TED Case Studies

Mekong River Dam




     CASE NUMBER:        258
     CASE MNEMONIC:      MEKONG
     CASE NAME:          Mekong River Dam

I.    IDENTIFICATION

1.    The Issue

      How can Thailand, a country faced with at least four major
environmental concerns -- deforestation, wildlife destruction,
water scarcity, and urban environmental quality -- afford to build
another dam? Dam construction is supposedly driven by the
imperative "to produce more electric power in order to raise the
national standard of living to a level comparable to that of
nations, like the United States, that already have their dams in
place."  However, the utility of building hydroelectric dams has
been challenged on a number of grounds.  First, they are extremely
expensive. A dam proposed on the Mekong River bordering Thailand
and Laos will cost $2.7 billion.  This no small amount considering
that Thailand's GNP stood at almost $70 billion and ranked 30th in
the world.  Second, coupled with deforestation, previous dams have
adversely affected local climate conditions, soil fertility, and
water and fishery resources.  Third, in many countries the
construction of hydroelectric dams has displaced people and altered
local community life.

2.    Description

      Since, the 1960s, the Mekong River basin, which spans China,
Laos, Burma, Burma, and Vietnam, has been slated for development by
a series of hydroelectric dams.  In order to coordinate the
transnational nature of this massive project, the United Nations
established the Mekong Committee.  The committee overseas all
aspects of project planning and implementation.  All told, some 100
hydroelectric dams have been proposed by the committee.  As the
1990s appear to be the decade for Thai economic growth and rising
energy needs, the utility of hydroelectric dams as component of
economic growth must be reconsidered in relation to the
environment.

      The construction of hydroelectric dams usually requires
numerous international inputs.  In Thailand, these include the
financial, administrative, architectural, and engineering services. 
A French firm Sogreth recently designed a $120 million dam to be
built at Pak Mong on the Mekong.  Another foreign firm, the
Australian owned  Snowy Mountains Engineering Corporation, has
designed the Nam Theum 2 dam to be built across a tributary of the
Mekong in Laos.  The $500 million project needs a reservoir of 300
square kilometers or larger to feed a 300 to 600 megawatt power
plant.  Besides services, high technology computers, generators,
and control systems are frequently imported from more advanced
nations like Japan and the United States.  Ray Oram, the Mekong
Committee's information officer, has therefore identified Sweden,
Australia and Japan as the countries with the greatest potential
role in supporting hydropower in the region as their economies
stand to benefit from lucrative energy market in Thailand.

      Any large scale modernization project such as a dam has
indirect relations to trade.  Large development projects may
generate additional "multiplier effects" by increasing the demand
for infrastructural development as more roads, ports, electricity,
and telecommunication facilities are required for the construction
and maintenance of dams in isolated areas.  Following
construction, the continued need for machinery and qualified
personnel to maintain the site may be met from overseas.  This is
especially relevant for Thailand when considering that there exists
a massive shortage of indigenous engineers.

      Thus, the building of major hydroelectric dams along the
Mekong River requires foreign inputs since many do not have the
capacity nor the technical expertise to make the generators and
other complex electrical-control systems. Moreover, Thailand's
neighbors through which the Mekong river also flows are burdened
with rising international debt and few export opportunities. 
Already, the tempting prospects of exporting electricity to energy-
starved Thailand has led Burma and Laos to begin constructing dams
along the Mekong river.  Sadly though, hydroelectric dams can have
devastating effects on the environment.

      On the advice of the World Bank and Mekong Committee, the
Royal Thai Government began to see the ability to generate
electricity as an essential element of the larger industrialization
effort.  The Choa Nem project, later renamed the Sri Nakarin Dam,
was completed in the late 1970s under the supervision of Electrical
Generating Authority of Thailand and the Asian Institute of
Technology.  When the local people found out about its proposed
construction in 1973, they stood up to protest the threat to public
safety and the potentially adverse environmental impact -- soil
erosion, loss of wildlife, change in the water table, among others. 
In addition, the dam was to be located in the Kanchanaburi Province
on a geographic fault line, a fact that could result in a major
catastrophe should an earthquake occur.  Similarly, risk associated
with flooding and/or breakage remained high as the dam was built on
porous limestone, which is water soluble.

