Land-use competition between forest conservation and agricultural food production poses major threats to climate change mitigation and food security. Land sparing policies aim at reconciling this conundrum by intensifying agriculture while conserving forests, but scientific debates prevail about their effectiveness. To contribute to this debate, we analyze the discursive dimension of land sparing efforts and their biophysical implications for Lao PDR. Applying an interdisciplinary mixed-methods approach, we examine how Lao land-use policies legitimize land sparing at the cost of shifting cultivation and how land use changed between 2000 and 2019. We quantify ecosystem carbon fluxes and agricultural emissions and investigate trends in agricultural production and food security. We find that policy documents use both socio-economic and environmental arguments to substantiate land sparing at the expense of shifting cultivation. In biophysical terms, the stabilization of shifting cultivation enhanced the recovery of some forest areas resulting in gross carbon sequestration while ecosystems in total remained a net source of emissions. Concomitant agricultural intensification improved dietary energy supply, reduced the prevalence of undernourishment, and increased agricultural exports. However, cropland expansion and the intensification of agriculture entailed greenhouse gas emissions of similar extent as the continuing shifting cultivation, and could not prevent the prevalence of moderate or severe food insecurity in the total population until today. We conclude that the narrow focus of land-use policies on land sparing falls short in effectively balancing societal needs and ecosystem functions.