightful stakeholder views and expert opinions, including from: Seumkham Institute of Renewable Energy Promotion Thoummavongsa, Xaysavanh Latthachack, Phouttavanh Phommachanh, Ministry of Energy and Mines Lao PDR Somephet Philadeng (Institute for Renewable Energy Promotion), Bounthee [email protected] Saythongvanh, Heuan Chanphana, Vilaivanh Liengsitham (Ministry of Tel. (856-21) 413-012/413-013 Natural Resources and Environment), Phonepaseth Krodouangdy (Ministry of Planning and Investment), Phongphackdy Sivilay, Sonethavy Bounvilai Alexandra Soezer (Ministry of Industry and Commerce), Phoudone Meksavanh (Vientiane [email protected] Urban Development and Administration Authority), Margaret Jones Williams, Balasubramaniam Murali, Chitlatda Keomuongchanh, Somlith Technical Oversight and Guidance Khounpaseuth, Jonas Aechtner (United Nations Development Programme), Janet Salem, Henrik Jakobsen (United Nations Environment), Jaeseung Lee Alexandra Soezer, Climate Change Technical Advisor, Low Emission (Global Green Growth Institute), Thongphet Phonsavath (Cleaner Production Capacity Building Programme Centre Lao PDR), Sisavanh Phanouvong, David Salter (Asian Development Bank), Paul Simcock (Geomatic Services, European Chamber of Commerce Lead author and Industry in Lao PDR), Marcel Crul (Frisian Design Factory, Delft Technical University), Christiaan Bolck, Rene Wijffels (Wageningen Jelmer Hoogzaad (Shifting Paradigms) University), Bastiaan Teune (SNV Netherlands Development Organisation), Jennifer Smith, Thomas Hesketh (Emerging Markets Consultancy), Chris Smithies (Earth Systems), Bamshad Houshyani (Greenovation), Main partners Robert O’Sullivan (Winrock International), Paul Rogers (Ecotourism Instituo Oikos), Sebastian Koch (Deutsche Gesellschaft für Internationale Bas Driessen, Yara Alnashawati, Eric Frijters (FABRIC) Zusammenarbeit), Eiji Egashira (Japan International Cooperation Agency), Matthieu Bardout, Shyaam Ramkumar, Marc de Wit Andy Schroeter (Sunlabob). (Circle Economy) Disclaimer: The views expressed in this publication do not necessarily Editor refect the views of the United Nations Development Programme or its Executive Board. Georgina Wilde September 2017

Design Nathanaël Reuling

At www.undp.org you can order a full colour print-on-demand version. Contents

Colophon 2 Step 2: Mapping priority sectors, industries and resources 39 Foreword 7 2.1 Selected maps 41 Summary 9 2.2 Resource analysis 37 2.3 Agriculture analysis 44 Thinking in flows and stocks 13 2.4 Energy analysis 46 2.5 Tourism analysis 48 Combining resource efficiency with low-carbon development 14 Circular future 51 The socio-economic metabolism 15 Circular economy strategies 16 Step 3: Circular economy strategies 53 Circularity as development paradigm 17 Stainable development and 3.1 Circular manufacturing, textiles climate action 19 and waste management: cores, Four steps from the socio-metabolic recycled fibres and bacteria 54 profile to circularity 19 3.2 Circular construction materials from forests: circular resorts to Development opportunities and advance ecotourism 58 challenges in Lao PDR 23 3.3 Circular agriculture, mining: algae farming to clean water in Step 1: The socio-metabolic profile 25 hydropower reservoirs 61 3.4 Overview of technologies and 1.1 Resource-driven growth 26 benefits per sector 65 1.2 Resource demand from 3.5 Contribution to achieving SDGs 65 neighbouring countries 28 3.6 International cooperation on 1.3 International commitments climate mitigation supporting and economic integration 29 circularity 65 1.4 Sector profiles 30 Annex 1: List of tables and figures 70 Circular economy strategies for Lao PDR Foreword 4

Foreword

The adoption of the Paris Agreement The central location of Lao PDR, its in 2015 marks not only an historic hydropower resources, a solid agricultural milestone for the global effort to and forestry basis for developing a bio- combat climate change but also sends an based economy, the potential to expand important signal for accelerated climate ecotourism, its modest wages and the action and a dramatic transformation of integration into the ASEAN Community economies as we know them. (Association of South East Asian Nations) In the strongest ever collective are all major opportunities. spirit, 195 countries came forward with The Institute of Renewable Energy Nationally Determined Contributions Promotion under the Ministry of Energy to outline targets for cutting green- and Mines, UNDP and Shifting Paradigms house gas emissions. These national developed a study on ‘Circular Economy contribution targets culminated into the Strategies for Lao PDR’ which analyses Paris Agreement which set the highly the metabolism of Lao PDR to improve ambitious, but vital, global goal to limit resource efficiency and asset use. For temperature increases to well below 2°C the study, a step-wise approach has been and transition to a zero-carbon economy adopted which goes from priority setting by the end of the century. based on national development ambitions Reaching this ambitious goal will, and the metabolic profile of the country, however, require achieving progressively to defining circular economy strategies. deeper cuts in greenhouse gas emissions. Priority setting and strategy formulation Since these emissions are closely related were guided by an ambition to optimise to resource use, circular economy strat- resource efficiency and reduce greenhouse egies can guide us onto a low-carbon gas emissions, seek cross-sectoral impacts development pathway. and ability to inspire circular innovations Therefore, Lao PDR developed across the Laotian economy. a vision of a circular future which The government of Lao PDR has combines economic development with embraced this approach to redefine a safeguarding the country’s unique nature development perspective for the country. and culture. This requires a systems It looks forward to continuing its effort to approach which looks beyond isolated further decouple economic development, challenges or attempts to optimise from the expansion of the national individual installations. resource and carbon footprint.

Circular economy strategies for Lao PDR Summary 6

Summary

Lao PDR is strategically located in the heart of Southeast Asia and a vital organ in the regional economic tissue. It supplies its own industries and consumers with food and resources, while also exporting large volumes of crucial supplies to surrounding countries. The country has an opportunity to leapfrog into a circular future, where economic activities and resource use are regenerative by design and safeguard the natural and cultural beauty which are unique to the country. Analyzing the flows, conversions and stocks of materials and energy which constitute the metabolism of Lao PDR, bring the most promising circular economy strategies to the surface. The analytical approach looks at Lao PDR as a system and combines resource efficiency with low-carbon development. These two development goals go well together, since 67 per cent of global greenhouse gas emissions are related to materials management. The opportunities build on circular economy strategies, which reduce the input of raw materials, improve the use of existing assets and reduce the output of harmful waste, including greenhouse gasses. For developing countries, this approach represents a unique opportunity to redefine development and growth, through the lens of metabolic efficiency. For Lao PDR it is an opportunity to skip the catching-up phase and leapfrog into a postindustrial society, where the living organism, rather than the machine from the industrial age, is the main source of inspiration. 7 Circular economy strategies for Lao PDR Summary

Development opportunities and challenges 1. A regional recycling and remanu- Between 1990 and 2015 the domestic facturing hub: Lao PDR can position extraction of resources in Lao PDR itself as a recycling and remanufac- increased from 10 to 71 million tons per turing hub in which material cycles year. Increased extraction and exports of are closed. The country can take full wood, metal ores and refined copper were advantage of its location on major the main drivers of economic growth. This regional transport arteries like the is a short-term growth strategy supresses newly built transit railroads and the the growth potential of non-extractive national industries. Mekong river. It could function as a The central location of Lao PDR in resource hub, through which resources between the large economies of southeast can be renewed and redistributed. Asia, and on existing and planned international transport arteries, is a major For example, by importing end-of-life opportunity. Other competitive advantages motorcycles and cores, Lao PDR can are its access to hydropower resources, replace the region’s need to import a solid agricultural and forestry basis for motorcycle parts, produced from newly developing a bio-based economy and its extracted raw materials. Similarly, the modest wages. The critical development import of synthetic materials can be challenges for Lao PDR are the heavy substituted with local, bio-based alter- reliance on: natives. Additionally, a new technology to sort fibres from waste textiles opens 1. temporary resource rents to stimulate an opportunity to replace the import economic growth; of new fibres and fabric for the textiles industry, with end-of-life textiles of 2. raw material exports which prevents the regional origin. Where the stream of growth of local industry; and textiles residues is insufficient to meet national demand, organic fibres like 3. the import of construction materials and hemp can close the gap. fuels which can also be sourced locally. 2. Piloting circular construction Three pivotal circular strategies methods to support tourism: The use of local, cross laminated timber Three circular economy strategies have and bamboo as the country’s main been selected for their positive impact construction materials, instead of on resource efficiency, greenhouse gas imported concrete and steel can reduce emission reduction potential, cross-sectoral the reliance on foreign raw materials impact and ability to inspire circular and support the construction boom in innovations across the Laotian economy. urban areas and the expansion of infra- Per strategy, artist impressions provide a structure. The use of local resources preview of a circular future for Lao PDR. in the construction of new buildings Circular economy strategies for Lao PDR Summary 8

can also preserve a sense of national Three pivotal circular strategies identity in urban areas and at resorts. The national, eco-tourism ambitions of The systems approach outlined for Lao Lao PDR can benefit from this mate- PDR steps away from focussing on a single rial transition and enable the tourism sector or industry. It defines collaborative industry to be an early adopter of strategies in which sectors cooperate to circular concepts. achieve the country’s objectives to reduce greenhouse gas emissions and make more 3. Algae farming to produce valu- efficient use of its resources. This way of able bio-based materials and clean thinking opens new avenues for countries surface water: Electricity in Lao to act on their climate ambitions and Paris PDR is predominantly generated by Agreement commitments. It also steps hydropower for both domestic use and away from the negative and often punitive export. By mobilising the aquaculture narrative of reducing emissions, to a more capacity of its hydropower reservoirs, positive and inspiring vision of a circular with the production of algae, the future. country can benefit from a growing and underused national asset. Algae produc- This research has the potential to be tion significantly improves the quality replicated and applied to any country with of water, while delivering valuable the political ambition to adopt a circular proteins, fertilizers or raw materials for economy. Circular strategies can enable fish oil or even biofuels. These prod- transformational change and maintain the ucts can be used to substitute imported value of resources and products which are meat and synthetic fertilizer, support already available. fish breeding throughout the country or substitute imported fossil fuels.

Thinking in fows and stocks

Addressing climate change and improving resource efficiency are a mutually reinforcing combination. Yet, in practice, they are often separate objectives. Consequently, approaches under the Paris Agreement to shift our world economy to a 2°C or even 1.5°C pathway risk overlooking the major mitigation potential of reducing our resource footprint. Its national focus also risks overlooking the mitigation impact which domestic action can have on greenhouse gas emissions in the countries from which carbon intensive materials and products originate. Emissions embodied in international trade represent over 30 per cent of the greenhouse gas footprint of countries. This requires a systems approach, which looks at all resource extraction, flows, stocks, conversions, imports and exports. Looking at a jurisdiction or industrial cluster as a metabolism, opens development perspectives which cut across sectors and industries. Circular economy strategies can help make the low- carbon and resource efficient development perspective concrete. Lao PDR has the ambition to graduate from its Least Devel- oped Country status. The predominant trend in developing countries is that economic growth is paralleled by a gradual decrease in resource efficiency. Circular economy strategies can curb that trend and allow the country to grow its infrastructure and building stock, and meet the needs of its society in a manner which already moves away from the linear economic model which has character- ized industrialization. An understanding of the metabolism of Lao PDR helps identify promising circular economy strategies which respond to the needs and expectations of society while reducing the input of raw materials and improve the use of existing assets and reduce the output of harmful waste, including greenhouse gasses. 11 Circular economy strategies for Lao PDR Thinking in flows and stocks

1. United Nations 5 Environment Programme Combining resource efficiency with of shifting to a 2⁰C emissions pathway. (UNEP) and International Resource Panel, Resource low-carbon development Still, the focus of climate mitigation Efficiency: Potential and action is on production6 and improving Economic Implications: International Resource When envisioning a long-term develop- energy efficiency, on promoting Panel Report, March 2017. See also World Bank, ment perspective for a country or region, renewable energy, reducing non-CO “Population total”, 2017. 2 resource efficiency and greenhouse gas greenhouse gas emissions, improving 2. S. Northey and others, “Modelling Future Copper mitigation should be addressed in tandem. land management and reducing deforest- Ore Grade Decline Based on a Detailed Assessment To feed our world economy, roughly 84 ation. These are also the predominant of Copper Resources and Mining”, Resources billion tons of raw materials each year are strategies of “Nationally Determined Conservation and Recycling Vol. 83, 190-201, extracted. This is 32 kilograms per person Contributions”, the emission reduction February, 2014. per day. This extraction rate is already pledges and associated policy intentions 3. Own analysis of the exceeding planetary boundaries, but which countries submitted to the United underlying data of Figure 2 from: B. Bajželj, J.M. population and economic growth might Nations Framework Convention on Allwood and J.M. Cullen, “Designing Climate push this figure to a staggering 186 billion Climate Change (UNFCCC) under the Change Mitigation 1 Plans That Add Up”, tons per year by 2050. Some resources are Paris Agreement. While these mitigation Environmental Science & Technology, 47(14): 8062– already near depletion. In metal extrac- options can do some of the heavy lifting 8069, July 2013. tion, this is evidenced by declining metal towards a 1.5⁰C pathway, common 4. S. Paulik and D. B. 2 Müller, “The role of in-use content of ores, and causes increasing approaches to identifying climate policies stocks in the social metabolism and in climate volatility of resource prices. and investments, risk overlooking the change mitigation”, Global Environmental A major share of the resources which economically feasible mitigation potential Change, Vol. 24, January we extract are the fossil fuels which con- of reducing our material footprint. 2014. tribute to climate change. Once extracted, This asks for a novel approach to 5. S. Hatfield-Dodds and others, “Assessing most of these fuels are used to extract, development, where resource flows, global resource use and greenhouse emissions to transport and process materials and stocks, conversions, imports, exports 2050, with ambitious resource efficiency and cli- products. In result, 67 per cent of global and energy use are examined as a system, mate mitigation policies”, Journal of Cleaner greenhouse gas emissions are related to rather than a set of individual elements. Production, Vol.144, 3 February 2017. material management. Only the mutually When looking at a national or subna-

