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DUKE ENVIRONMENTAL ECONOMICS WORKING PAPER SERIESorganized by the

NICHOLAS INSTITUTE FOR ENVIRONMENTAL POLICY SOLUTIONS

Analyzing Economic Tradeoffs of Water Use in the Nam Ngum River Basin, Lao PDRRyan Bartlett*

Justin Baker†

Guillaume Lacombe‡

Somphasith Douangsavanh‡

Marc Jeuland§

Working Paper EE 12-10December 2012

* WWF-US† RTI International‡ International Water Management Institute§ Sanford School of Public Policy, Duke University

The Duke Environmental Economics Working Paper Series provides a forum for Duke faculty working in environmental and resource economics to disseminate their research.

These working papers have not undergone peer review at the time of posting.

NICHOLAS INSTITUTEFOR ENVIRONMENTAL POLICY SOLUTIONS

AnalyzingEconomicTradeoffsofWaterUseintheNamNgumRiverBasin,LaoPDR

RyanBartlett1,JustinBaker2,GuillaumeLacombe3,SomphasithDouangsavanh3,Marc

Jeuland4

1:WWF‐US.WashingtonDC,USA.ryan.bartlett@wwfus.org2:RTIInternational.RTP,NorthCarolina,USA.justinbaker@rti.org3:InternationalWaterManagementInstitute.Vientiane,LaoPDR.g.lacombe@cgiar.org;s.douangsavanh@cgiar.org4:DukeUniversity,Durham,NC,USA.marc.jeuland@duke.edu

December2012

AbstractThispaperdevelopsahydro‐economicoptimizationmodelingframeworktoassesstheeconomicconsequencesandpotentialtrade‐offsofvariousinfrastructuredevelopmentandpolicypathwaysintheNamNgumBasin(LaoPDR).Weconsideredwhetherlargeshiftsinwaterresourcedemandsinarelativelywaterabundantbasincouldinducemeaningfuleconomictrade‐offsamongwateruses,includinghydropowergeneration,irrigationexpansion,floodcontrol,andtransboundarywatertransferobjectives.Weconstructedaseriesofsensitivityscenariosunderdry,average,andwethydrologicconditionswithvaryinglevelsdamdevelopment,irrigatedagriculturalexpansion,agriculturalreturns,floodcontrolstoragerestrictions,andwaterdiversionstoNortheastThailand.WealsoconsideredhowflowsintotheMekongwouldbeaffectedbythesecollectivedevelopments.Ingeneral,resultsindicatethattradeoffsbetweenhydropowerproduction,irrigation,andfloodcontrolaremodest.Hydropowerandagriculturalexpansionarefoundtobecomplimentaryunderhighlevelsofwateravailability,evenwiththemostambitiouslevelofirrigationexpansion.AllowingforfloodcontrolbymaintainingreducedstoragelevelsinthereservoirthatislargestandfurthestdownstreamontheNamNgum(NN1)hasaminimaleffectoneconomicoutputanddecreasestotalsystemhydropowerbylessthan1%.However,economicoutcomesarehighlydependentonwateravailabilityandeconomicreturnstoirrigatedagriculture.Systemhydropowerwasgreatlyreduced,andinter‐basintransferprojectsinducedlargeeconomiccostsunderdryconditions.Theseresultsonseasonalimpactsillustratetheimportanceofaccountingforclimatevariabilityandpotentialhydrologicchangeincost‐benefitanalysisofinfrastructureprojects,eveninwatershedsthatarerelativelywaterabundant.

Keywords:Optimization;waterresourcesmanagement,MekongRiver,LaoPDR,hydropower,irrigation

1.Introduction

AsrapideconomicdevelopmentcontinuesinSouthEastAsiaandtheLowerMekongBasin,demandsforbothfoodandenergywillcontinuetorise(FAO2010;IEA2012).Withtheserisingdemandscomechallengesassociatedwithregionalmanagementofwaterresources,creatingincreasedcompetitionbetweendifferentusersandMekongRiverriparians,andputtingnewandgreaterpressureonsurroundingecosystems(Ringler2001;Friendetal.2009;Zivetal.2012).LaoPDR,oneoftheleastdevelopedeconomiesintheMekongregion,isalsooneofthemostactiveinpursuinghydropowerandagriculturaldevelopment(GrumbineandXu2011;Matthews2012).Withitsriverscontributing35%ofMekongflowsanditsstrategiclocationbetweentheboomingeconomiesofChina,Vietnam,andThailand,LaoPDRisuniquelysituatedtodeliverhydropowertobothdomesticandregionalmarkets,andhasambitionsofbecomingthe“batteryofSoutheastAsia”(Bardacke1998;MRC2005;ICEM2010).Thecountryhas10damsnowinoperation,eightunderconstruction,and82underlicenseorinplanningstagesnationwide,togetherrepresentingmorethan20,000MW(ICEM2010).1Yetthebasin‐wideimplicationsofsuchprojectsareamatterofsomecontroversy(Molleetal.2009;BangkokPost2011;Pearse‐Smith2012),andthedegreetowhichhydropower‐basedeconomicdevelopmentisconsistentwithothersocioeconomicandenvironmentalobjectivesinLaoPDR(e.g.irrigation,fisheries,floodcontrol)hasscarcelybeenexplored.

Infact,theLaogovernmentisalsokeentoutilizeitswaterresourcestopursueirrigationexpansion.MuchofthenewirrigatedareawouldbelocatedinorwouldusewaterfromtheNamNgumBasin(DWR2008).Covering7%ofthecountry’slandarea,theNamNgumBasinishometoroughly500,000people,representingapproximately9%ofLaoPDR’stotalpopulation(WREA2008).Itsflowscontribute4%ofmeanannualflowsandupto15%ofdryseasonflowsoftheMekongRiver(Lacombeetal.2012).ThevastmajorityofexistingfoodproductionandexpansionpotentialfromtheNamNgumoccursintheVientianePlain,whichishometooneofthenation’smostagriculturallyviablelandareas,withgreatpotentialforirrigationexpansion(WREA2008).Severalnewirrigationprojectsareinvariousstagesofplanningaspartofalargergovernmentstrategytoturnthebasinintoanationalandregionalproductionareaforriceandvegetables.Themostambitiousoftheseproposalswouldincreaseirrigatedareabymorethan100,000hectares(Geotech2012).TherehavealsobeenrecentdiscussionsofdivertingflowfromtheNamNgum(orMekong)Rivertowater‐scarceareasinnortheastThailandviaalargeinter‐basintransferjustupstreamofitsconfluencewiththeMekong.2

However,likemanyriversinLaoPDR,theNamNgumattractsthemosteconomicinterestforitshydropowerpotential.Thebasinalreadyincludesthreedamsbuiltprimarilyforhydropowerproduction.Twooftheseprojectswerecompletedinthelastthreeyears(representing255MWof

1LaoPDRfarexceedsanyoftheotherlowerMekongcountries,withVietnamsecondindevelopingitshydropowerpotential,withsevencurrentlyoperatingprojectsandfiveunderconstruction,butonlytwoinplanningstages.2Thisproposalisnotuncontroversial.However,duetotherelativewaterstressofthisregion,waterwealthintheNamNgum,andlong‐termeffortsoftheThaigovernmenttosignificantlyexpandriceproduction,itislikelytoresurfaceinfuturenegotiationsoverwatersharing.

installedcapacity),anotherisunderconstruction(120MW),andsevenmore(373MW)areinvariousstagesofplanning(EPD2012;Lacombeetal.2012).ThesedevelopmentsareseenascriticallyimportantformeetingcurrentandfutureenergydemandintherapidlygrowingcitiesandtownsthroughoutthelowerMekonginThailandandVietnam,aswellasVientiane,thecapitalofLaoPDR.

