Natural resource extraction and household welfare in rural Laos

Human induced degradation of land due to over-extraction of water and forest resources is a threat to sustainable development in many developing countries. Solving this requires an understanding of the factors affecting the extraction and its impacts on rural welfare. In this study, we determine the factors affecting the extraction of and dependence on forest and water resources and examine the impacts of the extraction on rural household welfare in Laos. We address our research questions with an econometric framework that models the extraction and its implications simultaneously. We use the data of 430 rural households from a survey undertaken in 2013 in 38 villages of Savannakhet province. Our findings show that extraction is a shock-coping strategy of rural households but contributes to reducing household income inequality. For extracting households, extraction increases household income, consumption and food security. However, for non-extracting households, although extraction would increase food security, it would reduce their income and consumption. We suggest that promoting rural education and off-farm employment opportunities, enhancing investments in physical infrastructure, and developing livestock rearing would reduce the extraction of and the dependence on the resources of extractors and prevent non-extractors from being forced to extract the resources. Acknowledgement : We thank the farmers in Savannakhet province for their support and cooperation. We also acknowledge the support and appreciate the efforts of our partners in Lao PDR as well as all our colleagues at the Leibniz University Hannover for data collection.