6. H. Schandl, D.B. reinforcing combination of low-carbon tional economy as a metabolism, circular Müller and Y. Moriguchi, “Socioeconomic development and resource efficiency, can economy strategies point at innovative Metabolism Takes the shift our world economy to a 2⁰C or even interventions at system-level. Stage in the International Environmental Policy 1.5⁰C pathway. Debate: A Special Issue to Review Research This also makes economic sense. Box 1: Key definitions Progress and Policy Impacts”, Journal of For some sectors, effective decoupling Industrial Ecology, Vol. 19, Socioeconomic metabolism: “the set of all anthropo- No. 5, September 2015. of resource use from economic growth genic flows, stocks, and transformations of physical is enough to reach the 2⁰C benchmark.4 resources and their respective dynamics assembled in a systems’ context”.4 In the context of this This opens a development perspective analysis, the metabolism of Lao PDR constitutes the where lower dependency on material flows and stocks of resources and energy. resources and fossil fuels can create Socio-metabolic profile: “represent dynamic the savings which accelerate economic equilibriums of society-nature interactions, and are development. The economic benefits characterised by typical patterns of material and energy flows.” In history, the basic profiles are a) of resource efficiency and low-carbon hunters and gatherers, b) agrarian and c) industrial. development exceed the near-term costs Bio-geographical factors and resource endowment Circular economy strategies for Lao PDR Thinking in flows and stocks 12

(climate, soil, access to waterways, mineral ing cities12 and regions.13 This approach, 7. F. Krausmann and resources) contribute to the formation of sub-types others, “The global socio-metabolic transition: of regimes with region-specific socio-metabolic whether it is used for building design, past and present meta- characteristics.” 7 bolic profiles and their fu- urban planning or national development ture trajectories”, Journal of Industrial Ecology Circular Economy: “Looking beyond the current “take, planning, requires a large amount of data Vol.12(5-6), 637-656, 2009. make and dispose” extractive industrial model, the at different scales. Data visualization is circular economy is restorative and regenerative by 8. Ellen MacArthur an important means to help policymakers Foundation, “What is a design. Relying on system-wide innovation, it aims to circular economy?”, 2015. redefne products and services to design waste out, and corporate decision makers to while minimizing negative impacts. Underpinned by 9. G. Brugmans, M. understand the challenges and opportu- Francke and F. Persyn, a transition to renewable energy sources, the circular eds. The Metabolism of model builds economic, natural and social capital.”8 nities. Some of the first examples of this Albania: Activating the 14 Potential of the Albanian approach are from Brussels in 1977. Territory, 2015. Systems’ approach: “a focus on the development of 15 an integrated perspective that includes all levels, More recent work covers Rotterdam, 10. K. Blok and others, 9 “Implementing Circular rather than on the isolated search for readymade Albania and the Dutch province of North Economy Globally 9 solutions for sub-problems.” 16 Makes Paris Targets Holland. Achievable,” 2016. Nationally Determined Contributions: Submissions 11. United Nations, to the United National Framework Convention on Box 2: Disciplinary parallels between social “Sustainable Climate Change (UNFCCC) of mitigation commit- metabolism, accounting and biology Development Goals”, n.d. ments for 2030, or beyond, by countries under the 12. See, for example: 10 Paris Agreement. A disciplinary parallel can be drawn with accounting, www.urbanmetabolism. where transactions or flows of value change balance org, or http://metabolis- mofcities.org. Sustainable Development Goals (SDGs): “a set of sheets or stocks. This way of thinking in flows and goals to end poverty, protect the planet, and ensure stocks applies just as well to material resources in 13. V. C. Broto, A. prosperity for all as part of a new sustainable society. In fact, the mass extraction and depletion of Allen and E. Rapoport, “Interdisciplinary development agenda” adopted in 2015. Each goal 17 resources which is common to linear economies, Perspectives on Urban 11 has specific targets to be achieved by 2030. can be considered a form of “asset stripping”. In Metabolism”, Journal of accounting, a company which records short-term Industrial Ecology, Vol. 6, Issue 16, December 2012. The socio-economic metabolism profits by depleting its resources, will show a decline in the value of its assets. Traditionally, value creation 14. MFA Diagrams, by a nation state is measured as the Gross Domestic “Material Flow Analysis diagrams”. The resource and energy efficiency of an Products (GDP), where a decline in valuable reserves and deposits is not accounted for. In recent years, 15. N. Tilly and others, economy is more than the sum of the effi- the World Bank has begun to complement GDP eds, Urban Metabolism: Sustainable Development 18 ciencies of all its components. Decoupling measurement with reporting on “resource rents”, of Rotterdam, 2014. economic growth from resource and which are temporary revenues from the extraction of resources. 16. Circle Economy, “58 circular opportunities of energy use, requires understanding how A metabolism eats, drinks, breathes, uses its the province of North- the individual components operate, but senses and excretes waste. An urban or national Holland”, 2017. landscape shows similarly vital flows of resources.9 17. W. Haas and oth- above all, it requires an understanding In biology, all organisms, arguably except human ers, “How Circular is of how individual elements interact and beings, are part of an ecosystem where hazardous the Global Economy? An waste does not exist, and chemical conversions take Assessment of Material work together to deliver a diverse set of Flows, Waste Production, place at low temperature and pressures. That is very and Recycling in the services to society. When thinking in different from the industrial systems which humanity European Union and the employs. Biomimicry 19 is the discipline where World in 2005”, Journal of flows and stocks, the isolated search for Industrial Ecology, Vol. 19, biology is a source of inspiration on understanding No.5, October 2015. readymade solutions for sub-problems is how to close material loops and dramatically improve our material and resource efficiency. 18. World Bank, “Total replaced by a systems’ approach, which natural resources rents (% of GDP), Overview per focuses on “the development of an country”. integrated development perspective that For developing countries, this approach 19. For further informa- 9 tion on biomimicry, see: includes all levels and sectors”. represents a unique opportunity to view https://biomimicry.org/. Looking at a community as a metabo- development and growth through the lens lism is the new paradigm for understand- of metabolic efficiency. It helps govern- 13 Circular economy strategies for Lao PDR Thinking in flows and stocks

20. M. Braungart and W. McDonough, Cradle ments conceptualizing a future vision of Large amounts of raw materials are to Cradle: Remaking the Way We Make Things. New a resource efficient society as the ultimate extracted to build infrastructure in the York, North Point Press, 2002. objective of national development. They developing world. These materials are

21. G. Pauli, The Blue can avoid the development pathway of locked into physical structures for many Economy/Version 2, USA, industrialized countries, which accu- years and are our long-term materials Academic Foundation, 4 2017. mulated massive stocks of materials to stocks. They can only be recovered when 22. W.R. Stahel and G. support a society whose resource use is structures are demolished, after which Reday-Mulvey, Jobs for Tomorrow: The Potential mostly linear and can be summarized as they are typically down-cycled. for Substituting Manpower for Energy. New York, “take-make-dispose”. A circular economy Vantage Press 1981. is the nature-inspired alternative. Third, the biggest share of the remaining 23. For further information on Industrial materials is used for consumer products Economy, see the Journal of Industrial Circular economy strategies like cars, refrigerators, clothing, cleaning Ecology: http://on- linelibrary.wiley. agents, personal care products, etc. This com/journal/10.1111/ Circular economy strategies can decouple is a diverse and complex group of (ISSN)1530-9290. economic growth from resource use, products that generally have short to 24. Kalundborg Symbiosis, “Kalundborg making material use regenerative, rather medium lifetimes. Symbiosis is the world’s first working industrial than depletive. It does that by proposing symbiosis”. strategies which reduce the input of Seven circular economy strategies target 25. For further information on biomimicry, see: virgin materials, improve the use of all three material and product categories. https://biomimicry.org/. existing assets and reduce the output of On the road to circularity, no country 26. UNDP, “New opportunities are sprouting in harmful waste. The circular economy starts from scratch. Several examples Lao PDR”, 2017. builds on, and combines concepts like illustrate how these circular economy 27. Available from: http:// Cradle to Cradle,20 the Blue Economy 21, strategies are applied in Lao PDR. www.buraphawood.com/. the Performance Economy,22 Industrial 28. Available from: http:// 23 24 www.storaenso.com/. Ecology or Industrial Symbiosis, 4. Recovery and Reuse: Recovering and Biomimicry 25. and treating wastes and by-products for reuse as inputs or cascading for Not all the materials and products we use other uses. Lao PDR uses sawdust and are equally susceptible of having their straw residues from agriculture to circulation extended.10 First, about half of produce mushrooms.26 the materials extracted today cannot be 5. Circular Design: Designing products recovered, or only at high costs, because and assets with minimized resource use they are the fossil fuels that we combust, throughout the lifecycle in mind. the food we consume or the gasses, 6. Material substitution: Select mate- aerosols, liquids or solvents which rials with a low carbon footprint. we disperse. Burapha Wood is an example of a furni- ture manufacturer which uses sustain- Second, a large share of the materials ably produced wood, also to replace extracted are construction minerals like ceramic floor tiles.27 Stora Enso is also sand, gravel and limestone for cement producing a wood based substitute for production that we use for the construc- carbon intensive construction materials tion of buildings and infrastructure. by supplying cross laminated timber as Circular economy strategies for Lao PDR Thinking in flows and stocks 14

28 29. Y. Hanboonsong and alternative to enforced concrete. Other resource efficiency or circularity. The P. Durst, “Edible insects in Lao PDR: building on tradi- examples are the use of insects rather traditional culture of repair and re-use tion to enhance food secu- 29 rity” Food and Agricultural than meat as a source of protein, the is dismantled as income per capita Organization of the United 34 Nations, Regional Offce substitution of fossil fuels with biodiesel increases. In Asia, the deterioration for Asia and the Pacifc, at commercial scale from oilseeds, of resource efficiency Bangkok, 2014. 30 sugarcane and cassava, the produc- is aggravated by the relocation of relative- 30. B. Vongvisith and H. Theuambounmy, “Bio- tion of 2,400 tons of organic fertilizer ly resource intense production stages from Energy Science and 31 Technology Innovation in Sayabouly province and organic more industrialized economies, including and Policy in Lao P.D.R”, Journal of Sustainable agriculture which reduces the use of the EU, to lower-income Energy & Environment 32 35 Special Issue Vol. 13 No. pesticides and synthetic fertilizers. Asian countries. 18, 2015. 7. : Sharing and Service Models 31. Government of Lao th Box 3: Circular economy examples from developing PDR, “8 five-year nation- Offering products as a service through al socio-economic devel- countries. opment plan (2016-2020)”, pay-per-use models and employing Ministry of Planning and sharing and leasing platforms to There are many examples of circular economy Investment, June 2016. maximize the use of products and initiatives in developing countries which may not 32. V. Panyakul, “Lao’s yet carry this name, but which can inspire circular Organic Agriculture: 2012 assets. Lao PDR has 261 accommoda- development in other developing countries. To name Update”, United Nations Conference on Trade and tions available on Airbnb, an interna- just a few: Development 2012.

tional sharing platform for short- 33. Airbnb, 2017, Biogas in Lao PDR where manure and human faeces 33 term accommodation. are used to produce biogas and organic fertilizer and 34. R. Gower and P. 8. : Dematerialize improve the sanitary conditions of rural households.36 Schröder, “Virtuous Product as a service Initiatives to improve the recycling of solar Cycle: How the circular economy can create by replacing physical products with panels and appliances, to avoid the transition to jobs and save lives in low solar energy in Africa creating a new waste issue.37 and middle-income coun- online equivalents or services like tries”, Tearfund 2016. Spotify and use the internet of things Pay-as-you-go schemes are looked at as one of the solutions to retain ownership over the appliances and 35. A. Schaffartzik to optimize resource use and facilitate reverse logistics. and others, “The glob- The Kumasi industrial cluster or Suame Magazine al metabolic transition: maximise value. Regional patterns and in Ghana is an industrial estate with automotive trends of global material 9. Lifetime Extension: Extending the remanufacturing and repair activities, employing an flows, 1950–2010, Global estimated 200,000 workers. The cluster is a regional Environmental Change, lifetime of products and assets through Vol. 26, May 2014. hub for car remanufacturing. 38 a greater focus on maintenance, Refow flament aims to leapfrog the devel- 36. IEA, FAO, IRENA, opment of plastics recycling by creating high-value Country Presentation on upgrade, and repair, as well as reverse status of Bioenergy de- logistics, product takeback, and flament for 3d printers from recycled plastics in India velopment in Lao PDR, and Tanzania.39 Bangkok, July 2014. In September 2016, Corbion opened a new remanufacturing. 37. Lighting Africa, 10. : Move bio-polymers production facility in Thailand. The “SolarAid Partners with Promote renewable energy bio-plastics from this plant will be a biodegradable University of Edinburgh away from the use of fossil fuels. Lao substitute to plastic root containers used in the on Managing Waste from Solar Lights”, April 2014. PDR is expanding its hydropower rubber industry. This strengthens Thailand’s ambition to become a global bioplastics hub. 40 38. Institute of potential to avoid the use of fossil fuels Development Studies, “Africa’s biggest recycling in its power sector. hub?”, November 2015.