Determiningtheviabilityofthedualstrategyofirrigationandhydropowerexpansionrequirescarefulanalysistounderstandwhetherenergygenerationobjectiveswouldbeconsistentwithdeliveryofwaterrequiredbyadditionalirrigationdevelopment.Asisthecasewithmuchofrecenthydropowerdevelopmentinthedevelopingworld,however,thedamprojectsintheNamNgumareplannedinpiecemealfashionandindependentlymanaged,withonlyminimalconsiderationoftheircumulativeandbasin‐wideeconomicandhydrologicalimpacts(Jeuland2010).Thelackofcoordinationisevidentinrecentcontroversiesandobservedflooddamagesfrompoorly‐managedwaterreleasesduringhighflowevents(Bachetal.2012).Thisisinpartduetoaninsufficientunderstandingoftheeconomicvalueofthecountry’svastwaterresources,withrevenuesfromelectricitygenerationatindividualdamssometimesovershadowingpotentialtrade‐offswithotherimportanteconomicsectorslikeagriculture,aquaculture,orwiththenonmarketvaluegeneratedbysubsistencefisheriesorotherhydrologicalservices(GrumbineandXu2011).

ThispaperdevelopsanoptimizationmodelingframeworkforassessingtheeconomicconsequencesassociatedwithvariousinfrastructuredevelopmentpathsintheNamNgumBasin.Themodelisthenparameterizedwiththelatesthydrological,wateruse,andtechnicalandeconomicproject‐specificdata.Ourgoalisnottoconductacomprehensiveeconomicanalysisofdifferentpackagesofpotentialinfrastructures,butrathertounderstandwhetherdifferentenergygeneration,irrigation,andfloodcontrolobjectivescanbeachievedacrossalternativewateravailabilityscenarios,focusingspecificallyonpotentialeconomictradeoffsamongthem.Todoso,weuseahydro‐economicmodelthatoptimizestheeconomicbenefitsfrombasin‐widepowerproductionandagriculturalproduction,subjecttoconstraintssuchasfloodcontrolandenvironmentalflowrequirements.Themodelallowsustomeasurethecost,intermsoflostpowergeneration,thatmightemergefromconstraintsdevelopedtoprotectassetsandecosystemslocateddownstreamfromhydropowerdams.Wemodeldry,normal,andwetyearsasselectedfromthewiderangeofvariabilityinhistoricalflows,sincethisvariabilityappearstoincludetherangeofprojectionsofaverageclimatechangeforthisregion(Lacombeetal.2012).Importantly,themodelassumesthatoperationofcontrolinfrastructuresinthebasinwouldbecoordinatedacrossdamsandovertime,andthusrepresentsanupperboundontheeconomicproductionthatwouldbepossible.TheNamNgumbeingsuchanimportanttributarytotheMekong,wealsoconsiderhowflowsintothelargerriverwouldbeaffectedbythesecollectivedevelopments.Wealsostudythedegreetowhichdownstreamflowrequirementsorlarge‐scaledemandsforwatertransfertoNortheastThailandwouldreducetheeconomicbenefitsgeneratedintheNamNgumBasin.Thoughsuchwatertransfersarenotcurrentlyunderseriousconsideration,theyhavebeeninthepast,andcouldre‐emergeinthefuture.Thus,weplaceourresultsforthisbasininthewidercontextofMekongBasindevelopment(Ringler2001;Laurietal.2012),withouthoweverattemptingtoevaluatetheeconomicsofchangesintheMekonghydrograph.

Theremainderofthepaperisorganizedasfollows.Inthenextsection,weprovideadditionalbackgroundontheNamNgumBasinandthevariousdevelopmentproposalsadvancedforincreasedutilizationofitswaterresources.WethendevelopthemodelanddiscussdatasourcesandparameterizationinSections3and4.Section5presentsresults,andadiscussionfollowsinSection6.

2.Background

2.1.ExistingLiterature

Alargenumberofhydro‐economicoptimizationmodelingstudieshavebeendevelopedandappliedtoriverbasinsaroundtheworld(RogersandFiering1986;Harouetal.2009;Jeuland2010),butonlytwohavefocusedontheMekongoritssub‐basins.Inabasin‐wideanalysis,RinglerandCai(2006)appliedanoptimizationmodeltoanalyzetrade‐offsbetweendamdevelopmentonthemainstemoftheMekongandthevalueofdownstreamfisheriesandwetlandslocatedaroundtheTonleSapLakeinCambodia.Theanalysisrevealedcleartradeoffsbetweenconsumptiveandin‐streamuses,withthelargestoccurringbetweenfisheriesandagriculture,andwetlandsandmunicipalandindustrialuses.Ultimately,duetothegeographicscopeofthestudy,theMekongBasinmodelisfairlycoarseinresolution,requiresnumerousassumptionsduetosignificantdatagaps,andislimitedtoconsideringdevelopmentprojectsontheMekongmainstream.Nonetheless,thestudyisusefulfordescribingtheeconomicsofcompetingsectorsofproductionfromwaterresourcesinthebasin:hydropower,agriculture,andecosystemservicessuchasfisheries.

Similarlytoours,thesecondanalysiswasconductedforanimportantsub‐basinofthelowerMekong.Ringleretal.(2006)useaneconomicoptimizationmodelfortheDongNaicatchment,asub‐basinlocateddownstreamintheVietnameseMekongDelta,toassesstheimpactsofchangesinwatermanagementpoliciesinthebasin,includingimprovementsinirrigationefficiency,changesincroppingpatternsorreservoiroperations,andtheestablishmentofwaterrightstradingmechanisms.Contextually,theDongNaiisaverydifferentbasinthantheNamNgum,however.Inparticular,theDongNaiisalreadyhighlydevelopedanddenselypopulated,andcompetitionamongwaterusersinirrigation,domesticwaterconsumption,andhydropowergenerationisalreadyacute.Theauthorsdonotthereforeincludenewinfrastructureprojectsintheanalysis.TheNamNgum,incontrast,wasuntilrecentlyfairlyundeveloped,withtheexceptionoftheNamNgum1damandtherelativelylimitedirrigationlocatedintheVientianePlain;itthereforeprovidesanopportunitytoconsidersomewhatdifferentquestionsrelatedtotheeconomicsofnewinfrastructureprojects.

ThoughtherehavebeenfewstudiesoftheeconomicsofdifferentinfrastructuredevelopmentstrategiesintheMekongBasin,studiesofthedriversofhydrologicalandotherchangesaffectingtheriverabound(Laurietal.2012;Räsänenetal.2012).Thesestudiespointtoimportantdevelopmentsinhydropowerandirrigation(Kingetal.2007;Keskinenetal.2012),climatechange(Vastilaetal.2010;Kingstonetal.2011;Laurietal.2012),andlandcoverchange,waterdiversion,andurbanization(KummuandSarkkula2008).Thiscollectiveworkpointstotheimportanteffects

thatwouldresultfromalterationsofthenaturalfloodpulseoftheriver,whichwouldsignificantlyperturbseveralofitskeyecologicalfunctions(KummuandSarkkula2008;Zivetal.2012).

ModelingeffortsspecifictotheNamNgum,thoughmuchmorelimited,havealsobeencarriedout,withaparticularfocusontheeffectsofnewinfrastructureproposals.Broadlyspeaking,thesestudiesfallintotwobasiccategories:studiesthatdescribeorestimatethesocialandenvironmentalimpactsofspecificprojects,especiallynewdamproposals(ADB1996;ADB2007;VattenfallPowerConsultantAB2008);andmorecomprehensiveresearchthatanalyzesdevelopmentscenariostobetterunderstandthebasin’swaterbalanceandfuturewateravailability(SCI2004;WREA2008;AgenceFrancaisedeDeveloppementandAsianDevelopmentBank2009;WREAetal.2009;Lacombeetal.2012).Themostcomprehensiveofthesestudies,Lacombeetal.(2012),findsthathydropowerprojectsenablethefullsuiteofirrigationexpansionplansintheVientianePlain,whilepreservingrequiredecologicalflowsandincreasingdryseasoncontributionsfromtheNamNgumtotheMekong.Theanalysisshowsthatsuchexpansionwouldnotbefeasiblewithoutdamstorage;however,itisalsoworthnotingthathydropowerprojectsreducethefloodpeakintheriverbyroughly20%inanaverageyear.

