Article

Hydropower, development, and poverty reduction in Laos: promises realized or broken?

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Abstract

While hydropower projects have been seen as a sort of panacea for clean energy production in an increasingly environmentally-sensitive time, allowing for continued development, dam projects have nevertheless been a source of significant negative social and environmental impacts. The topic of hydropower projects, associated political-administrative processes, and the outcomes of these projects with regard to poverty reduction remain understudied. This paper reviews hydropower projects and impacts on poverty and environmental quality in the case of Laos, querying intent and realization of goals. The research questions asked in this paper are: How have hydropower projects in Laos affected the nation’s economic prospects? Has promised poverty reduction, particularly among the nation’s rural poor, been seen as a result of infrastructure projects? The paper begins with a view of Laos in terms of development and priorities. A section on infrastructure development, in light of poverty reduction, follows. Next, hydropower projects and implications for forest management are discussed. It is suggested that the connection between electricity provision and poverty reduction in rural areas is unclear; further, the benefit of mega-scale energy projects is limited to increases in energy export, with direct benefits being seen primarily by officials and elites.

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... For example, commitments to combat global climate change and its impacts (SDG 13) With its diverse topography, hydropower has become the main renewable energy source of the basin. Other major reports of the region also cite hydropower infrastructure as the main development opportunity that can help the LMB Countries achieving their goal of ensuring affordable and clean electricity (Mekong River Commission, 2016;Intralawan et al., 2019;International Hydropower Association, 2020;Atkinson, 2021). While hydropower has been highlighted as a renewable and sustainable resource for countries to meet SDG7 and their energy needs, it has also been known to cause negative effects on the ecosystems (Section 1). ...
... While hydropower has been highlighted as a renewable and sustainable resource for countries to meet SDG7 and their energy needs, it has also been known to cause negative effects on the ecosystems (Section 1). As more and more rivers are dammed, uncertainties associated with costs and benefits of hydropower development and operation have become the focal point of debate and water politics in the LMB (Geheb and Suhardiman, 2019;Intralawan et al., 2019;Trung et al., 2020;Yoshida et al., 2020;Atkinson, 2021). ...
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Lao People's Democratic Republic (hereafter Lao PDR or Laos) has implemented policies to expand plantations on the basis of their contribution to economic development, improvement of local livelihoods, poverty alle-viation, developing linkages between the processing industry and smallholder growers, and improving environmental outcomes. Despite the significant inflow in foreign investment in forest plantations, few studies have attempted to analyse the contribution of foreign investment to income distribution and poverty. This paper uses a top-down macro-micro economic modelling framework to assess the impacts of plantation development policies on poverty and inequality in Laos. The results revealed that welfare and inequality would increase while poverty incidence would decrease. These results can be used to improve policies for economic development and poverty alleviation.
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Protected areas (PA) cover an impressive 62% of Laos' land surface, however there are a lot of low biodiversity value residential and agricultural areas within the protected area network (PAN). The Government of Laos is aiming to re-delineate the PAN in order to exclude these areas. We support this aim by estimating how efficiently different protected area categories have reduced deforestation, by modeling priority areas for conservation and by evaluating the mismatch between these and the current PAN. Protection effectiveness was analyzed via combined matching and regression method, which indicates that only National Protected Areas have actually reduced deforestation, while the remaining PA categories have had negligible impacts. Spatial multi-criteria decision analysis supported by local and international expert knowledge on conservation, forestry and land management was used to model conservation priority areas, which were compared with the current PAN. The results indicate that vast overprotected low conservation priority areas exist inside the PAN, especially within Protection Forest Areas. Based on these findings, we argue that the current PAN is ineffective and inappropriately targeted. We recommend that Laos re-delineates and downsizes its PAN to ensure sufficient management of remaining high conservation priority areas both inside and outside the PAN. We further discuss potential methods and co-benefits of PA re-delineation in Laos' context. The findings are also globally linked to limitations of systematic conservation planning in data-scarce developing countries and the need to improve both quality and coverage of biodiversity data alongside protected area monitoring and management.