      With the help of a public information campaign, the pressure
to reconsider the dam mounted.  A small group of university and
Forestry Department Scientists spoke out against the dam.  Also a
group of non-governmental organizations and international
environmental groups launched an international campaign to
challenged the official environmental impact assessments. 
Moreover, local NGOs and student environmental groups opposed the
construction on democratic grounds, arguing that local resources
would be exploited for the benefit of a small group of elites.

      On the side favoring the dam were the Thai Military, the
Electrical Generating Authority of Thailand (EGAT), numerous Thai
agencies, foreign lenders, and producers of parts for the dam.  In
1973, the supporters produced a document--the environmental impact
assessment (EIA)--that recommended the dam's construction.  As the
opposition's campaign mounted, the leader of EGAT agreed to meet
with opponents in what was to be the only consultation.  Although
both parties agreed that the original EIA was useless, the second
part was never made public.  Construction pressed ahead and the dam
was completed in the late 1970s.

      The Japanese corporation Mitsubishi provided almost all the
parts and equipment.  Furthermore, the World Bank and Japan's
Overseas Economic Cooperation Fund supplied the initial long-terms
loans to finance the dam.  The environmental consequences of this
dam are symptomatic of the larger problems facing dam construction
world-wide.  By flooding a large forested area to build up enough
water to generate electricity the dam ruined local farmlands and
required resettlement of some 4,000 families.

      Downstream at the estuary of the Mae Klong river, the reduced
flow of water caused an intrusion of saline water wiping out
farmland and ruining the fragile mangrove forests.  In addition,
the dam also hardened the soil on the river-banks by reducing the
water flow.  Coupled with the problems of deforestation in
Thailand, successive droughts exacerbated the difficulties of
farming the soil as infrequent rainfall from deforestation
hardening the soil and pushed back the planting season from
February to May.  All told, the export crops produced downstream on
coconut and lychee plantations were wiped out and farmers were
forced to abandon their land because of accumulated saltiness. 

      The connections between trade and environmental degradation in
the case of dam construction has both direct and indirect effects
on the environment.  The environmental problems associated with dam
construction can also combine with deforestation to produce even
more problems.  Dam construction usually requires foreign inputs in
the form of services and goods.  Yet, hydroelectric dams can be
very detrimental to the local environment and may indirectly harm
the prospects for other types of exports by degrading the natural
resource base in this the freshwater supply.  Moreover, dams help
to dislocate rural populations who frequently protect the local
resources.  As with many of these development projects the refugees
end up impoverished and landless.  The story has repeated itself 26
times across Thailand.

3.    Related Cases

     COLORADO case
     DANUBE case
     LESOTHO case
     ISREALH2 case
     ATATURK case
     ARAL case
     THAILOG case

     Keyword Clusters    
     (1): Product                  = MANY
     (2): Bio-geography            = TROPical
     (3): Environmental Problem    = HABITat Loss

4.    Draft Author: Paul F. Macek
      Completed: 6/1994         Updated: 3/1996

B.    Legal Filters

5.    Discourse and Status:  DISagree and INPROGress

      The discourse on dam building has become very rich in recent
years as more and more groups have lobbied for increased
transparency and accountability by lenders.  On the side of those
favoring dam building, the renewable and sustainable nature of
water resources has been emphasized.  For them, rivers are seen as
an alternative to fossil fuels and nuclear energy.  However, dam
building in Thailand has been opposed by local and international
groups on a number of occasions for the very reasons that were
cited above.  They have engaged the government agencies and
multilateral lenders in a dialogue about the long term
sustainability of large hydropower.

      Using the Environmental Impact Assessment, debates have
occurred over the validity and authority of the contents.  On
occasion, the authors have agreed to review their findings and
concluded that the dam should not be built.  This is also an
opportunity to save face on behalf of the interests  involved, who
may withdraw their support at the second revision.  Other groups
have become involved the larger international opposition to dam
building.  For instance in the United States, groups like American
Rivers have identified 10 endangered rivers and 25 threatened
rivers due to destruction from dams, water diversions, mining,
dredging, land development and/or pollution.

