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I. Identification
The Lao People's Democratic Republic holds some of the most vital biodiversity resources in Southeast Asia, yet it is one of the poorest countries in the world. As a result, the tiny country is working to improve the severe economic problems that it is facing today. A proposed solution to the economic problem is the construction of Nam Theun 2 Dam. However, this objective will come at the expense of its citizens in the short-term. It will also produce major negative effects on the ecological integrity of the river ecosystem and its surrounding areas. Opponents list five environmental concerns over the Nam Theun 2 Dam:(1) deforestation, (2)water scarcity, (3) reduction in water quality, (4) wildlife destruction of particular species, (5) and an upset in urban environmental quality of life. The dam will most certainly impact the migratory species of the area. The seasonal migrations allow the fish to adapt and flourish within a river system that is characterized by extreme seasonal variations in flows. A dam will terminate migratory activites in the area which will result in a desperate need for food by the Lao people who depend on fish as their main staple of survival (13). According to Patrick McCully, the Campaigns Director for the International Rivers Network, the quality of the water will be changed. The land use patterns in this area reflect impacts from numerous villages with considerable agricultural activity, and the river is used as a domestic water source for bathing and washing purposes. Also, the extremely unfavorable nutrient ratios in the proposed reservoir will cause accelerated eutrophication producing very serious water quality degredation and human health risks (14). Major effects will include dramatic changes in the biodiversity profiles of the aquatic plant and microbial communities including lowered species diversity and increased microbial biomass that could overwhelm the natural carrying capacity and normal processes of the reservoir (14). The new excess biomass will add to the decrease in oxygen produced by the decay of existing biomass during the filling of the reservoir. The environmental degradation will include a lowered dissolved oxygen level which will kill fish and thus affect the Lao people who depend on fish for food. Lowered oxygen levels will also increase diseases such as Malaria, Dengue Fever, Schistosomiasis and Fasciolopsiasis. In essence, these diseases can result in the death of wildlife, livestock and human beings. In addition to negative environmental factors, the costs of the project are enormous. The five year project is proposed to total approximately $1.2 billion. This number is quite unsettling when we realize that Lao PDR's total GDP per capita stands at only $350 (1994-1995)(1). These are the short-term economic problems facing the people of Lao PDR. Yet, while these concerns are all rational in their entirety, the project has several major supporters; two of which are the World Bank and the Lao Government. According to them, these short-term negative impacts will lead to long-term economic propseperity for Laos. From their perspective, it is of paramount importance to invest in the Nam Theun 2 project for the long-term economic well-being of the nation.
This section has been broken down into three areas. The first talks about the development of the Nam Theun 2 hydroelectric project. The long-term positive effects will be addressed. The second part illustrates its economic significance. Attention focuses on the residents of the area and how it will affect their standards of living. Lastly, the third area highlights economic and political desirability. The analysis will place emphasis on how the NT2 will initiate Laos to form stronger ties with its foreign counterparts. It hopes to make comprehensive strides in its economy by transforming from a central planning system to a market based system.
Project Development:
The Nam Theun 2 Hydroelectric Project (NT2) is to be located on the Nakai Plateau in the Khammouane Province of Central Laos. The project is being developed by the Nam Theun 2 Electricity Consortium (NTEC) whose members include three registered Thai companies (Phatra Thanakit (PT), Jamine (JA) and Italian-Thai Development (ITD), one Australian company, Transfield Holdings Ltd. (TH) and the French electricity authority, Electricite de France (EdF). Following final negotiations and after contractual arrangements for the partial risk guarantee which was approved by the World Bank, NTECo, finalized the Concession Agreement (CA) and implemented the project.
The project will utilize water collected from the Nam Theun watershed in the Annamite Mountains. A maximum of 210 m cubed/sec will be diverted out of the river for power production and then discharged through a series of channels into the Xe Bang Fai River, in a separate river basin system, which flows into the Mekong 40 km downstream of Thakhek. It has been a long term collaboration of efforts between Lao PDR and Thailand which provides an opportunity for Laos to export 3000 MW of hydropower energy to Thailand by the year 20006. The share of the Lao Government in the ownership of the project is about 25% and the project will become the Government's full property after 25 years of operation.