When assessing circular economy 39. Refow Filament, 2017.

Circularity as development paradigm opportunities in developing countries, or 40. N. Waramit, “Developing a bioecono- a Least Developed Country like Lao PDR, my in Thailand”, Journal of the International Society The predominant trend in developing the policy options and national context for Southeast Asian countries is that economic growth is need to be considered. Most publications Agricultural Sciences, Vol. 18, No.2.2012. paralleled by a gradual decrease in on circular economy stem from countries 15 Circular economy strategies for Lao PDR Thinking in flows and stocks

41. See, for example: http://reflowfilament.com. with an industrial socio-metabolic profile. with services. This requires innovation

42. A.G. Fernandes, Only a selection of these best practices and entrepreneurship and points at an “Closing the Loop: The benefits of the circular can be transposed to a developing country important role for the emerging private economy for developing 31 countries and emerging context, which is that of a transition from sector in Lao PDR. economies”, Tearfund, an agrarian to an industrial profile. 4. 2016. Declining versus increasing . Material stocks 43. A.B. Lovins, A new material stocks Dynamic – Effective busi- 1. . Developing in developed countries may decline ness in a circular econo- Leapfrogging progress my 2014. countries can skip the catching-up because of material efficiency improve- phase and leapfrog to a post-industrial ments. An example is making vehi- age where the living organism rather cles lighter to reduce their energy than the machine is main source of consumption during usage. Stocks in inspiration. Replacing products with developing countries on the other hand services and developing modern asset will continue increasing as they expand sharing platforms does not require their infrastructure. Converging stocks going through the same development will lead to a redistribution of material stages as OECD countries. For example, stocks between world regions,4 where sorting and processing waste plastics Lao PDR could be on the receiving end. for 3D printing would benefit from low 5. Degree of market saturation. labour costs.41 Another example is the The sales of new cars in Germany historic investment in waste-to-energy is very close to the numbers of cars schemes like in the Netherlands, which scrapped. This points at a high level create a lock-in of the waste sector of market saturation. Some circular into the combustion of valuable waste economy business models are good at resources. The waste sector in Lao PDR managing risks in saturated markets.43 is currently at this crossroads. Markets in developing countries are 2. Involve the base of the pyramid typically less saturated. and consider the informal sector. The 6. Low-carbon energy supply. Circular artisan repair, reuse and recycle industry economy strategies put little emphasis has mostly been eliminated in the on renewable energy development. developed world but is still very much This terrain is already well-covered alive in many developing countries. It by climate policies. The energy supply is a vital source of revenue to many, but of Lao PDR relies predominantly on often part of informal economic activity hydropower and biomass. These two in a country. Circular development calls energy sources have a low carbon foot- for involving and organizing this work- print and, when operated and designed force, improving their working condi- well, can be relatively sustainable. tions and safeguarding their role in a circular economy.42 A best practice for policymakers is to shift 3. Entrepreneurship. Circular economy taxes away from what deserves encourage- concepts ask for pioneering and testing ment, to what should be discouraged. new product designs, consumer-pro- A tax system should make the consumption ducer relations and replacing products or extraction of virgin resources more Circular economy strategies for Lao PDR Thinking in flows and stocks 16 expensive, and labour cheaper.44 Such tax control 4 » p. 14 or bears responsibility (Scope 3 44. The Ex’tax Project emissions)45 but which occur upstream or downstream in cooperation with Cambridge Econometrics, reform is less relevant to the Lao context. in the value chain of the reporting country. It is these Trucost, Deloitte, EY, Wages in Lao PDR are amongst the lowest indirect emissions, or emissions embedded in the KPMG Meijburg, and carbon footprint of imported products, that are the key PwC. “New plan. Europe: in the Southeast Asian region. Compared A Fiscal Strategy for to bringing our cumulative international commitments an Inclusive, Circular to its Southeast Asian peers, this makes in line with a 2°C or even 1.5°C pathway.10 » p. 15 Economy”’ Utrecht, 2016. The Paris Agreement should encourage the resources already relatively expensive, 45. Greenhouse gas pro- development of climate policies which target the emis- tocol, FAQ. “The GHG while labour is available at low cost. sions embedded in imported materials and products. Protocol Corporate This is an opportunity for the negotiations on UNFCCC Standard classifies a company’s GHG emis- guidance, and the modalities and procedures, which sions into three “scopes”. Sustainable development and will be drafted under Article 6. This article governs Scope 1 emissions are the international cooperation on mitigation action direct emissions from climate action owned or controlled and the potential exchange of mitigation outcomes. sources. Scope 2 emis- Article 6 can be used to develop incentive schemes for sions are indirect emis- The Sustainable Development Goals guide countries to account for foreign emission reductions, sions from the genera- tion of purchased energy. if they are a clear result of national action. the 2030 Agenda for development. The Scope 3 emissions are all Low-carbon development strategies developed indirect emissions (not impact of circular economy strategies under the Paris Agreement should also put into included in scope 2) that occur in the value chain question the mere existence of industries which are cuts across a range of SDGs. Improving of the reporting company, inevitably carbon intensive, rather than devoting effort including both upstream circularity touches upon several SDGs, like to making them more effcient. An example is the and downstream emissions.” reducing poverty, improving food security, production of steel, cement and paper from virgin resources, which accounts for a major share of global 46. S. Hashimoto and water quality, access to clean energy, emissions. The greenhouse gas mitigation potential in Y. Moriguchi, “Resource Management for economic growth, innovation, responsible the production of these materials is limited. Reducing Carbon Management: A consumption and production, sustainable international demand for these materials is the prime Literature Review”, Global low-carbon development pathway for these industries.46 Environmental Research, communities and climate action. Vol 17, 2013. Enhancing circularity contributes to mitigating climate change under SDG Four steps from the socio-metabolic 13, Climate action and achieving national profile to circularity commitments under the Paris Agreement. However, the potential mitigation impact The first step is to develop an understand- of circular economy strategies reaches ing of the socio-metabolic profile of Lao well beyond national borders. Through PDR, based on its imports and exports, international trade, they can reach the blast land use, and anecdotal information furnaces, refineries, wells, quarries and on specific locations (Figure 1). This mines from which the imported materials economy-wide data set supported priority and product originate. Emissions embodied setting in a workshop with government in international trade represent over 30 representatives. Priorities were identified per cent of the greenhouse gas footprint of based on national development ambitions, countries.4 » p. 14 land-use conflicts, cases of loss of material value or underused assets, and pressing Box 4: Accounting for embedded emissions under environmental issues. the Paris Agreement By setting priorities at a relatively

The carbon accounting framework of the Paris early stage, data collection was more Agreement is based on inventories of national or focussed and the timeframe up to the territorial emission sources. This is a practical way to arrive at an estimate of global emissions, but does delivery of the first report was shortened. not indicate over which emissions a country has When using this approach to, for exam- 17 Circular economy strategies for Lao PDR Thinking in flows and stocks

ple, increase the ambition of a Nationally objective of that workshop should be to Determined Contribution, the focus can verify or amend the circular economy be on the mitigation impact. In addition, strategies proposed in this report. After if the timeframe is more generous, the that, the implementation roadmaps can mapping under step 2 could still have be developed. an economy-wide character. National Another amendment to the approach development priorities will then not guide depicted in Figure 1 has been that the data collection but only make the iden- priorities were not identified as a selection tification of circular economy strategies of sectors, but as a development priorities

more focussed. which cut across resource flows and In Step 3 all available data and visuals sectors, and geographic regions and were compared with international circular environmental concerns. best practices, to identify circular econo- Many choices have been made my strategies for Lao PDR. throughout the study which were The first three steps have been taken informed by anecdotes, views and before the publication of this report. opinions from stakeholders in Lao PDR, The approach has been amended since as well as consultations with experts in the workshop with representatives the Netherlands. These choices on which from government, private sector and data to use, what topics to examine and NGOs in Step 3, was postponed until the which opportunities to elaborate, have implementation phase. Therefore, the determined the recommendations. The data visualizations and circular economy loops in Figure 1 are opportunities to strategies proposed in this report are not reconsider these choices and explore the outcome, but rather the starting-point other development avenues with the of a workshop with private and public data already available. sector stakeholders in Lao PDR. The Circular economy strategies for Lao PDR Thinking in flows and stocks 18

STEP 1 The sociometabolic profile

input - Trade balance of main resource categories - Sector profiles - National development ambitions, challenges and opportunities STEP 2 Mapping priority sectors, industries and resources

analysis Government workshop input on national priorities Targeted collection of statistics, and georeferenced data STEP 3 Circular economy strategies analysis Workshop DOCA input (Data, Opportunities, - Presentation of data Challenges and Anecdotes) visualisations with knowledge partners - International circular economy best practices output - Selected national priority STEP 4 sectors, industries or analysis Implementation resources Workshop with representa- - Verified anecdotes on tives from government, input resource management in private sector and NGOs - Working groups per circular Lao PDR, opportunities and economy strategy with challenges private and public sector - Guidance on data sources representatives output - Implementation roadmaps Data visualisations: maps, flow charts

analysis output Circular economy strategies Coordinated movement and implementation road- across all stakeholders maps

feedback Reconsider output priorities CE strategies implemented

feedback Reassess data

feedback Refine circular strategies

▲ Figure 1: A four-step approach towards a circular economy Development opportunities and challenges in Lao PDR

Step 1: The socio-metabolic profle

Lao PDR has a large surface area, with a relatively small population and a low income per capita. Although domestic demand for products and services is keeping pace with strong growth in Gross Domestic Product, most of the demand for resources comes from neighbouring countries. Between 1990 and 2015, Gross Domestic Product grew from US$866 million to US$12.3 billion. This growth was paralleled by a growth in resource extraction from 10 to 71 million tons per year. The government has taken bold measures to keep the country on a sustainable development pathway and it stopped issuing new mining concessions and banned the exports of raw wood. Cooperation with neighbouring countries is crucial to reduce the reliance on resource rents and move away from the large material exports which hamper development of non-extractive national industries. A circular economy will lead to a more resilient society, less vulnerable to changes in commodity prices or availability and with a smaller carbon footprint. This is an immediate opportunity for Lao PDR, but also requires that the country responds adequately to circular economy ambitions in countries with which it maintains economic ties. The development priorities of the country are rural development and diversification, agriculture and food security, eco-tourism, renewable energy, assembly and industrial development, reforestation, sustainable mining and protecting the quality of water resources. For these sectors, the focus will be on reducing resource rents, reducing raw material exports and developing local industries and avoiding the import of materials and products which can be sourced locally with a smaller environmental impact. In Step 2 the priorities and development challenges guide further data collection and mapping, after which they are integrated into three circular economy strategies in Step 3. Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 22

55 47. World Bank, 1.1 Resource-driven growth the extraction of ores and wood. This “Program Information Document Green Growth is significantly higher than any of the (Concept Stage)”, 2016. Lao PDR is a country with abundant surrounding countries 18 » p.15 and causes 48. Department of Mines national resources.47 Its fertile soils “Dutch disease”– where revenues from – Ministry of Energy and Mines Lao PDR, 2012, support large forestry and agricultural resource extraction strengthen the national “Mining activities in Lao PDR.” systems, while covering deposits of gold, currency, raise the prices of other domestic 49. Lao PDR spans 236 copper, zinc, lead, tin, iron, aluminium, products like consumer products, handi- square kilometres. That 48 is close to the 244 square potash, limestone, gypsum and coal. crafts and tourism, and reduce their ability kilometres of the United 52 Kingdom. Lao PDR has The country’s surface area is comparable to compete on international markets. a population of 7.0 mil- th lion. The population of to that of the United Kingdom, but has The 8 Five-Year National the United Kingdom is 49 at 64.4 million, nearly about ten times fewer inhabitants. Socioeconomic Development Plan 10 times larger. Central The metabolic profile of a country expresses the country’s ambition to Intelligence Agency, The World Factbook. consists of the typical patterns of material graduate from its current least developed 50. World Bank, “Energy and energy flows and characterizes the country status by 2020, and become an intensity level of prima- 7 » p.15 ry energy (MJ/$2011 PPP interaction between nature and society. upper middle-income country by 2030. GDP), Overview per coun- Lao PDR has an agrarian socio-metabolic Graduation from least developed country try”, 2016. 51. Central Intelligence profile with a low population density and status requires that the country increases Agency, The World low material and energy use per capita.50 It its scores on Gross National Income Factbook. 52. Jayant Menon and has a relatively large rural population; 73 (GNI), the human assets index (nutrition, Peter Warr, “The Lao Economy: Capitalizing per cent of its work force is concentrated health, education and literacy) and the on Natural Resource in the agricultural sector.51 This sector economic vulnerability index.56 With a Exports”, Asian Development Bank provides 80 per cent of the population GNI per capita of US$1,740 in 2015, Economics Working Paper Series, No 330, with a source of income, despite a Lao PDR already meets the graduation January 2013. 52 declining contribution to GDP. The threshold on income, but still falls short 53. UN Environment, “Science and da- extraction of ores and minerals mostly on the human assets and economic ta for people, Natural 57 Resources: Resource serves industries in surrounding coun- vulnerability indexes. Circular economy Efficiency Indicators”. tries, which have a more industrialized strategies can support the country’s 54. The Observatory of Economic Complexity, profile. The revenues from these exports graduation by decreasing its dependence “The Atlas of Economic Complexity, Mapping are altering the Laotian economy, and can on extracted and imported resources. paths to prosperity: Laos”. accelerate its transition towards a more Most of the poverty is concentrated in 55. In 2014, 9.4 per cent industrialized profile. rural areas.52,58 Tackling rural poverty of GDP came from forest rents and 9.0 per cent Between 2004 and 2010 the domestic is also where the most potential lies for from mineral extraction. World Bank, Lao PDR extraction of resources, excluding water, improving scores on human assets and country data. increased from 17 to 49 million tons economic vulnerability. This argues 56. UN-OHRLLS, “Criteria 53 for Identification and per year (Figure 2). During these years, for a focus on rural circular economy Graduation of LDCs”, increases in the extraction and export opportunities. 2017. 57. UN Economic of wood, metal ores and refined copper The ambition of Lao PDR is to and Social Council, Official Records 2015 were the main drivers behind economic combine “sustainability of development - Supplement No. growth.54 The extraction rates exceed the by emphasizing economic development 13 Committee for Development Policy - country’s ability to replenish reserves; 18 which should include cultural and social Report on the seven- teenth session - (23-27 per cent of its Gross Domestic Product progress, natural resource preservation March 2015). (GDP) is made up of resource rents from and environment protection, with 23 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

