Agro Tourism
Agro Tourism
Business Model Description
Invest in the development and promotion of agro-tourism by integrating agricultural practices with tourism activities. This includes creating experiences like farm visits, workshops, local food tasting and stays in rural settings to provide tourists with an immersive and educational experience about local agriculture and culture. Illustrative examples of companies working in this space are:
Living Land Company, Laos is a community-run farm in Luang Prabang that offers hands-on rice farming experience to tourists. Visitors learn about traditional farming methods, contributing to sustainable tourism and local economy
The Gibbon Experience, Laos is an eco-tourism project in Bokeo Nature Reserve, providing visitors with a unique experience of staying in tree houses and zip-lining, while promoting forest conservation and providing local employment
Organic Farm Vang Vieng, Laos is a farm promoting sustainable practices such as organic farming and mulberry paper production. Tourists can stay, volunteer, and learn about their methods, contributing to local community development
Laos Buffalo Dairy, Luang Prabang is a social enterprise offering a unique agro-tourism experience with a dairy farm. Visitors can learn about dairy production, feed animals, and taste local dairy products, supporting local farmers and sustainable agriculture
Kamulodge, Laos: A lodge in the Lao jungle offering an eco-tourism experience with organic farming, local craft workshops, and sustainable practices like using renewable energy.
Expected Impact
IOA fosters sustainable growth in local communities via agro-tourism,which through employement opportunities promotes gender equality and inclusion.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Lao PDR: Vientiane Capital
- Lao PDR: Champasak Province
- Lao PDR: Luang Prabang Province
- Lao PDR: Khammouane Province
- Lao PDR: Luang Namtha Province
Sector Classification
Services
Development need
In 2019, the service sector accounted for 41.9% of Lao PDR's GDP. This sector contributes significantly to the country's GDP and, thus, plays an essential role in economic diversification and job creation. However, challenges such as limited access to finance and skilled labor shortage need to be addressed to ensure the sector's sustainable growth. (1)
Policy priority
The government of Lao PDR has prioritized sustainable development and the promotion of public-private partnerships in its policy initiatives. The government aims to provide support and incentives for further service sector development, aligning with the Lao PDR Vision 2030 and the National Socio-Economic Development Plan. (2)
Gender inequalities and marginalization issues
Despite formal equality, gender inequality persists in Lao PDR, with women facing barriers to entry and advancement in the service sector. Policies and laws do not sufficiently address gender disparities or provide for the specific engagement of women in institutional processes. (3)
Investment opportunities introduction
The service sector in Lao PDR, encompassing areas such as tourism, information technology, and financial services, offers considerable investment potential. As the country continues to diversify its economy away from a traditional agriculture-based model, opportunities for investment in these and other services are expected to grow.
Key bottlenecks introduction
The service sector in Lao PDR faces several bottlenecks that could hinder its growth. Limited access to finance, inadequate infrastructure, and a shortage of skilled labor have been identified as major challenges. Tackling these issues is crucial for the sustainable development of the sector.(5)
Hospitality and Recreation
The COVID-19 pandemic has had a profound impact on the tourism sector in Lao PDR, which was already grappling with limited job opportunities beyond agriculture. Agro-tourism, a subsector that blends agriculture and tourism, has been identified as a potential area for synergistic development. The pandemic has further emphasized the need for diversification within the tourism sector, making agro-tourism a critical focus.
In response to the pandemic, the Lao government, with support from UNDP, has outlined a Tourism COVID-19 Recovery Roadmap for 2021-2025. This roadmap should extend its focus to include agro-tourism as a priority. The strategy aims to revitalize the hospitality and recreation sector while emphasizing sustainable tourism development, which aligns well with agro-tourism principles [3].
Women make up a significant portion of the tourism sector workforce and are particularly vulnerable due to the pandemic. Since agro-tourism often involves community-based activities, a gender-responsive approach in this subsector could provide more equitable opportunities for women [4].
As Lao PDR aims to recover from the pandemic, agro-tourism presents plenty of investment opportunities. These range from eco-tourism farms to cultural experiences centered around local agriculture. Such diversification enriches the tourism experience and creates more resilient income streams [5].
Key bottlenecks introduction
The challenges facing the agro-tourism subsector include inadequate infrastructure, limited access to finance, and a lack of skilled labor. The pandemic has likely exacerbated these bottlenecks and should be a focal point in any development strategy for agro-tourism [2].