Economic Significance:
The construction of the Nam Theun 2 Dam is of extreme economic importance to Lao PDR because it has the opportunity to earn a great deal of money by exporting its hydrolectic power to Thailand. Thailand's economy has been characterized by rapid expansion over recent years. The growth rate in 1997, in spite of an economic slowdown, has been variously estimated to be between 5.9% and 6.5% (6). Energy is a key factor of production, 62% of which must be imported. Electricity demand, reflecting economic performance, has grown at about 12% annually over the last decade. Installed generation capacity has increased from 2,400 MW in 1975 to over 20,000 MW in 1997. The most recent forecast of load growth in Thailand predicts average annual growth rates in peak demand of about 9% over the next 5 years. This creates an adequate market for electricity imports of 3,000 MW from Lao PDR by 2006.
A major question considered is whether the Nam Theun 2 project would contribute to poverty alleviation in Laos. Both negative and positive influences attributable to the project have been considered. One concern is that construction-project expenditures could cause price rises that would have an adverse impact on the rural-urban terms-of-trade. But because of its enclave nature, and because Laos has been largely successful in liberalizing prices and trade, there are few reasons to believe that the project would have any but the most short-term impact on local prices; wheras its impact on regional or national prices would be nil. Another concern is that rising hydropower exports could, through appreciation of the real exchange rate, impoverish other sectors, like agriculture, from which the majority of the population falling below the poverty line derives a subsistence. The best way to guard against this would be to implement an outward-oriented economic strategy and public investments toward relieving human and physical capacity constraints (11).
A study conducted by Louis Berger International, Inc. (who also builds dams),concludes that poverty alleviation to Nam Theun 2's direct impact on economic growth, even under conservative assumptions, would be measurable and positive: The increment to GDP growth alone would reduce the number of persons falling below the poverty line by more than 13,000. This very likely understates the direct poverty- reducing impact of the project, because during the construction period increased demand for goods and services in the Nakai Plateau would provide additional sources of income for local residents, most of whom are subsistence farmers who have been experiencing increasing rice deficits in recent years. And, although the Nam Theun 2 programs for environmental protection and resettlement are still under negotiation, the governement's goal is to make local residents better off, so that if implemented effectively these programs also would contribute to poverty alleviation (11).
The final source of potential poverty reduction to be derived from Nam Theun 2 would be the net revenues that would accrue from the project to the GOL. Even under quite conservative assumptions concerning social and environmental mitigation costs, the net cash flow to the GOL (in 1996 dollars) would average $33 million annually from project initiation throughout the life of the concession agreeement. If applied solely to the GOL's planned capital expenditures in the current fiscal year, annual revenues of this magnitude would have represented an increase of 38% if the increment were applied solely to the social sector in items in that plan (11).
The Nam Theun 2 hydroelectric project is the largest and most preeminent of any project under consideration in Laos today, representing a total investment about three-quarters as large as annual GDP. Although Laos remains one of the world's poorest countries, implementation of this strategy has produced sustained GDP growth rates of 5%-8% during the 1990s (11) and significant increases in per capita income, while inflation has fallen to single-digit levels. This emphasizes rapid economic growth, under the New Economic Mechanism, which by 1997 had succeeded substantially in stabilizing the economy; in liberalizing trade, prices, interest rates and the exchange regime; and in making considerable progress in the task of re-defining the public sector's role in the economy (11). In turn, Laos will join ASEAN in 1997 and aims to join WTO as soon as possible thereafter.
Laos' economic strategy also envisions a progressive reduction in the nation's dependence on timber exports and royalities by approximately 45% to levels commensurate with sustainable commercial forestry, replacing and significantly augmenting those revenues with hydro-power exports and royalities, while further strenthening the domestic tax base. Some of the new revenues will be utilized for a concerted effort, with the support of international institutions, to protect national rainforests.
Economic and Political Desirability:
Laos is at a crossroads in its development where it has already implemented a fairly comprehensive series of economic stabilization and structural adjustment measures, and is well on the way to making the transition from central planning to market systems. It has put forward an economic and social strategy to continue that process which would broaden the base of economic growth, and improve environmental stability, while relying on the gains from hydropower. Nam Theun 2 is an integral part of that strategy. The project, in addition to yielding substantial net economic benefits for the Lao PDR, is intended to demonstrate that private investments in Laos can and will meet international standards, not only of profitability and risk, but also of environmental and social responsibility. The former can be demonstrated by successful implementation of a large private concession led by credible foreign sponsors; the latter by strict adherence to the environmental and social standards of the World Bank (11). While there are concerns to Laos' political and economic status once the Dam is completed, there aren't any long term threatening environmental problems. The biggest concern is the short-term effects on the Lao people who live near the site of its construction.
