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Case Studies
The Problem
The Nam Theun-Hinboun hydropower project, a 210 MW run-off river dam on the Theun River in central Laos, is the first of several large hydropower projects planned in the Theun-Kading River Basin in Laos. Launched in 1994, construction has been completed and was officially opened in early 1998 (Shoemaker, 1998). The Asian Development Bank (ADB), and a consortium composed of other public and private interests, including the governments of Japan, Norway, Australia, and the Theun-Hinboun Hydropower Company (THHC) financed the project. Despite the concerns raised by groups in Thailand, Norway, and other ADB-donor countries, the project was approved. This fact indicates that the project proponents had systematically failed to safeguard the interests of Laos' citizens (IRN, 1999).
The impacts of this project are astonishing. Approximately 6000 people that live in the 25 villages near the project site and are considered to be so vulnerable to the effects of this project that they were forced to resettle to other places. Resettlements resulted in changes in social context, lifestyle and agricultural practices. Resettled groups are reported to suffered especially from declining nutritional intake, rising sickness and mortality rates, loss of language and cultural . (Community Aid Abroad - Oxfam Australia, 1998) In addition, thousands of other people living in the downstream are now being affected by the project. These villagers reported being impacted by declines in fish catches, flooding of vegetable gardens, transportation difficulties and fresh water shortages (Shoemaker, 1998). Villagers should be given compensation, which has been estimated by some environmental groups to be $3.6 million. Although some Laotians have received compensation, in total $50,000 out of the entire $260 million dollar project cost, thousands of Laos's citizens suffering harmful impacts from the Theun-Hinboun project have not received direct compensation and there are no plans to provide them with any such compensation. According to staff of the Environmental Management Committee Office of the THPC, which implements the mitigation program, most of the $50,000 available for resettlement and compensation was spent on purchased land for the transmission line towers. Most of the other line items had also already been expended or committed so there is no prospect of reassigning any of the current mitigation budgets to increase compensation for affected villagers. (IRN, 1999).
The Nam Theun-Hinboun Hydropower Project is just one of many controversial projects in Laos. The same problems are revealed on other similar hydropower projects. The major concerns about ADB involvement in Laos can ultimately be traced back to the development philosophy that underpins all of the Bank's activities. Although Bank rhetoric increasingly acknowledges the need for direct poverty alleviation and environmental protection; all such policies are inevitably interpreted through the lens of economic growth (Community Aid Abroad - Oxfam Australia, 1998).
The Background
The dam projects in Laos have been resulting in long-term struggle for Laotians. As one of the world's poorest and most highly indebted poor countries (HIPS) according to conventional World Bank and donor criteria, Laos has been complying with the dictates of its foreign advisors, primary the IMF, World Bank, Asian Development Bank, and United Nations Development Program, to sell its abundant hydropower to the proximately neighboring Thailand, whose power demand was expected to grow by as much as 12 percent per year to 2010 (IRN, 1999).
Before the project was launched (1994), the Norwegian organization FIVAS, had been monitoring Norwegian involvement in the project since 1993. In 1996, this organization published a report, which documented many concerns related to the project, including the process of implementation, consultation with local people, the potential damage to thousands of people's livelihoods, and the measures of mitigation and compensation that were ignored by the ADB's decision process. During the process of dam construction, the environmental groups kept pressure on ADB and its donor governments, but this project continued. This dam was opened in April 1998. The ADB declared, "The first privately financed infrastructure in Laos PDR, Theun-Hinboun will serve as a model for future hydro power development."
However, the impacts of this project are obvious. In March 1998, the independent researcher Bruce Shoemaker interviewed 60 people in 10 villages in the project area - downstream in the Nam Kading, downstream in the Hai/ Hinbound, or along the headpond. He pointed out that without exception they reported experiencing various harmful effects from the project. In all three areas he visited, villagers reported substantial declines in fish catches ranging from 30 to 90 percent. Villagers also reported being impacted by the loss of riverbank gardens, the loss of dry season drinking water sources, and transportation difficulties. An entire village of over 100 households living below the dam was informed that they had to move because of the increased threat of flooding. In some regions, villagers must relocate their homes and do not feel they are receiving adequate assistance with this process (Shoemaker, 1998).