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This paper examines measuring of interdependency among households through their transactions by using information of individual villagers in a disadvantaged area in a developing country. To obtain the information, we created a village input–output table (VIOT) from household survey data conducted in a rural village in Lao PDR in 2015 and 2016. Because each household in the village is not only a producer but also a consumer who is trading products and consuming them, the VIOT is a simple but useful tool to know the economic transactions among villagers. The main findings are that four higher-income families, which mainly trade rice very frequently, are playing key roles in the village economy, and the interdependency among higher-income households is stronger than among lower/middle-income households. Additionally, this method can be used to form an economic policy such as poverty reduction because of informing households playing a key role in the village.
Book
Based on extensive original research, this book explores the technical, social, political, and economic dimensions of four Asian energy megaprojects: a regional natural gas pipeline network in Southeast Asia, a series of hydroelectric dams on the island of Borneo, an oil pipeline linking Europe with the Caspian Sea, and a very large solar energy array in the Gobi desert. © Benjamin K. Sovacool and Christopher J. Cooper 2013. All rights reserved.
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This paper investigates the relationship between electricity consumption and economic growth in Laos by applying the ARDL bounds testing approach to cointegration and Granger causality tests. Our results confirm the existence of a long run relationship between electricity consumption and economic growth. In addition, we found unidirectional causality running from economic growth to electricity consumption in the long run supporting the ‘Conservation hypothesis’.
Article
Laos has launched ambitious plans on poverty reduction greatly by developing hydropower in the mainstream of the Mekong River. However, upstream dam construction may result in salt water intrusion followed by ecology deterioration of downstream countries in a transboundary river context. These potential impacts could worsen economy and social growth, ecology security, and residents’ lives to downstream states. Furthermore, diplomatic crisis may be triggered if all stakeholders do not handle the conflicts properly. In this study, dilemmas of hydropower development in Laos are analyzed from policy perspective. Various factors constraining hydropower exploration are identified. Results indicate that the Lao government is confronted with numerous stressors from the mechanism of the Mekong River Commission and other organizations in hydropower development. Laos should adopt multiple approaches to shake off the current dilemmas rather than pursue a unilateral policy on dam construction in the Mekong River.
Article
Purpose India is a developing nation where the marginal benefit of Infrastructure Development is tremendous. This paper aims to analyze the relationship between infrastructure development and poverty reduction for India using the yearly data from 1991 to 2015. Design/methodology/approach We use the Principal Component analysis to construct indices for four major sub-sectors namely: Transport, Water and Sanitation, Telecommunications and Energy, falling under the broad Infrastructure sector and then using these sector wise indices, we construct an overall index which represents infrastructure development. We provide evidence on the link between infrastructure development and poverty reduction by using the Auto Regressive Distributed Lag (ARDL) bound testing approach. Findings The ARDL test results suggest that infrastructure development and economic growth reduce poverty in both long run and short run. The causality test confirms that there is a positive and unidirectional causality running from infrastructure development to poverty reduction. Research limitations/implications The study confirms that India’s Infrastructure development plays a vital role in reducing poverty and calls for the Indian government to adopt economic policies which are aimed at developing and strengthing the Infrastructure levels and bringing in more investment in the Infrastructure sector in order to help the poor population by making them exposed to better opportunities of employment and income growth, thereby achieving the goal of poverty reduction. Originality/value This paper is a fresh and unique attempt of its kind to empirically investigate the causal relationship between infrastructure development and poverty reduction in India using modern econometric techniques.
Article
Contradicting policies and overlapping property arrangements are common in many countries, opening doors for diverse interpretations by different actors. This requires better knowledge on how competing interests and actors interact and what determines the practical competition outcomes as demand for land intensifies and international actors get increasingly involved in regulating natural resources. Land use planning in Laos provides a case in point as it aims at strengthening tenure security, intensifying agriculture and sparing forest areas while other policies simultaneously promote agricultural development and agri-business investment that reconfigure land use and land access. Through national, provincial, district, village and household interviews, we examine how different land- and forest-related policies interact, and whether ongoing land use planning processes and land rights formalization increase tenure security. We show how government policies supported by international donors, and introduced to strengthen tenure rights for the rural population actually reduce villagers’ legally permitted agricultural areas. Even if district-level land use regulations do not currently exclude local communities from their land, land use plans lay the groundwork for potentially excluding villagers from large land areas. We find that plural, contradictory regulations and policies, combined with existing power inequalities result in a “filter mechanism” that reduces the practical impact of legal instruments and safeguards aimed at strengthening the least powerful actors’ rights. Our results add to other authors’ arguments that political and legal changes are mediated by power relations, cultural norms and economic incentives, by highlighting that the duel-edged rights sword may actually end up paving the way for greater state control over future benefits derived from community areas classified as forest lands. This is especially relevant when preparing REDD+, which we show is likely to weaken rather than strengthen tenure security for rural populations.