TED Cases:
(1) ARAL case
(2) ATATURK case
(3) CAMBODIA FOOD EXPORTS case
(4) COLORADO case
(5) DANUBE case
(6) HIDROVIA case
(7) HUNGARY case
(9) ITAIPU case
(10) LESOTHO case
(11)MEKONG case
(13)NILE case
(14)RIOGRAND case
II. Legal
Clusters
DISagree and IN PROGress
Dam building has become tremendously controversial in this tiny country. While groups are lobbying for increased transparency and accountability by lenders, there is much opposition to the construction of Nam Theun 2 on account of the negative environmental implications. These include the destruction of the water quality which in effect, limits the amount of fish migrating up the river. As a result, this reduces the amount of food available to the people and species inhabiting the area. In turn, this leads to an upset in the quality of life. For the most part however, a favorable continuum between the Lao Government and its respective political and social organizations. International groups, as well as government agencies and multilateral lenders have discussed and thus promoted the long-term sustainability of hydroelectric power.
The Environmental Assessment Management Plan (EAMP), drafted by SEATEC International LTD, ascertains that "Policy, legal and administrative capacity is essential for environmental management since the ultimate success of the EA depends upon the capability and understanding of environmental matters of the government agencies concerned" (2). While there might be opposition to the issues at hand, it is necessary to note that the NT2 project is being developed within the context of environmental and social policies of the Government of Lao (GOL).
There are, however, environmental organizations which oppose the project. For instance,writers for the "World Rivers Review" associate dam building as solely a negative consequence to the environment (3). Steve Rothert and Patrick McCulley, the Campaign Director claim a moral standpoint. Is it more prosperous for an underdeveloped nation to increase its economic opportunities through hydroelectric power sources than address the destroying of forests, water quality, partial flooding and the block of fish migration which is the main source of protein for local villagers. From this perspective, of course, the NT2 project has only negative consequences for the citizens of Lao PDR.
In many developing countries, local NGOs and environmental groups have initiated protests at various levels: "(1) international--in multilateral forums such as the UN RioEarth Summit for other dams being constructed and lobbying the World Bank directly to stop lending for such projects; (2) national--putting pressure on government agencies involved, bilateral lending institution like the U.S. Export-Import Bank, using nation-wide NGO groups and national student organizations; (3) Local--drawing up alternative strategies for sustainable water resource management and pressuring local government officials at the provincial and village levels to take a stand"(4).
LAOS and UNILATeral
The government of Laos is encouraging the development of the Nam Theun 2. In spite of the wide debate regarding hydroelectric dams in both developed and underdeveloped regions of the world, there is not yet any set of guidelines to go by in their construction. While specific policies have been implemented by the NTEC and World Bank Groups, no broad policies have been proposed which solely address the difficulties associated with hydroelectric dams.
The individuals, communities, government agencies and organizations which represent stakeholders in the NT2 project are diverse in their interests, ranging from the directly effected communities on the project area to the international communitites such as the World Bank, NTEC investors and international NGOs. These stakeholders include:
TABLE I:
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LOCAL REGIONAL REGIONAL NATIONAL INTERNATIONAL
host committees BPKP GOL Ministries World Bank
other host committees business contractor people of Lao PDR Financial Inst.
downstream who provincial agencies NGOs International NGOs
will be affected
by project
those people to be community leaders other hydroelectric
resettled district agencies dam developers
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Source: Nam Theun 2 Hydroelectric Project Resettlement Action Plan. Vientiane, Lao PDR:
NTEC: May 1997.
There is no specific enabling legislation for the establishment and management of protected areas in Lao PDR. The NTEC Consortium and its five members are prepared to conform to policies of the Lao Government and the policies and directives of the World Bank. NTECo will become a formal entity with GOL's participation as an equity partner following final negotiations and after contractual arrangements for the partial risk guarantee is approved by the World Bank and the Concession Agreement (CA) is finalized with the Government of Lao.