Figure 2: Resource extraction and GDP in Lao PDR

58. H. Coulombe and widened regional and international inte- Slowing the rate of absorption of resource revenues others, “Where are the can reduce the symptoms of Dutch disease and poor? Lao PDR 2015 31 » p.17 Census-based Poverty gration”. The country welcomes the financially support this transition. An example is 52 » p.17 Map: Province and revenues from the export of raw resources, the Sovereign Wealth Fund in Norway. This District Level Results”, fund invests Norwegian oil proceeds in companies Lao Statistics Bureau, and the jobs which mining activities create Centre for Development abroad, and the government can draw down no and Environment, The in rural areas. Diversifying job opportuni- more than the fund’s expected annual returns.60 World Bank Lao PDR Lao PDR is committed to invest revenues from County Office, The World ties away from typical subsistence farming Bank, 2016. resource extraction in education, health and basic would make the rural economy more infrastructure. This contributes to the graduation 59. Ministry of Industry ambition from least developed country status. and Commerce, Lao resilient. Such diversification should go PDR,2012, Trade 59 and Private Sector beyond hydropower and mining alone. Development Roadmap. The government confirmed during the The emerging private sector in Lao PDR 60. “How not to spend it”, The Economist, 24 workshop, that it is its ambition to develop is an opportunity for the development and September 2016. the mineral, forestry and agricultural adoption of circular economy strategies. resources, and tourism potential. When The country has been open to private sustainably managed, these sectors provide sector development since 1980. It is hoped a sound basis for both short and long term that the private sector will increase the growth.31 » p.17 country’s labour productivity and invest in its human resources.59 The concept of a Box 5: Norwegian Sovereign Wealth Fund circular economy should be the paradigm which guides that effort. The country’s development ambition asks for a new direction in which economic growth and development is decoupled from resource extraction. Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 24

61. Forest Trends and 1.2 Resource demand from stopped issuing new mining concessions, DFID, “Timber Markets and Trade between neighbouring countries shifting its attention to forcing compli- Laos and Vietnam: ance of substandard mining operations a Commodity Chain Analysis of Vietnamese Located on the crossroads of three major with environmental standards.62 Driven Timber Flows”, 2010. Asian economies: China, Vietnam and However, compared with the 62. Xinhuanet, “Laos Thailand, Lao PDR is surrounded by large surrounding countries, the adoption of to continue suspen- sion of mining conces- and demanding markets. It serves these environmental legislation is slow and sions”, July 2015. Radio 63 Free Asia, “Pollution mostly with the extraction and export enforcement is weak. The moratorium From Copper Mining in Northern Laos Destroying of raw materials, like metal ores and on timber exports is an example of legisla- Local Livelihoods”, 24 wood. This causes landscape degradation, tion which faces enforcement challenges.64 July 2015. 63. Government of deforestation, biodiversity loss and, due to This attracts economic activities where Lao PDR, “Strategic the chemicals used in the metal extraction a competitive advantage can be gained framework for national sustainable develop- process, surface water pollution. from running industrial operations below ment strategy for Lao PDR”, Water Resources In agriculture, contract farming is international environmental standards. and Environment Administration, 2008. another example of natural resource and The objective of environmental policy 64. Radio Free Asia, asset use, with low added value for the development could go beyond bringing “New Lao Prime Minister Issues Ban on Timber Laotian economy. In the north, Chinese these operations within environmental Exports”, 17 May 2015. investors rent land from farmers and limits. When building on a vision of a 65. Mekong River mobilize Chinese labour and resources circular future, it could even help com- Commission. 66. ASEAN, available to produce agricultural products for the panies become circular. Promoting such from: http://asean.org/. Chinese market. The forestry sector on a vision can attract innovative foreign the border with Vietnam also serves the investors to Lao PDR; investors to whom Vietnamese market, while employing sustainability is a moral business principle Vietnamese labour for the extraction and extending beyond compliance with export of raw wood.61 This puts the coun- environmental regulations. try on a development path which creates Lao PDR must cooperate with its short-term revenues but compromises bordering countries when carving out a long-term development with declining long-term development pathway which ore grades, deforestation, soil erosion and relies less on virgin resources. Several surface water pollution. cooperation frameworks with that In response, the government of Lao objective are already in place. One of these PDR has taken bold measures to keep the is the Mekong River Commission. This country on a sustainable development commission focusses on resource use pathway. In a moratorium from May with the objective “to jointly manage the 2016, it banned the export of logs, timber, shared water resources and the sustainable processed wood, roots, branches, and development of the Mekong River.”65 Lao trees. Production forests must submit PDR joined the Association of Southeast forest management plans and project Asian Nations (ASEAN) 66 in 1997. This developers are no longer allowed to use Association promotes cooperation and timber to co-finance infrastructure devel- economic integration with all neighbour- opment. Another example of bold policy ing states except China. “ASEAN Plus development, is that the government Three” was founded to further integrate 25 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

67. ASEAN, available from: http://asean.org/ and improve ties with China, Japan and high on the agenda within many OECD asean/external-relations/ 67 asean-3/. South Korea. countries, it is important that Lao PDR China is important for the develop- understands its position within these 68. De Groene Zaak, “Circular Economy ment ambitions of Lao PDR. The Chinese international value chains. This is a Promotion Law”, n.d. government adopted a Circular Economy condition for ensuring that industries 69. L. Leebouapao, S. Insisienmay and V. Promotion Law in 2009. It set the objec- which rely on foreign markets, secure Nolintha “ASEAN–China Free Trade Area and the tive to improve resource efficiency by 15 themselves a place at the table where Competitiveness of Local Industries: A Case Study per cent by 2016 and used the concept as the circular future of these markets of Major Industries in the 68 70 Lao People’s Democratic a development model. For some sectors is designed. Republic”, ADB Working paper series on Regional in the Laotian economy, cooperation with Lao PDR communicated an ambitious Economic Integration No. 98, July 2012. China is a precondition for important mitigation action plan before the Paris steps to circularity. An example is climate negotiation round in 2015. It 70. An example is the circular textiles initiative removing certain trade restrictions. seeks support with exploring innovative in the Netherlands. 67 per cent of European im- While some sectors benefit from import emission reduction avenues, to comple- ports from Lao PDR are textiles. tariffs like wood processing and cement, ment its current efforts on expanding

71. United Nations motorcycle assembly has fewer concerns renewable energy, electrifying rural areas, Framework Convention 69 on Climate Change, over international price competitiveness. increasing forest cover and reducing “Intended Nationally 71 Determined Contribution, On the contrary, this sector would transport emissions. Circular economy Lao PDR”, 2015. benefit from low-cost reverse logistics strategies are estimated to be able to for remanufacturing. deliver significant emission reductions in OECD countries.10 » p.15 They can do just 1.3 International commitments and the same in Lao PDR. Since the current economic integration emission level per capita in Lao PDR is already far below OECD levels, mitigation Circular economy strategies provide action in Lao PDR is mostly about main- practical implementation options which taining a low-carbon economy alongside respond to a range of development economic growth, rather than reducing ambitions of Lao PDR. A circular the country’s current carbon footprint. economy will lead to a more resilient The Sustainable Development Goals society, less vulnerable to changes in (SDGs) guide the 2030 Agenda for devel- commodity prices or availability and with opment. Lao PDR is very committed to a smaller carbon footprint. This is an progress on the SDGs and the it is the first immediate opportunity for Lao PDR, but country which defined a country-specific also requires that the country responds 18th SDG, which is “Lives saved from adequately to circular economy ambitions Unexploded Ordnance”. The following in countries with which it maintains SDGs can inform priority setting for economic ties. circular development: The economy of Laos is strongly integrated with the surrounding countries • SDG 1 No poverty: Lao PDR has halved and relies on supply chains which extend its national poverty rate over the past to consumers and producers in other decade, from 46 per cent in 1992 to 23 continents. With the circular economy per cent in 2015. Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 26

Figure 3: Import and export data on major resource types and related products

Trade balance US$million

Import (USD) Export (USD)

• SGD 2 Zero hunger: 18.5 per cent of cially Vientiane, the capital, 72. UN in Lao PDR, “SDG Kickoff”. the population in Laos today is still is growing quickly, with challenges undernourished. including rising inequalities • SDG 6 Clean water and sanitation: 24 and sanitation. per cent of Lao PDR’s population are • SDG 12 Responsible consumption and without safe water. production: 76 per cent of all house- • SDG 7 Affordable and clean energy: Laos holds in Laos grow rice. 99 per cent has a low rate of energy consump- of agriculture sector workers are in tion and a relatively low population vulnerable employment. density, a good starting point for • SDG 13 Climate Action: Lao PDR was sustainable use of energy. hit by 21 floods and storms between • SDG 8 Decent work and economic growth: 1990 and 2015, with the more severe 70 per cent of employed people in ones affecting over 500,000 people.72 Laos work in the agriculture or fishery sector. 1.4 Sector profiles • SDG 9 Industry, Innovation and infrastructure: How can Laos trans- Strategic priorities for sustainable devel- form itself from a subsistence opment of Lao PRD lie with agriculture farming society into an industrialized and food security, eco-tourism, renewable country, boosting rural productivity energy, sustainable mining and sustainable and resilience? transport. Products like timber, textiles, • SDG 11 Sustainable cities and communi- minerals and coffee are of strategic ties: Migration to urban areas, espe- 27 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

Table 1: Sectors and industries and the most Sector or industry Main materials relevant materials used or produced Mining Metals, ores

Manufacturing (vehicles only) Vehicles and vehicle parts

Forestry Wood, rubber, paper

Agriculture Vegetables, meat, coffee, tea, tobacco

Construction Cement, lime, stone, iron bars

Textiles Fibres, leather, apparel, headwear, footwear

Power and energy Electricity, fossil fuels

Waste All resource categories, no data on cross-border trade of waste

Tourism All resource categories, notably services

importance for trade development, export The trade balance in metals is promotion and market liberalization.6 » p.14 negative in monetary terms (Figure 4). An analysis of cross-border resource The value of copper and ores exports flows in Lao PDR, shows eight major is US$2.3 billion below the value of the resource categories which are internation- import of vehicles and articles of iron ally traded (Figure 3). Some of these, like steel and aluminium.55 » p. 26 In reaction, agricultural products, forestry products the government aims to attract process- and textiles and fibres, can be directly ing industries, to be able to export higher linked to a sector or industry. Other added-value products. The 8th five-year resources are used in more than one plan also aims to strengthen the metal sector or for certain products it is unclear smelting industries, notably iron, lead, whether they are related to production aluminium, zinc, and gold. 31 » p. 17 and assembly, or only consumption in The impact of the mining sector on Lao PDR. Following the development the natural resource base of the country priorities from the Laotian government, is a concern and the government plans to the sector profiles cover eight sectors reduce the discharge of waste, chemicals or industries with high relevance to the and toxic and hazardous substances in Laotian economy. These sectors are rural areas. Both mining and hydropower listed in Table 1. development support the objectives of job The mining industry has been the creation, economic diversification in rural driver behind recent export-driven eco- areas and infrastructure development. nomic growth in Lao PDR. Its contribution The concern is their adverse impact on to national GDP grew from 0.5 to 10.3 per forest and water resources.31 » p. 17 cent over the period 2002 to 2011.49 » p. 26 Another challenge facing the mining The government has designated mining as sector is to ensure long term income for a priority and a driver for local community local communities. People value jobs development and poverty alleviation. which remain after the mining operation Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 28

Figure 4: The trade balance of metal products and materials

Trade balance US$million

Import (USD) Export (USD)