      In the case of developing countries, local NGOs and
environmental groups have initiated protests at multiple levels:
(1) international--in multilateral forums such as at the UN Rio
Earth Summit 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 official at the provincial and village level to take a
stand.

6.    Forum and Scope:  THAIland and UNILATeral

      In Thailand, some dams have been constructed and their danger
assessed and made public; others have been postponed indefinitely. 
In other regions and other countries their construction continues
unabated.  Despite the almost universal problems associated with
hydroelectric dams, especially in both developed and developed
countries, there has yet to be any sort of international guidelines
on their construction.  No broad policy programs have been proposed
to address the difficulties associated with hydroelectric dams.

      China has constructed two dams uprivr on the Mekong (which
they call the Lancang), at Dachaoshan and Manwan.  China plans five
more dams and nine on the Mekong's tributaries, in total exceeding
the capacity of the Three Gorges dam (see THREEDAM case).  These
dams are meant to produce hydro-electric power, so long-term water
diversion is unliekly.  However, during periods of dam-filling has
produced sverely reduced flows downstream.  Vietnam fears that
reduced water will cause the salt water to intrude further
upstream, threatening rice production.
 
7.    Decision Breadth: 1

      In the case of the Choa Nem dam numerous groups were effected. 
These include environmental NGOs, national and international, Thai
government Agencies like EGAT and Royal Forestry Department;
multilateral banks, in particular the World Bank and the Asian
Institute of Technology; and foreign  governments like Japan and
the United States and their businesses especially companies like
Mitsubishi that provided the parts and equipment. 

8.    Legal Standing: LAW

      National Laws and Transnational Actors: The first policies
with regards to energy were set out in the Petroleum Authority Act
(1970), which established broad policy objectives for the
exploration and discovery of petroleum.  Subsequent legislation
reinforced the governments central role in coordinating energy
activities through strengthening of the institutional  framework. 
One agency, the Electrical Generating Authority of Thailand (EGAT),
worked closely with Bank staff to design massive dams for the
production of electricity.  A series of laws also set out the same
broad policy objectives of the Board of Investment; in particular,
laws were designed to encourage private exploration and develop
domestic petroleum reserves through the use of incentives similar
to those used by the BOI, especially tax concessions and guarantees
against nationalization. Private companies have operated
alongside the public sector, in particular American corporations
and the affiliates of the transnational corporations Esso and Shell
have been active in exploration.

C.    Geographic Filters

9.    Geography

      a.     Domain:     ASIA
      b.     Site:       East Asia
      c.     Impact:     THAIland

10.   Subnational Factors:  NO

      The issue of dam construction relates to development policies
and priorities in rural areas, especially in Thailand's
impoverished north and  northeastern regions.  Often the issue will
center around control over natural resources at the village level. 
While at the national level, the government may have other designs
for such resources.

11.   Type of Habitat: TROPICAL

D.    Trade Filters

12.   Type of Measure: Regulatory Standard [REGSTD]

      No specific measures have been implemented to deal with the
trade in energy or the trade in parts and equipment related to
hydroelectric dam construction.  In general Thailand has been very
open to foreign trade and foreign direct investment in Thailand.

13.   Direct vs. Indirect: INDirect

      Dams generate water to be used for production of the export
agricultural products.   The water from the reservoir can be fed
into irrigation systems.  However, the flooding of a reservoir may
irreversibly change the ecosystem and water table downstream
threatening other farmers.  Also, the lack of water flowing
downstream may increase the likihood that salt-levels increase
downstream killing wild-life and habitats dependent on semi-annual
silt deposits and freshwater.

      Although Thailand uses its dams for local energy use, the
potential for trade is enormous given the fact that Thailand
imports much of its energy.  As the economy grows other neighboring
countries like Cambodia, Laos, and Burma may be tempted to export
energy to Thailand.  In 1989, Thailand's dams produced 4.5 billion
Kilowatt hours and in 1982 the figure was 3.8 billion kilowatt
hours.  The world's net production of hydroelectric power was
2,144.8 billion kilowatt hours in 1991.