III. Geographic
Clusters
a. Geographic Domain: ASIA
b. Geographic Site: East Asia
c. Geographic Impact: Laos
The construction of Nam Theun 2 along with other dam sites relates to development policies in rural areas. The Nam Theun 2 hydroelectric project is located on the Nakai Plateau in Khammouane Province in Central Laos. The project will collect water from the Nam Theun watershed in the Annamite Mountains and will deliver water from two locations: (1) downstream release to the Nam Theun River which flows to the backwaters of the Theun-Hinbourn reservoir downstream and (2) downstream releases to the Xe Bang Fai River. The Xe Bang Fai River delivers water to the Mekong River (5).
In these villages, water issues are often centered around the control of natural resources. Since most of these villages are underdeveloped, the individuals living here are constantly competing for these ressources. Despite these problems, the Lao government still wants to build the dam. They assert that it will provide the country with adequate hydroelectric power. In the long-term, hydrolectric power will facilitate the process for obtaining these resources.
The People:
Almost 900 families of various ethnic groups such as the Brou (Tai So), Bo, various Tai-Kadai groups and a number of Vietic groups live on the Plateau and the great majority of these live in villages of which all or part will move as a result of the Project (14). They are among the poorest of the Lao PDR population with an average income of approximately $100 per capita versus $280 per capita for Lao PDR as a whole (14).
Plateau communities have traditionally cultivated rice, hunted animals for meat, raised livestock, fished and gathered non-timber forest products for mainly household use. In effect, agriculture dominates the economy of the Plateau.
Animals:
There are many animals who could face extinction due to the Nam Theun 2. Among them are the White-Winged Duck, the Clouded Leopard Asian Golden Cat, the Elephant, Tiger, Sun Bear, Asiatic Black Bear, the Lesser Fish Eagle, 3 types of otters and Blythe's Kingfish.
Plants:
The plateau also has several pine forests, swamps and grasslands which serve as important grazing areas for livestock and breeding grounds for fowl.
IV. Trade ClustersWhile Lao PDR has not been tremendously open to trade in the past, the implementation of the NT2 is likely to change her status as a semi-closed economy. The 680 MW Nam Theun 2 hydroelectric project, according to Lahmeyer International (6) is being developed as a build own-operate transfer (BOOT) project by the NAM Theun 2 Electricity Consortium (NTEC) and the Government of Lao PDR. The generated power will be exported to Thailand in part satisfaction of a Memorandum of Understanding between the Thai and Lao governments for the exports of 3,000 MW by 2006. The share of the GOL in the ownership of the project is about 25% and the project will become the government's full property after 25 years in operation.
According to S.H.C. de Silva, a consultant to the Irrigation Department of Sri Lanka, dams have two main functions: (1) to store water to compensate for fluctuations in river flow or in demand for water and energy to export agricultural products and (2) to raise the level of the water upstream to enable water to be diverted into a canal or to increase ‘hydraulic head'--the difference in height between the surface of a reservoir and the river downstream. (7) The creation of a storage and head allows dams to generate electricity (hydropower provides nearly a fifth of the word's electricity) to supply water for agriculture, industries and households; to control flooding; and to assist river navigation by providing regular flows and drowning rapids. Other reasons for building large dams are for recreational activities such as boating and the creation of reservoir fisheries.
As a result of these significant changes, Laos can be expected to become a greater exporter of energy to neighboring countries such as Cambodia and Thailand. The net production and export of hydroelectric power is expected to attain a figure of 3,000 MW by 2006.
a. Directly Related to Product: Yes ELECtricity
b. Indirectly Related to Product: Yes MANY
c. Not Related to Product: NO
d. Related to Process: Yes HABItat Loss and Resettlement
The inputs used for dam construction such as construction equipment, professional services, machinery and generators along with energy production are necessary.
Main Exports: Electricity, timber and wood products, garments and textiles, coffee, tin, petroleum, machinery and raw materials
Main Imports: Vehicles, cement, iron, fabrics.
In table 2, the main economic indicators for Lao PDR between 1992 and 1996 are discussed. In Laos' GDP prices for 1996, we see that these figures are consistently increasing over time. This is certainly something to watch out for in the future. In fact, it may be an indicator that the construction of Nam Theun 2 will be a positive influence on Laos' GDP for the coming years.
