Detection of actual and assessment of potential plantations in Lao PDR using GIS and remote sensing technologies doc

Rubber in Laos
Detection of actual and assessment of potential plantations in Lao
PDR using GIS and remote sensing technologies


Diplomarbeit
der Philosophisch-naturwissenschaftlichen Fakultät
der Universität Bern


vorgelegt von:
Kaspar Hurni

2008



Leiter der Arbeit:
Prof. Dr. Urs Wiesmann
Centre for Development and Environment,
University of Bern



ii



Rubber in Laos
Detection of actual and assessment of potential plantations in Lao

PDR using GIS and remote sensing technologies


Diplomarbeit
der Philosophisch-naturwissenschaftlichen Fakultät
der Universität Bern


vorgelegt von
Kaspar Hurni

2008



Leiter der Arbeit:
Prof. Dr. Urs Wiesmann
Co-Leiter:
Dr. Andreas Heinimann
Centre for Development and Environment,
University of Bern


ii





iii

Preface
During my studies I had the chance to work as a tutorial assistant within the NCCR
North-South at the Centre for Development and Environment of the Institute of Geog-
raphy at the University of Bern. It was a huge opportunity to gain insight into the re-
search context of the NCCR North-South and obtain some practical experience. Most
of my knowledge and skills regarding GIS and Remote Sensing technologies were at-
tained during this employment.
Besides the administrative work I could also participate in more research-related tasks
where I got in touch for the first time (although only digitally) with Laos. I performed a
classification of satellite imagery in order to map land cover changes, which was part
of a study assessing land cover changes in the lower Mekong region. When later on the
decision on the topic of my diploma thesis came closer, I opted for a work in context
with Laos, as it was a chance to visit a country for two months that I previously only
knew through satellite imagery.
Besides the opportunity to travel to Laos, the motivation for this thesis is mainly based
on giving a contribution to the current research on rubber in Laos. Considering the
amount of newly established rubber plantations in the recent years, research on the
topic is indispensable regarding decision-making and elaboration of development
strategies.
Using my GIS and Remote Sensing competence and my fascination for the possibilities
offered by spatial data and modelling approaches, I hope being able to add to the cur-
rent research, or at least provide some thought-provoking impulses.
Besides the institutional support acknowledged below many people contributed to this
study in various ways. First I would like to thank Professor Urs Wiesmann, the leader
of the thesis. His professorship at the University of Bern and his functions within the
CDE and the NCCR North-South provided the background for various studies and re-
search projects in Southeast Asia and thus enabled my research in Laos.
My thanks go also to Dr. Andreas Heinimann, the co-leader of my thesis, who was,
already during my time as tutorial assistant, my mentor regarding GIS and Remote
Sensing technologies. While working on the thesis his inputs on various levels and the

motivational words were indispensable.
I am also very thankful for the support I received from Dr. Peter Messerli. He works in
the research project on “Contextuality of Development Interventions” in Laos, and was
the contact during the time I spent in Laos. He introduced me to several people and
institutions in Laos and was very supportive in specifying the direction of my research
at the initial stage.
My acknowledgements go to Mr. Sangkhane who joined me for the field trip. His assis-
tance during the interviews, knowledge on the Lao culture and the ability to contact
people was very helpful. Additionally I would like to mention Mr. Mike Dwire and Mr.
Phaythoune Pilakone who were very obliging in terms of sharing information and re-
sources.


iv

My thanks go also to my parents, Marlies and Hans, who supported me throughout my
studies and provided many inputs regarding the success of my research. Your motiva-
tional stimulus, thought-provoking impulses and corrections helped me a lot.
Additionally I would like to thank Brigitte Portner for her skills and help regarding
editing and the use of Microsoft Word, Daniel Loppacher for his advices on administra-
tional processes and various discussions, and Adrian Weber with whom the work and
leisure time in Laos was fun to spend with.
Finally, my thanks go to all the co-workers and the student body for their advices and
talks, and my friends where I could recharge during my off time. However, you are too
many to be named in person.