Hotels and Lodging
Pipeline Opportunity
Agro Tourism
Invest in the development and promotion of agro-tourism by integrating agricultural practices with tourism activities. This includes creating experiences like farm visits, workshops, local food tasting and stays in rural settings to provide tourists with an immersive and educational experience about local agriculture and culture. Illustrative examples of companies working in this space are:
Living Land Company, Laos is a community-run farm in Luang Prabang that offers hands-on rice farming experience to tourists. Visitors learn about traditional farming methods, contributing to sustainable tourism and local economy
The Gibbon Experience, Laos is an eco-tourism project in Bokeo Nature Reserve, providing visitors with a unique experience of staying in tree houses and zip-lining, while promoting forest conservation and providing local employment
Organic Farm Vang Vieng, Laos is a farm promoting sustainable practices such as organic farming and mulberry paper production. Tourists can stay, volunteer, and learn about their methods, contributing to local community development
Laos Buffalo Dairy, Luang Prabang is a social enterprise offering a unique agro-tourism experience with a dairy farm. Visitors can learn about dairy production, feed animals, and taste local dairy products, supporting local farmers and sustainable agriculture
Kamulodge, Laos: A lodge in the Lao jungle offering an eco-tourism experience with organic farming, local craft workshops, and sustainable practices like using renewable energy.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
29,400 jobs in the service sector lost due to the covid19 pandemic.
The tourism sector in Lao PDR has seen a substantial growth over the years. According to the World Travel and Tourism Council, the direct contribution of travel and tourism to Lao PDR's GDP was around $575 million in 2019[16]. It was forecasted to rise by 6.9% per year from 2020-2030[17].
However, the COVID-19 pandemic has caused a temporary decline in tourism worldwide. As the world recovers from the pandemic, nature-based tourism is expected to play a significant role in the revival of the sector in Lao PDR.
Indicative Return
15% - 20%
The tourism industry in Lao PDR is projected to grow back to pre covid 19 levels where tourism accounted for 12% of the country's GDP
Investment Timeframe
Short Term (0–5 years)
Tourism is expected to become the dominant industry in Lao PDR in the upcoming years.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Business - Supply Chain Constraints
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Economic Diversification: Rural areas in Laos are heavily dependent on agriculture, which is subject to climate risks. There's a need to diversify rural economies to increase resilience.
Environmental Conservation: Uncontrolled tourism in some areas has led to the natural and cultural heritage degradation. There's a need for sustainable tourism models to conserve these resources.
Rural Poverty: Poverty rates in rural areas of Laos are higher than in urban areas. There's a need to create additional income streams to alleviate rural poverty.
Gender & Marginalisation
Gender Inequality: Women in rural Laos face limited employment opportunities, resulting in economic and social inequality.
Geographic Marginalisation: Rural communities, particularly those in remote areas, often lack access to economic opportunities and basic services.
Expected Development Outcome
Economic Resilience: By promoting agro-tourism, rural communities can diversify their income sources, reducing their vulnerability to climate risks and economic shocks.
Environmental Stewardship: Agro-tourism promotes sustainable use of natural and cultural resources, fostering environmental conservation and cultural preservation.
Poverty Reduction: Agro-tourism can boost local economies by creating jobs and stimulating investment in rural areas, contributing to poverty reduction.
Gender & Marginalisation
Women Empowerment: Agro-tourism can provide women with income-generating opportunities, thereby promoting gender equality.
Rural Development: By bringing economic activities to remote areas, agro-tourism can help alleviate geographic marginalisation, improving access to services and opportunities.
Primary SDGs addressed
8.3.1 Proportion of informal employment in total employment, by sector and sex
Lao PDR’s informal employment, female (% of total non-agricultural employment) was 79.63% in 2017.
Reduction in the ratio of informal employment through the creation of formal job opportunities
12.b.1 Implementation of standard accounting tools to monitor the economic and environmental aspects of tourism sustainability
The government has begun formulating sustainable tourism policies, but implementation is still in the early stages
Full implementation of sustainable tourism strategies and action plans
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Public sector
Outcome Risks
Exclusion risk: There's a risk of exclusion of marginalized groups if they are not adequately considered in program design. This could result in a widening of the income gap.
Environmental harm: There's a risk of negative environmental impact if sustainable practices are not strictly adhered to, potentially leading to deforestation.
Over-tourism: If not appropriately managed, increased tourism can strain local resources, damage the environment, and reduce the quality of life for residents.
Impact Risks
External risk: External factors such as political instability, economic downturns, or natural disasters could disrupt the expected impact.
Stakeholder participation risk: Misunderstanding stakeholder expectations or experiences could lead to unintended negative consequences, reducing the program's overall impact.
Drop-off risk: There's a risk that the positive impact may not endure due to a lack of long-term planning or follow-through.