TABLE II: Main Economic Indicators: LAO PDR 1992-1996
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1992 1993 1994 1995 1996 (est.)
Real GDP growth(%) 7.0 5.9 8.1 7.0 6.8
GDP at current
prices(million kip) 844,300 951,000 1,109,000 1,419,000 | 1,710,000
GDP constant prices
(million kip) 681,797.1 721,842.0 780,657.1 835,519.0 892,201.5
Share in GDP(%):
-agriculture: 58 56.3 56.4 54.3 52.0
-industry: 16.7 17.4 17.8 18.8 20.6
-services: 3.9 24.3 23.7 24.5 24.9
Public savings(% GDP) ------ 0.87 0.76 1.0 2.6
Total Inv.Approved
(million US$) 130.1 1,537.7 2,597.4 804.2 1,292.3
-number of projects 94 146 112 55 63
Growth of money supply 49.1 64.4 32 16.4 20.2 90 _18.3 5.9 98.7
Inflation
(avg. annual rate) 9.9 6.3 6.0 19.4 13.0
Rate of growth of:
-exports: ------- 86.9 23.2 13.4 -9.6
-imports: ------- 70.7 30.6 4.4 15.1
Total value of exports
(M US$)of which: 132.6 247.9 305.4 346.2 313.1
wood products: 42.7 65.8 96.1 88.3 127.1
coffee: 2.42 4.1 3.1 21.3 22.5
manuf. goods: 9.4 38.1 36.3 78.3 30.9
Total value of imports
of which: 253 431.9 564.1 588.8 678.1
equipment goods: 14 22.7 32 43.8 70.1
consumption goods: 140.5 224.7 276.5 283.8 309.7
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Source: Socio-Economic Development and Investment Requirements 1997-2000;
Government Government Report; June 19-20, 1997; page 38.
According to the August 12, 1997 edition of the Wall Street Journal, revenue from the sale of Nam Theun Two power to energy-starved Thailand is projected to add at least $40 million a year to the state over the first 25 years and then jump to as much as $100 million after Laos assumes full ownership of the project under a Build-Own-Transfer (BOT) contract (8).In table 3, the figures demonstrate the economic advantages to putting money into the project. If spent to alleviate poverty, as the World Bank would require, these proceeds would equal more than 40% of Laos' 1996 budget for social services. In reference to table 4, it is apparant that Lao PDR is in dire need of increasing it's GDP growth in order to compete successfully in the global market.
Table 3: Construction Costs of the Nam Theun 2 Project
TABLE III:
CONSTRUCTION COSTS OF THE NAM THEUN 2 PROJECT
(US $ millions,1996 dollars)
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Expenditure Carryover debt @ 9% Annual Sum
real discount rate
1998 $17.40 * $17.40
1999 $117.55 $18.97 $136.52
2000 $231.63 $148.80 $380.43
2001 $231.63 $148.80 $380.43
2002 $120.55 $704.47 $825.02
2003 $14.00 $899.27 $913.27
2004 * $995.46 $995.46
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Source: Wayne C. White, PhD. Foresignt Associates: Review of Economic Impact
Study: Nam Theun 2 Hydroelectric Project; July 28, 1997; page 4.
Table IV: LAO PDR
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Nominal GDP('96) $1.85 billion
Real GDP Growth 1994: 8.1%
1995: 7.1%
1996: 6.8%
GNP per capita ('95) $374
Population ('95) 4.8 million
Inflation ('96) 73%
Budget deficit/GDP ('96) 13.0%
Foreign financing/GDP('96) 5.1%
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Source: IMF: Louis Berger International, Inc.; Economic Impact Study
of Nam Theun 2 Dam Project; Volume 1; July 28, 1997; page 25.
Once the Nam Theun 2 Dam is complete, there will be a slight trade-off between the economy and conservation. The question that has been posed is whether economic growth can only be attained by sacrificing the very livelihood of the natural environment. Many argue that natural waterways which hold valuable resources such as fish, plants and minerals will be threatened as a result of Nam Theun 2's construction. Moreover, individuals that live in the areas will be forced to relocate. Trade however will certainly not be restricted by the Lao government. While the short-term effects will negatively affect the inhabitants of the area, the long-term affects will promote hydroelectric power as its main source of energy in order to attempt developed nation status by 2006. This will in essence lead to significant economic opportunities for Laos in the years to come.