Kaspar Hurni, August 2008

v
Acknowledgements

The cornerstones for my research activities in Laos are on the one hand the funding and
network provided by the National Centre for Competence in Research North-South
and, on the other hand, the support I received from various individuals. The present
study is performed within the context of research projects of the Centre for Develop-
ment and Environment (CDE) at the Institute of Geography of the University of Berne.
The CDE is the executive agency of the NCCR North-South and involved in various
research themes, projects and networks all over the globe. One of these projects is lo-
cated in Laos and performs research on the contextuality of development interventions.
The local institution this project is related to is the Lao National Mekong Commission
Secretariat (LNMCS). Within the framework of these three institutions the research on
rubber in Laos is performed. During my stay in Laos the LNMCS was the main con-
tact, while back in Switzerland the work was performed at the CDE while the NCCR
North-South provided the funding and network.
In Laos other Institutions contributed to this thesis, too, mainly by sharing information
and data. These are namely: The National Geographic Department (NGD), the National
Land Management Authority (NLMA), the National Agriculture and Forestry Research
Institute (NAFRI), Ecotourism Laos and the Ministry of Agriculture and Forestry
(MAF).


vi


vii
Contents
Images xiii
Figures xiv
Tables xiv
Equations xv
1 Introduction 1

1.1 Rubber in Laos 1
1.2 Objectives 9
1.3 Hypotheses 9
2 Approaches and methods 13
2.1 Approaches to assess the rubber dynamics 13
2.2 Fieldwork 13
2.3 Classification of satellite images 14
2.3.1 Choice of Remote Sensing data 15
2.3.2 Preparation of Remote Sensing data 16
2.3.3 Object- versus pixel-based classification 17
2.4 Input data used to model the potential spatial distribution of
rubber plantations 18
2.5 Fuzzy systems 22
3 Results 25
3.1 Rubber detection on medium-resolution imagery (ASTER) in
Northern Laos 25

3.1.1 Characteristics of the Rubber tree (Hevea brasiliensis) 25
3.1.2 Rubber classification on satellite images 27
3.1.3 Analysis of land use and land cover changes 34
3.2 A spatial assessment of the potential development of rubber
plantations in Laos 51
3.2.1 Reasons for the necessity of potential rubber mapping in
Laos 51
3.2.2 Factor selection for the rubber suitability models 52
3.2.3 Three scenarios of the potential spatial distribution of
rubber plantations in Laos 67


viii

4 Conclusions and recommendations 83
4.1 Conclusions on rubber 83
4.2 Conclusions on methods 84
4.2.1 Satellite image classification conclusions 84
4.2.2 Modelling conclusions 85
4.3 Conclusions on hypotheses 87
4.4 Research-relevant recommendations 88
4.5 Policy-relevant recommendations 89
4.6 Recommendations for development cooperation 91
References 93
Annex 99


ix
Summary
With the crash of the Soviet bloc in the early 1990s Laos faced a cut off in foreign aid
and needed to reorient itself. Ties were bid up with China and Thailand, and an eco-
nomic reform programme was pushed with focus on liberalizing the market. This posed
and still poses opportunities for the more developed surrounding countries, as Laos has
a lot of forest land that can be used for agricultural plantations. The Laotian govern-
ment fosters this dynamic, as with the market integration of the smallholder, socio-
economic development can be pushed. But today’s dynamics can also have some det-
rimental consequences for the economic development and the environment.
Prices on the world market for natural rubber in 2008 are at an all time high, mainly
driven by the high oil price and the demand of China. On the background of this global
market development the regional disparities between Laos and China lead to a high
dynamic. Around 2001 the rubber boom in Laos set off, and up to now more and more
land has been and still gets converted to rubber plantations. An assessment and control-

