Future in Doubt: Reviewing Dam Builder’s Efforts to Restore River–based Livelihoods in Laos

David Blake, who was contracted by the Theun-Hinboun Power Company to review the company’s mitigation and compensation program, shares some of the review panel’s findings and his outlook on mitigating the impacts of Theun-Hinboun in World Rivers Review, February 2005.

For the past four years, the Lao–based Theun–Hinboun Power Company has invested significant resources to mitigate and compensate for the impacts of the Theun–Hinboun hydropower project in central Laos. While the company has made "good progress," according to a third–party review panel, there are serious concerns over the effectiveness and long–term sustainability of its program to restore affected people’s livelihoods. Here, a member of the review panel, a British fisheries and sustainable aquaculture specialist who lives in Thailand, shares some of the panel’s findings and his outlook on mitigating the impacts of Theun–Hinboun.

More than 3,000 families in at least 57 villages have been negatively affected by the Theun–Hinboun Hydropower Project. Built primarily for power export to Thailand with funding from the Asian Development Bank, this run–of–river project diverts water from the Theun–Kading River, one of the Mekong’s largest tributaries, through a tunnel to a 210–MW power plant before release into the Hai/Hinboun river basin. After the project was completed in 1998, the changes it made to the rivers resulted in people suffering from flooding of dry season riverbank gardens, declines in fisheries, loss of drinking water sources, riverbank erosion, downstream sedimentation and income losses due to delays in providing mitigation and compensation.

As part of its plan for compensation and mitigation, Theun–Hinboun Power Company (THPC) requires a third–party review to be conducted every two years to examine the effectiveness of its program and issue recommendations for improvement. In March 2004, three independent experts, including myself, travelled to Laos for one month to conduct the program’s first review. We spent 90% of our time at the project site and impact area, meeting with a wide range of affected persons, project staff, local government officials and other stakeholders. At press time, the panel’s final report had not been publicly released.

The Plan
THPC’s Environmental Management Division (EMD) staff, in charge of implementing the plan for compensation and mitigation, have initiated a broad range of rural development activities focusing on establishing village development committees, savings and credit schemes, health and sanitation, food security and livelihood restoration.

Two primary strategies have been used for affected communities. Villages along the headpond, which flooded a considerable length of the Nam Theun/Kading River, were targeted for a gradual conversion from shifting cultivation to more permanent agricultural practices like wet rice terracing, agro–forestry and horticultural production on irrigated plots. Lowland villages along the recipient Nam Hai and Hinboun rivers were offered irrigated fruit tree and vegetable plots on river levees, support for livestock rearing and intensive irrigated dry season rice cultivation, as the chief compensatory measures for loss of livelihoods from declines in fisheries and riverbank garden production.

Most of these activities resembled those of a conventional donor–funded integrated rural development project, and there was plenty of evidence to suggest that they were successfully meeting many local needs. For example, the panel found that THPC’s activities in establishing village savings and credit funds, installing wells for water supply, building toilets and distributing mosquito nets were going well.

It is important to keep in mind, however, that this mitigation program is not an ordinary aid–driven rural development project to improve people’s living conditions. Instead, this program was created to mitigate the impacts of an environmentally destructive project carried out without properly consulting the traditional users of the local natural resource base beforehand, and who have ultimately borne many direct and indirect costs and risks to their former river–based livelihoods. The program’s ultimate success must be judged according to whether it adequately compensates for costs already incurred by affected people to their livelihoods and well–being. Although the program has had some initial success, its overall effectiveness in restoring livelihoods will remain in question for many years to come. Some areas of concern are described in these excerpts from the review panel’s report:

Aquatic Resources
The panel found that "the poorest sectors of the impacted communities, and those heavily reliant on living aquatic resources for their livelihoods and diets ... have not been adequately included in project activities to date." This has resulted from difficulties in including the poorest villagers in a primarily agricultural–production–oriented development strategy, as well as delays in conceiving and incorporating a fishery management component into the project. It was also found that there are some villages located above the headpond which have been negatively affected by the project, but have never been recognized as such and thus have not received any assistance from THPC.

Although fisheries decline was one of the project’s most significant impacts and significant declines in fish catches were predicted before the dam was built, THPC has not yet implemented fisheries mitigation activities. THPC has never fully acknowledged the extent and severity of the living aquatic resource impacts, and still stubbornly clings to the belief that they can be mitigated using technical solutions (e.g., construction of a fish ladder, larger re–regulation pond, erosion protection, etc.) or compensated for using other production–based livelihood options, euphemistically named "protein replacement" options. This is a common misconception among hydropower proponents and developers in the lower Mekong region.

Villagers I spoke with in March 2004 and during a previous visit in 2000 complained about the rapid decline in fish catches following the dam’s construction. Many had given up fishing in recent years because it was "a waste of time." They have resorted to gathering more non–timber forest products for income and trapping small game to compensate for the loss of protein. According to the village headman of Ban Kapab, which formerly was an important area for dry–season rapids fishing before the dam was built, nowadays it can take all day to catch enough fish for a single meal, even using several nets.