73. Ministry of Energy has been terminated and fear being is US$1,9 billion. Mostly to Vietnam and Mines, “Utilizing mining and mineral resourc- left with a deserted, barren mining and China. Forestry operations in Lao es to foster the sustainable development of the landscape. Another challenge is avoiding PDR range from well-managed and Lao PDR”, 2011. UNDP and UNEP, “Economic, Dutch disease, whereby the revenues sustainable plantations to uncontrolled Social and environmental from resource extraction appreciate the illegal logging. Deforestation alone impacts of investments in mining”, Poverty- national currency and undermine the created CO emissions of 42.7 million Environment Initiative 2 (PEI) Lao PDR Issues 73 Brief, 08/2010. competitive position of other industries. tons of CO2e out of a total of 43.8 million

74 nd The industry, tons of national CO2 emissions in 2000. 74. 2 National manufacturing Communication Lao PDR, other than textiles which is discussed The added value of the sector is under- page 33. separately, is concentrated on vehicles developed, since the logging operations 75. World Wildlife Fund, “Lao Government aims to and electronics. Import and export attract Vietnamese labour and most restore forest cover to 70 statistics in Figure 4 show large imports wood processing takes place in Vietnam. percent by 2020”. of electronic equipment, vehicles and Also, illegal logging remains a concern vehicle parts. Twelve vehicle assembly and impedes improving circularity in the lines in Vientiane import motorcycle forestry sector. components and assemble them for the The government aims to reduce national market. Since all components illegal logging with a moratorium on are imported, the added value to the the export of wood. This is a vital step Laotian economy is low. towards protecting natural assets and The forestry sector is the largest increasing forest cover. Another gov- source of exports both in volume and ernment aim is to increase forest cover monetary terms (Figure 5). The net by 8.2 million ha, to 70 per cent of the export value of rough and sawn wood country’s surface, by 2020.31 » p. 17, 75 29 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

Figure 5: The trade balance of forestry and agricultural products and materials

► 1970 Trade balance US$million

Import (USD) Export (USD)

Agriculture provides a source production with processing and market of income to about 80 per cent of the demand. Overproduction in some population and is a potential lever to regions conflicts with the national alleviate rural poverty. Its development objective to increase yields.31 » p. 17 The aligns well with the national objective distribution issue is also evidenced by of stepping away from resource-driven the combination of local overproduction growth by tapping into national forestry and the food and nutrition insecurity in and agriculture resources. On the other some of the south-eastern and northern hand, the government aims to make rural regions of the country.55 » p. 26 areas more resilient “by increasing the The construction sector benefitted ratio of non-agricultural sectors”.31 » p. 17 from a boom as resource extractive The sector struggles with coordinating industries started pushing the national Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 30

Figure 6: The trade balance of construction materials and minerals

Trade balance US$million

Import (USD) Export (USD)

76. USGS, “2012 Minerals GDP upwards; 35 per cent of govern- includes US$46 million raw iron bars Yearbook – Laos” [ad- ment investments go into the construc- which can be used for enforced concrete. vance release], “2013 Minerals Yearbook – 31 » p. 17 tion of roads and offices. The textiles industry stands out Laos” [advance release]. The construction sector is expected for its positive trade balance (Figure 7 ). 77. Factsheet Laos - Lina Stotz - Facts on Laos‘ to continue growing. For the Kunming- In 2015, it exported higher added value Garment Industry. Vientiane railway (also referred to as the garments while importing fibres, creat- Vientiane–Boten Railway Project) alone, ing a positive trade balance of US$111 an estimated 3.6 million tons of cement is million per year on top of the US$88 needed. This exceeds the national produc- million worth of imported fibres.55 » p. 26 tion capacity which stood at 1.5 million Its 100 to 120 factories are concentrated tons/year by 2014.76 Expanding cement in the Vientiane and Savannakhet production is one of the activities foreseen regions.77 The textiles industry is in the 8th five-year plan.31 » p. 17 internationally oriented. For example, Figure 6 shows the import and 67 per cent of the import value of the export of construction materials and EU from Lao PDR is clothing.55 » p. 26 In minerals. When looking in more detail acknowledgement of its importance, the into construction materials, Lao PDR 8th five-year plan mentions the textiles is a net importer. For example, the salt industry as a priority within specific includes net imports of US$94 million industrial zones.31 » p. 17 worth of Portland cement and US$1.7 The power and energy sector million worth of bricks. Glass includes of Lao PDR is dominated by export of US$149,000 worth of insulating glass and hydropower and import of fossil trans- 31 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

Figure 7: The trade balance of textiles and fibres

Trade balance US$million

Import (USD) Export (USD)

78. World Food Programme, Food and port fuels. The country installed 6.4 GW tial and electrification of rural areas are nutrition security atlas of hydropower capacity in parallel with national development priorities.31 » p. 17 Lao PDR, 2013. increasing the household electrification Lao PDR imports all its transport 79. Japan International Cooperation Agency, rate from 16 per cent in 1995 to 92 per fuels (Figure 8 ) from Thailand and Ministry of Public Works 78 and Transport, (JICA, cent in 2016. This is only a fraction of Vietnam. The value of imported transport MPWT) “The preliminary works for the technical its 26 GW potential. The country has fuels was US$785 million in 2015 and cooperation on low-emission transport system a lower use of primary energy per unit is expected to reach US$1,430 million in Lao PDR (LETS EV)”, 2014. JICA, MPWT, “Basic of GDP than its neighbours and a low by 2020 and US$2,296 million by 2030. Data Collection Study 50 » p. 26 on Low-Emission Public national power demand. Thus, Lao The country has the ambition to produce Transport System in Lao PDR”. 2012. PDR can afford to export over 80 per biofuels while some development partners

80. Engineering and cent of its power mostly to Thailand, consider promoting electric vehicles in Consulting Firms creating a revenue of US$533 million parallel.79 To satisfy a demand for liquid Association, Japan, Japan Development in 2015. To provide electricity to some fuels, Lao PDR intends to produce bio- Institute (JDI) Japan Bio- Energy Development remote border areas, Lao PDR purchases fuels from plastics and used vegetable oil Corporation (JBEDC) Lao Bio-Energy US$170 million worth of power from but also develop the cultivation of energy Corporation (LBEDC) 55 » p. 26 31 » p. 17 JDI, “Decentralized neighbouring countries. crops like oleaginous fruit trees. Biofuel Supply Chain Development Study in The reservoirs have a major impact Some estimates show that agricultural Lao PDR - Application of Biofuel Supply Chains on the flow of resources, ranging from engines could run 100 per cent on biofuels for Rural Development and Lao Energy Security extending the retention time of the by 2020, and road vehicles could use 20 Measures”, Study Report, 80 March 2008. water, to altering the flow of sediments per cent blended biofuel by 2020. These and water-borne substances. Further activities would put additional pressure on development of the hydropower poten- scarce land resources, which are already Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile 32

Figure 8: The trade balance of plastic and chemical products and materials, mineral fuels and power

Trade balance US$million

Import (USD) Export (USD)

81. Kongmeng Ly, destined to provide space for the develop- vegetables and 19 per cent wood Henrik Larsen, Nguyen Van Duyen, 2013 Lower ment of forestry, agriculture, hydropower, and cuttings. Mekong Regional Water Quality Monitoring Report, mining and tourism. The challenge here The waste sector in the larger MRC Technical Paper No. is to find development directions which cities of Lao PDR is targeted by several 51, 2015, Mekong River Commission. could respond to the need for biofuel development organizations which are development without putting further exploring ways to improve waste collec- pressure on available land. tion, generate fuels from plastic waste Waste sector. The net imports of and improve composting. Apart from plastics into Lao PDR cost over US$150 municipal solid waste, the food processing million per year (Figure 8).55 » p. 26 On and mining industry have an important the other hand, plastics make up 12 per role in protecting surface water quality. cent of the waste generated from urban The water quality of the Mekong river is a centres. A similar imbalance is reflected clear indicator for the success of national in the flows of nutrients and fertilizers. water discharge policies and international While Lao PDR imports a net US$ 40 treaties on river water quality. The million worth of fertilizers, and the same Mekong river shows an increase in the value of organic chemicals, its municipal concentration of phosphorous 81 and waste consists of 40 per cent food and organic matter, resulting in a decline in 33 Circular economy strategies for Lao PDR Step 1: The socio-metabolic profile

Table 2: Waste composition in the larger cities Waste composition Weighted average (%) Vientiane, Luangprabang, Savannakhet, Champasak Food, vegetables 40

Wood, grass, trees, leaf 19

Paper 6

Plastic 12

Glass 5

Metal 2

Textile 2

Other 14

82. World Bank, Lao PDR the dissolved oxygen which supports graduate from its least developed Environment Monitor 2014. aquatic life.82 country status.83 83. UNEP, Towards a Green Economy, represents 5 per cent Tourism is a national priority and Pathways to Sustainable Tourism Development, “Tourism, of the world GDP. It contributes to the 8th five-year plan sets a target of six investing in energy and resource effciency”, 2011. around 5 per cent of global greenhouse million tourists by 2020, and seeks to gas emissions while offering about 6-7 encourage a longer average stay of more per cent of global employment. In Lao than ten days per head. The sector is set PDR, the sector is designated as one of to generate a minimum annual revenue of the main levers to lift the country out of US$ 953 million, compared with US$406 its least developed country status. The million in 2011, making it amongst the tendency towards farther travel over largest export sectors. The “promotion shorter time periods, increases transport and development of eco-and cultural tour- emissions from tourism. Improving ism through implementing community energy and resource efficiency is based tourism projects” is one of the stated expected to reinforce local hiring and objectives for this sector, along with sourcing, and might help preserve local the promotion of “eco-tourism facilities cultures. Tourism is also a sector where in forests and biodiversity-rich areas”. a relatively high share of the income and This resonates well with the objective revenues accrue to poor households. it to divert “more labour from rural agricul- can thereby contribute to progress on ture to work in the industrial and the human assets and economic vulner- service sectors”.31 » p. 17 ability indexes, and help the country

Step 2: Mapping priority sectors, industries and resources

Resource flows have a spatial component which tells where development opportunities and challenges lie, or where ambitions overlap. With respect to the development priorities, four maps show where raw material extraction, agriculture and energy production have an impact on the landscape, creating both opportunities or challenges. Since tourism is a sector where the government expects a lot of growth, a map with tourism potential and challenges has been added to identify development hotspots. A lot of the development ambitions of Lao PDR require land, whether it is expansion of the mining sector, increasing agricultural produce, reforestation, the production of biofuels or the expansion of infrastructure. In addition, they show several opportunities to position Lao PDR as a hub in the flow of resources in Southeast Asia. If it takes advantage of these opportunities, the country can make best use of current and future cargo infrastructure, while substituting some of the import of high-value products and materials, with domestically produced alternatives. Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, 36 industries and resources

2.1 Selected maps The energy analysis map, therefore shows hydropower development The development priorities for Lao together with water flows and power PDR are rural development and eco- infrastructure, looking for ways in which nomic diversification, tourism, mining, the expanding hydropower reservoirs hydropower, reforestation, assembly and can support circular development in industrial development, and clean water. other sectors. The spatial aspect of these priorities is Tourism is an interesting devel- explored in a series of maps which show opment priority, since advances in the opportunities and threats for the parallel circularity of the tourism sector can spill development of national ambitions. over to other sectors. Its international The first map depicts the resource exposure can make tourism a frontrunner flows. Most raw materials extracted and in the adoption of circular concepts. The produced in Lao PDR are exported. tourism analysis map, therefore, has a This resource analysis map connects sectoral focus and looks at the locations the centres of production and processing of interest for tourism, the main points of of wood, food, minerals and metals, entry, accommodation, spatial opportuni- with product destinations in Lao PDR ties for tourism development, while also and abroad. It looks for opportunities to depicting the developments which pose close the loop, and investment opportu- a threat for tourism, or where tourism nities to make the linear outflow of raw poses a threat to vulnerable landscapes materials circular. and nature. The agriculture analysis map The choices made here and the infor- explores the imminent land-use conflict mation which has been selected for each which is embedded in the combination of map represent a certain angle of looking development ambitions which Lao PDR at resource use in Lao PDR. Many others has. It looks for alternative production remain unexplored but deserve attention sites for organic matter which can fuel as well. The data which has been collected a bio-based economy. can support additional analysis tailored to The third map looks at Lao PDR’s a specific industry, resource type, supply ambition to become the battery of chain, national development ambition, Southeast Asia. Expanding hydropower specific city, province or industrial area, has a major landscape impact, while also or even a specific opportunity. altering the flow of rivers and sediments. 37 Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, industries and resources

2.2 Resources analysis

Mapping resource flows in Lao PDR This raises the question whether some confirms that there is a net outflow of of the imports can be substituted with resources. In monetary terms, the flow national products. When building an of metals, mostly copper and gold to industry in Lao PDR which uses domestic Thailand and China, is large. In terms resources and processes these for the of volume however, the export of raw domestic market, it might in future timber is the largest cross-border resource also be feasible to replace the export flow. While exports are mostly of raw of raw material with higher added materials, imports are rather higher-added value products. value or refined products like electronic equipment, vehicles, petrol and cement.