ling of this development is indispensable, as it can have detrimental effects regarding
the environment and dependencies from the market and China. In the study at hand
these problems are addressed by an attempt to assess the current extent of the rubber
plantations and by modelling the potential spatial distribution of rubber plantations
according to different assumptions on policy implementations.
These tasks are approached in three main steps: The first one consists of the fieldwork,
where GPS points for the classification of the satellite image were collected, informal
talks with farmers and officials conducted, and an impression of the landscape was
gained. The second step is a remote sensing approach, performed in order to gain some
knowledge on the actual distribution of rubber plantations. Information from the image
classification is meant to provide inputs for the last step, the GIS-assisted modelling
approach. Through the combination of different datasets using fuzzy logic, models
displaying the potential spatial distribution of rubber plantations according to different
scenarios are elaborated.
For a sample area in north Laos around the town of Luang Namtha the current distribu-
tion of rubber plantations was tried to be captured on ASTER satellite imagery using
image segmentation and fuzzy classification. Due to the recent rubber boom this task
could not be fulfilled, as most of the rubber plantations were still too young to be cap-
tured according to their spectral properties. A multi-resolution image classification
could possibly tackle this task by including texture analysis in order to classify the
younger plantations. On the ASTER imagery however, the land cover changes could
still be mapped using a binary classification approach. The land cover changes do not
allow a quantification of the rubber dynamic, but nevertheless they include the rubber
plantations. Some indications regarding the plantations can therefore still be gained
when analyzing the land cover changes.
The land cover changes around Luang Namtha were combined with a set of factors as
slope, elevation, accessibility and different types of protection areas. In a logistic re-
gression model the linear correlation of the factors with the land cover changes was
checked. Accessibility and slope showed a correlation, and we are thus able to explain

x
changes in land cover. Elevation in fact is linked with the land cover changes but in a
non-linear way and is thus not able to explain land cover changes. For the protection
areas the sample area was too small to determine any relations with the land cover
changes. Additional calculations including a land cover dataset of 2002 revealed rela-
tions between deforestation and accessibility. Deforestation is much more likely to
occur in good accessible forest areas; especially dense forest is more likely to get cut
down in accessible places. In more remote areas dense forest is less affected, it is rather
the secondary forest that still gets cut down. Additionally, deforestation is much higher
and more concentrated around bigger cities, while at rather remote villages it is lower
and more disperse.
Using this information, and including literature on rubber crop requirements, economic
considerations (accessibility) and interpretations of Laotian forest protection policies, a
modelling of the potential spatial distribution of rubber plantations in three scenarios
could be performed. For the modelling fuzzy logic was used, as this allows including
uncertainties on the data and the effects of data combination. Three different scenarios
were calculated, each including different assumptions on the policy implementations
regarding forest and conservation area protection. The first scenario delineated the po-
tential rubber area when no protection is applied. It thus shows the maximum potential
extent of rubber in Laos according to its biological suitability and accessibility of the
landscape. The second one was the opposite, considering maximum conservation, in-
duced by all the protected or classified forest areas. The scenario is rather fictional as it
would exclude 74% of the area of Laos from being used agriculturally. The third sce-
nario showed the potential extent of rubber according to the current level of policy
implementation. Some forest and conservation areas are protected, but in accessible
areas the plantation of rubber is still tolerated.
Comparing the different scenarios allows considerations of the effects the current pol-
icy or policy changes have on the landscape of Laos and other economic activities as
ecotourism (mainly in protected areas) and collection of non-timber forest products.

Accessibility has been found to be a major factor regarding the plantation of rubber.
Increasing accessibility to a region can foster socio-economic development, but can
also have detrimental effects on the environment and thus other economic activities.
Another important factor are the protection policies. In many villages the definitions of
land-use types, conservation areas and management rights are unclear; population den-
sity and accessibility rather determine whether land is agriculturally used or not. In
order to reduce one-sided dependencies and environmental degradation, and foster
socio-economic development policies, the Lao Government needs to be clear about
management rights and possible land use activities and delineate protected areas prop-
erly. Through investments in infrastructure and the promotion of different crops and
economic activities one-sided dependencies can be reduced through diversification.

xi
Abbreviations and Acronyms
ASTER Advanced Spaceborne Thermal Emission and Reflection
Radiometer
CDE Centre for Development and Environment
CPI Committee for Planning and Investment
DoF Department of Forestry
DTM Digital Terrain Model
DSCA Demining Defense Security Cooperation Agency
ESRI Environmental Systems Research Institute
FAO Food and Agriculture Organization
GIS Geographic Information System
GLCF Global Land Cover Facility
GPS Global Positioning System
Landsat TM/ETM Landsat (Enhanced) Thematic Mapper
Lao PDR Lao People’s Democratic Republic
LMB Lower Mekong Basin
LNMCS Lao National Mekong Commission Secretariat