The Theun-Hinboun is a "BOOT" project run by the Theun Hinboun Power Company (THPC) with a 30 years license. "BOOT" means the private sector would build dams projects with their own financing; operate, maintain and manage the facility for a period up to 30 years; and then transfer ownership to the government. This means the private sector would invest the capital and absorb the risks, with virtually no drain on the public purse. However, most of the financing is either public or publicly guaranteed. Less than half of the total investment in the project involves non-publicly guaranteed private financing (IRN, 1999).
Key Actors
Asian Development Bank
The Asian Development Bank (ADB) is the main banker of the Theun-Hinboun hydropower project, the first dam to be completed in Laos since 1972. Since 1992, the ADB has been actively promoting the development of the Greater Mekong Subregion (GMS), which covers the six countries of Thailand, Laos, Vietnam, Cambodia, Burma and Yunnan Province of the People's Republic of China. The Asian Development Bank's Program Department (West) Nortiada Morita, of Japan, described the speeding economic growth potential of the six riparian states of the Mekong River Basin as "an airplane taking off with six powerful engines". According to the ADB, the GMS countries will require $40 billion in the next 25 years to finance about 100 projects, mostly in the transport, energy and telecommunications sectors. The ADB estimates that $20 billion will come from the private sector. In 1994, ADB approved a loan of $60 million to the Lao Government for the 210 MW, the U.S. dollar 280 million Theun-Hinboun hydropower project, in spite of the criticism from various environmental groups. The ADB claimed that with Theun-Hinboun there is "no flooding, virtually no reservoirs, and no need to resettle anyone", which was an obvious lie.
Bruce Shoemaker
Bruce Shoemaker was an independent researcher who lived in Laos PDR for seven years (1990-1997) and worked for several non-governmental organizations. The researcher visited the project area as a guest of the Environmental Management Committee Office (EMCO) of the Theun-Hinboun Power Company (THPC). After his visit to this area, he published a report for policy and decision makers in the Laos PDR, Nordic countries, and the ADB concerning the sustainable hydropower and economic development in the Laos PDR.
Environmental Groups
More than 30 environmental groups in the world have entered the struggle against this project, as well as other dam projects in this country. Among these groups, International Rivers Network (IRN), and Community Aid Abroad - Oxfam Australia (CAA) were the major groups. These environmental groups petition for halting destructive river development projects and encourage equitable and sustainable methods of meeting needs for water, energy, and flood management. IRN's Mekong program has largely focused on Laos which, until recently, the pace of dam building was fastest. These groups kept pressuring ADB and its donor-governments. Since the Nam Theun-Hinboun Hydropower Project has been completed, these groups are focusing on the compensation of villagers from the ADB and halting constructions of other dam projects in this country.
Theun-Hinboun Power Company
The THPC is a joint venture between Electrisite du Laos (EdL) (60%), MDX/GMS-Thailand (20%), and Nordic Hydropower (20%). The latter is jointly owned by Vattengall AB of Sweden and Statkraft AS of Norway. In October 1996, the Lao government, acting with legal advice from the ADB, signed a license agreement with the THPC which absolved the company from any further obligation to assist with mitigation or compensation measures for the life of the project. The EHPC did not even make a sincere effort to investigate the real situation of the villages affected by the project (Warren, 2000).
Villagers
Rural people in Laos substantially rely on wild fisheries as their major income and protein resource. Large dams have invariably lead to a significant reduction in food for the people whose lives are intertwined with the cycles of this river system. Since Laos is a communist country, grassroots movement is extremely unlikely. However, the villagers accepting interviews by Bruce Shoemaker still expressed their fears and angers.
Demographics
Detailed socioeconomic data of the region is currently unavailable. However, since this is not a local problem, but a problem intertwined with the general poverty in Laos, I will use the national averages with the understanding that they are high, because this region is comparatively poor.