► Figure 9: Resources analysis

Transportation Export import products Energy network Land-use agricultural lands international roads Wood planned thermal power plant national roads Forestry railroad to China Plastic materials and products Hydropower station Planned / Existing Special Economic areas Mekong river Cement, construction materials 1- Savan-Seno Special Economic Zone border crossing Meat and fish Substation Planned / Existing 2- Boten Beautiful land Specific Economic Zone Mining areas Rubber largest Hydropower station 3- Golden Triangele special Economic Zone gas Fertilisers Existing 115 kv TL Salt Pesticides 4- Vientiane Indusrial and Trade area Existing 35, 22 kv TL Minerals Fossil transport fuel 5- Saysetha Development Zone Existing 35, 22 kv TL gold Electricity 6- Phoukhyo Specific Economic Zone planned 115kv D/CTL natural stones Copper 7- Thathuang Lake Specific Economic Zone Industries General Copper ore 8- Longthanh- Vientiane Specific Economic Zone Cement, gypsum, concrete, lime Exploitation Textiles 9- Dongphosy Specific Economic Zone Textiles Export import products amounts Motorcycles 10- Thakhek Specific Economic Zone Vehicles > $ 10 m Vehicle parts Plastics and(bio-based materials) $ 10 m - $1 m Other vehicles $ 1 m - $ 500 K Machines $ 500 K - $ 100 K Vegetable products, foodstuffs $ 100 K< Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, 38 industries and resources 39 Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, industries and resources

2.3 Agriculture analysis

Food production in Lao PRD is concen- The food processing industries are a trated in the south and in the area around major source of organic residue. Four Vientiane. The presence of Unexploded large sources of biomass in Lao PDR are Ordnance (UXO) impedes access to sawdust, rice husks, corncob and bagasse. agricultural lands in the west and south- These four alone represented 1.3 million west of the country, aggravating land tons in 2007.30 » p. 17 The energy potential scarcity. This is a challenge for the biofuel of these resources needs to be balanced ambitions of the Laotian government. against using biomass as a material By 2014, Lao PDR had 33,000 ha of oil resource. Since Lao PDR produces a vast seed plantations but significantly larger amount of electricity, while importing areas are needed for biofuels to be able plastics and construction materials, the to substitute a significant share of the latter might be the preferred option. national fossil fuel imports.

► Figure 10: Agriculture analysis

Transportation Export import products Energy network Special Economic areas international roads Wood planned thermal power plant 1- Savan-Seno Special Economic Zone national roads Plastic materials and products 2- Boten Beautiful land Specific Economic Zone railroad to China Hydropower station 3- Golden Triangele special Economic Zone Mekong river Cement, construction materials Planned / Existing border crossing point Meat and fish Substation 4- Vientiane Indusrial and Trade area Rubber Planned / Existing 5- Saysetha Development Zone Mining areas Fertilisers largest Hydropower station 6- Phoukhyo Specific Economic Zone gas Pesticides Existing 115 kv TL 7- Thathuang Lake Specific Economic Zone Salt Fossil transport fuel Existing 35, 22 kv TL 8- Longthanh- Vientiane Specific Economic Zone Minerals Electricity Existing 35, 22 kv TL 9- Dongphosy Specific Economic Zone gold planned 115kv D/CTL natural stones Copper 10- Thakhek Specific Economic Zone UXO Copper ore General air bombardment (1965- 1975) Textiles Exploitation UXO impact in villages Motorcycles Export import products amounts herbicide missions Vehicle parts > $ 10 m Land-use Other vehicles $ 10 m - $1 m agricultural lands Machines Forestry $ 1 m - $ 500 K Vegetable products, foodstuffs $ 500 K - $ 100 K $ 100 K< Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, 40 industries and resources 41 Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, industries and resources

84. ASEAN Centre for Energy. 2.4 Energy analysis

The Laotian power grid is interconnected ASEAN has a Power Grid Consultative with surrounding countries. The country Committee which aims to connect power exports power mainly to Thailand and supply and demand in the Southeast Asia is negotiating offtake contracts with region. New connections are planned Malaysia and Singapore. It is also a transit between Lao PDR and Thailand, Vietnam country for power from China destined and Cambodia, while other power lines for Thailand. In addition, in border also connect Brunei and the Philippines to regions, neighbouring countries some- the mainland grid. These plans strengthen times supply power to remote areas which the ambition of Lao PDR to be the battery are not yet connected to the Laotian grid. of Southeast Asia.84

► Figure 11: Energy analysis

Transportation Export import products Energy network Special Economic areas international roads Wood planned thermal power plant 1- Savan-Seno Special Economic Zone national roads 2- Boten Beautiful land Specific Economic Zone railroad to China Plastic materials and products Hydropower station Mekong river Cement, construction materials Planned / Existing 3- Golden Triangele special Economic Zone border crossing point Meat and fish Substation 4- Vientiane Indusrial and Trade area Rubber Planned / Existing 5- Saysetha Development Zone Mining areas Fertilisers largest Hydropower station 6- Phoukhyo Specific Economic Zone gas Existing 115 kv TL 7- Thathuang Lake Specific Economic Zone Salt Pesticides Existing 35, 22 kv TL Minerals Fossil transport fuel 8- Longthanh- Vientiane Specific Economic Zone Existing 35, 22 kv TL Electricity 9- Dongphosy Specific Economic Zone gold planned 115kv D/CTL natural stones Copper 10- Thakhek Specific Economic Zone Industries General Copper ore Cement, gypsum, concrete, lime Exploitation Textiles Textiles Export import products amounts Motorcycles Vehicle parts Vehicles > $ 10 m Plastics and(bio-based materials) $ 10 m - $1 m Other vehicles Machines Land-use $ 1 m - $ 500 K agricultural lands Vegetable products, foodstuffs $ 500 K - $ 100 K Forestry $ 100 K< Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, 42 industries and resources 43 Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, industries and resources

2.5 Tourism analysis

Lao PDR receives 4.2 million tourists within or close to natural parks. This per year, of which 2.0 million come from requires a tourism concept which pre- Thailand, 1.0 million from Vietnam, 0.5 serves the natural qualities of the land- million from China and 0.3 million from scape and its vegetation and wildlife and Europe and North America. Most of the can also help diversity rural economies tourist highlights are in the southern and and help lift people out of poverty. central parts of the country, and often

► Figure 12: Tourism analysis

Transportation Buddhist sites Natural sites international roads national protected areas national roads paguda lake and reservoir railroad to China temple Mekong river stuppa waterfall border crossing point khone fall trail roads Buddha’s foot mountain or karst Airport luagphrabang dinosaur international Airport (world heritage list) cave flight connections vientaine pak ou caves (buddhist) that luang guesthouses (%) xamonva caves Hotels (%) Historic sites elephant camp prehistoric sites tourist attractions area Total number of beds ancient fortified town pre Buddhist sites 3.145 kilns plain of jars 930 wat phou attractions sites 24 Circular economy strategies for Lao PDR Step 2: Mapping priority sectors, 44 industries and resources Circular future

Step 3: Circular economy strategies

Existing industries in Lao PDR can make better use of recycled or bio-based materials. When positioning the country as a hub for secondary resources, and developing reverse logistics for national products, national industries can grow without increasing imports of half-fabricates or raw materials. Examples are the recovery of end-of-life motorcycles or vehicle parts in the motorcycle manufacturing industries in Vientiane, and the use of recycled and sorted fibres in the textiles industries in the Savannakhet region. Finally, technological advancements in the use of bacteria to extract valuable metals represents an opportunity for the safe and efficient recovery of metals from e-waste. The second strategy aims at substituting the import of carbon-intensive construction materials like steel and concrete with domestically produced cross laminated timber and bamboo. International experience is being gained through erecting multiple storey buildings with these two materials. Circular procurement by the government and using circular construction materials in the tourism sector can make this opportunity part of broader ambitions for sustainable building standards and eco-tourism. The third strategy focusses on overcoming the overlap in land-use ambitions. The hydropower reservoirs represent a large underused asset with potential for tourism and fishing. It can also help substitute imports with the production of protein, fertiliser and even biofuels by farming algae. Algae also help improve water quality. Circular economy strategies for Lao PDR Step 3: Circular economy strategies 48

• Consider the use of bioleaching to extract metals ▲ Figure 14: Tailor-made 3.1 Circular manufacturing, textiles and from electronic waste or e-waste. motorcycles with use of cores waste management: cores, recycled fibres • Use idle inbound cargo transport capacity for reverse logistics of end-of-life products and and bacteria materials.ambition.

Circular economy strategy Lao PDR exports large volumes of metal ores, forestry and agricultural products. Position and develop Lao PDR as a resource hub for recycling and remanufacturing. This net outflow of materials implies that there is idle transport capacity in Technologies the reverse direction. This reverse cargo • Extend the lifetime of motorcycles by recovering capacity is available at low cost and can and remanufacturing end-of-life motorcycles and be used for reverse logistics of end-of- motorcycle components. • Use new technologies to process and sort life products to stimulate the growth of end-of-life textiles and use these to substituted the Laotian recycling and remanufactur- imported virgin fibres. If needed, complement the available fibre residues with organic fibres. ing industries. 49 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

85. Prashanth Parameswaran, “China, The country is in the heart of motorcycle assembly in Vientiane with Laos to build $6 billion railway by 2020”, The Southeast Asia. This enables it to connect markets in China. This can also support Diplomat, 16 November supply and demand between the larger recovery of end-of-life motorcycles, or 2015. economies of Thailand, Vietnam, China their components, to undergo remanufac- 86. Syviengxay Oraboune, “Lao PDR’s and possibly Malaysia and Singapore. The turing and re-enter the market. Industrial Development Policy and Intermediate construction of a railway line between Figure 14 shows what remanufactur- Goods Trade”, in Mitsuhiro Kagami, ed., Kunming, a city with 6.6 million inhabit- ing of historic, classical motorbikes could Intermediate Goods Trade 85 in East Asia: Economic ants in south China, and Vientiane, the mean for both assembly and local retail deepening though FTAs/ EPAs, BRC Research capital of Lao PDR, will place Lao PDR on businesses. An ecosystem of suppliers, Report No.5, Bangkok Research Center, IDE- a major transport artery between China refurbishment industries, catalogue opera- JETRO, Bangkok, Thailand. and other countries on mainland and tors and store housing could position Lao maritime Southeast Asia (Figure 13 ). PDR as regional hub for cores. A collector 87. “Convert your classic car to battery power”, The The railway is another opportunity from China can find the unique missing Telegraph, 16 April 2013. for Lao PDR to develop remanufacturing, component for their precious classic recycling, assembly or packaging motorcycle; repair industries in Southeast industries which can add value to the raw Asia can find remanufactured vehicle materials and products which this new parts which last forever; and this is where railway is expected to transport. This a diversity of “typical Lao motorbikes” strategy can help to prevent Lao PDR can find their way into the local markets from becoming only a transit country, and tourism. with cargo flows creating little added Motorcycle remanufacturing becomes value. In this case, the low labour costs a vibrant industry, creating new jobs and in Lao PDR are a competitive advantage economic activity on the streets. Tourism since remanufacturing and recycling companies organizing trails and renting activities are often labour-intensive. out motorbikes and bicycles quickly catch The motorcycle industry has up on the trend, happy that Lao PDR has potential for remanufacturing. The twelve found a way to really distinguish itself in motorcycle assembly lines, concentrated the tourism market of Southeast Asia. in the Vientiane region, produce for On the back of developing reman- domestic and foreign markets. Their ufacturing industries, the conversion of added value to the Laotian economy is motorcycles to electric can help make limited since they rely on imported parts urban transport cleaner. Developing its and components. This can change by ambition as the battery of Southeast Asia, developing remanufacturing industries in Lao PDR can lead the labour-intensive Lao PDR and using idle transport capacity conversion of vehicles to electricity, for the reverse logistics.86 At the national taking away combustion engines as a scale this requires organizing the recovery prime source of air pollution in cities in and remanufacturing of end-of-life Lao PDR and surrounding countries.87 motorcycles and parts (also referred to The textiles industry can substitute as cores) from Lao PDR. The expansion its use of virgin fibres and fabric with of the Laotian railway network connects recycled textiles. The Laotian textiles Circular economy strategies for Lao PDR Step 3: Circular economy strategies 50

88. Available from: http:// industry mostly serves European fashion Cambodian and Thai textiles industries www.valvan.com/prod- 55 » p. 26 ucts/equipment-for-used- markets which are looking for a with raw materials. clothing-wipers/sorting-equipment/fibersort/. “closed loop textiles industry” where no Vientiane is attracting e-waste material is lost. Innovations like Fibresort 88 , 89. Available from: processing and recycling companies https://www.circle-econ- will enable sorting of the different fibre which is an industry that does not yet omy.com/fibersort-project-successfully-enters- types used in clothes.89 That will have appear in the official statistics. These phase-2-of-the-interreg- north-west-europe-nwe- implications for the Laotian textiles companies are attracted by shortcomings funding-programme/. industry. By adopting similar technologies in the regulation in Lao PDR on e-waste 90. The US$ 87.5 million is the value of the import in Lao PDR, the Laotian textiles industry processing and sometimes operate of cotton, knitted or cro- cheted fabric and man- can substitute the import of virgin outside the law. Since e-waste contains made staple fibres. fibres, with a value of US$87.5 million in a variety of toxic substances, this is both 91. Janya Sang-Arun and 55 » p. 17, 90 Krakanh Pasomsouk, 2015, with the import of low-cost an environmental and health risk. If Lao IGES, A guide for improving municipal solid waste end-of-life clothes. This will complement PDR has a competitive advantage for the management and promot- the over 2,000 tons of textiles waste which processing of e-waste it makes sense to ing urban organic waste utilization in Lao PDR, was estimated to be available within its formalize this sector 92 and support its IGES Working Paper No. SCP-2012-01, 2012. four larger cities as early as 1998.91 Current development while improving labour 92. I. Nnorom and O. figures probably far exceed that value. conditions, extraction techniques and Osibanjo, “Electronic waste (e-waste): Material When adopted in Lao PDR, the resource management. flows and management practices in Nigeria” Fibresort technology could position the Proper recycling of e-waste requires Waste Management, Vol.28, Issue 8, 2008, textiles industry as a recycling hub for design for disassembly and recycling, pp.1472–1479. the Southeast Asia region. Imported, and safe methods to recover and recycle low-value end-of-life clothes can then be materials. The extraction of metals present sorted, upgraded and supply the Laotian, in e-waste has technical parallels with the