LRM Logistic Regression Model
LSUAFRP Lao Swedish Upland Agriculture and Forestry Research
Project
MAF Ministry of Agriculture and Forestry
MCTPC Ministry of construction, Transport, Posts, and Communica-
tions
NAFRI National Agriculture and Forestry Research Institute
NBCA National Biodiversity Conservation Area
NCCR N-S National Centre for Competence in Research North-South
NDVI Normalized Difference Vegetation Index
NGD National Geographic Department
NLMA National Land Management Authority
NSC National Statistic Centre
PAFO Provincial Agriculture and Forestry Office
rs remote sensing
SPOT Satellite Pour l'Observation de la Terre
SWIR Short Waved Infrared
TIR Thermal Infrared
UNESCO United Nations Educational, Scientific and Cultural Organi-
zation
UTM Universal Transverse Mercator (coordinate system)


xii
VNIR Visible Near Infrared
WSCP Watershed Classification Project

xiii
Images
Image 1: Rubber plantations in Yunnan (around Mengman and Yun-Chin-Hung)

covering large areas along the hillsides of the valleys (source: Google
Earth, accessed in July 2008). 4

Image 2: Smallholder rubber plantations northwards of Luang Namtha and the land
cover difference between Laos (on the left) and China (source: Google
Earth, accessed in July 2008). 7

Image 3: GPS points collected during field trip in June 2007 in Luang Namtha
Province. 14

Image 4: Different stages of smallholder rubber plantations in the North of Luang
Namtha, approximately two and seven years old (source: author). 25

Image 5: Rubber plantations in the north of Luang Namtha. Characteristic pattern
comes from the contour bunds in the plantation (source: Google Earth,
accessed in July 2008). 26

Image 6: ASTER Satellite image North of Luang Namtha. Comparison of spectral
reflectance and land cover: Depending on the age the rubber
plantations show different reflectance (source: author). 28

Image 7: Segmentation dialogue window of ‘Definiens eCognintion’ software.
Here the settings for the segmentation are defined. 30
Image 8: Example of a class description and a membership function in eCognition. 31
Image 9: Areas of classification problems: Haze and image transition zones
(source: author). 32
Image 10: Land cover change trajectories around Luang Namtha (source: author). 33
Image 11: Potential spatial distribution of rubber plantations without conservation
policies. 69
Image 12: Potential spatial distribution of rubber plantations according to crop

requirements. 70

Image 13: Potential spatial distribution of rubber plantations without conservation
policies in the north of Laos around Luang Namtha displayed with
forest and national biodiversity conservation areas. 71

Image 14: Potential spatial distribution of rubber plantations with maximum
conservation. 73

Image 15: Potential spatial distribution of rubber plantations according to current
policy. 75

Image 16: Potential spatial distribution of rubber plantations according to current
policies in the north of Laos around Luang Namtha displayed with
NBCA’s. 76

Image 17: Percentage of areas suitable for rubber within NBCA’s according to crop
requirements. 77

Image 18: Percentage of areas suitable for rubber within districts according to crop
requirements. 79

Image 19: Potential spatial distribution of rubber plantations according to
accessibility from surrounding countries without conservation policies
applied. 81




xiv

Figures
Figure 1: Yearly mean price of rubber in US cent per kilo (source: Malaysian Rubber
Board, 2008). 1

Figure 2: Comparison of rubber and oil prices in percent of year 2000 prices
(source: OPEC, 2008; Malaysian Rubber Board, 2008). 2

Figure 3: Area of rubber plantations in Luang Namtha 1994-2006. Data is
unavailable for 1996, 2000 and 2002 (source: PAFO Luang Namtha
in Shi, 2008). 15

Figure 4: Comparison of Spectral Bands between ASTER and Landsat-7 Thematic
Mapper (% Ref is reflectance percent) (source: Abrams, 2002: 10). 16
Figure 5: Rectangular function and example of a fuzzy function (source: author). 23
Figure 6: Value ranges of selected image layers used for the classification (source:
author). 31
Figure 7: Combination of land cover changes with slope classes in the study area
from 2001 to 2006 (source: author). 39

