Development is inherently about reorganising space, thus all development has the potential of causing displacement, most of which is indirect. Greater attention to indirect development-induced displacement could shift our attention from questions of how to justify and reconstitute lives and livelihoods after displacement to finding ways of preventing or minimising displacement to the point where reconstitution is not necessary. This approach may not eliminate all the vexing dilemmas that accompany development, but it could make them less vexing and could suggest better procedures for addressing them. These arguments are illustrated through an analysis of the Land and Forest Allocation Programme in Lao PDR. This programme is exemplary in the way in which it creates community-based natural resource management institutions through a process that, while it appears highly participatory, is also the single most important cause of displacement and impoverishment in Lao PDR today. This impact can be traced to the way in which the programme attempts to reorganise space into arable land and non-arable forests. There are alternative approaches to land and forest allocation, which could bring most of the benefits without inducing widespread displacement.