      In addition, the items used to construct dams include a
significant number of power generators and other electrical
systems.  Japan was particularly eager to export these products to
Thailand in connection with the construction of dams. 
Unfortunately, data on the export of generators are unavailable. 
However, these parts are the most sophisticated and hence expensive
parts of the construction, and therefore the amount of trade should
be significant.  Furthermore, international services rendered by
consultants, bankers, engineers, and architects may also be brought
into the planning stage and constitute an additional aspect of
international product flows.  Similarly, after completion these
services and parts will be needed to maintain and upgrade the
functioning of the dam.

14.   Relation of Trade Measure to Resource Impact

      a. Directly Related:                  Yes ELECtricity
      b. Indirectly Related:                Yes MANY
      c. Not Related:                       No
      d. Process:                           Yes HABITat Loss

Urbanization: In constructing dams, usually the rural communities
are uprooted and forced to  go elsewhere to take up residence. 
This often results in rural landless who end up living in slums and
working in the cities.  Gradually, the rural community becomes a
thing of the past.

Consolidation of State Control:  One reason for the rural
development projects like the Nam Choan dam was the military's
desire to extend its control to the old strong-hold of the
Communist Party of Thailand.  New government administrators and
military committees were appointed as part of the effort to
construct the dam.

15.   Trade Product: MANY

      Energy production and inputs to the dam construction--
generators, machinery, construction equipment, and professional
services.  Also a multiplier effect may occur which would require
additional indirect inputs, such as adequate telecommunications and
road systems to reach the isolated rural areas where dams are
located in Thailand (see above).

16.   Economic Data

      In 1989, Thailand's dams produced 4.5 billion Kilowatt hours
and in 1982 the figure was 3.8 billion kilowatt hours.  The world's
net production of hydroelectric power was 2,144.8 billion kilowatt
hours in 1991.  The world's leading hydroelectricity producers
were  Canada, the U.S., Brazil, Norway, the former U.S.S.R. and
China.  Together they accounted for over half of the world's
total hydroelectric power generation in 1991 (see Table 258-1).

                                    Table 258-1
                       Percent of Total Hydroelectric Power

Canada             14.2 Percent
US                 13.0 Percent
Former USSR        10.3 Percent
Brazil              9.8 Percent

17.   Competitive Impact: LOW

      The impact of trade restriction on the trade in dam parts and
equipment could result in increased conservation.  Japan has
effectively reduced its consumption of energy over time.  There is
no reason why Thailand could not pursue a similar path.

      The question here remains to what extent countries are 
willing to sacrifice their natural waterways and resources for the
short term gain of energy production.  If economic growth can only
be attained by destroying the natural environment, then the cost of
such destruction should be compensated for.  Those displaced should
be reimbursed for their loss of land and livelihood.  Otherwise,
the rural populations will subsidize the growth of industry in the
cities, who use the hydropower.  Alternative energies and
conservation campaigns must be developed so as to reduce the need
to rely on such environmentally unsafe sources. Thus, while dams do
create much needed energy to fuel industrial growth the long-term
sustainability and impact on the larger environment and ecosystem
must be brought into question.

18.   Industry: MANY

19.   EXPORTER AND IMPORTER: THAIland and MANY

      Thailand imports electrical machinery and generators from
Japan and the United States.  For instance, a recent US Department
of Commerce Document concluded that best prospects for US exports
to Thailand were in Pollution Control Equipment, Telecommunications
Equipment, and Computers and Peripherals.  Thailand imports a
considerable amount of capital goods and intermediate goods from
Japan, the US and Germany.

      In addition, dams require may "service" products in the ways
of financial, consulting, and engineering services,  These are
often providing internationally and may be tied to certain loans. 
Thus, some countries like the United States and Japan provide loans
for certain projects only on the condition that the country use
products and services provided by their companies.  This is how
only 30 cents out of every development dollar allocated by the
United States government actually gets spent in a developing
country.

E.    Environmental Filters

20.   Environmental Problem: HABITat Loss

21.  Species Information

      In almost all cases, dams alter the natural environment,
changing the water table on which all life depends.  Thus, the
number of species affected is almost infinite. 

22.   Impact and Effect: HIGH and 10-20 years

      Coupled with deforestation dams have adversely affected local
climate conditions, soil fertility, and water and fishery
resources.  Also a number of mud-slides have been noticeable
during the rainy season, which can alter the local environment
immediately.