► Figure 13: Remanufacturing and recycling opportunities

Transportation Industries Energy network international roads Cement, gypsum, concrete, lime planned thermal power plant national roads Textiles railroad to China Hydropower station Vehicles Mekong river Planned / Existing Plastics and(bio-based materials) Substation border crossing point Cassava suitability index trail roads Planned / Existing Moderate Airport larger hydropower reservoirs Low international Airport Existing 115 kv TL flight connections High Existing 35, 22 kv TL population concentrations Mining areas Existing 35, 22 kv TL gas >100 planned 115kv D/CTL Salt 100 - 50 Land-use agricultural lands Minerals 50 - 30 Forestry gold 30 < natural stones UXO General air bombardment (1965- 1975) Exploitation UXO impact in villages Food processing industries B-52 strikes (1965 - 1975) Coffee and tea herbicide missions Oil Sugars Tobacco 51 Circular economy strategies for Lao PDR Step 3: Circular economy strategies Circular economy strategies for Lao PDR Step 3: Circular economy strategies 52

93. Deepak Pant and extraction of metals from ores during the substitution, material cycling; modular Others, “Chemical and bi- ological extraction of met- mining process. Bioleaching is a technol- building; and asset sharing. Vientiane is als present in E waste: A hybrid technology”, ogy with benefits for both mining and experiencing a construction boom and Waste Management, Vol 93 32, Issue 5, 2012 pp.797- e-waste processing. It is an extraction these strategies should take a central 1058. method which makes use of bacteria rather position in supporting further growth, 94. Abhishek Kumar than hazardous chemicals, like arsenic or while using domestic rather than Awasthi, Xianlai Zeng and Jinhui Li, “Integrated bi- cyanide, for the extraction of copper, zinc, imported resources, maintaining a degree oleaching of copper metal from waste printed circuit lead, nickel, gold and silver from ores or of flexibility in the function of buildings board—a comprehen- sive review of approach- e-waste. It is an opportunity to reduce and safeguarding a national architectural es and challenges”, Environmental Science the environmental impact of the e-waste character. A very promising strategy is and Pollution Research, Vol. 23, Issue21, 21141- processing industries but also reduce the material substitution. In Lao PDR, 21156. And see also P. Kiddee, R. Naidu, and risk of severe water and soil by mining the use of bamboo and wood are very M. H. Wong, “Electronic waste management ap- industries. For the government, the ability good candidates. proaches: an overview”, of mining and waste processing industries The possibilities for the use of Waste Management, Vol. 33, Issue 5, May 2013, pp to adopt processing technologies which bamboo and wood as construction 1237–1250. 95 guarantee a clean material recovery materials are expanding. Stora Enso 95. Available from: http:// process,94 should be a precondition for is a Finnish company which sources www.storaenso.com. 96. Layne Evans, “Cross issuing a licence to operate. sustainable wood from plantations in Laminated Timber, Taking wood buildings to the Lao PDR. The company produces cross next level”, American 3.2 Circular construction materials laminated timber which is used for Wood Council, 2013. 97. Designboom, from forests: circular resorts to advance several-storey buildings and complex “Wooden skyscrapers: a roundup of tall timber ecotourism structures and arguably, offers higher buildings”, 2016. See also comfort and better aesthetics than Inhabitat, “Cross Laminated Timber”. Circular economy strategy high-carbon alternatives like enforced 98. Available from: http:// 96, 97 concrete would. The same is true www.circular-tourism. Substitute imported construction materials with 98 com/news/cole-compa- cross laminate timber and bamboo for bamboo. ny-creates-bamboo-co- coons-to-protect-la- Selecting circular construction os-wildlife/. Sectors materials, choosing an architecture Construction, forestry, tourism which allows for the building to serve different purposes and modular design, Rationale can become the basis for country-wide • Use cross laminated timber and bamboo to building standards. These standards replace imported concrete and steel as the prime construction materials which support could require considering landscape the construction boom in urban areas and features in building design, and prioritize expansion of tourist infrastructure. • The use of domestic resources, can preserve the use of nationally available building a sense of national identity in the architecture materials. They would acknowledge used in urban areas and touristic resorts. and expand on traditional construction • Pilot new building methods in the tourism sector and further elevate the circularity of the tourism methods while still allowing for a mod- sector, in line with the national ecotourism ern architecture. Circular procurement by the gov- There are four main circular strategies ernment of Lao PDR could stimulate the in the construction sector: material development of a circular construction 53 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

Figure 16: Diagram of circular resort design and operation

99. The Global Sustainable Tourism sector in the national and provincial of pristine nature, the ambition of the Council. capitals; 35 per cent of government tourism industry should strive to become investments go into the construction completely circular. 31 » p. 17 of roads and offices. Circular resort design requires that The tourism sector could be another the resource flows and stocks guide its early adopter of new building materials, as architecture and aims at full site restoration an important part of a broader ambition when the resort has reached the end of its to enhance the sustainability of eco-tour- lifetime or has become obsolete for other ism. The sector has a direct incentive to reasons (Figure 16). Local construction build and operate resorts while avoiding methods allow for small-scale approaches or minimizing their impact on natural which are common to ecotourism in Lao surroundings, resources and even culture. PDR. Such accommodation is relatively Furthermore, high-end and high-value easy to integrate into the landscape. It tourism is attracted by high standards becomes challenging when looking at the of sustainability. larger resorts which are planned in the Sustainable tourism is expected to Special Economic Zones. However, the grow six times faster than the sector-wide use of construction materials like wood growth rate.83 » p. 37 Certification by the and bamboo can help preserve a national Global Sustainable Tourism Council character and distinguish tourism in Lao (GSTC) allows companies and pro- PDR from large-scale resort development grammes to obtain recognition for their in surrounding countries. 99 greening efforts. Considering its impact During resort operation, circu- on the environment and the attraction larity may imply stepping away from Circular economy strategies for Lao PDR Step 3: Circular economy strategies 54

▲ Figure 17: Impression bureaucratic environmental management Operation of the resort can also of a circular resort systems, towards allowing a resort and be inspired by the way in which local its staff to be guided by a unique vision communities produce food, use water of circularity, which would also inspire and recycle food waste. Where they are 100. Ministry of its guests (Figure 17 ). This could include circular in essence, studying, documenting Agriculture and Forestry, Department sourcing food locally and recycling and applying these approaches in the of Agriculture, “Development Strategy of nutrients back to the land from which resort will provide experience with the Crop Sector 2025 and Vision 2030”, 2015. the food products originate. This could application at a larger commercial scale. 101. Asian Development build on the vision of Lao PDR for the This may allow for replication in other Bank, “Organic Crops 100 Help Small Farmers out crop sector, expertise from existing communities, which have already lost of Poverty in Lao PDR”, programmes to promote organic farming their traditional, nature-based approach June 2014. 101 102. See, for example: in Lao PDR, or experience from entre- to food production, house construction, http://www.laofarm.org/. preneurs which already connect organic water use, waste avoidance and nutrient agriculture with tourism.102 management. 55 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

Figure 18: Diagram of algae production in hydropower reservoirs

103. International When envisioning a resort in a rural dam and covers 450 km2. The reservoirs Hydropower Association, “Hydropower Status area in Lao PDR, local communities represent a large underused asset and host Report 2016” should be the main source of labour, and only some tourism and fishing activities. their lifestyle a source of inspiration. The ambition of Lao PDR to restore Rural communities in pristine areas of is forest cover to reach 70 per cent of the Lao PDR have long relied on locally avail- landmass, while also aiming to expand its able resources to sustain their community agricultural production, produce biofuels, and provide the construction materials, expand mining and hydropower activities. food and clothing which they need. Not This makes land increasingly scarce and all practices are sustainable, however. For points at the hydropower reservoirs as example, swidden agriculture is common a large, underused asset. practice in rural areas of Lao PDR and is Mobilizing this underused potential one of the drivers of deforestation. should consider the water quality in Lao When selecting those practices PRD, which is threatened by discharges which preserve or even enhance the local from agriculture and mining. Water qual- resource base, a resort could be designed ity measurements in the Mekong river as an ecological community or eco-village, show an increase in the concentration of whereby nearby producers can supply the phosphorous 96 and mines are reported food and resources. to pollute water resources with metals and chemicals. In 2013, water quality 3.3 Circular agriculture and hydropower: monitoring in the Mekong river reported algae farming to clean water in reservoirs an alarming increase in organic matter, resulting in a decline in the dissolved Lao PDR has an installed capacity of oxygen which supports aquatic life.85 6,441 MW of hydropower,103 including The relatively high temperature of 16 stations with a reservoir. The largest the water in the reservoirs, as well as reservoir belongs to the 39m high Nakai the nutrients from upstream agricultural Circular economy strategies for Lao PDR Step 3: Circular economy strategies 56 areas make the reservoirs a fertile location can further . 104. O. Uysal, F. O. Uysal improve water quality and K. Ekinci, “Evaluation of Microalgae as Microbial to produce algae. Algae can be used as Studies with industrial wastewater show Fertilizer”, European ,104 and in the long-term that freshwater algae can remove certain Journal of Sustainable bio-fertilizer Development, Vol. 4, No. 2, 105 potentially also as source of protein, pollutants from water, by: 77-82, 2015. raw material for or 105. E. W. Becker, “Micro- biofuel bio-kerosene algae as a source of pro- 106 production or the extraction of 1. reducing electric conductivity by tein”, Biotechnology fish oil Advances, Volume 25, if that technology also becomes available removing metal ions from industrial Issue 2, pp 207–210, 2007. 107 for freshwater. discharges; 106. Wageningen University, “Sustainable On the other hand, taking the 2. removing dissolved organic matter and aviation fuels from algae”. Wageningen University, hydropower reservoirs into production reduce the related chemical oxygen “Bonaire to have its own AlgaePARC”, 20 also creates an additional requirement demand; January 2017. See also H. to protect the surface water quality. 3. removing dissolved solids; and Hulsman and others, 2011, Algae as a source of fuel Mining activities are a potential source 4. reducing eutrophication by removing for the Dutch aviation sector - A feasibility study. of pollution with heavy metals and nitrate and phosphorous.109 » p. 64 107. DSM, “DSM and extraction agents like cyanide and arsenic. Evonik establish joint ven- ture for omega-3 fatty ac- Bioleaching is a way to extract metals These are all a concern for the water qual- ids from natural marine al- 96 gae for animal nutrition”, 8 from ores with the use of bacteria. This ity of the Mekong River. Safeguarding March 2017. avoids the use of dangerous chemical water quality also makes reservoirs 108. C.N. Mulligan and M. Kamali, Bioleaching substances, and can seriously reduce the more attractive to tourism (Figure 20). of copper and other met- 108 als from low-grade ox- risk which mines pose to water quality. One method of producing algae, one of idized mining ores Deteriorating water quality is a risk the fastest growing plants on Earth, is by Aspergillus niger, Chemical Technology and to drinking water quality, agriculture, with photobioreactors.110 » p. 64 These are Biotechnology, 2003.W. H. Dresher, “Producing tourism development and vegetation and floating flexible tubes, where algae use Copper Nature’s Way: Bioleaching, Copper wildlife. Algae production in reservoirs energy from the sun, carbon dioxide and Applications in Mining & Extraction”, Innovations, May 2004.