Figure 8: Combination of land cover changes with elevation classes (source: author). 40
Figure 9: Combination of land cover changes with province accessibility (source:
author). 41

Figure 10: Combination of land cover changes with village accessibility
(source: author). 42

Figure 11: Deforestation rate between 2001 and 2006 in relation to village and
province accessibility (source: author). 43
Figure 12: Combination of land cover changes with land cover classes. Change
trajectory "no change" not displayed (source: author). 44

Figure 13: Combination of areas without land cover change with the land cover
classification and province accessibility (source: author). 46

Figure 14: Combination of ”low to high biomass density changes” with land cover
classes and province accessibility (source: author). 47
Figure 15: Combination of ”high to low biomass density changes” with land cover
classes and province accessibility (source: author). 48

Figure 16: Deforestation rate in relation to forest classes and province accessibility
(source: author). 49

Figure 17: Fuzzification of the elevation (DTM) and the slope according to
suitability for rubber. 59

Figure 18: Fuzzification of the village and province accessibility. 62
Figure 19: Comparison of different scenario calculations on the potential spatial
distribution of rubber plantations in Laos (source: author). 83

Tables
Table 1: ASTER satellite images acquired for rubber detection. 27

Table 2: Weights assigned to the image layers for the segmentation process. 29
Table 3: Result of the Logistic Regression Model on the occurrence or
non-occurrence of land use and land cover changes. 37

Table 4: Collection of crop requirements for rubber (Hevea brasiliensis) from
different sources. 53

xv
Table 5: Factors to be included in the model and suitability range for rubber. 54
Table 6: Combination of village and province accessibilities with GPS points of
rubber plantations. 55

Table 7: Assignment of values between zero and one according to the suitability
for rubber of the soil types (1= high suitability, 0 = no suitability). 60
Table 8: Assignment of values between zero and one according to the suitability for
rubber of the soil depth and soil drainage (1 = high suitability, 0 = no
suitability). Values independently assigned to each layer. 60

Table 9: Considerations for the different model scenarios according to the
protection and forest laws (source: MAF, 1996). 65

Table 10: Reclassification of forest and land cover layers to model different policy
implementation effects in the potential spatial distribution of rubber
plantations. 66


Equations
Equation 1: Calculation of the NDVI (source: Weier & Herring, year unknown). 17

Equation 2: “and” operator (minimum) (source: Cassel-Gintz, 2001). 24
Equation 3: “or” operator (maximum) (source: Cassel-Gintz, 2001). 24
Equation 4: minimum-maximum compensatory (source: Cassel-Gintz, 2001). 24
Equation 5: geometric mean (source: Cassel-Gintz, 2001). 24
Equation 6: Form of the linear logistic model (source: Mertens & Lambin, 2000). 35
Equation 7: Probability values of the linear logistic model (source: Mertens &
Lambin, 2000). 36

Equation 8: Odds ratio calculated from linear logistic model (source: Mertens &
Lambin, 2000). 36

Equation 9: Combination of soil data using minimum-maximum compensatory
operator. 61
Equation 10: Combination of village and province accessibility using minimum-
maximum compensatory operator K
0.5.
63



xvi

Introduction

1
1 Introduction
1.1 Rubber in Laos
Rubber cultivation has a rather young history in Laos. In 1930 small areas around
Pakse Town in southern Laos were planted with rubber trees that are still alive up to
now. The villagers tapped the trees rather for fun in order to trap small animals like
insects and birds. The economic potential of these trees was not considered and the
cultivation of local species was preferred. The basis for the rubber boom in Laos was
laid in 1994 when smallholders established a 400 ha plantation around Ban Had Ngao,
a village in the north of Luang Namtha. The villagers, mainly from the Hmong ethnic-
ity, were supported by resettled relatives from China, which had gained experience in
cultivating rubber from their work in the Chinese agricultural collective. Even though
there was an increasing area planted with rubber it never caught the attention of policy-
makers, traders or stakeholders. This rapidly changed after the first two to three years

when tapping the trees generated high income from latex sales. The boom set off
around 2003 with rubber being promoted by foreign traders and companies, the Lao
Government and by the villagers themselves (Shi, 2008; Alton et al., 2005; Ketphanh et
al., 2006). The situation on the global rubber market heavily supported, and is still sup-
porting, the expansion of rubber plantations within Laos. Figure 1 shows the develop-
ment of the rubber price over the last eight years.