One of the review panel’s key recommendations is for THPC to widen the recognized impacted area to include villages affected by declines in fisheries and other aquatic resources, especially in villages above the headpond. The company should also develop a participatory aquatic resource management program, which includes conservation awareness programs, small–scale aquaculture schemes and a long–term monitoring program in partnership with local communities. Without such a program, it is likely that the poorest villagers will slip through the safety net provided by THPC. If the aquatic resource base further declines, "intra–village wealth disparities may well widen" since the poorest community members rely more heavily on these resources for their livelihoods. The review panel also recommended one–off non–cash compensation payments for affected villagers.

The panel recognized that "improving social economic conditions within the headpond area presents a daunting challenge." Part of this is due to THPC’s emphasis on encouraging villagers to switch from shifting cultivation to sedentary agriculture. "Many projects have tried and ultimately failed to convert land with such marginal soils to productive sedentary agriculture."

Viability of Irrigation
The heavy emphasis on promoting dry–season pumped–irrigated rice along the Nam Hai and Hinboun valleys was another source of concern to the review panel. We felt the strategy of promoting a high–input, chemical fertilizer–based farming system among resource–poor farmers was risky, and favored the wealthier members of the community who could better afford the risks involved while excluding the poorest. Furthermore, this strategy has the potential to have unintended negative impacts on aquatic ecology by polluting surface and ground water, thus further degrading the very resource base on which the poorest sectors are most reliant.

While the first year’s irrigated crop in many villages provided good yields, there were strong indications that problems with pests and disease occurred during the second year. Reports after the end of the 2004 dry season rice harvest confirmed a slump in rice yields from 2003 and economic losses incurred by farmers, which eventually had to be covered by THPC. The panel also noted problems with pump breakdowns and reluctance of farmers, often the poorest ones, to participate in the program due to concerns about the risks of dry–season rice production. The panel felt THPC was spreading itself too thinly on the ground before villagers have accepted and can deal with risks associated with this new livelihood activity. Given these problems, the future effectiveness and long–term sustainability of this model of compensation assistance must surely be in doubt now.

In addition, THPC’s strategy of encouraging villagers to grow fruits and vegetables for sale in local markets to generate income has had limited success. The panel found that "many if not most of the farmers involved in the household garden activities are not yet able to make the major developmental leap to supplying for markets."

The panel recommended that EMD at least partially bear the pumping costs for both vegetable gardens and dry–season rice fields until cash crop production becomes normalized. Given the high cost of diesel, the project should work to improve irrigation efficiency, support conversion to high–value commercial crops with reduced water requirements and promote conversion of diesel pumps to electricity. It is sadly ironic that despite the close presence of a large hydropower plant and promises of connection by Electricite du Lao for many years, most villages affected by the project are still without electricity.

Livestock Program
To compensate for losses in dietary protein, THPC has worked with villages to improve livestock management through penning of animals, vaccinations, training of volunteers and other interventions. While the strategy for improved livestock management was considered "generally sound," the review panel reported that the benefits will take "some time, likely many years, to reach the majority of households." The review panel reported that present efforts to vaccinate livestock are not reaching most animals, and owners are "enduring economic losses" from annual livestock mortality and disease. Villagers frequently requested greater efforts to provide regular veterinary care for livestock.

Riverbank Erosion
One of the most visible impacts of the Theun–Hinboun Hydropower Project is the severe erosion and collapse of riverbanks along the Nam Hai River. THPC has invested considerable resources to understand the erosion problem and examine its impacts on water quality and downstream fish populations. It is estimated that two meters of riverbank have eroded each year since the project was completed.

The review panel speculated that mitigation of riverbank erosion "may not be possible" and recommended against implementation of vegetative erosion control techniques and fencing along banks since these would bring only marginal benefits. The panel did suggest small improvements to THPC’s monitoring program to inform decision–making on appropriate mitigation strategies. The impacts of past and continuing erosion on water quality are mainly elevating suspended solids and turbidity levels in the dry season, thus curtails light penetration, which impacts the entire food chain, including the fish, mollusks, shrimps and aquatic weeds which formerly provided subsistence diets and income for villagers. Beyond this, bedload sediments from bank slumping and other sources are infilling pools, which were formerly important dry season fish refuges. Many of these are now reported by villagers to be half as deep as a decade ago.

Conclusion
The findings of the Theun–Hinboun Mitigation and Compensation Program Review panel underscore the serious difficulties inherent in trying to replace former natural resources and river–based livelihoods with agricultural–based livelihoods in a limited time frame. This is a long term and tricky task even for conventional development projects, but is made all the more difficult where the aquatic resource base has been severely depleted by massive environmental changes wrought by a trans–basin diversion of water between river basins with different base characteristics. Even with the high level of commitment shown by EMD staff and significant financial resources made available to the program, there were still signs of exclusion of many of the poorest and most vulnerable community members from core program activities designed to mitigate and compensate for their loss of livelihood. At the same time, it was noted that a participatory living aquatic resources co–management program which might provide more long term benefits for the poorest sectors, had been slow in coming, after a series of conflicting fishery studies over the years. There are strong implications arising from our findings for the future success and sustainability of other hydropower projects planned or under construction in the region, in particular, the World Bank–supported Nam Theun 2 Dam.