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This contribution examines how and with what effects the Movement of People Threatened by Dams (MOAB) in the Ribeira Valley, Brazil, works at various scales simultaneously. It is argued that MOAB was kicked off by mobilising Afro-descendants around livelihood issues, and that one of the first anti-dam strategies was to claim quilombola recognition and land rights at the state level. MOAB soon expanded its network and broadened its agenda to include procedural justice, targeting federal and international agencies for recourse. The paper concludes that MOAB has successfully used different scales for framing, mobilisation and action, which has contributed to the dam project being put on hold for almost three decades.
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We examine the patterns and characteristics of private investment in Laos, and how these evolve in relation to the Lao government's investment incentive policies in particular, and the wider State policies in general. Our goals are to: 1) systematically describe and analyse the patterns and characteristics of private investment in the country; and 2) analyse investment outcomes in terms of economic growth, poverty reduction and livelihoods. We argue that while private investments in the resource sector have contributed to the economic growth, they have also negatively impacted local resources and communities. From a policy perspective, we highlight the need to examine the actual significance of policy incentives provided by the Lao government, especially with regard to its ability to direct investment decisions, geographically and sectorally.
Article
Purpose – The purpose of this paper is to examine the impact of public expenditure on economic growth and poverty alleviation in developing countries like India. If poverty and inequality are high, the government may resort to distributive policies at the cost of long-term growth. The distributive policies and poverty alleviation measures fail to achieve success due to lack of good governance, lack of proper targeting and problems in the implementation of such schemes. On the other hand, if the nature of public expenditure is such that it enhances per capita income, it will help reduce poverty. Design/methodology/approach – After analytical digression and construction of hypotheses panel regression has been done using state-level data in the Indian context to empirically verify the above propositions. Both Fixed effects and Random effects models have been used for this purpose. Findings – The results show that in states where ratio of public expenditure on the development of infrastructure such as road, irrigation, power, transport and communication is higher, per capita income is also higher and incidence of poverty is lower indicating that economic growth is important for poverty alleviation and development of infrastructure is necessary for growth. Originality/value – This study demonstrates how public policy and public finance can be used as instruments for removal of poverty.
Article
Purpose – The purpose of this paper is to examine the contribution of financial development to poverty reduction in 11 South Asian developing countries using panel data set over the time period 1990-2012. Design/methodology/approach – The stationarity properties are checked by using Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests. The paper applied the Pedroni’s panel co-integration test to examine the existence of long-run relationship. The coefficients of co-integration are examined by fully modified OLS (FMOLS) and the causal link is checked by panel causality test. Findings – The empirical results of Pedroni co-integration test confirm a long-run relationship between financial development and poverty reduction in South Asian developing economies. The findings of FMOLS method confirm a strong and positive relationship between financial development, trade openness, inflation and poverty reduction. Results of panel causality test indicate that there is a unidirectional causality running from financial development to poverty reduction variable. Research limitations/implications – The present study recommends appropriate economic and financial reforms focussing on financial inclusion to reduce poverty in selected South Asian economies. Originality/value – This paper is the first of its kind to empirically examine the causal relationship between financial sector development and poverty reduction in South Asian economies using modern econometric techniques.
Article
The Mekong is a region whose geopolitics are shifting in complex ways. They are shifting with the post-Cold War reconfiguration of ideological as well as strategic power deployments. They are also shifting with rapid economic development and associated regional integration. This paper employs these various dimensions of shifting geopolitics to explore and partially explain the (re)emergence of hydropower development in the Mekong. It does so by outlining both the shifting geopolitics of river and region, and showing how the Mekong as metaphor extends to much more than the materiality of the river from which the multiply constructed region derives its name. It suggests that the regional geopolitics produced by these shifts is key to the re-emergence of mainstream hydropower.