Yearly mean price of natural rubber in US cent per kilo
0
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
US cent / kg

Figure 1: Yearly mean price of rubber in US cent per kilo (source: Malaysian Rubber Board, 2008).

For the enormous increase in the price over the last eight years (over 400%) a set of
different parameters can be accounted. But what may be more important is the fact that
such a huge increase was not expected when looking at rubber price scenario calcula-
tions performed after the crisis in Asia and for the new millennium. In general, the pro-
jections underestimated the price and the quantity of natural rubber that has been traded
in the past couple of years (ICNR, 2008). A reason for this can be found to some extent
Rubber in Laos

2
in the nature of rubber. Most importantly natural rubber can be substituted perfectly by
synthetic rubber which is produced using oil. Several factors affecting one or both
types of rubber can thus influence the overall price. The price level of natural rubber
may be shifted due to natural hazards such as storms or floods, while the price of syn-
thetic rubber rather depends on the dynamics on the oil market. Other factors leading to
a price shift are the stocks on the supply and demand side and also effects of currency
de- and appreciation. However, a rise or decline in the price of one of both, natural or
synthetic rubber, leads to a substitution and thus to an overall price increase. The price
increase displayed in Figure 1 is mainly due to an increased oil price and an increased
demand for rubber in Asia, but especially in China. Figure 2 shows the oil price and the
price for natural rubber. To be comparable both prices are indicated in percent of the
year 2000 prices.

Comparison of rubber and oil prices (percent of year 2000 price level)
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008
year
percent of year 2000 price level
rubber
oil

Figure 2: Comparison of rubber and oil prices in percent of year 2000 prices (source: OPEC, 2008;
Malaysian Rubber Board, 2008).

In general both prices evolve similarly – the increasing oil price lead to higher prices
for synthetic rubber which in turn boosted the demand for natural rubber resulting in a
higher price for both, synthetic and natural rubber. Gaps between the two graphs in
Figure 2 may be due to speculations. The steady growing oil price causes expectations
of an increasing rubber price in the future and thus a higher demand which fuels the
price increase. This dynamic may not be foreseen in the pre-millennium scenario calcu-
lations but between 2001 and 2003 the potential was recognized by both, smallholders
and governmental institutions of Laos. Within these first years of the boom the relation
to China seems to play a crucial role in northern Laos. The first rubber plantations in
Ban Hat Ngao have been established by resettled people from China or people with
relatives in China providing the technical knowledge and the experience (Alton et al.,
2005). Farmers from other villages also reported to have some connection to China, be
it relatives or just traders animating them to plant rubber. Additionally Chinese, but
also Thai (rather in central Laos) and Vietnamese (rather in south Laos) companies
seek to establish rubber plantations on the basis of concession or contract farming (Ket-
phanh et al., 2006).
Introduction

3
Different types of concessions and contracts exist, but in general within concessions the
farmers only provide labour and are paid monthly wages while in the contract farming
system land and labour is supplied by the farmer and profits from latex and timber sales
are shared among farmers and investors (Douangsavanh & Thammavong, 2006). This
dynamic (regarding smallholders but also contracts and concessions) is heavily sup-
ported by the Lao Government. Rubber is one of the focus commodities for poverty
alleviation and eradication of shifting cultivation. In the sixth national socio-economic