Ingeneral,theNamNgumBasinstudiesdonotconsidertheeffectsthatnewwatercontrolinfrastructureswouldcollectivelyhaveonecosystems,fisheries,anddownstreamflooding.Inaddition,todate,therehasbeennocomprehensiveeconomicassessmenttounderstandthenatureofsynergiesortradeoffsbetweendevelopmentoptions,andtounderstandthecumulativeimpactsonthebasinfromtheiroptimaleconomicmanagement.

2.2.TheNamNgumBasin

TheNamNgumRiverextendsfromitsuppermostregionsabovethePlainofJarsintheXiengkhouangplateausouthintotheexpansiveNamNgum1reservoirandtheVientianePlain,anddowntoitsconfluencewiththeMekongneartheLaocapitalofVientiane(Figure1).Withtheexceptionsofthesetwolargeplainsthebasinismostlyhillyandmountainous,withelevationsrangingfrom2820metersabovesealevelatthePhouBiapeak(thehighestmountaininLaoPDR),tothelowestlowpointof155mattheconfluencewiththeMekong.ThebasinisthefourthlargestinLaoandcoversanareaof16,700km2(or7%ofthetotalareaofthecountry).Itcomprises18developmentdistrictsspreadacrossfiveprovincesinLao,andrepresents2%ofthetotalareaoftheMekongbasin(andprovides4%ofitsmeanannualflow).Theclimateofthebasinistropical,withtwodistinctseasonspoweredbytheEastAsianandIndianmonsoons.ThewetseasonbeginsinJuneandendsinOctoberandthedryseasonspansfromNovembertotheendofMay.Meanannualrainfallacrossthebasinrangesfrom1,500to3,000mm,withanaverageof2,000mmperyear(WREA2008).

Thehydrologyofthedownstreamportionsofthebasinisheavilyinfluencedbytheregulationprovidedbythe155megawattNamNgum1(NN1)damanditsenormous370km2reservoirjustupstreamoftheVientianePlain.PriortoconstructionofNN1,averageflowsinthemainstemoftheNamNgumRiverthroughtheVientianePlainrangedfromapproximately150m3/sinthedryseasonto3,000inthewet.Today,though,flowsrangefromroughly300m3/sto1,500m3/s;the

hydrographhasthussignificantlychanged,whichtheoreticallyallowsforgreaterwateruseduringthedryseason(Lacombeetal.2012).DuewestoftheNN1catchment,thelargetributarysystemoftheNamSongandNamLikriversflowsaroundthedam,itsconfluencewiththeNamNgumRiverlyingjustdownstreamofNN1’soutflowstotheVientianePlain.Adiversioncompletedin1996transfersaportionofflows(thecapacityofthistransferisabout400m3/s)fromtheNamSongRiverdirectlyintotheNN1reservoir,forthepurposeofincreasinghydropowergeneration.TherearealsotwomajorinterbasindiversionsintotheNamNgumBasinfromneighboringcatchmentsoutsidethebasin:theNamLeuk,eastofNN1andcompletedin2000,divertsflowsintotheNN1reservoirviatheNamSanRiver(roughly100m3/scapacity)andtheNamMang3dam,completedin2005,whichdivertsflowsintotheNamKhanRiverintheVientianePlain(Figure1).

Figure1.TheNamNgumBasin,includingcurrentandplannedhydropowerdams

TheNamNgumbasinislargelyrural:smallvillagesandpopulationcentersarefoundalongmainroadsandintheXiengkhouangPlateauandVientianePlain,withsomeperi‐urbanareasandthemajorityofthepopulation(300,000;aboutthreefifths)foundatthesouthernendofthebasininthecityofVientiane.Forestcoversroughly50%ofthebasin,withshrubland,bamboo,andre‐growingforestcoveringroughlyonethird,andcroppedareasabout10%(WREA2008).Subsistence‐basedagricultureisthemainformoflivelihoodgeneration,and75%ofthepopulationinbasinprovincesreportagricultureastheirprimaryformofemploymentinthe2005nationalcensus.Thefifthprovince,whichcomprisesVientianeMunicipality,ismostlyurban;twothirdsof

peopletherereportednon‐farmincomeastheirmainactivityin2005.Industrialactivityinthebasinisverylimited(WREA2008).

ThewetseasonirrigationpresentthroughoutmuchoftheLowerMekongregionalsooccursintheNamNgumBasin(MekongRiverCommission2010),withlowlandanduplandricebeingthemostcultivatedcrops,followedbymaizeandamixofvegetables.Dryseasonirrigationiscurrentlymuchmorelimitedduetoanumberoffactors,includinginsufficientreturnsoninvestment,limitedinfrastructure,highoperationandmaintenancecosts,insufficientcapitalinvestmenttoexpandirrigationnetworks,andprobablyalsoresistancetoadoptionofnewmodernfarmingpractices(UNEPandAIT2001;Setboonsarngetal.2008).ThemaindryseasonirrigationareasareontheXiengkhouangPlateauandintheVientianePlain,withtheplainaccountingforroughly75%ofthebasin’sdryseasonirrigationandthemajorityofitslarge‐scaleirrigationinfrastructure.Forty‐twopumpingstationsandanumberofconcrete,brick,anddirtcanalswerebuiltintheVientianePlainalongthemainstemoftheNamNgumRiverduringthe1990s(Lacombeetal.2012).CurrentgovernmentplansobtainedfromtheDepartmentofIrrigationcallforanincreaseofroughly5,000hectaresatthreeofthesepumpingstationsduringthenextfiveyears,withfeasibilitystudiesbeingcarriedoutformuchgreaterexpansioninthecomingdecades,including120,000haofnewgravity‐fedirrigationinthePlain(Geotech2012).ThislargedevelopmentplanwouldutilizedivertedflowsfromtheNamLikRiverandtheNamNgumreservoir.ThegovernmentalsohopestoexpandproductionintheXiengkhouangPlateau,onamorelimitedscale(WREA2008).

Table1.CurrentandFutureDamsintheNamNgumBasin

Status Type Year Operational

Capacity (MW)

Intended Market

Nam Lik 1‐2 Operational Reservoir 2010 100 Lao PDR

Nam Ngum 1 Operational Reservoir 1971 155 Lao PDR/Thailand Nam Ngum 2 Operational Reservoir 2011 615 Lao PDR

Nam Ngum 5 Under

construction Reservoir 2012 120 Lao PDR/Vietnam

Nam Bak 1 Proposed Reservoir Unknown 88 Thailand

Nam Bak 2 Proposed Reservoir Unknown 60 Lao PDR/Thailand

Nam Ngum 3 Proposed Reservoir 2014 440 Thailand

Nam Ngum 4A Proposed Run‐of‐river Unknown 45 Lao PDR/Vietnam

Nam Ngum 4B Proposed Run‐of‐river Unknown 45 Lao PDR/Vietnam Nam Ngum Downstream

Proposed Run‐of‐river Unknown 70 Lao PDR

Nam Ngum Downstream 2

Proposed Run‐of‐river Unknown 5 Unknown

Nam Lik 1 Proposed Reservoir Unknown 60 Unknown

Notes:Operationalyearsandintendedmarketsarecurrentlyunknownforsomeproposedprojects,astheyarestillinfeasibilityassessmentstages.Source:CompiledfromADB,1996;InternationalRivers,2009;EPD,2012.

Theothermajorcomponentofcurrentbasindevelopmentplansistheconstructionofnewhydropowerfacilities.Thereareatotalof13damsinvariousstagesofoperation(3dams;870MW),construction(1dam;120MW)andplanning(9dams;813MW)inthebasin(Table1).Fourof

theseplannedprojectsarerun‐of‐the‐riverdamsthatwouldnotstorewater.Thereisverylittleirrigatedareaaroundtheplanneddamprojects;thustheareaoflostfarmlandduetoconstructionofsuchinfrastructureswouldlikelybeminimal.