Revenue from the sale of Nam Theun Two power to energy starved Thailand is projected to add at least $40 million a year to the state over the first 25 years, then jump to as much as $100 million after Laos assumes full ownership of the project.
V. Environment
Clusters
In almost all cases, dams alter the natural environment. They change the movement of the water, thus transforming its very habitat. For instance,there will not be as many fish in the area because the flow of the water does not allow them to move into the reservoir area. Therefore, villagers may have to alter their lifestyles since fish are a major component of their daily regimen. The impact of dams on migratory species in the river could even be worse. Migrating fish constitute a relatively small number of closely related species that travel once in their lifetime in a linear fashion to historic spawning areas. In the basin however, dozens of very different types of fish appear to migrate repeatedly both up and down river, as well as back and forth between the main river, tributaries, seasonal streams, wetlands, and even rice fields. The seasonal migrations allow the fish to adapt and flourish within a river system that is characterized by extreme seasonal variations in flows.
It is said that the Nakai Plateau is home to at least 17 other internationally threatened wildlife species including the giant muntjac (barking deer), a species only recently discovered by international biologists; the Clouded Leopard Asian Golden Cat, Asiatic Black Bear, Sun Bear, and White-winged Duck. Other species include the Elephant, Tiger, the Lesser Fish Eagle, Blyth's Kingfisher and three types of otters. The Plateau is also unique for its pine forests, grasslands, and swamps which serve as important grazing areas for livestock and breeding grounds for fowl. Aside from endangering the lives of these species, the region's farmland could be deprived of fertile silt; and nearly 100,000 people could be forced to relocate.
Of the 900 families that live on the Nakai Plateau, a great majority of them will be forced to relocate. They have traditionally cultivated rice, raised livestock and fished for a living. This will be severely disrupted by the construction of the Nam Theun 2. While the long-term effects are considered economically positive for the Lao people, the short-term effects are extremely harmful to the Plateau's livelihood.
Dams have affected local climate conditions, soil fertility, created deforestation, and water and fishery resources.
Dam construction can immediately effect the living organisms that inhabit the river downstream by altering the amounts of water. Also, the changing water table affects a fish's ability to swim upstream and spawn. The slowest time set for destruction can range between 10 and 100 years. However, some plant life and animals may be wiped out within a year. The low amount of water flowing downstream may contribute to the salinization of river tributaries as they approach the ocean.
There are several substitutes for hydroelectric power. These include solar energy, fossil fuels and even
geothermal energy. However, according to the Alternatives Analysis for the NT2 project which was
undertaken by Lahmeyer and Worley consultants for the GOL, hydroelectricity is the best source for a number of reasons: (9)
(1) Growth in electricity demand in Thailand has been steady at more than 12 percent annually during the period of 1986 to 1996. It is expected to slow to 9.0 percent from the present to the year 2001.
(2) In absolute terms, peak power demand is expected to reach more than 41,000 MW by the year 2011 from a 1996 value of 13,300 MW.
(3) While Thailand has a variety of available options for satisfying the forecast demand, including an aggressive demand side management program expected to achieve a savings of about 2,000 MW by the year 2011, additional power generating capacity of some 34,000 MW will be needed for the period from 1997 to 2011.
(4) Importation of electric power from Laos is an important component in Thailand's overall supply scenario for which there are various options including more than 24 hydroelectric power proposals for a lignite-fired thermal power plant.
Table V: Primary Energy Resources of Lao PDR:
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RESOURCE: POTENTIAL FOR USE IN POWER GENERATION:
____________________________________________________________________________
Oil and Gas -Possibly in the longer term (10-15 years), if
sufficient reserves found.
Coal (Lignite) -Sufficient reserves for about 2,000 MW installed
capacity.
Coal (Anthracite -Possible long term option for around 500 MW,
& Bituminous) depending on results of exploration.
Uranium -No known reserves of uranium.
Solar -Photovoltaic modules already used for small-scale
remote applications. Current costs of large-scale
solar thermal or photovoltaic power make plants
unfeasible.
Wind -Limited potential due to low average wind speeds and
high unit costs.
Geothermal -No significant known reserves and therefore limited
potential for power generation.
Biomass (waste) -Wood-fired cogeneration (heat and power) plants
could be economic or self-supply in wood processing
facilities but uneconomic for large scale export
plants.