development plan goals and means for the promotion of rubber are formulated regard-
ing the labour market, investment and processing industries (Lao People’s Democratic
Republic, 2006).
Regarding the high or even increasing prices for rubber on the world market and the
heavy promotion from the side of the government but also private investors an ongoing
rubber boom in Laos can be expected resulting in vast areas of forests and other land
cover types being converted to rubber plantations. The effects of this dynamics are
difficult to predict. First, returns from the rubber trees can be expected after approxi-
mately seven years, when the tree can be tapped for the first time. Within this time-
span a lot can happen considering market uncertainties, natural hazards, etc. Addition-
ally, the outcome of the environmental impacts of rubber monoculture (especially on
large-scales) and the effects on other crops and income diversification of the farmers
are mainly unknown. Historically, heavy governmental promotion of rubber already
occurred in the Chinese province Yunnan bordering with Laos. Beginning in the late
1950s and in a second step in the late 1970s the expansion of rubber was fostered,
which resulted in a successful natural rubber industry on steep slopes in southern Yun-
nan (Chapman, 1990). Analyzing Chinese policy measures and environmental and
socio-economic impacts may help to formulate predictions and recommendation for
Laos.
Laying on the ecological margin for Hevea brasiliensis the establishment of rubber
plantations in southern Yunnan faced environmental difficulties with heavy losses of
even mature rubber trees. Major constraints were the occasionally very severe cold
events causing damage to the bark, and sometimes leading to death in the rather long
dry season of four to five months. After primary failures the establishment of a success-
ful Chinese rubber industry can mainly be accounted for in the planning skills of the
Bureau of State Farm Managements and China’s determination to increase domestic
production. By the end of the 1980s, rubber plantation in Yunnan covered approxi-
mately 100’000 ha of which 46’000 ha were owned by smallholders. Planning skills
and a protected domestic market take a big share in the success story. In order to mini-
mize losses from environmental impacts plantations were restricted to areas below 900

– 1000 m asl. In narrow valleys on the bottom and on lower slopes no plantations were
established to avoid areas of cold air drainage. Additionally, before planting, site as-
sessments had to be performed including three years of winter temperature observation
(Chapman, 1990).
Up to the mid-1980s most of the Chinese rubber was coming from state farms, as fam-
ily farming was prohibited until 1978. The state farms had good funding, technical
efficiency and sometimes even provided housing. Wages of rubber tappers could thus
easily compare with those of urban workers. China’s main concern was laid on techni-
Rubber in Laos

4
cal efficiency and increasing the production. Economic efficiency had a secondary
function as rubber enjoyed a protected market with domestic prices well above the
world market price. Not until 1978, with family farming being allowed again, some of
the state farms were reorganized into smaller production units at village level and many
villagers became in effect smallholders (Chapman, 1990). Due to the favorable domes-
tic prices rubber became even a boom crop in Yunnan. Up to now, large areas of Yun-
nan are covered with rubber plantations being planted in state farms or by smallholders
on smaller patches, as can be seen in Image 1.


Image 1: Rubber plantations in Yunnan (around Mengman and Yun-Chin-Hung) covering large
areas along the hillsides of the valleys (source: Google Earth, accessed in July 2008).

A set of different factors can thus be accounted for in the successful establishment of a
rubber industry in Yunnan, some of which may be adapted to the context of the Laotian
rubber boom. The Chinese achievement can be bound to the following favourable con-
ditions: The promotion of rubber was well planned and technically supervised. Initially,
the rubber was only planted in state farms according to regulations concerning altitude,
tree spacing, etc. and a prior three-year site assessment. Working on these state farms

Introduction

5
the smallholders received training in planting, maintaining and tapping the trees, which
they could adopt later when planting rubber on their own. On national level there was
the determination to increase domestic production in order to reduce dependence
(Chapman, 1990). This plays a crucial role for the successful rubber industry and espe-
cially for the vast expansion of rubber plantations within Yunnan. With the protected
market and favourable prices a long term investment like rubber (seven years until tap-
ping can be started and first returns expected) faces fewer risks and uncertainties.
Combined with the knowhow the smallholders were able to gain on the state farms they
are more likely to successfully plant rubber on their own.
The setting of the rubber boom in Laos shows some analogies but also major differ-
ences especially in terms of dependencies on the market and overseas. During the late
1980s and 1990s Laos was in a wind of change. Due to the crash of the Soviet bloc it
faced a cut-off in foreign aid. The reorientation of the country resulted in bidding up
ties with China and Thailand and an economic reform programme called the New Eco-
nomic Mechanism, involving decentralization of economic decision-making, more
accountability for public enterprises, fiscal and financial reforms, deregulation of
prices, removal of trade barriers, the implementation of new investment codes and an
overall greater reliance on market forces. Agriculture is still considered the engine of
growth, but production has been shifted back to a family-based form opposed to the
prior work within collectives (Gunn, 1991).
Regarding the actual dynamic in the field of rubber plantations the economic reform
played a crucial role: Both domestic and foreign ownership and capital investments
have constitutional guarantees of protection and private ownership of production is
guaranteed along with state and collective forms of ownership, transfer and inheritance
of property. The legal basis for investments on the side of smallholders, but also for-
eign companies, is thus given. While the implementation of the New Economic
Mechanism basically opened Laos economically, the political situation was not much