Article
'Water grabbing' in the Mekong River has been accelerating at a feverish pace. The stakes have never been greater. Talks between international socio-environment groups, public-private dam partners, and Mekong countries are increasingly fractious and dysfunctional. The departure of the multilateral agencies, such as the World Bank and Asian Development Bank, from large-scale infrastructure funding has allowed the private sector access to investment opportunities in hydropower, and as a result facilitated the promise of rapid hydropower growth in the Lao PDR. The antagonism of international social and environmental groups towards these dams is due primarily to the transboundary impacts of multiple constructions and modifications to the Mekong. We posit that the dilemma in the negotiations over the Mekong dams in Lao can be best understood from the perspective of misaligned incentives-objectives. We examine the major stakeholders involved in contractual negotiations and group parties according to their aligned incentives-objectives. We employ a criteria trade-off framework to show that if talks take place over two rounds under particular rules, compromises of objectives and trading of incentives are possible. We stipulate that a Pareto-optimal solution is indeed possible-if a non-partisan, authoritative agent with retributory powers to design and enforce corrective incentives for all stakeholders takes part in both negotiation rounds. © 2015 Crawford School of Public Policy, The Australian National University and Wiley Publishing Asia Pty Ltd.
Article
Because of the role that peripheral forest landscapes played in postwar nation-building, the Lao military has long played a significant, even if often hard-to-see, role in the administration of the country's protected areas. This role is becoming increasingly apparent as transnational market-based forest governance efforts begin to threaten military administration of protected areas. As a consequence, the multi-dimensional nature of security – both defensive in the classic military sense, but also increasingly economic and complex – is coming to light through uses of what we describe as the security exception: the invocation of national security, in this case by military actors, to manage the reach and efficacy of emerging forest governance efforts. Projects to reduce climate-related emissions from deforestation and forest degradation (REDD+) have been especially prone to trigger the security exception due to their focus on forest measurement and change over time, and are examined here in two cases from protected areas in western and southern Laos. We suggest that even as conflicts over forest management may be interpreted through the lens of foreign domination and the loss of domestic sovereignty – indeed the security exception feeds on such interpretations – these conflicts are better understood as struggles within the Lao state and society over the how to manage and use forest resources in a context of economic uncertainty and persistent underdevelopment. In such a context, the role of conservation NGOs and Western donors as gatekeepers to ongoing transnational governance efforts is nonetheless highly significant.
Article
This article develops the idea of “dirty money states” by defining and exploring the problem of illicit state financing in Southeast Asia. Most diagnoses of Southeast Asia's flourishing illicit economies focus on the prevalence of corruption and the “decay” of the state, but the authors of this essay develop a more nuanced explanation by exploring how states cultivate and sustain themselves through illicit extraction. Drawing from emerging literature on states and criminality, as well as fiscal sociology, they develop a novel theoretical framing for the six country case studies that comprise this thematic issue. Each study – on Indonesia, Cambodia, Vietnam, Myanmar, East Timor, and the Philippines – examines empirically how illicit state financing works. Whether revenues derive from gold, timber, opium, aid agencies, or business interests, the authors identify consistent patterns in the nature and behavior of the state vis-à-vis illegally generated funds. These patterns encompass territorial dynamics and practices; the everyday social worlds of state actors and their entrepreneurial allies; and the paradoxical interplay between formal and informal realms. Ultimately the authors argue that illicit monies are fundamental to contemporary state building in the region, extending even to the delivery of public goods and services. These findings are potentially uncomfortable for scholars, governments and development practitioners, particularly because they challenge conventional ideas about how the strength and/or weakness of states might be understood in Southeast Asia. But they demand attention, since they are the product of an ambitious and unconventional research endeavor.
