AN ASSESSMENT OF THE IMPACT OF THE GLOBAL FINANCIAL CRISIS ON SUSTAINABLE ALTERNATIVE DEVELOPMENT Key Determinant Factors for Opium Poppy Re-cultivation in Southeast Asia Jul 08 Nov 08 Mar 09 Jul 09 Nov 09 May 2010 United Nations Office on Drugs and Crime, Published in May 2010 This publication is based on the outcome of a study commissioned by the UNODC Global Partnership on Alternative Development Project (GLO/I44). ThisThe informationis not an official contained document therein of the is Unitedfor information Nations. purposes only. Opinions Nations. The designations employed and the presentation of material in this documentexpressed doin notthis imply publication the expression do not necessarilyof any opinion reflect on the the part view of the of Secretariatthe United country, territory, city or areas of its authority, or concerning the delimitations of itsof the frontiers United or Nations boundaries. Office onThe Drugs boundaries and Crime of the concerning maps in thisthe legaldocument status do of anynot imply official endorsement or acceptance by the United Nations. II AN ASSESSMENT OF THE IMPACT OF THE GLOBAL FINANCIAL CRISIS ON SUSTAINABLE ALTERNATIVE DEVELOPMENT Key Determinant Factors for Opium Poppy Re-cultivation in Southeast Asia May 2010 prepared for: UNODC Global Partnership on Alternative Development Project (GLO/I44) by: Tom Kramer Edited and reviewed for publication by Simon Howard III Foreword Southeast Asia achieved significant reductions in illicit opium poppy cultivation in the ten years leading up to 2006, with an estimated 87% reduction from 202,100 ha to 24,200 ha. However, in 2009 UNODC certainopium surveysgeopolitical indicated situations a worrisome and the fact 40% that increase alternative in cultivated development area to 33,819 ha. The impact of the global economic crisis, compounded by problem are some of the reasons for this resurgence. assistance received was not sufficient to address the magnitude of the in the national programme strategy to sustain opium elimination (2006- In the Lao PDR only an estimated 10% of the 1,100 villages prioritized survey maps underline the fact that opium resurgence occurs mainly in areas2009) that had haveaccess not to receivedalternative alternative development development. assistance In in the 2009. preceding Opium contributeyear there has to beenincreasing a significant corruption, increase money in seizures laundering, of methamphetamine drug abuse and heroinother negative in the region. social Thephenomena massive profitsthat could that seriously are being undermine generated national security and socio-economic development in the region. This study by Tom Kramer is timely and not only looks at the impact of the global economic crisis on alternative development initiatives in inthe the Golden region Triangle have adopted region butnational also identifiespolicies and the strategieskey determinants to counter of opium poppy re-cultivation as well as possible solutions. Governments the problem, however long-term political and financial commitment together with increased international support will be required to address the serious and growing threat posed by drugs to this region. Chinnanon for initiating this study and to the German Government for providingI would like the to funding this opportunity support. to express my appreciation to Dr. Sanong Leik Boonwaat Representative UNODC Lao PDR V Table of Contents Background . .1 Alternative Development . .3 Why do people grow opium? 3 What is Poverty? 4 What is Alternative Development? 5 Why is Alternative Development important? 6 Lessons learned from Alternative Development 7 Implications of the Global Financial Crisis on opium cultivation .9 Impact at the Community Level 9 Laos 10 Myanmar 13 Impact on donors 14 Other key factors causing an increase in opium cultivation . .16 Lack of food security 17 Lack of alternative sources of cash income 18 Collection of NTFPs 19 Lack casual labour 19 Lack of credit 20 Lack of technology 20 Lack access to markets 21 Lack of access to land 21 Lack of development assistance 22 VII Table of Contents (Continued . ) Unsustainable foreign investment in commercial plantations 23 Conflict 26 Opium consumption 26 Rising opium prices 27 Global drugs market 28 Conclusions & Recommendations . 30 Conclusions 30 Recommendations 30 Bibliography . 