The reducing emissions from deforestation and forest degradation (REDD plus) has been proposed as a key tool for reducing greenhouse gases (GHG) from deforestation and forest degradation in land use sector. The development of a REDD plus that considers national, sub-national, and/or local circumstances in relation to a target area requires an analysis of site-specific deforestation drivers and land use characteristics. This study aimed to analyze the capability of forest-dependent people to find the way for reducing pressures on forest resources, i.e. reducing shifting cultivation and identified their patterns of land and forest use, as this knowledge is essential for developing a REDD plus for land and forest management for an area. The study target area was Luang Prabang Province in the northern part of the Lao People's Democratic Republic (Lao PDR). We conducted questionnaire-based surveys and participatory workshops to identify the drivers of deforestation and forest degradation as well as current local capabilities. Our findings, which focused on the characteristics of ethnic groups (Khmu and Hmong) and the agricultural techniques used by villagers, revealed significant differences between upland rice farmers without paddy fields and farmers with paddy fields who cultivated upland rice in terms of their capabilities to maintain livelihoods. The results of a discriminant function analysis indicated that 66.7% of the initially categorized respondents were correctly classified for the variable Khmu or Hmong and 82.1% classified for the variable upland rice farmers with paddy or upland rice farmers without paddy. The results indicated a lower capability to transition to alternative livelihoods among farmers relying on upland cultivation (i.e. shifting cultivation) than among farmers who cultivate paddy. Moreover, the study revealed the importance of applying a capability approach when planning REDD plus in Lao PDR that account for differential capabilities attributed to ethnicity or other vulnerable group statuses.