This document outlines a study on sustainable financing mechanisms for integrated water resource management in Lao PDR. It discusses the country's abundant water resources and emphasizes water's important role in social and economic development. It then examines current laws and regulations related to water resource management and fee collection. Several potential fee structures and rates for different water-using sectors like hydropower, mining, agriculture, and tourism are proposed. Challenges in implementation including lack of skilled staff and funds at local levels are also noted. The future plan is to further develop methods to calculate water resource fees across all sectors and pilot payment for ecosystem services schemes.

1. Study on Sustainable
Financing Mechanism for
Integrated Water
Resource Management in
Lao PDR
Department of Water Resource
Ministry of Natural Resource and Environment
Lao PDR

2. Outlines
1. Introduction
2. Laws and Regulations and Lesson learnt of Fee
Collection on IWRM in Lao PDR
3. Financing Source and Current Implementation
4. Future Plan

3. 1. Introduction
• Laos is a natural resource abandon
country, especially a great wealth in water
resources. The northern region captures a
rainfall of approximately 1,300 mm/yr and
the southern region 3,000-3,700 mm/yr.
• 35% of all water in the Mekong River
originates from watersheds within Lao
PDR.
• The government also emphasizes the
important role of water resource on SocialEconomic
Development,
especially
revenues
generation
from
sector
development project and livelihood
improvement of the poor NGPES, NSEDP
5, 6, 7).
• Therefore, it is required to have fund for
financing the recovering cost of IWRM.

4. 1. Introduction Cont.
The cycle of water resource
utilization
Water resource
Utilization
Wastewater
Water resource utilization in Lao PDR:
– Agricultural sector
– Industrial sector: mining, hydropower, commercial water
production, heavy and light industry
– Service sector: tourism, transport, and others.
– Household sector

5. Costs of water related services provision
Investment cost operating and maintenance debt services coordination,
administration, and labor cost, and researches
Managing natural and man
made environment to deliver
sufficient water quantity,
quality, and timing
Water
resource
management
Abstracting , storing,
treating, and distribution
Water
distribution
Capturing, retaining,
treating, re-releasing
sewage and other liquid
wastes
Waste water
management

6. Influential Factors Affecting Availability of Water
Resources
 The decline in forest cover
in
to
in
in Laos
 An increase in demand of water
utilization:
Impacting to
environment
 GDP Growth Hydropower mining
industry, service, agriculture, and
other economic activities
 Water resources
surface and
underground
water
 quantity
 quality
 An increase of population
 Climate change
 Other factors
source draft Water Resource Strategy from present to
and
action 2011-2015

7. different mandates, funds & funding sources
mandates
fund types
funding sources
coordination &
planning
public budget
govt & donor funds
special
account/retention
fund
service charges &
user fees
operation
of utilities &
regulation of
activities
provision of
ecosystem services
& public benefits
users’ contributions
autonomous
earmarked fund
public donations
7

8. Laws and Regulations on WRM & Fee Collection in
Lao PDR
a. Review of Laws and Regulations:
 Existing laws and regulations established the responsibility of
water users and developers to protect water resources and the
natural environment, and enable the use of various charges and
funds relating to environmental protection.
 Apart from the Law on Water and Water Resources (1996), it does
not however deal explicitly with funding for WRM. Nevertheless,
They provide an enabling legal basis for developing kind of water
resource fee.
b. Lesson Learnt of Fee Collection in Laos:
 Although well-established water supply tariff and
wastewater charge systems exist in Lao PDR for piped water
users, they neither factor in the costs of WRM nor generate
revenues for IWRM.

9. Laws and Regulations on WRM & Fee Collection in Lao PDR
(cont.)
• Hydropower and mining developments
are already subjected to a variety of
fees, taxes and royalties. These
payments are not however explicitly
concerned with, or allocated to, water
resource management and protection.
– Although developers are additionally
required to provide funding to support
environmental protection and community
development activities, it is not clear to
what extent revenues are used to directly
support IWRM

10. Government budget

Service fees and user fees
?
Royalties

Fines
?
Payments for watershed services

Payments for other ecosystem services
?
Carbon finance
Fiscal transfers
?
?
Contributions from water developers

Biodiversity offsets

Other corporate sponsorship

International development grants
Interest from investments

?
10

11. Water Resource Fee Rate Draft-Possible
Options)
No.
Sector
Fee Rate
Remark
I. Natural resource fee for hydropower project
1.1 Hydropower for export
Hydropower for domestic utilization
1.2 Medium and large scale capacity
generation from MW up
Hydropower for domestic utilization
1.3 Small scale capacity generation below
MW
5%- 15%
II. Water resource fee for each sector calculated in m
2.
Water use in industry and handicraft
1-100
m3
kip
101-500 m3
8 kip
501-1000 m3 10 kip
1001-5000 m3
kip
5000 up m3
kip
Source Draft Presidential Decree on Natural Resource Fee, MOF
detailed rate of
each project
indicated in the
agreement

12. 2.2 Water use in mining
Fresh water use for production
1-100 m3
101-500 m3
501-1000 m3
1001-5000 m3
5000 m3 Up
0 kip
kip
kip
0 kip
kip
Water use in commercialized
2.3 agricultural production
(concessionaire projects)
a.
Water use for crash crop and
industrial trees
Water use fishery and livestock
b. Direct
Indirect
1 m /5 kip
1 m /10 kip
1 m /5 kip
Source Draft Presidential Decree on Natural Resource Fee, MOF
Detailed collection
methodology will be
mentioned in
implementation
manual

13. 2.4
a.
2.5
Water use in tourism
Water use in resort, hotel, guest
house, restaurant, entertainment
places and others (surface and ground
water not including connected to
pipes
Urban water users (connected to
piped water/water supply)
1-100 m3
101-500 m3
501-1000 m3
1001-5000 m3
>5000 m3
kip
kip
0 kip
kip
kip
1 m / 0 kip
Source Draft Presidential Decree on Natural Resource Fee, MOF
Revenue collection from this sources will be centralized
through the National Treasury

14. Source: Public Investment Law (2009)

15. 6. Future plan and challenges
 Future Plan:
– Create or study on water resource fee
calculation method for all sectors:
hydropower and others.
– Piloting payment for ecosystem services
– Fund mobilization from international
communities for water resource
management activities and capacity
development
 Challenges:
– Lack of skilled technical staff at provincial
and district levels.
– Lack of fund to implement water resource
management activities at local level.
– The detailed method for fund collection and
using (need more details)

16. References
• Nation Growth and Poverty
Eradication Strategy
• National Social-Economic
Development Plan 5th 6th and 7th
•
Draft water resource strategy
from present to 2020 and 12
action programmes 2011-2015
• State Budget Law updated
version, 2
• Public Investment Law (2009)

17. Thank you for your kind
attention
Email: lan-laos@hotmail.com
www.dwr.monre.gov.la
Tel: +856-21 241 744; Fax: +856-21 218 737