Execution risk: There is a risk that activities are not delivered as planned. This could be due to operational challenges, lack of adequate skills among the team, or unforeseen obstacles.
Gender inequality risk: If not well managed, the program may fail to adequately address gender inequality, resulting in a missed opportunity to empower women and promote gender equality.
Impact Classification
What
The IOA aims to boost local economies through sustainable tourism, providing income to locals while conserving the environment.
Who
The primary beneficiaries are the local communities, who are currently underserved in terms of economic opportunities, and the tourists.
Risk
There's a risk of over-tourism, exclusion of marginalized groups, and environmental harm if the IOA is not managed properly.
Contribution
The IOA is expected to generate new economic opportunities and enhance environmental conservation, which would not have occurred without the initiative.
How Much
29,400 workers in the service sector lost employement due to the covid-19 pandemic. This IOA aims to provide employement opportunities to reduce this number.
Impact Thesis
IOA fosters sustainable growth in local communities via agro-tourism,which through employement opportunities promotes gender equality and inclusion.
Enabling Environment
Policy Environment
"National Agro-Tourism Development Plan 2020-2030." This plan aims to develop agro-tourism as a sustainable economic activity in rural areas.
"National Agriculture Policy 2020." This policy aims to modernize the agricultural sector and supports the development of agro-tourism.
"National Rural Development Strategy 2020-2025." This strategy focuses on developing the rural economy, including agro-tourism.
Financial Environment
"Agro-Tourism Development Grant." Government grants for developing agro-tourism projects.
"Agro-Tourism Tax Incentives." Tax breaks for agro-tourism businesses.
"Agro-Tourism Loan Scheme." Reduced interest rates for loans to agro-tourism businesses.
Regulatory Environment
"Agriculture Act 2020."This act governs agricultural activities and impacts the agro-tourism sector.
"Tourism Act 2020." This act regulates tourism activities, including agro-tourism.
"Environmental Management Act 2020."This act mandates environmentally sustainable practices for businesses, including agro-tourism enterprises.
Marketplace Participants
Private Sector
Green Acres Agro-Tourism," "Farm Life Tours,", "Rustic Holidays Agro-Tourism, Green Discovery Lao and LCC group
Government
"Ministry of Agriculture and Forestry," "Ministry of Tourism and Culture."
Multilaterals
"Food and Agriculture Organization (FAO)," "World Tourism Organization (UNWTO)."
Non-Profit
"Rural Development Foundation," "Sustainable Tourism Foundation."
Public-Private Partnership
"National Agro-Tourism Development Project," a government and private sector collaboration.
Target Locations
Lao PDR: Vientiane Capital
Lao PDR: Champasak Province
Lao PDR: Luang Prabang Province
Lao PDR: Khammouane Province
Lao PDR: Luang Namtha Province
References
- ([1] World Bank. (2019). Tourism for Development in Lao PDR. (https://openknowledge.worldbank.org/handle/10986/31668) [2] Lao PDR's Eighth National Socio-Economic Development Plan (2021-2025). (https://www.la.undp.org/content/lao_pdr/en/home/library/socio-economic-development-plan.html) [3] UNDP. (2020). Women's Economic Empowerment in the Tourism Sector in Lao PDR. (https://www.la.undp.org/content/lao_pdr/en/home/library/womens-economic-empowerment-in-the-tourism-sector-in-lao-pdr.html) [4] Ministry of Natural Resources and Environment, Lao PDR. (https://www.monre.gov.la/index.php/en/) [5] Asian Development Bank. (2019). Financial Inclusion in Lao PDR. (https://www.adb.org/sites/default/files/publication/513501/financial-inclusion-lao-pdr.pdf) [6] Laos - United States Department of State. https://www.state.gov/reports/2021-investment-climate-statements/laos/. [7] COVID-19 to Impact Lao PDR Growth, Debt in 2020: New World Bank Report. https://www.worldbank.org/en/news/press-release/2020/05/20/covid-19-to-impact-lao-pdr-growth-debt-in-2020-new-world-bank-report. [8] Lao PDR Tourism COVID-19 Recovery Roadmap for 2021-2025. https://www.undp.org/laopdr/publications/lao-pdr-tourism-covid-19-recovery-roadmap-2021-2025. [9] Women's Economic Empowerment in the Tourism Sector in Lao PDR. https://www.undp.org/laopdr/publications/womens-economic-empowerment-tourism-sector-lao-pdr. [10] Laos - Investment Climate Statement - International Trade Administration. https://www.trade.gov/country-commercial-guides/laos-investment-climate-statement.