3.ModelingFramework

Inthissection,wedescribethemathematicalstructureofthemodelusedtoassesspotentialeconomicandhydrologictrade‐offsofvariousdevelopmentpathwaysintheNamNgumBasin.Thiseconomicoptimizationmodelisanonlinearmathematicalprogrammingmodelthatmaximizesnetreturnstoregionaleconomicactivitiesthatrelyonwaterasaprimaryfactorofproduction(principally,irrigatedagricultureandhydropowergeneration).

3.1.ModelSchematic

WecharacterizetheNamNgumsystemasaseriesoflinks(riverreachescorrespondingtoparticularsub‐catchments)connectingnodesthatrepresentkeywaterinfrastructuresorriverconfluencelocations(Figure2).Nodeswereclassifiedintofourcategories:riverconfluences;hydropowerprojects(reservoirswithhydroelectricturbines);surfacediversionpoints;andirrigationpumpingstationslocatedalongtheriversystem.Nodetypeswerefurtherseparatedintocategoriesof“existing”and“proposed,”dependingontheircurrentstatus,asdeterminedfrombasinplanningdocumentsfromtheDepartmentofIrrigation(DOI),theMinistryofEnergyandMines(MEM),andNGOsworkingintheLaohydropowersector.Proposedprojectnodeswerethenassignedtodifferentdevelopmentscenariosbasedonthesecategoricalclassifications(seeSection4.5).Theschematiconlyincludesthemostimportantsurfacediversionsinthebasin,anddoesnotincludeconnectionstogroundwatersystems.

3.2ModelObjective

Aswithmanyotherpreviouseconomicmodelsappliedtoriverbasinmanagement,waterisallocatedoverspaceandtimetooptimizeneteconomicreturnstothecombinedagricultureandenergysystem.Thetime‐stepforthemodelismonthly.Theobjectivefunctionofthemodelmaximizesthenetreturnstohydropower(HydroBenefitsi)andagriculturalprofits(AgBenefitsi)acrossallmonths(t)andmodeledriver“nodes”(i)withinthesystem(expressedbyEquation1),overthecourseofamodeledyear.Nodesrefertoanymodeledpointorareaalongthewatershedandcanincludeconfluencepointsbetweentributaries,orlocationswherewaterisregulated,consumed,stored,ordiverted.

∑ (1)

Themodelconstraintsaredescribedbelow.

Figure2.TheNamNgumRiverbasinnode‐linkhydrologicalschematic

3.3.Flowcontinuityconstraints

→ , → , 1 ∀ , (2)

→ , , → , , (3)

Thecontinuityconstraintsensureproperaccountingofthewaterquantitiesflowingthroughthesystem,fromupstreamreachestowardsthedownstream.Equation2depictsthecontinuityflowconditionsforintermediatenodeswithoutstorage,whereasequation3dictatesthecontinuityofflowsathydropowerdams.Theoptimizationprocedureusesinflowdatatoinitiatetheflowofwaterwithinthesystem;node‐specificvirgininflows(Inflowit)werethuscalculatedforeachnode.Thefirstconstraintthenrequiresthatthesumofnaturalinflows(Inflowit)andreleasesfromupstreamnodes(Wi‐1i,t)equatetoallreleases(Wi→i+1,t

)andirrigationwithdrawals(WitAg),forintermediatenodes.Thetermδinequation2accountsforthefractionofflowthatreturnstotheriversystemfromirrigatedareas(a30%returnflowrateisassumedforthisanalysis,asinother

similaranalyseswhereirrigationcanalsareunlined–seeforexampleWuetal.(2012)).Forhydropowerdams,theflowcontinuityconstraintsalsoaccountfornetrainfall(precipitationlessevapotranspiration)overthestoragereservoir(NetRainit);andtheabilitytostorewaterflowsovertime(asrepresentedbytimevariationinthestockvariableWSit).Thus,fordamsinthesystem,thesumofallinflowsintandstorageint‐1mustequatetototalstorageandreleasesinthecurrenttimestep.

3.4.Hydropowerproductionandturbineoutflows

Netoutflowfromhydropowerdamscomesfromtwosourcesthataredeterminedendogenouslybythemodel:turbineoutflow(whichdictatesenergyoutput),andspillwayoutflow(forperiodsofwaterabundance,i.e.whendamstorageexceedsthespillwaylevel).LetDbethesetofallnodesthatareactivehydropowernodesinthesystem,equation4illustratesthenetoutflowrelationshipforhydropowerfacilities:

→ , → , → , ∀ ∈ (4)

Equations5and6governhydropowerproductionbymonth,whichisafunctionofturbineoutflow,plantefficiency(ϕit),gravity,andnethead—thedifferencebetweenthestorageheightvariableandtheturbineintakeheight(whichisafixedparameterspecifictoeachdam):

→ , ∙ ∙ ∅ ∙ 9.81 (5)

Linearfunctionswithslopecoefficientsβiandintercepttermswereusedtoapproximatetherelationshipbetweenstorageheightandvolumeforeachreservoir.ThisrelationshipissummarizedinEquation7:

∙ (7)

Additionally,weimposeminimumandmaximumboundsonstoragevolume,storageheight,nethead,turbineoutflow,andspillwayoutflow.Thelowerandupperboundscorrespondtothecharacteristicsofspecificdams(suchasstoragecapacity,maximumheight,andturbineintakelevels).DamspecificparametervaluesareshowinTableA1intheAppendix.Inaddition,minimumandmaximumboundsareimposedontheproportionofhydropowerproduced,bydam,inanygivenmonth:

∙ ∑ ∙ (8)

Equation8isabehavioralconstraintonoperationsthatensuresthatanarbitrarilylarge(orsmall)amountofenergyisnotproducedbyspecificdamsduringparticularmonths.TheseparameterswereformedusingobservedenergyoutputdataattheNN1damfrom1999‐2010.Foreachmonth,wecalculatedtheaverageandmaximumproportionofmonthlyenergyoutputtototalenergyproducedduringthecalendaryear.Theaverageproportionparameterizesthelowerbound(Өmin)

ontheleft‐handsideoftheequation,whilemaximummonthlyproportions(Өmin)areusedfortheupperboundconstraint.Theminimumandmaximumvaluesvarybymonth,andserveaslowerandupperbounds,respectively,ontheproportionofenergyeachdamcanproduceinagivenmonth.Forsimplicity(andduetoalackofobserveddataforadditionaldams),weassumethesamerelativemonthlyproportionsholdforeachdam.

Revenuegeneratedateachdamistheproductofhydropowergeneration(inmegawatthours)andtheelectricityprice($permegawatt‐hour).Eqation9showsthenetbenefitstohydropower,whicharecalculatedasthesumofrevenueoverallmonthslessannualizedcapitalcostsofdamconstructionandmaintenance(assumingadiscountrateequalto5%andalifespanof50years).

∑ ∙ (9)

WherePeistheunitpriceofenergyandCapCostsHydroiaretheannualizedcapitalcostscalculatedforeachdam.

3.5.Floodcontrolconstraints

ToallowforfloodcontrolupstreamoftheVientianeplain,welimittotalstorageinNN1tobelessthansomethresholdbelowfullcapacity.Thepurposeofthisconstraintistoallowforexcessstoragecapacityatthelargestdaminthesystemincaseofafloodevent,whichwouldprovideprotectiondownstreamfarmersandinhabitantsfromextremeflows.Equation10depictsthefloodcontrolconstraintforthissystem:

NN1, ∗ (10)

Whereγisauser‐definedproportionsetto1whenfloodcontrolconstraintsarenotactive.Forthisstudy,wetseasonmonthsincludeMaythroughOctober.

