Natural Hazard Risk
Lao People’s Democratic Republic (PDR) is exposed to high climate and disaster risks. Droughts, floods, and storms are the most prevalent hazards, and are expected to become more severe with climate change. Three of the five costliest natural disasters have taken place since 2009, including two floods in 2013. The 2015–16 El Niño, one of the strongest on record, impacted the country through lower yields, reduced hydropower production, and storm damages.
These events have significant impacts on the agriculture sector, a critical part of the economy, representing about 24 percent of gross domestic product and 64 percent of employment. The poor have suffered the brunt of disaster consequences in the aftermath of disasters, due to their higher vulnerability and reduced ability to recover. About 80 percent of the Lao population practices subsistence agriculture and lives on less than $2.5 per day.
Lao PDR has incorporated disaster risk management (DRM) in its policies and institutions. With support from GFDRR, the government integrated climate risks and measures in its main planning documents, including a scaled-up focus on DRM in the Eighth National Socio-Economic Development Plan (2016–20). Key sectoral policies and strategies in agriculture, environment, housing, and transport have integrated climate and disaster risk considerations.
The Ministry of Natural Resources and Environment introduced DRM and climate change in its Vision 2030, Strategy 2025, and Action Plan 2020––in consort with a 2010 National Strategy on Climate Change. In 2017, the Ministry of Planning and Investment, with World Bank support, decreed climate and disaster risk considerations in the public investment review process. A climate change and disaster management law is currently being developed, together with a new five-year National Strategic Disaster Risk Management Plan.
The government also developed disaster risk financing mechanisms. The State Reserve Fund, established in 2013 under the Ministry of Finance, includes 3 percent of the annual expenditure budget. The Social Welfare Fund, established in 2015 under the Ministry of Social Welfare, covers disaster emergency relief.
To further advance its DRM agenda, government priorities include:
- Advancing legal frameworks to support DRM;
- Strengthening the disaster and climate resilience of the transport sector; and,
- Strengthening government capacity to respond to natural disaster events.
GFDRR has supported disaster risk management activities in Lao PDR since 2008. Following Typhoons Ketsana in 2009 and Haima in 2011, GFDRR supported damage and loss assessments that estimated losses at over $58 million and $63 million, respectively. The assessments helped leverage post-disaster funding from the government and donors and laid the groundwork for risk reduction activities. GFDRR helped rehabilitate damaged infrastructure and strengthened the government’s capacity to carry out future post-disaster assessments through trainings and developing a handbook.
GFDRR support has helped strengthen the legal framework for hydro-meteorological services and formulate a national strategy and standard operating procedures for early warning. Provincial and national risk profiles and a value for money strategy in reconstruction were also developed. With GFDRR assistance, DRM has been integrated in a urban development law and socioeconomic development plans at the national level and in the three provinces affected by Typhoon Ketsana.
GFDRR support is enabling improved disaster risk financial resilience in Lao PDR. Building on its 2012 report, “Advancing Disaster Risk Financing and Insurance in ASEAN Member States,” GFDRR crafted a feasibility study for risk financing and insurance options, enabling improved understanding of risk risk-informed decision-making. GFDRR has also supported a proposed Southeast Asia Disaster Resilience Insurance Facility for Cambodia, Lao PDR, and Myanmar. This would be the first regional catastrophe risk pool in Asia, building on similar GFDRR-supported initiatives in the Caribbean and in the Pacific.
Additionally, GFDRR support is helping the government develop DRM investment plans. This includes an integrated urban flood risk management plan for Muang Xay and major transport hubs in northern Laos and the capital city of Oudomxay Province. These efforts support preparing World Bank’s $30 million Lao PDR Southeast Asia Disaster Risk Management Project. GFDRR is also helping to improve the disaster and climate resilience of Lao PDR’s transport sector, with critical sections of selected provincial and district roads identified for interventions. These activities feed into a World Bank $25 million Lao road connectivity project.
GFDRR anticipates continued demand from the Government of Lao PDR to support:
- Promoting an integrated urban flood risk management;
- Strengthening the disaster and climate resilience of the transport sector;
- Strengthening disaster financial resilience; and,
- Enhance government capacity for DRM.