Article
The Mekong Basin spanning large parts of continental Southeast Asia is endowed with rich natural resources that are increasingly under pressure as a result of rapid socio-economic development over the last decades. Particularly the forests in the region are threatened by large-scale infrastructure developments, the expansion of agriculture and trading of timber products. In view of these developments, this study provides an updated view of the current state of the forest resources in the region and the change they have undergone throughout the last decade. Annual maps of percent tree cover, herbaceous cover, and barren land for the years 2001–2011 were derived from 500 m MODIS data, and formed the basis for a tree cover specific identification of changes utilizing utilising long-term statistics on inter-annual prediction variability. Furthermore, the temporal patterns shown in the tree cover history of each pixel for the observation period, allowed a differentiation to be made between permanent forest cover conversions and temporary forest losses, as well as between areas of abrupt and more gradual forest dynamics. Average gross forest loss for the Lower Mekong Basin was estimated at a rate of 0.4% per year. When considering permanent forest losses only, the highest annual loss rates were evident for Vietnamese Basin area (1.1 %), followed by the respective national areas of Cambodia (0.7%), Laos (0.4%), and Thailand (0.2%). Extensive areas of forests and forest regrowth within Laos and Vietnam have been affected by temporal losses that have been mostly attributed to shifting -cultivation practices and the conversion of natural forests to forest plantations. Furthermore, it could be shown that temporal patterns of change may possibly reveal information about the underlying causes of forest cover reduction. Forest clearance related to large-scale mechanised clear cutting, e.g. by the agroindustry, generally showed very abrupt decreases in canopy cover, while forest losses related to small-scale agricultural clearings or more selective logging where characterised by more gradual decreases.
Article
Gaining public acceptance is one of the main issues with large-scale low-carbon projects such as hydropower development. It has been recommended by the World Commission on Dams that to gain public acceptance, public involvement is necessary in the decision-making process (WCD, 2000). As financially-significant actors in the planning and implementation of large-scale hydropower projects in developing country contexts, the paper examines the ways in which public involvement may be influenced by international financial institutions. Using the case study of the Nam Theun 2 Hydropower Project in Laos, the paper analyses how public involvement facilitated by the Asian Development Bank had a bearing on procedural and distributional justice. The paper analyses the extent of public participation and the assessment of full social and environmental costs of the project in the Cost-Benefit Analysis conducted during the project appraisal stage. It is argued that while efforts were made to involve the public, there were several factors that influenced procedural and distributional justice: the late contribution of the Asian Development Bank in the project appraisal stage; and the issue of non-market values and discount rate to calculate the full social and environmental costs.
Article
This article reviews a landmark policy on resource management in Lao People's Democratic Republic (PDR). The Land and Forest Allocation Policy was introduced in the early 1990s as a means of legitimately recognizing the customary rights of local communities to use and manage land and forest resources. We examine the policy from the viewpoint of decentralized resource management and, through three case studies conducted by the National University of Laos, how it works in practice. The studies were conducted in Vientiane, central Lao PDR, and indicate gaps between the expected goals of land reform and actual practice. The study also shows the varying impacts of the allocation policy on local resource use and household livelihoods in different villages. Finally, the case studies suggest the importance of field-based research as a way of critically reviewing the impact of government policy on local resource management and people's livelihoods.
Article
A companion paper in the previous issue of this journal (Briscoe, 1999) describes the changing face of infrastructure financing in developing countries. This paper deals with the financing of major infrastructure in the water-related sectors-hydropower, water supply and sanitation, irrigation, and overall water resources management (including the environment). The overall level of investment in water-related infrastructure in developing countries is estimated to be of the order of 65billionannually,withtherespectivesharesabout65 billion annually, with the respective shares about 15 billion for hydro, 25billionforwaterandsanitationand25 billion for water and sanitation and 25 billion for irrigation and drainage. About 90% of this investment comes from domestic sources, primarily from the public sector. Water-related infrastructure accounts for a large chunk-about 15%-of all government spending. This heavy dependence on the public sector means that the global 'winds of change' in the respective roles of government and the private sector have major implications for the financing and structure of the water economy. The paper describes how each of the 'sub-sectors' is adapting to these winds of change. First, in recent years competition and private sector provision have emerged as the characteristicsof the new electricity industry. This change poses a fundamental challenge to hydro which, to a much greater degree than thermal, has risks (hydrological, geological, social and environmental) which are better assumed by the public than the private sector. The future of private hydro, and thus of hydro itself, depends heavily on the ability of the public sector to both share risks with the private sector, and to provide predictable social and environmental rules of the game. Second, the urban water supply sector is in the early stages of equally profound change. In recent years there has been a dramatic shift towards the private sector, in developed and developing countries alike. An outline of the future shape of a competitive urban water sector is emerging: it is one in which a growing number of private companies will compete with revitalized (and often corporatized) public utilities. Capital will, increasingly, come from the private capital markets, with the critical government role being that of light, transparent benchmarking and regulation. Third, the adaptation to the winds of change is least advanced in the public irrigation sector, which has long been characterized by public financing and 'rent seeking' by bureaucracies, politicians and private beneficiaries. It is only in recent years, and only in a few countries, that the irrigation sector has modernized. In these cases irrigation has become like any other utility, in which accountable, autonomous agencies provide users with the services the users want. In many instances, farmers have become responsible for the costs of operating and maintaining their systems; in some instances they are responsible for meeting the full costs of replacement, rehabilitation and new investments. Where these changes have taken place, there have not only been sharp swings in the relative proportion of private and public spending, but there have been dramatic improvements in the efficiency of investment and operation and, in most cases, major positive environmental impacts.