Although Laos only has a small population, approximately 4.5 million people, Laos has a high degree of ethnic diversity, with anywhere between 40 to 100 ethnic groups, depending on the method of classification (Community Aid Abroad, Oxfam Australia, Mekong Hydrodevelopment). The dominant group, the ethnic Laos (or Lao Tai), perhaps only account for 35% of the population. Laos is also generally considered to be one of the least developed nations in Asia. Unlike its highly urbanized neighbor, Thailand, over 75% of the population in Laos still live in rural areas, practicing subsistence or semi-subsistence agriculture. [Community Aid Abroad, Oxfam Australia, Mekong Hydropdevelopment].
According to the report from Community Aid Abroad in Australia,
most proposed hydropower development in Laos, including Nam Theun Hinboun
Hydropower Project, require the involuntary resettlement of villagers in and
around the dam and reservoir sites. The vast majority of these come from vulnerable ethnic minority
groups.
|
|
East Asia & Pacific |
Lao PDR |
|
GNP per capita ($) |
990 |
320 |
|
Life expectancy |
69 |
54 |
|
GDP ($ millions) |
1,693,340 |
1,261 |
|
GDP growth (annual 1%) |
-1.0 |
4.0 |
|
Value added in agriculture (% of GDP) |
14.0 |
52.6 |
|
Life Expectancy |
- |
48 - 50 |
|
% Of Labor in Agriculture |
- |
70 -92 |
Sources: World Bank. World Development Indicators,
April 2000. East Asia & Pacific, p9. Lao PDR, p.129
1. Investigations, Reports
Since ADB and World Bank neglect to take the livelihoods of villagers into consideration, the international environmental groups have been dedicating to investigating the true local situations and the impacts of large dam projects, hoping that this strategy can persuade these banks to establish better policies. In 1996, the Norwegian organization FIVAS published a report based on a study tour to the project area. This report documented many concerns related in the project, including its poor process of implementation, lack of consultation with local people, potential for causing serious harm to thousands of people's livelihoods, and the lack of appropriate mitigation and compensation measures. However, the concerns raised in the FIVAS report have been consistently downplayed or ignored by the ADB and the project developers. The International Rivers Network singled out the Nam Theun-Hinboun project, which involved direct ADB loans, for criticism. In early March 1998, the independent researcher Bruce Shoemaker visited the projected area, interviewed 60 people in 10 villages, including women, men, young people, fish market stall owners, shop owners, fishermen, village headmen, boat pilots, and others who were potentially effected by the dam. Based on this visit, Bruce Shoemaker publicized a report in April 1998, which indicated the serious impact of this project in the area. His report had three objectives: (1) to raise awareness about the suffering caused to local people in the Theun and Hinboun watershed; (2) to demonstrate the need for further detailed assessment and evaluation of the environmental and economic losses caused by the project; (3) to appeal to the responsible authorities and the project investors so that these issues may be resolved fairly and to the satisfaction of local people.
2. Letters to ADB and UNDP
- April 15th, 1996
Twenty-nine nongovernmental organizations from 13 donor countries called on the organization to halt support for the Mekong River Commission (MRC). The NGO letter highlights the major contradictions between what UNDP promotes and what the MRC is doing.
-Oct 29th, 1997
Letter to Satsuo Sato, President of Asian Development Bank. They indicated that many of the statements in the Inception Report of ADB were flawed. This report lacked cumulative impacts assessment, adequate hydrological data, baseline data, participation and consultation, and the demand evaluation for power and economic justice.
- July, 22 1998
15 NGOs from Asia, North America and Australia sent a letter to the ADB. They noted that no assessments have yet been done of the cumulative ecological and social impacts of the dams on these basins and very little information is available describing the impacts or economic justification of the individual projects. The groups write, "We believe the ADB should undertake the long-term process of gathering and analyzing data on the impacts of the projects which are already underway or scheduled to begin soon." "No further projects should be proposed on these basins until a complete and honest assessment based on empirical evidence of the impacts of the dams already being built on these basins is done and made publicly available."
- Aug 3, 1999
18 NGOs working on large dams in Asia wrote a letter to President Chino of Asian Development Bank in responding to the World Commission on Dams (WCD).
3. Network
Through network, IRN spreads the information from the secret country. This helps international and local groups organize and fight together.