3.6.Agriculturalproduction

Inoptimizingoverallnetreturnsfromwateruse,themodelallocateswaterforirrigation(WitAg),andsolvesforthecorrespondingtotalproductiveareaforcropj(Lij)associatedwitheachwithdrawalnodeinthesystem.Totalirrigatedareaforallcropscannotexceedtheinitiallandendowment(Limax)plustheexpansionpotentialatnodei(LExpimax):

∑ (11)

WemodelcropproductioninareasirrigatedwithNamNgumwaterusingthreecompositecropgroups:rice,cereals(includingmaize),andfruits/vegetables.Areaweightedpricesandyields(exogenousmodelparameterswhichwerespecifiedatthedistrictlevel)foreachcompositecroptypewereformedbydividingcommodity‐specificyieldsandpricesbythetotalareaforthecropgroup,asshowninequations11and12.Forexample,ifkrepresentsthesetofcropswithincompositecropgroupj,thenthefollowingequationswereappliedtogenerateatimeseriesofyield(Yij)andpricePijAg.

Thesecalculationswereperformedforallyearsinthetimeseriesforwhichwehaveprovincial‐levelstatistics.Wetookthemeanandmaximumvaluesforyieldsandpricesoverthetimeseriestoproducehighandlowprofitconditions.The“highreturns”caseisbasedondatafromtheyear2009,while“lowreturns”parameterswereformedusingaverageyieldandpriceestimatesoverthefulltimeseries.Highagriculturalreturnsdenotethebaselineyieldandpriceassumptions,whichisjustifiedgiventhetrendsinhighglobalcommoditypricesthathavebeenobservedinrecentyears.Furthermore,useofhighyieldandpriceparametersencouragesirrigationexpansion,allowingonetoevaluatepotentialtrade‐offsbetweenuses,oreffectsofirrigationexpansiononwatershedhydrology.

∑ ∀ ∈ (12)

∑ ∀ ∈ (13)

Similartotheyieldandpriceparameters,anarea‐weightedprocedurewasusedtogeneratecropwaterrequirementsforeachcompositecroptype.Equation14thenequatesmonthlyirrigationwithdrawalstothesecropwaterrequirements,whereϕijtrepresentsthetheoreticalcropwaterrequirementforcropgroupjandμistheirrigationcanalefficiency(assumedtobe50%atallnodes):

∑ ∅ ∙ (14)

Equation15thendenotestotalprofits(oreconomicbenefit)generatedfromirrigatedproductionateachnode:

∑∙ ∙

∙ (15)

Inthisequation,Cijrepresentscultivationcost,andtheparametersκandηrepresentper‐hectarecapitalcostsforlandconversionandirrigationcanalexpansion,respectively(annualizedat5%discountrates,andassumingalifespanof25years).

Cropareaallocationateachnodeisrestrictedtoavoidcornersolutions(i.e.unrealisticconversionofallirrigablelandtoaparticulartypeofcrop)andtoreflectappropriateareatotalsthatareconsistentwithobservedcropmixes.FollowingMAF(2010)andconversationswithMAFofficials,weassumethat80%ofallnewirrigatedareaisdedicatedtoriceproduction,while20%isallocatedtograinproduction.Whilethisdoesnotallowforflexibilityincropmixdecisionsfornewirrigatedarea,itisconsistentwithexpecteddevelopmentplansinthebasin.Here,wecalculatedtheminimumandmaximumratioofobservedareabyproxycroptototalobservedirrigatedareafortheyearsofavailabledata(seenextsection).Theratioofprojectedarea(bycrop)tototalcroplanduseateachnodewasthenconstrainedtoliebetweentheseminimumandmaximumareaproportions:

3.7.Instreamflowprotectionandterminalconstraints

Finally,weimposethreeadditionalmanagementconstraintsonriverflowsand/ordamoperations.First,aninstreamflowconstraintisimplementedtopreserveminimumlevelsofunregulatedoutflowsfromthebasin.ThisconstraintensuresthattheminimumamountofflowflowingintotheMekongisatleastequaltothehistoricallowflowintheriver.ConsistentwithLacombeetal.,2012,thisoutflowconstraintissetto94m3/sec.,orapproximately247millionm3permonth:

→Mekong, ∀ (17)

Second,wespecifyatargetwithdrawalfortheproposedwatertransfertoNortheastThailand.Todoso,weaddanintermediatenodetotheschematicjustupstreamoftheMekongconfluence.Watertransfersatthispointarerequiredonamonthlybasis.ThisessentiallyreducesnetflowstotheMekongRiverbyaconstantamountonam3/sec.basis.Thisprocessaugmentsequation17,forminganewminimumoutflowconstraintgivenwhentheThaitransferisactive,asshownbyequation18.

→Mekong, ∀ (18)

Finally,werestrictfinalreservoirstorageconditionstoprotectagainstthemodelsystematicallydepletingstorageinthelatermonthsoftheoptimizationperiodinanefforttomaximizehydropowerand/orotherwateruse.Thisconstraintrequiresthatfinalstorageateachreservoirmustfallwithin+/‐5%oftheinitialstoragecondition.InitialstorageisdefinedastheDecemberstorageconditionobtainedusingsimulatedflowdatafortheyearprecedingtherainfallscenarioyear(Lacombeetal.2012):

0.95 ∙ 1.05 ∙ (19)

4.Dataandanalyticalapproach

ThissectionpresentstheNamNgummodelschematicanddescribesthedatausedtoparameterizethemodel(AdditionaldetailsareprovidedintheAppendix).

4.2.Flowdata

FlowdatawereobtainedfromtheLaoDirectionofMeteorologyandHydrology(DMH)fortwostations:BanNaluangonthemainstreamoftheNamNgumRiversouthoftheNamNgum2dam(1985‐2004);andBanHinheupontheNamLikRiverbetweentheNamLik1‐2andNamLik1dams(1967‐1984).InflowswerethenassignedtospecificnodesinthemodelbyapportioninghistoricalflowsrecordedatthemainhydrologicalgaugingstationsintheNamNgumBasinusingthecatchmentmethod,similarlytotheprocessdescribedinLacombeetal.(2012).Wealsousedata

fromLacombeetal.todefineinitialreservoirstorageconditions.Foradditionaldetailsonthespatialdelineationprocedureusedtocalculateinflowsatmodelednodeswithinthesecatchments,refertothetechnicalAppendix.

4.3.Hydropowerdamcharacteristicsandenergyproduction

Modelparametersforcurrentandproposeddamswereobtainedfrombasindevelopmentreports,projectprofiles,damdevelopers,theelectricityauthorityofLaoPDR,ElectricitéduLaos(EDL),andtheDepartmentofEnergyPromotionandDevelopment(EPD)oftheMinistryofEnergyandMines(MEM).ActualelectricitygenerationdatafromNN1for2009and2010,thoughnotstrictlynecessaryforthemodel,provideausefulcomparisonwithouroptimizedproductionestimatesforthatdam(ElectriciteduLaos(EDL)2010).Thesedam‐specificparametersaresummarizedinTableA1oftheAppendixandareconsistentwiththoseusedinLacombeetal.(2012).Pricedata($0.07/KW‐hr)andelectricitygenerationcapacitiesforexistinginfrastructuresareconsistentwiththefigurespresentedinannualreportspublishedbyEDL(2010).

Capitalcostsforthedamsincludedinthelong‐termscenariowereobtainedfromEPD,damfeasibilityandimpactassessmentreports,andNGOswithdirectknowledgeoftheLaohydropowersector(ADB1996;InternationalRivers2009;SD&XPConsultantsGroupandNipponKoei2009).Thesecostswerenormalizedtobeinconstantyearterms(2010).

4.4.Cropproductiondata

ThemainirrigatedcropgrowninLaoPDRisrice(crop1).Wegroupedothercerealcrops(group2)andhighvaluefruitsandvegetables(group3)whicharealsowidelycultivatedintheNamNgumBasin.Ourdataforthecropparameters(yields,pricesandareas)comefromatimeseriesof(2000‐2009)ofdistrict‐andprovincial‐levelagriculturalstatistics.Theseparametersareformedatthedistrictorprovinciallevelusingtheobservedagriculturalstatistics,whicharethenmappeddirectlytothenodelevel.

