Lao PDR climate change institutional assessment (CCIA)

The objective of the Climate Change Institutional Assessment (CCIA) is to analyze the institutional framework for addressing climate change challenges, in the context of the preparation of the World Bank Country Climate and Development Report (CCDR) for the Lao PDR. Lao PDR is highly exposed to climate change due to its dependence on agriculture and hydropower exports, and the high proportion of its population living in flood-prone areas. Key climate risks include rising heat, erratic precipitation, and increasing frequency and severity of floods, droughts, and storms. Climate change is projected to reduce hydropower capacity, alter seasonal output patterns, and raise the risk of dam failure, while limited job opportunities outside agriculture deepen economic and social vulnerability. Against this backdrop, the World Bank's Climate Change Institutional Assessment (CCIA), conducted between November 2024 and February 2025, evaluates the institutional framework through which Laos addresses climate change, focusing on four dimensions: the legal framework, the policy coordination mechanism, climate change in planning documents, and climate considerations in public financial management (PFM).

The findings reveal significant institutional gaps across all four dimensions. The 2019 Prime Minister's Decree on Climate Change provides a foundational legal framework but lacks long-term emission targets, independent oversight, and key policy instruments such as carbon taxation and climate budget tagging, while implementation of its core provisions — including climate vulnerability assessments, the GHG inventory, and the Environmental Protection Fund climate window — remains incomplete. Climate policy coordination is fragmented, with no active multi-stakeholder platform, an inactive National Environment Committee, and limited reporting on NDC implementation, including a Biennial Transparency Report overdue since end of 2024. Planning suffers from a proliferation of strategies lacking prioritization, costing, and clear links to the five-year National Socio-Economic Development Plan. Public financial management practices do not support climate financing, as macro-fiscal forecasts ignore climate risks, public investment management is weak, and state-owned enterprise oversight is insufficient to attract international climate finance. The CCIA recommends a prioritized set of actions — including upgrading the Decree into law, reviving the National Environment Committee, finalizing the National Adaptation Plan, preparing an integrated climate implementation plan, and accelerating Green Climate Fund accreditation — to strengthen Laos' institutional readiness to deliver on its climate commitments.