It could be concluded that there is
still no reasonable solution made by the ADB and the multinational company.
Before the Nam Theun-Hinboun Hydropower was completed in 1998, there was no
obvious phenomenon indicating that the strategies used by these environmental
groups changed the decisions of Bank and the multinational company. Because concerns were being raised by
several of ADB's member countries, this forced ADB to rethink their funding
in Laos. On April 24,1999, South
China Morning Post reported that the Asian Development Bank was poised to
stop funding controversial dam construction in Laos amid fears of poor viability
and rampant illegal logging of some of the region's last forests. However, whether these efforts will have
further impact on the intention of the ADB and the multinational company is
yet to be seen. In 1999, the
ADB gave loans under the assistance scheme for Thailand from 1999 to 2001,
which had lead to the implementation of the Social Sector Program. Not long after that, the Agricultural
Sector Program and the Samut Prakarn Wastewater Management Project soon was
put into practice. Although there
is a clear need for a reassessment of the best use of the scarce financial
resources in the country, the fact that such an assessment has never been
done points to the one-sided advice of the ADB and other development agencies.
The environmental groups should keep pressure on the ADB, the World Bank and the IMF, and force them to take a broader and more profound viewpoint into consideration. First, the movement must pursue the support from democratic forces. Laos is a communist country, and the low transparency of policies has been making these banks fail to regard the painful situations of local villagers. Pursuing support from western countries and agencies, which are the donators of these banks, would make the banks re-inspect the impacts of these projects. Second, environmental groups should pursue further possible cooperation from local people. People within this country until now haven't been able to participate in the debate. The consciousness of local communities is a critical factor that affects the outcome of the struggle. Third, keeping monitoring the decision making process of the ADB. At the meantime, research should be done. The participation of academic institutions would help reassessment of the best use of the scarce financial and human resources in this country. Investments in areas such as tourism, agriculture and non-timber forest products are good be alternatives to hydropower (Yuk-Shing Li, 2000).
Key Contacts
Yuk-Shing Kevin Li
Three Gorges Campaign and China Program, International
Rivers Network
Old Web Site: http://www.hk-sanxia.org
Ms. Aviva Imhof at International Rivers Network. Fax: 1-510-848-1008
E-mail: aviva@irn.org
Patrick McCully, IRN, in Berkeley, CA, USA. TEL: (510) 848-1155
For more contacts link to:
1) International Rivers Network
2) Community Aid Abroad : Oxfam Australia
3) South East Asia Rivers Network
Interview with Yuk-Shing Kevin Li through E-mail on Dec, 5th 2000.
Nette, Andrew. 1998. Double Jeopardy for Laos: Logging Interests and Hydropower Developer Join Forces to Dam Mekong Tributary. World Rivers Review, 13 (1998).
Malhotra, Kamal. 1996. "Economic Development and Sustainability Issues for Energy Projects in Laos."
International Rivers Network. 1999. "Power Struggle: the impacts of Hydro-Development in Laos." International Rivers Network Press
Imhof, Aviva. et al. Aug 3, 1999. "Letter to President Chino of Asian Development Bank" from Ms.
Imhof, Aviva. et al. Oct. 29,1997 "Letter to Mr. Mitsuo Sato President of Asian Development Bank from International Rivers Network."
South China Post. April 24,1999. "Controversial dam projects may lose development bank funding, South China Morning Post."
Shoemaker, Bruce. 1998 Trouble on the Theun- Hinboun. International Rivers Network, Berkeley.
Community Aid Abroad - Oxfam Australia. 1998. Mekong Hydrodevelopment.
Warren, Terry. 2000 "Impacts to fish populations and fisheries created by the Nam Theun : Hinboun Hydropower Project, Lao P.D.R."
Glossary
ADB = Asian Development Bank
CCA = Community Aid Abroad, Oxfam Australia
FIVAS = Foreningen for Internajonale Vann-org Skagstudier
GMS =Greater Mekong Subregion
IMF = International Monetary Fund
IRN = International Rivers Network
THHC =Theun-Hinboun Hydropower Company
UNDP = United Nations Development Program
WCD =the World Commission on Dams