Cropwaterrequirements(perunitarea)wereestimatedforindividualcropsusingCROPWAT8.0(UNFAO2009).CROPWATcalculatesirrigationrequirementsbasedonclimate,soils,andotherenvironmentalparametersforeachcrop,aswellasauser‐specifiedcroppingcalendar.CroppingcalendarsforLaowereobtainedfromtheMinistryofAgricultureandForestry(MAF)(MAF2010;MAF2010).Duetodatalimitations,theCROPWATdefaultparametervaluesfordevelopmentalstagetime,cropcoefficientsandsoilsweremaintained(MAF2009;MAF2010;MAF2010).

Cultivationcostswerederivedfromasurveyofroughly500farmersinVientianeProvinceandtheVientianePlain(Setboonsarngetal.2008).Duetodatalimitationsinthesurveydata,cultivationcostsdonotvarybycrop.Fornewirrigatedareas,estimatesofcapitalcostsassociatedwithbuildingnewirrigationcanalswereobtainedfromDOI.Theseestimates(inUS$/hA)includecostsassociatedwithbuildingnewreservoirs,weirs,electricwaterpumps,andliningdirtcanalswithbrickorconcrete,butdonotincludeothercostsassociatedwithdevelopingnewagriculturallands,

suchasclearingandleveling,whicharelikelytovaryconsiderablydependingonthenatureofthelandsthatwouldbeconvertedtoirrigation.

AdditionaldetailsonagriculturalstatisticsandparameterdevelopmentcanbefoundintheAppendix.

4.5.Scenarioanalysis

Ourbaseanalysisconsistsof39differentscenarios:threedifferentclimaticconditionsrepresenting“wet,”“dry,”and“average”hydrologyinthebasinforfiveagricultureandhydropowerexpansionscenarios,includingcurrentconditionsandmaximumexpansion,andtwodifferentlevelsofagriculturalreturns(Table2).These“wet,”“dry,”and“average”years(2002,1998,and1996)weredeterminedbythemax,min,andmedianoftotalannualflowsfortheentirebasin,asindicatedbytheflowsmeasuredupstreamoftheconfluencewiththeMekongRiver(atThaNgon),followingdatafromLacombeetal.(2012).Agricultureandhydropowerscenariosarereasonablebestguessesoflikelydevelopmenttrajectoriesinthebasin.Withregardstohydropower,ourmodelincludesthreeactivedamsforthecurrentscenario(NN1,NN2,andNL12),and8activedamsforalllong‐termscenarios(addingNN3,NN4,NN5,NB1,NB2).Thus,onlyfiveofthenineplanneddamsforthebasinarerepresented;theremaining4projectshavenotbeenwellstudiedatthistimeandcriticaldesignparametersneededforinclusioninthemodelarethereforeunavailable.

Potentialnewirrigatedareasforagriculturaldevelopmentweredividedintothreemainexpansionscenarios:ID1,ID2,andID3(Table2).TheID1scenarioroughlycorrespondstoroughlyadoublingofthedetailedexpansionplansdescribedbytheMAFinits5yearinvestmentplan(2011‐2015),whichidentifiedthreespecificpumpingstationstobeexpandedbyatotalofroughly5,000hectaresintheVientianePlain(MAF2010).Thisscenarioexpandsonthe5yearexpansionplanbyaddingallcurrentlydrypaddyfieldswithin2kilometersofawatersourceandwhoseelevationislowerthanthatofexistingcanals.TheID2scenariofurtherincludesnonagriculturalbushareas,grasslands,andpondsthatarebelowtheelevationofexistingcanalsandwithin2kilometersofexistingirrigatedareas.Lastly,theID3scenarioincludesadoublingoftheirrigatedareaunderproductionintheID3scenario,whichapproximateslong‐termplanstoexpandirrigationintheVientianeplainby100,000hectares(Geotech2012).Thescenariosrepresentincreasesinirrigatedareaofapproximately12,000,50,000,and100,000hectare,respectively,andweremodeledusingthesamespatialdelineationprocedureasthatusedbyLacombeetal.(2012).

Wealsotestedthesensitivityofresultstoalternativeassumptionsofagriculturalreturns.Specifically,weexaminedcaseswith“low”returns(meanpriceandyieldfrom2000‐2009)and“high”returns(maxpriceandyieldfrom2000‐2009,whichtypicallycorrespondsto2009values).Ourbaseassumptionis“high”agriculturalreturns,whichisjustifiedgivenrecenttrendsinagriculturalcommoditymarkets(OECD/FAO2012).

Totestadditionaltrade‐offsbetweenhydropowerandagriculturalproduction,wealsomodelthediversiontoThailandandfloodcontrolsonNN1damintheID2andID3expansionscenarios.WerunseparateanalysesthatincludetwolevelsofdiversiontoThailand:150m3/s,whichSCI(2004)determinedcouldbetransferredtoThailandwhilestillmeetingirrigationrequirementsinLaoin

anaveragehydrologicalyear;and300m3/s,whichrepresentstheproposeddesigndischargecapacityofthediversiontunneltonortheastThailandSCIoutlinesinitsfeasibilitystudyofthetransfer.Wealsostudythetradeoffbetweeneconomicbenefitsandfloodcontrol.TodosowelimittotalstorageatNamNgum1duringnormalandwetyearsto90%and95%ofthemaximumstoragecapacity,insteadof100%usedforthedefaultscenarios.Notethatwedonotevaluatefloodcontrolunderdryhydrologicconditions,asfloodcontrolmeasuresarenotnecessaryunderdryyearconditionswhenreservoirsarelikelyalreadymaintainedatlowlevels.Additionally,the300m3/sec.transfertoThailandisinfeasibleunderthedriesthydrologicconditionsaccordingtomodelresults,sowefocusontheimplicationsofthisdiversionunderaverageandwetconditions.

Table 2. Summary of model scenarios

Current

Conditions

Expansion

HP + ID1

Expansion

HP + ID2

Expansion2

HP + ID3

Expansion2

Potential Irrigated

Land Area (ha)1 20,759 20,759 32,064 70,172 119,147

Total dams 3 8 8 8 8

Capacity (MWh) 870 1228 1228 1228 1228

Scenario

Specifics Climate Scenario

Agricultural

Returns – High

& Low3,4

Dry X X X X X

Average X X X X X

Wet X X X X X

Notes: 1 Irrigated potential is not fully developed if net returns do not justify capital expansion. 2 Diversion to Thailand and flood control at NN1 are also considered in separate sensitivity analyses in the ID2 and

ID3 expansion scenarios.

3 High agricultural returns are based on 2009 prices and yields and are therefore used for the sensitivity analyses

on flood control and the Thailand water diversion.

4 Low agricultural returns are also considered in separate sensitivity analyses in the ID2 and ID3 expansion

scenarios.

5.Results

OurresultsprovideinsightsintothepotentialeconomicandhydrologicimpactsofalternativedevelopmentpathwaysintheNamNgumBasinacrossthedifferenthydrologicalconditionsdescribedabove.Thefollowingsectionsprovidethekeyresultsforhydropowerproduction,agricultureandirrigationexpansion,neteconomicbenefits,andtotalbasinoutflows;additionaltabularsummariescanbefoundintheAppendix.

5.1.HydropowerProduction

Figure3displaysthepotentialincreaseinsystemhydropowerasthebasinmovesfromacurrent(threedam)scenario,toafuturewitheightdams(underaverageannualflowconditions).Theadditionofthefivedamsleadstoasubstantialincreaseinhydropowerproductionandnetrevenue.Averagemonthlyenergyproductionexpandsfromapproximately570MWhtoslightlymorethan820MWh,representinga44%increasepermonthonaverage.Whiletheadditionofnewdamstothesystemincreasestotalenergyoutput,hydropoweratexistingdamsdoesnotincrease.Infact,averagemonthlyhydropoweroutputatNN1andNN2decreasesfromthecurrentscenarioby15and11.6MWh,respectively,implyinggreatersystemflexibilityandreducedrelianceonindividualdamsforhydropower.