Article
A survey of energy use on Mauritius was carried out during the period July–September 1979. It shows that the island is dependent on oil for 90% of its energy supplies and that about half of the energy consumed is used for transport. The potential for developing renewable energy sources in Mauritius is considered and it is shown that solar water-heating and the use of sugar by-products could make significant contributions to the future energy economy of the island.
Article
The Lao People's Democratic Republic, a least developed land-locked country in Southeast Asia, was able to quadruple its electrification rate from 16% in 1995 to 63% in 2009. This has been achieved due to a series of projects undertaken by the government in conjunction with multilateral aid organizations. This study examines one such project undertaken recently by the Lao government and the World Bank called the Rural Electrification Project Phase I (REP I). Based on field research and research interviews conducted in Laos, the focus of this study is to understand this project's design and implementation, key success factors, and shortcomings. The authors derive lessons for both developing countries and those giving energy aid (such as multilateral financial institutions and development agencies) by laying out the dilemmas the project faced and emphasizing how key challenges were overcome. The study concludes by arguing that geographic and socio-economic data should be collected before electrification programs proceed, that programs must focus on the commercial viability of electricity suppliers, that fee-for-service models hold great promise, and that outsourcing can improve the efficiency and efficacy of electrification efforts.Research Highlights► Laos has quadrupled its electrification rate from 16% in 1995 to 63% in 2009. ► The experience with Laos shows that geographic and socio-economic data should be collected before electrification programs proceed. ► It also shows that programs must focus on the commercial viability of electricity suppliers and that fee-for-service models hold great promise.
Article
While there is an important body of research on environmental discourses and policy in Southeast Asia, the situation in the Lao PDR remains understudied. This paper builds on debates related to environmental change and knowledge production and examines the socio-political construction of the current mainstream discourse on land degradation in Laos. It highlights that, despite significant uncertainties as regard the extent and severity of the issue, land degradation in the uplands is represented by the Laotian authorities and many of their development partners as a major and imminent threat to the development of the country. The paper also examines the way this perspective is translated into policies specifically aimed at resolving the upland issue and proposes an alternative reading of this process where mainstream discourse and associated policy appear partly shaped by the subjectivities and political economic projects of Laos’ policy-makers. Finally, drawing on the case of Laos, the paper provides a critical reflection on conventional approaches to assessing socio-environmental issues and defining policy interventions.
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The article describes the widespread use of an estimated 60,000 low-head pico-hydropower turbines and well-developed networks of supply and support in the Northern part of the Lao People's Democratic Republic (Lao PDR). This apparent widespread use is contrasted with the policy narratives of key actors in the government, multilateral organisations and the private sector which show an often simplified and overly negative attitude towards pico-hydropower. Based on empirical research carried out in three upland districts and the capital, Vientiane, the paper critically investigates the apparent disjuncture between policy and practice by placing pico-hydropower within the broader political context of rural electrification in the Lao PDR. It is argued that the neglect of pico-hydropower and other off-grid household electrification technologies is a result of an endemic lack of information on which to base policy decisions, the orientation of the government to facilitate large scale foreign investment in large hydropower dams, the universal applicability of solar home systems, and the broader state agenda of centralisation and control over service provision to remote upland areas.