23.   Urgency and Imapct:  High and Scale
 
      Dam construction immediately effects the living organisms that
inhabit the river down stream by altering amount of water and the
ability of fish to swim upstream to spawn.  Some animals and plant-
life could be wiped out within a year.  The more slow on-set types
of destruction and environmental degradation can range between 10
and 100 years, as the changing water table gradually effects all
life.  The low amount of water flowing downstream may actually
contribute to the salinization of river tributaries as they
approach the ocean.

24.   Substitutes:  ALTERnative Energy

      There are any number of substitutes for hydroelectricity. 
Many are fossil fuels which have their own environmental
consequences.  However, wind energy is emerging as a viable
alternative.  Solar energy has long been employed to heat houses
and supply heat to the earth.  Geothermal energy is also another
alternative.  It seems that wind energy and solar would be best
suited to Thailand's climate.  In addition, improved energy
efficiency as illustrated by China's conservation efforts is
another pathway open to Thailand.

F.    Other Factors:

25.   Culture:  YES

      Culture has played a role in the environmental consequences of
dams.  In particular, Thailand is heavily reliant on rice
production as both an export crop and subsistence staple.  Thus,
the scarcity or reallocation of water can have a severe effect on
the rural economy.  Compared with a pastoral people, dams displace
those who are tied to crop production based on seasonal rainfall. 
In addition, Thailand has historically had an indigenous dam system
which maximizes the community usefulness of irrigation by
distributing water to all according to size of their land holdings. 
Similarly one's land determines the amount of work one has to
contribute to the communal irrigation system.  However, dams have
replaced this system with a system determined by proximity to the
major dam.

26.   Human rights: YES

      There has been some intervention in the right to freely
organize, as was the case of the protesters the dam. It seems that
some basic human rights may have been violated by the government
and EGAT.  However, the protests were successful in the end.

27.   Trans-boundary: YES

28.   Relevant Literature

Economist, "Damned if You Don't," 337/7941. November 18, 1995, 38-
39.

Fairclough, Gordon, "Graduates in Demand:  Companies Struggle to
Find Engineers," Far Eastern Economic Review, 11 March 1993, p. 51.

Energy Information Administration, Department of Energy.
International Energy Annual 1991. U.S. Government Printing Office,
Washington, D.C., December, 1992.

Hirsch, Philip and Larry Lohmann, "Contemporary Politics of the
Environment in Thailand," Asian Survey.  29, 4. (April 1989), pp.
439-451.

Hirsch, Philip, "The Military in the Thai Countryside" Far Eastern
Economic Review, 137. September 10, 1987, pp. 34-35.

Jagannathan, C.R. with Tata Energy Research Institute, and Charit
Tingsabadn.  India and Thailand: Social and Economic Effects of
Petroleum Development.  Geneva:  International Labor Office, 1987.

Kelly, Jean , Country Desk Officer, U.S. Department of Commerce,
author interview on November 12, 1993.

Lohmann, Larry. "Who Defends Biological Diversity? Conservation
Strategies and the Case of Thailand" Ecologist. 21, 1. (1991) pp.
5-11.

"Engineers move in on the Mekong:  Plans to dam the Mekong River,"
New Scientist, 131, 1777 , (July 13, 1991), p. 44.

Nation, February 22, 1988.

Rich, Bruce. "Mortgaging the Earth: The World Bank, Environmental
Impoverishment, and the Crisis of Development. Boston: Beacon
Press, 1994.

Royal Thai Government. Thai environmental situation, Thailand
National Report to UNED. Bangkok, Thailand: 1992.

Tuntawiroon, Nart. "The Environmental Impact of  Industrialisation
in Thailand,"  Ecologist. 15, 4. (1985) pp.  161-164.

United States Department of Commerce, International Trade
Administration,  Foreign Economic Trends and Their Implications for
the United States: Thailand. Washington: US Government Printing
Office, July 1993.

World Resources Institute (WRI) in collaboration with UNEP and
UNDP. World Resources 1992-92. New York:  Oxford University Press,
1992.

World Resources Institute. The 1993 Information Please
Environmental Almanac.  Boston: Houghton Mifflin Co.: 1993.




Go to Super Page 1/11/97