altered. The one-party system was not touched, and any antiregime associations or calls
for a multiparty system are against the constitution (Gunn, 1991; Inoue & Hyakumura,
1999). The challenge Laos faces is to cover the span between the reliance on the market
forces on the economic side, while political decision-making and planning is limited to
one party.
The economic reform and the reorientation towards China led to agreements on trade
and cooperation as well as an agreement on technical cooperation between authorities
of China’s Yunnan province. On this background today’s high dynamics in this region
become explicable. Due to the prior economic closure Laos, compared with its sur-
rounding countries, still has large areas under forest cover, and within rural areas most
people rely on subsistence with some local market integration (Foppes & Ketphanh,
2000). These disparities are a potential to foster socio-economic development and in-
crease the income of the rural population. The promotion of certain industrial crops
based on the potential of each region should boost export volumes (Lao People’s De-
mocratic Republic, 2006). Nevertheless, the vacuum Laos poses within Southeast Asia
needs good political guidance. The economic potential for both, the rural smallholders
and the foreign investors can create a dynamic that calls for control measures in order
to reduce possible negative environmental effects and one-sided dependencies.
Rubber in Laos

6
The example of coffee in Vietnam enlightens how local land use decisions are influ-
enced by central policy-making combined with global economics. The “de moin” pro-
gramme in 1975 changed the Vietnamese centrally planned command economy into a
market economy with socialist direction. The land use in the Vietnamese highlands
could be influenced by the global economy, and with high global coffee prices in the
mid-1990s the area under coffee doubled within a few years only, resulting in a major
change in the land use and land cover characteristics (Heinimann, 2006). Temporary
changes on the global market can thus have an impact on regional level with uncertain
future effects on environment and socio-economic development.

The case of rubber in Laos in fact faces a similar starting position as the coffee in Viet-
nam. The price increase of rubber on the global market made its cultivation more valu-
able. Disparities between Laos with vast areas of agriculturally unused forest land and
its more developed neighbouring countries are expected to result in a fast expansion of
rubber fuelled by foreign investors and smallholders. Controlling these dynamics is
crucial as they can have negative environmental effects and easily result in dependen-
cies from the global market and other countries. The currently high demand on the
Chinese side for natural rubber, which increases the rubber area in Laos, results in an
increased dependence from the global market and from China. Up to now the rubber
plantations in northern Laos have not yet reached the scale and the extent of those in
Yunnan, as can be seen in Image 2.

Introduction

7

Image 2: Smallholder rubber plantations northwards of Luang Namtha and the land cover differ-
ence between Laos (on the left) and China (source: Google Earth, accessed in July 2008).

Nevertheless, large areas have already been converted to rubber plantations, and al-
ready many of the smallholders rely on prospects of future sales of latex and thus de-
pend on the dynamics of the global market. The success story of Yunnan and the high
demand of China fuels expectations of future gains and motivates many to participate
in the latex production.
Although there are differences between Laos and the Chinese example, especially con-
cerning the influence of the market. The challenge Laos is facing at the moment is the
balancing of the different potentials in order to reduce one-sided dependencies, prevent
environmental degradation and foster socio-economic development. As the Chinese
example shows, rubber is a good commodity to increase the income of the rural popula-
tion. However, there are differences regarding the rubber production between the two

countries. The Chinese rubber industry was established in order to achieve self-
sufficiency. They solely produce for the domestic market and enjoy fixed prices well
above the world market price. Production is utterly independent from foreign influ-
ences with the major concern laid on achieving technical efficiency and increasing