Figure3.Hydropowerexpansionfromcurrentbaselineto8damfuturescenario

Whilehydropowerpotentialisdramaticallyimprovedwiththeadditionofnewdams,totaloutputishighlydependentonclimateconditions.Figure4displaysthevariationinoptimalhydropoweroutputacrossthethreeclimatescenarios(assumingnoagriculturalexpansion).Inwetyears,monthlyhydropoweroutputisapproximately9%higherthanintheaverageyear(rangingfrom600‐1150MWoverthecourseoftheyear),reflectingadditionalwateravailabilityinthesystem.Underdryconditionsthesystemismuchmoreconstrainedbywateravailability,andhydropowerdecreasesby61%whenall8damsareincluded(to400‐600MWduringtheyear).Thisissimilartothe59%decreaseobtainedwiththe3existingdams.Theimplicationofthisresultisthataddingadditionaldamsincreasestotalhydropowerproductionbutthatlong‐termreductionsinflowcouldstillreducehydropowerproductiontolevelsbelowhistoricalgeneration.

jan feb mar apr may jun jul aug sep oct nov dec

Energy Generation (MWh)

Curent Conditions HP Expansion Only

Whilehydropoweroutputvariesgreatlywithwateravailability,irrigationexpansionandotherdevelopmentscenariosdonotsubstantiallyaffectenergyoutput,implyinglittletonotrade‐offbetweenirrigatedagricultureandhydropower.Figure5showsthepercentchangeintotalannualhydropoweroutput,byclimatecondition,acrossirrigationexpansionscenarios.Evenunderdryconditions,increasedirrigationwithdrawalsdonotaltertotalenergyoutputsignificantly(lessthan1%,evenwiththegreatestareaexpansionscenario).Fortheaverageandwetscenarios,thepercentchangeintotalhydropowerislessthan1%acrossallirrigationexpansioncases.

Figure4.Hydropowergenerationvariationbyhydrologicalcondition

Figure5.Theeffectofagriculturalexpansiononhydropowergeneration

Energy generation (MWh)

Dry Year

Average Year

Wet Year

‐0.60%

‐0.50%

‐0.40%

‐0.30%

‐0.20%

‐0.10%

Dry Year Average Year Wet Year

% Difference from HP Expan

sion Only

Scenario HP + ID1

Expansion

HP + ID2Expansion

ThewatertransferstoThailandandfloodcontrolscenarioshaveagreaterimpactonnethydropowerthanirrigationexpansion,asshownbyFigure6.Atransferof300m3/sinducesa3.5%and1%decreaseintotalhydropowerunderaverageandwetconditions,respectively,relativetothe30‐yearagriculturalexpansionscenariowithnotransfer.Thisreductioninoutputoccursbecausetemporalflowsmustbeaugmentedtosupplymonthlydiversionrequirements(hence,greateroutflowsinthedryseasonwhichreducestotalstorage,storageheight,andnetelectricitygenerationoverthecourseoftheyear).Floodcontrolalsoreducestotalhydropower,thoughthiseffectisverysmall(lessthan1%).FloodcontrolatNN1changesreservoirmanagementpatterns,andinhibitsthesystem’sabilitytomaximizestorageheightatNN1forgreaterhydropoweroutput.Thiseffectincreaseswiththeleveloffloodcontrolrequired.Additionally,floodcontrolinducesalargerhydropowertrade‐offasirrigationwithdrawalsincrease;aswaterdemandsincreaseinthesystem,theopportunitycostsoffloodcontrolconstraintsincreasesandthereservoirwaterstoragesystematicallydecreases.ToassessthevalueoffloodcontrolatNN1,onewouldhavetocomparethereducedhydropowergenerationwiththebenefitsfromenhancedfloodcontrol.

5.2.AgriculturalExpansionandIrrigationWaterUse

Toanalyzetheeffectsofirrigationexpansion,weallowthetotallandareaavailableforirrigationtoexpandincrementallyintheVientianePlainandtheXiengkhouangPlateau,from20,000hectaresundercurrentconditionstoabout120,000hectaresintheID3scenario.Asdetailedinsection3,ourmethodologydoesnotrequirethatallirrigatedareapotentialbeusedinallscenarios,butratherallowsthemodeltoincreaseordecreasetotalirrigatedareaendogenouslydependingonwateravailability,waterdemands,netreturnsfromirrigation,andotherconstraintsonwaterusethatarespecifictoascenario.Thecrop‐mixinirrigatedareasisalsoconstrained,toavoidunrealisticcrop‐productionsolutions(suchasconversionofalllandtovegetablefarming).

‐4.00%

‐3.50%

‐3.00%

‐2.50%

‐2.00%

‐1.50%

‐1.00%

‐0.50%

Average Wet

Percent Chan

ge from HP Expan

sion Only

Scenario

HP + ID2 Expansion + 150m3/s Transfer

Figure6:Hydropowerproductionlosseswithinter‐basintransfertoThailandandfloodcontrolscenarios

Inmostcases,irrigatedpotentialisfullyrealized.Figure7showstotalirrigatedarea,bycrop,underaverageclimateconditions.Ineachcase,irrigatedareaismaximized,risingfromapproximately20,000hainthebaselineto119,000undertheID3expansionscenario.Thesameresultisfoundforwetyearconditions.However,underdryyearconditionswhenirrigationsuppliesareconstrained,areaexpansiondecreasesbelowthemaximumbound.FortheID2andID3expansionscenarios,totalirrigatedareaunderdryyearconditionsfalls0.6%and7.6%,respectively,relativetotheaverageyeartotals.

‐4.00%

‐3.50%

‐3.00%

‐2.50%

‐2.00%

‐1.50%

‐1.00%

‐0.50%

Average Wet

Percent Chan

ge from HP Expan

sion Only

Scenario

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

HP Expansion Only HP + ID1Expansion

HP + ID2Expansion

HP + ID3Expansion

Hectare

Rice Cereals Fruits and Vegetables

Figure7.Totalirrigatedareabyirrigationexpansionscenario(top)andalternativescenario(bottom)

Furthermore,astheright‐handsideofFigure7indicates,totalirrigatedareaisnotfullyrealizedunderallscenarios.IntheID2expansionscenario,totalirrigatedareadeclineswhenlargewatertransfersarerequired,orwhenexpectedagriculturalreturnsarelow.RelativetotheID2casewithoutthetransfer,totalirrigatedareaswiththe300m3/stransferdeclinesbyapproximately25%.The150m3/stransferscenariodoesnotimpactirrigatedareaunderaverageclimateconditions,but(ifprioritized)decreasesagriculturalexpansionbyapproximately60%underdryconditionsrelativetotheID2expansionwithnotransfer.Supplyingincreasedirrigationdemandsandwatertransferrequirementsunderdryconditionswouldthusbedifficult.Asthetransferquantityismandated,thisinducesacleartrade‐offwithlostagriculturalproductionintheNamNgum.Underwetconditions,transferrequirementsdonotaffectagriculturalexpansion.

Loweragriculturalreturnshavethelargesteffectonirrigatedarea,astotalproductiondeclinestolevelsconsistentwiththebaselinecondition.Theselowerreturnsdeliverinsufficienteconomicbenefitstojustifytheadditionalper‐hectarecostsforlandconversionandirrigationcanalexpansion.Iftheseadditionalcostswerecoveredfromexternalpublicorprivatesources,thenadditionalirrigatedareacouldstillprovidepositiveneteconomicbenefitstofarmers,evenwithreducedagriculturalrevenues,thoughtheeconomiccaseforsuchfinancingwouldlikelybeweak.Finally,thefloodcontrolmeasureshavenoimpactonirrigatedareaexpansion.