33 VIII Background I . Background Between 1998 and 2006, Opium production in Southeast Asia declined1. In thisfrom time an aestimated number of1,437 countries to 335 have tons. been Over declared the same opium period, free, Vietnam opium incultivation the year 2000,decreased Thailand from in an 2003, estimated and Laos 158,230 in 2006. to 24,000 The last hectares decade has also seen a steady decline in opium cultivation in Myanmar. However, in recent years there has been resurgence in opium cultivation in South East Asia, estimated to be 30,388 hectares, producing 424 tons. The 2008 Southeast Asia Opium Survey stated that whilst some ex-poppy farmers had returned to opium cultivation, other communities were engaging in opium cultivation for the first time. Between 2007 and 2008 there was a 26% increase in opium poppy cultivation in the region. for products produced or collected from the forest by ex-poppy farmers hasAs a dropped. result of Atthe the global same financial time the crisis, cost theof basicmarket household price and items demand has increased. There has also been a sharp increase in the value of opium driven by the reduced level of production. Each of these factors has theprovided last decade. renewed incentive for farmers to resume or begin opium cultivation, compromising the efforts made to reduce production over The situation outlined is further compounded by a lack of viable alternative sources of income for (ex) poppy farmers. Although the decline in opium cultivation in the region has in part been due to policy intervention by local authorities, these campaigns have failed to address the poverty that drives communities in the region to grow opium. Current interventions necessarythat aim toto provideprevent afarmers humanitarian with sustainable crisis, and alternativefurther interventions livelihood areoptions needed are toinsufficient. sustain the They socio-economic represent an development emergency response and livelihoods that is geopolitical and regional changes, have contributed to the increasing trendof the of former opium opium cultivation farmers. in the These region. factors, If these combined factors are with not addressedadditional to further increase in the coming years. in a timely and proper way, opium cultivation in Southeast Asia is likely 1 UNODC Opium Poppy Cultivation in Southeast Asia, 2008. 1 The impact of the Global Financial Crisis on Alternative Development GoldenThis study Triangle will assessregion 2the impact of the current global financial crisis on sustainable livelihoods and alternative development efforts in the , with specific reference to the key determinant factors that lead to opium poppy re-cultivation. It will recommend coping strategies and related policies as well as future interventions that address this emerging situation. The study will take into account the new Political Declaration and Action Plan on International Cooperation Narcotictowards anDrugs Integrated (CND) inand Vienna. Balanced Strategy to Counter the World Drug Problem, which was adopted at the 2009 session of the Commission on Plate 1: Map of affected regions 22 Data was collected during July and August of 2009 Alternative Development II . Alternative Development Why do people grow opium? 3 The northern regions of both Laos and Myanmar are poor countries, both rank at the lower end andof the mountainous, Human Development inhabited by Index. diverse ethnic minority groups. These communitiescountries, where tend mostto be opiumthe poorest is traditionally and most cultivated,marginalised are groups isolated in their respective countries, usually subsistence farmers from groups such Akhaas the in Wa, Thailand. Akha, Lahu, Palaung, Pao, Shan, Kayah, Kayan and Kachin in Myanmar; the Yao, Hmong and Kor (Akha) in Laos; and Hmong, Lahu and They grow upland rice for their own consumption using shifting cultivation and many households face rice shortages over two to six months of the year. Opium is grown as a cash crop and is popular due travelto its highto remote value villages to weight to purchase ratio, which opium. makes The itincome easy tothat transport such sales to generatesthe market. is usedThis meansto buy food,that, clothes,unlike other medicines, crops, and traders improves are willing access to education. Opium plays multiple roles within remote communities in addition to that of a cash crop. Raw opium is used as a form of cash and as savings. It is often cultivated for personal use and in areas where access to health care and essential medicine is low, is used to treat various ailments. In the past it was offered to visiting guests and used at ceremonies such as weddings and funerals. It is widely connected with spirit worship. Subsistence based communities have few coping mechanisms to deal with shocks and stressors, making them vulnerable to the increasingly frequent changes in their environment and economy. Whilst opium ofcultivation income toprovides sustain them their withlivelihoods a degree in ofthe resilience absence ofto opiumchange haveand integration into the cash economy, efforts to find an alternative source opium cultivation in Laos and Myanmar. Indeed, a representative of the