► Figure 19: Algae farming opportunities

Transportation Food processing industries UXO international roads Coffee and tea air bombardment (1965- 1975) national roads Oil UXO impact in villages railroad to China Sugars B-52 strikes (1965 - 1975) Mekong river Tobacco herbicide missions border crossing point Industries Energy network trail roads Cement, gypsum, concrete, lime Airport Textiles planned thermal power plant international Airport Vehicles Hydropower station flight connections Plastics and(bio-based materials) Planned / Existing Cassava suitability index Mining areas Substation Moderate Planned / Existing gas Low Salt larger hydropower reservoirs High Minerals Existing 115 kv TL gold population concentrations Existing 35, 22 kv TL Existing 35, 22 kv TL natural stones >100 planned 115kv D/CTL General 100 - 50 Land-use Exploitation 50 - 30 agricultural lands 30 < Forestry 57 Circular economy strategies for Lao PDR Step 3: Circular economy strategies Circular economy strategies for Lao PDR Step 3: Circular economy strategies 58

▲ Figure 20: Impression nutrients from the water to produce In the short term, algae from the of algae farming in com- biomass. These structures can separate the reservoirs can replace fertilizers. Lao bination with tourism different activities in the reservoir, like PDR is a net importer of fertilizers worth algae production, tourism, fishing or fish US$40 million in 2015. In the long run, 109. S. Khan and others, “Remediating in- farming. The floating systems can also be technological advancements can make dustrial wastewater con- made accessible for pedestrians, to form the production of biofuels from algae taining potentially toxic elements with four fresh- paths that connect shores of the lake, and commercially viable. These biofuels could water algae, Ecological Engineering, Vol. 102, pp turn the lake into a unique public space. replace the net value of US$1.04 billion 536–541, May 2017. The paths attract not only tourists, but fossil fuels which Lao PDR is importing 110. Omega Project 55 » p. 26 2009-2012, “National also become a floating market place for every year. Aeronautics and Space local merchants and craftsmen to sell More likely however is that the Administration”, n.d. their products. country will switch its car fleet to electric 59 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

111. Freshplaza, “New bi- opolymers from cassava vehicles, making optimal use of the 3.4 Overview of technologies and bene- and banana waste developed”, 4 August 2013. existing hydropower capacity. In that case, fits per sector biofuels can replace kerosene. This would 112. Bio Based Press, “Biobased materials in enable Lao PDR to address one of the The three circular economy strategies the motor car, part 1: automotive industry’s de- main environmental issues from tourism: proposed involve a range of priority mands” 21 September 2014. the increasing greenhouse gas emissions sectors. The strength of a systems’

113. Bio Based Press, from airlines. This would be a unique approach is that it reveals opportunities “The Transition”, n.d. N. Waramit, “Developing feature of ecotourism in Lao PDR, distin- across, rather than within, sectors. a bioeconomy in Thailand”, Journal of guishing it from its peers in the region. Table 3 summarizes by sector, the different the International Society for Southeast Asian The existing agricultural metabolic solutions proposed and the main benefits. Agricultural Sciences, Vol. 18, No.2. 2012. profile of the country can be a basis for the development of a bio-based economy 3.5 Contribution to achieving SDGs with a more industrial character. Replacing synthetic materials with biotic or even The three circular economy strategies biodegradable materials, is a development will not only contribute to the articulated strategy in several industrialised countries. development ambitions of Lao PDR, but Lao PDR has maintained its agricultural they will also assist with achieving the profile and uses relatively little synthetic Sustainable Development Goals. Table 4 or inorganic materials. The agricultural provides an overview. and forestry foundation of its economy are a solid basis for developing a bio-based 3.6 International cooperation on climate economy. Concrete examples are: mitigation supporting circularity

1. Using waste streams from cassava Lao PDR imports several products starch production as raw material with a relatively high carbon footprint for biodegradable plastics. The use of at production. Examples are meat and biodegradable plastics would also solve dairy products, paper and paperboard, environmental problems associated and products and materials with high with the disposal of synthetic plastics iron and steel content including vehicles, in areas without proper waste collec- plastics and plastic products, cotton and tion and disposal.111 fabric.55 » p. 26 Materials substitution for 2. Using organic fibres like hemp, low-carbon alternatives could reduce in the textiles or motorcycle the dependence of Lao PDR on imports, assembly industry.112 while reducing carbon emissions in the 3. Positioning Lao PDR within the countries of origin. bio-based industrial ambitions in For example, to support the construc- neighbouring countries, like the tion boom in Vientiane, Lao PDR imports production of bioplastics in Thailand, cement. Cross laminated timber is a based on tapioca production and starch construction material with a substantially chemistry.113 lower carbon footprint than reinforced concrete has. Furthermore, it is produced in Lao PDR. Circular economy strategies for Lao PDR Step 3: Circular economy strategies 60

That Paris Agreement has moved and promote the use of Article 6 for away from the bipolar world of developed this purpose. and developing countries, opening A variation on this line of thought is the door for all countries to take up to encourage the production and supply of mitigation ambitions. Within a more the substitutes for carbon intensive mate- equal global climate regime, international rials, with a carbon incentive. Lao PDR is cooperation along supply chains under uniquely positioned to do so. Substituting Article 6 could be a means to create incen- carbon intensive enforced concrete with tives for reducing the consumption and cross laminated timber, would be the kind use of carbon intensive products. Prime of fundamental changes in consumption candidates are cement and steel.46 » p. 19 As habits, which really contribute to meeting a net importer of these two products, Lao the Paris targets. Some of the sustainable PRD could side with other countries with wood production companies in Lao PDR negative trade balance on these materials, produce cross laminated timber. 61 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

Table 3: Overview of technologies proposed, and Sector Technology their benefits per sector Produce and Produce algae Adopt bioleach- Recycle Remanu- use local Use rainwa- use bio-based in hydropow- ing which us- textiles facturing of mo- food sourc- ter harvesting materials like er reservoirs to es bacteria to and sort fi- torcycle comes in tour- and biologi- cross laminat- produce fertil- extract metals bres with ponents and ism and close cal waste wa- ed timber, bam- iser, protein, from ores and Fibresort convert to elec- the minerals ter treatment boo, hemp, bio- fish oil or bio- e-waste tric cycle in resorts plastics fuels

Forestry Substitutes imported construction materials Develops national timber industry

Agriculture Substitutes im- Adds hydro- Reduces risk of Increases val- ported plastics power reser- pollution in irri- ue of agricul- and fibres voirs to the gation water tural prod- Develops nation- productive agri- ucts al bio-based in- cultural area dustry Improves river water quality

Energy Reduces ener- Substitutes im- Reduces the gy consumption ported fossil import of fos- and greenhouse fuels sil fuels gas emissions Adds economic from concrete value to current and steel pro- and future hy- duction dropower reservoirs

Mining Substitutes hazardous chemicals Reduces risk of water pollution

Solid waste Reduces plas- Improves river Potentially and waste- tics and synthet- water quality a safer and water ics fibres in solid cleaner way waste and waste- to process e- water waste

Manufacturing Substitutes im- Extends lifetime ported synthetic of motorcycles materials Uses low-cost reverse logistics capacity

Textiles Substitutes im- Substitutes ported fibres imported fibres Reduces textiles waste

Tourism Reduces land- Improves river Reduces risk Favours com- Favours com- scape impact of water quality of water pol- munity-based munity-based quarries for con- lution ecotourism ecotourism struction minerals Circular economy strategies for Lao PDR Step 3: Circular economy strategies 62

Table 4: Contribution Relevant to of the circular strategies to the Sustainable Development Goals Sustainable Development Goals and underlying targets Recycling Circular re- Algae- and reman- sort biofuel ufacturing hub

SDG 1 - No poverty

1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people liv- X X X ing on less than US$1.25 a day: explain what share of the rural population lives under this budget.

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal X X X rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

SDG 2 - End hunger, achieve food security and improved nutrition and promote sustainable agriculture.

By 2030, ensure sustainable food production systems and implement resilient agricultural prac- X No harm tices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality

Increase investment, including through enhanced international cooperation, in rural infrastruc- X X ture, agricultural research and extension services, technology development and plant and live- stock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries.

SDG 6 - Ensure availability and sustainable management of water and sanitation for all

6.1 By 2030, achieve universal and equitable access to safe and affordable drinking water for all X X

6.2 By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing X X X release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally

SDG 7 - Ensure access to affordable, reliable, sustainable and modern energy for all

7.2 By 2030, increase substantially the share of renewable energy in the global energy mix X

7.3 By 2030, double the global rate of improvement in energy efficiency X

7.a By 2030, enhance international cooperation to facilitate access to clean energy research and X X technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology

7.b By 2030, expand infrastructure and upgrade technology for supplying modern and sustaina- X ble energy services for all in developing countries, in particular least developed countries, small island developing States, and land-locked developing countries, in accordance with their respective programmes of support

SDG 8 - Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

8.4 Improve progressively, through 2030, global resource efficiency in consumption and produc- X X X tion and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead

8.9 By 2030, devise and implement policies to promote sustainable tourism that creates jobs and X X promotes local culture and products

SDG 9 - Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

9.2 Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s X X X share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries

9.5 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with in- X X X creased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities 63 Circular economy strategies for Lao PDR Step 3: Circular economy strategies

Table 4: Contribution SDG 11 - Make cities and human settlements inclusive, safe, resilient and sustainable of the circular strategies to the Sustainable Development Goals 11.1 By 2030, ensure access for all to adequate, safe and affordable housing and basic services X and upgrade slums

SDG 12 - Ensure sustainable consumption and production patterns

12.1 By 2030, achieve the sustainable management and efficient use of natural resources X X X

12.8 By 2030, ensure that people everywhere have the relevant information and awareness for sus- X X tainable development and lifestyles in harmony with nature

SDG 13 – Take urgent action to combat climate change and its impacts

13.2 Integrate climate change measures into national policies, strategies and planning X X X Minutes of Meeting Stakeholder Consultation on Circular Economy Action Study for Improved Resource Efficiency in Lao PDR

Friday,4 August 2017 Lane Xang Conference Room, UNDP Offce, Vientiane

1 Background The PPT presentation is given in Annex 5.

UNDP and IREP conducted the Circular Economy Action Study for Improved UNDP and IREP are working on fnalization of this report and this meeting is Resource Effciency in Lao PDR. This meeting takes the opportunity to pres- an opportunity to share the report with stakeholders and get some feedback. ent the fndings of the Circular Economy Study to stakeholders for feedback A stakeholder consultation was also held in December 2016. The fnal report and comments. will be shared with stakeholders.

2 Objectives of the meeting IREP commented that in discussing Circular Economy there is a focus on reuse, recycling and remanufacturing. The Circular Economy implemen- To present and discuss the results of the Circular Economy Study tation is relevant to MEM mandate and to MONRE mandate. In the future To discuss and consolidate comments and feedback from stakeholders MEM and MONRE should closely work together to discuss the legal frame- To discuss potential synergies with ongoing or proposed development pro- work that could be enabling the implementation of the Circular Economy in jects supported by other development partners in the area of NDC implemen- the country. tation, rural electrifcation development and local livelihood development UNIDO noted that Circular Economy is not only relevant to MEM and 3 Participants MONRE. The MOIC has already started implementation of this idea. Thus, both ministries should coordinate with other ministries and agencies as well. About 35 people participated in the meeting, including representatives from Ministry of Planning and Investment, Ministry of Natural Resources and DIC/MPI noted that the implementation of Circular Economy should have a Environment, Ministry of Energy and Mines, National University of Laos, main coordination agency. DIC supports that MEM should be a lead coordi- Ministry of Labour and Social Welfare, Ministry of Industry and Commerce, nation agency to develop the policy for the implementation. However, it WFP, UNDP Lao PDR, UNIDO and USAID Asia. is subject to the decision at the higher level. The idea of Circular Economy is not new and not old, the MOIC has already started implementation of 4 Meeting proceeding this idea.

4.1 Opening remarks DMO/MLSW supports DIC comments that implementation of the Circular Economy should have a coordination unit to further develop policy to enable The meeting was Chaired by Mr. Balasubramaniam Murali, Deputy Resident the implementation on the ground. Representative and Co-chaired by Mr. Seumkham Thoummavongsa, Deputy Director General of the Institute of Renewable Energy Promotions (IREP) of 5 Closing remarks Ministry of Energy and Mines (MEM). Opening Remarks of Chair and Co- Chair are attached at Annex 1 and Annex 2. The Agenda of the Meeting is Mr. Murali thanked all participants and IREP team for the preparation. Mr. given in Annex 3. Murali also noted the Circular as a fairly is a new concept. The goal of Lao PDR is to achieve graduation from LDC status and to achieve sustainable de- 4.2 Presentation on the Circular Economy velopment. The implementation of CE could also contribute to the achieve- ment of the LDC graduation and we should fnd a way to support the imple- The presentation was delivered by Dr. Margaret Jones Williams, Environment mentation of Circular Economy. Unit Manager of UNDP. The presentation covered background, concept and objective of the circular economy, approach of the study, fndings and recom- Mr. Seumkham also thanked the participants and noted his appreciation to mendations for the way forward. The idea of the Circular Economy is for re- stakeholders for providing direct comments to the presentation. source effciency and economy through reducing, re-using, recycling or extending the life of products. The fndings of the study show that the Circular Annexes: Economy concept could be applied in Lao PDR and support Lao PDR’s development agenda and also contribute to the implementation of the Paris 1. Opening Remarks from IREP Agreement. The study identifed three sectors that could implement the CE: 2. Opening Remarks from UNDP 3. Agenda of Meeting First: A regional recycling and remanufacturing hub 4. PPT on circular Economy Study 5. Tweet https://twitter.com/MargaretJWUNDP/status/893338962483269633 Second: Circular construction materials from forests to advance 6. Photos of Meeting ecotourism Photo 1: Chair and Co-Chair Third: Algae farming to produce valuable bio-based materials and clean sur- Photo 2: Group of Stakeholders face water. Photo 3: Stakeholder asking questions . Economic growth in developing countries is often paralleled by a gradual decrease in resource and carbon efficiency. By redefining development from the perspective of the system, developing countries can grow their infrastructure and building stock, and meet the needs of its society, while moving away from the linear economic model which is putting long-term development ambitions at risk. The systems approach outlined for Lao PDR steps away from focussing on a single sector or industry. Rather, it defines collaborative strategies to develop a circular economy, in line with national objectives to reduce greenhouse gas emissions and make more efficient use of resources.

This way of thinking opens new avenues for countries to act on their climate ambitions and Paris Agreement commitments. It is also an opportunity to redefine development and growth, through the lens of metabolic efficiency.

Lao PDR is a country with abundant national resources. It is experiencing rapid economic growth, build on the export of valuable raw materials. However, large extractive industries leave their mark on the landscape, while the temporary rents from resource exports suppress the growth of non-extractive, local industries. Mapping the flows and stocks of raw materials and energy, reveals three pivotal strategies to substitute carbon-intensive materials, develop and diversity the economy, make better use of existing assets and avoid further linear lock-in. For each strategy described, artist impressions provide a preview of a circular future for Lao PDR.