Hydropower -Exploitable hydropower potential, including share of
mainstream Mekong, is around 23,000 MW.
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Source: Lahmeyer International and Worley International-Nam Theun 2-Study of
Alternatives Draft Executive Summary July 1997; page 5.
VI. Other
FactorsCulture has played an integral role in the construction of dams. According to the Draft Resettlement Action Plan, "the inundation of up to 40 percent of the Nakai Plateau will cause significant changes to the resource base available to the villages" (10). There will be positive and negative changes. The reservoir will convert the land currently used for grazing, forestry, agriculture and hunting into a lake. From the lake, fish quantities will be greater than is currently seen in the rivers. There is also greater potential for agriculture, grazing and aquaculture in the drawdown zone.
The lake, together with the availability of electricity will make it possible to supply water to irrigate crops in areas that are currently unproductive. Even with a reservoir, there is sufficient land available for each family. Although approximately 22 villages will have to be resettled, they will not be moved far from their current homes and will stay within the boundaries of their traditional village on land that is well known to them.The Nakai Plateau is populated by a number of "ethnic groups" recognized by the Lao government as Brou (Tai So), Bo, various Tai-Kadai groups and a number of Vietic groups. These groups can be further subdivided into twenty-eight ethnic sub-groups on the basis of linguistics. In addition, the people of the Plateau have long been exposed to localized social disruption due to war, invasion and epidermic and physical relocation due to the proactice of shifiting cultivation (14). Currently, the area consists of a melting-pot of cultures, combining elements of the indigenous cultures of the Plateau with the dominant lowland-Lao culture. The Nakai Plateau communities have traditionally cultivated rice, fished, raised livestock, hunted animals for meat and gathered non-timber forest products all mainly for household use. In recent years, increases in population, problems with cultivation, and exposure to cash commodities have spawned more intensive and extensive exploitation of the forest for its marketable products.
The shift from an almost entirely subsistence economy to a somewhat more commercial one is being promoted by in-migrants. These people generate a buying market for items such as vegetables, meat and forest products. About 500 ha of rain-fed rice is under cultivation, but is not a large contributor to economic production. It is also meager due to poor soils, alternating flood and drought events and lack of modern technology (11). In effect, these changes will only enhance the farming system in the area.
Table VI: Reservoir Households - Present Income
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ACTIVITIES INCOME Percentage (%)
(000S KIPS)
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Agriculture and Livestock 83 18
Wildlife 18 4
Forest products 97 2l
Fish 23 5
Wages 36 8
A. Total Cash Income 266 56
Rice production 140 30
Wildlife 31 7
Fish 34 7
B. Total Imputed Income 205 44
Total Income (A + B) 461 100
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Source: Draft Resettlement Action Plan; Nam Theun 2 Electricity
Consortium; Vientiane, Lao PDR; May 1997; page II-3.
There have been protests against the building of the Nam Theun 2 dam because outsiders felt that this project would threaten the livelihoods of individuals living on the Nakai Plateau. These protests however were not successful. The construction of the Nam Theun 2 Dam will go on. The Government of Lao PDR will focus on building its economy. While many citizns will have to resettle elsewhere and species such as fish will be harmed, the main aim is to produce hydroelectric power in the region which can then be exported. The Government of Lao PDR and the World Bank argue that the short-term negative effects will lead to long-term economic benefits for the entire country.
(1) Economist, "Dam Risky." July 27, 1996: 62.
(2) Economist, "One Dam Thing After Another." March 30, 1996: 39-40.
(3) Hiebert, Murray. "The Common Stream." Far Eastern Economic Review 21 February 1991: 24-28.
(4) International Advisory Group. World Bank's Handling of Social and Environmental Issues in the Proposed Nam Theun 2 Hydropower Project in Lao PDR. Washington, DC, August 19,1997.
(5) IUCN. Environmental and Social Management Plan for Nakai-Nam Theun Catchment and Corridor Areas. May 1997.
(6) Lahmeyer International and Worley International. Nam Theun 2-Study of Alternatives. Draft Executive Summary. Vientiane, Lao PDR: July 22, 1997.
(7) Lao People's Democratic Republic. Ministry of Industry and Handicraft. Reports of the International Environmental and Social Panel of Experts. Vientiane, Laos PDR: February 7, 1997.
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