Figure8displaystotalwaterwithdrawalsforirrigation(inmillioncubicmeters,ormcm)useacrossagriculturalexpansionscenariosforaverageyearconditions.Irrigationwithdrawalsincreaseproportionallywiththeamountofareaexpansion,risingfromapproximately262mcmwithnoareaexpansiontoalmost1,400mcmundertheID3expansioncase.Resultsshowminor

HP + ID2Expansion

HP + ID2Expansion + 150m3/s Transfer

HP + ID2Expansion + 300m3/s Transfer

HP + ID2Expansion withLow Returns

Hectare

Rice Cereals Fruits and Vegetables

changestototalwithdrawalsbetweenthedry,average,andwetyearscenariosundertheID2andID3scenarios.ThesedifferencesarecausedbyslightlyreducedirrigationwithdrawalsintheXiengkhouangPlateau,whereflowsareverylowunderdryconditions.

Figure8.AgriculturalWaterUseacrossAgriculturalExpansionScenarios

Figure9displaystheproportionofirrigationwithdrawalstototalbasinoutflowsonanannualbasis.ThisfigureillustrateshowirrigationexpansioncouldpotentiallyreducetotaloutflowstotheMekongannually,andhowthisvarieswithwateravailability(withthelargestproportionsfoundfordryyears).Underfuturebaselineconditionswithnoagriculturalexpansion,thisproportionislessthan2%forallclimatescenarios.Thisrangeexpandsto3%‐6%fortheID2expansion,and5%‐10%fortheID3case.

Figure9.Theproportionofirrigationwithdrawalstototalbasinoutflows(annual)

HP ExpansionOnly

HP + ID1Expansion

HP + ID2Expansion

HP + ID3Expansion

HP ExpansionOnly

HP + ID1Expansion

HP + ID2Expansion

HP + ID3Expansion

Average

5.3.EconomicBenefits

Adetailedsummaryoftotaleconomicbenefitsforthemodeleddevelopmentscenariosisprovidedintables3‐5,whichrepresentdry,average,andwethydrologicyears.Theseresultsrevealseveralkeyfindings.First,thereisasubstantialdifferencebetweentheneteconomicbenefitsderivedunderdry,average,andwetconditions,suggestingthatbothhydropowerandagriculturalprofitsarehighlysensitivetochangesinwatershedhydrology(thoughthesesensitivitiesmaybeoverstatedsinceeconomicreturnshavebeenassumedtobethesameacrossscenarios,whichignoresthepotentialforpriceadjustmentstomitigatethesevariations).Totaleconomicbenefitsare30%‐38%lowerunderdryconditionsthanunderaverageconditions,withthemajorityofthisdifferenceattributabletoreductionsinhydropoweroutput.Thedifferenceineconomicbenefitsbetweenaverageandwetconditionsissmaller,butnotinconsequential,rangingfrom3.5%to7.5%.

Theneteconomicbenefitofhydropowerdevelopmentinthebasinisfoundtobeapproximately$28million,$98million,and$112million,respectively,underdry,average,andwetconditions.Theseprojectswouldthereforeprovideasignificantboostineconomicactivityfromenergygenerationandconsumption.UsingacurrentGDPmeasureofapproximately$8.3billionperyearinLaoPDR,themacroeconomicbenefitofdamdevelopmentunderaverageconditionswouldequatetoa1.2%increaseinannualeconomicoutputifallbenefitsaccruedinLao,thoughitislikelythatsomeexportpowerwouldbeexported(WorldBank,2012).Ofcourse,theseestimatesdonotincludetheeconomiccostsassociatedwithresettlementorreducedlivelihoodsforactivitiesdisplacedbythereservoirconstruction,forwhichdatacurrentlyarenotavailable.

Agriculturalexpansionwouldalsodelivernetbenefitsintheregion.Incontrasttohydropower,irrigationbenefitsonlyincreasemodestlywithwateravailability,sincethereisrelativelylimitedirrigationpotentialintheNamNgum,anditcanbedevelopedevenunderdryconditions.Thedifferenceinnetbenefitsofirrigationexpansionunderdifferentwateravailabilityscenariosisdrivenbysubtlechangesintheoptimalcropmixandwaterreleaseschedulefromhydropowerdams.ThenetbenefitstoID1expansionrange$5.3‐5.6millionrelativetoanoexpansioncase.Thisrangeexpandsto$15‐16millionunderID2expansion,and$30‐32millionunderID3.Thedivergenceinadditionaleconomicbenefitstoirrigationexpansionbetweendryandaverage/wetconditionsexpandswiththelevelofirrigatedareapotential.Thisimpliesthatwithincreasedeconomicopportunitiesforwaterconsumptionandlowerwateravailability,thereisaslightlyincreasedtrade‐offbetweenhydropowerandagriculturalexpansionastemporalflowsareadjustedandupstreamflowsaredivertedforirrigation.

However,netbenefitsfromagriculturalexpansionaredramaticallyreducedunderthe“lowreturns”scenario.Inthiscase,thecapitalcostsoflandconversionandirrigationcanalexpansionwouldleadtonegativeprofitsforproductionactivitiesonnewland,sotheexpansion,assumedtohaveaconstantcostperunitarea,doesnotoccur.Inaddition,profitsonexistinglandsarereducedinthiscasevialoweryieldsaswellasreducedpricesTotaleconomiclossesundera“lowreturns”scenario(measuredrelativeto“highreturns”)thusrange$91‐$92millionperyear.Thisresultholdsacrossallhydrologicscenarioswithlowreturns,thoughtheoptimalcropmixshiftsslightlyin

responsetowateravailability.Note,however,thatoncelandconversionandcanalexpansioncostsarecovered(thatis,settingthesecostparameterstozerointhemodel),landexpansionpotentialisonceagainmaximized,andneteconomicbenefitstoexpansionaremuchclosertothe“highreturns”case.Ifgovernmentsupportwereprovidedforlandandcanaldevelopment,agriculturalexpansionwouldinallcasesdeliverneteconomicbenefitstofarmersacrossarangeofagriculturalmarketconditions(thoughnetsocialbenefitswouldprobablyremainnegative).

WatertransferstoThailandandimplementationoffloodcontrolmeasurescanalsoinduceeconomictrade‐offs.Thecostsofimplementing95%floodcontrolareapproximately$640,000and$780,000peryearunderwetandaverageconditions,respectively.Thisisamodestcostcomparedtototaleconomicbenefitsfromthesystem(1%‐2%peryear),andrepresentstheopportunitycostofforgoneeconomicactivity(mostlyduetoreducedhydropowerproduction)oncefloodcontrolmeasuresareimplemented.Floodcontrolcostsincreasewithlowerwateravailability.The90%floodcontrolcaseleadstolosteconomicbenefitsranging$2‐$2.3millionperyearfortheaverageandwetscenarios,respectively.HighwatertransferratestoThailandalsoimposecostsonthesystem.Whilethe150m3/sinducesnocostsfortheaverageandwethydrologicscenarios,a300m3/stransferleadstosignificanteconomiclosses(approximately$2.3and$22millionforthewetandaveragecases,respectively,withID2expansion).Thisequatestoanaverageopportunitycostoftransferringwaterofapproximately$0.2and$2.4/1,000m3(beforeaccountingforthecapitalcostsofdevelopingthetransferinfrastructure).Inaddition,the300m3/scasewasfoundtobeinfeasibleunderdryconditions,sowedonotincludethatscenariointhisanalysis.

Table3.DevelopmentScenariosandNetEconomicBenefits(DryYear)

Outcome Current

Conditions

HP Expansion

HP + ID1

Expansion

HP + ID2

Expansion

HP + ID3

Expansion

Hydropower (GW‐hr/yr) 2.5 6.1 6.1 6.1 6.1

Irrigated area (‘000 ha) 20.8 20.8 31.6 69.7 110.4

Irrigation water used (mcm) 262 262 431 823 1,375

Incremental hydropower net benefits (millions of $)

n.a. $35.1 $35.1 $35.1 $35.1

Incremental agricultural net benefits (millions of $)

n.a. n.a. $5.3 $15.4 $30.1

Total Benefits; ‘high’ ag. Returns (millions of $)

$297 $332 $337 $347 $362

Total Benefits; ‘low’ ag. Returns (millions of $)

$256 $256

5.4.TotalBasinOutflows

Lacombeetal.(2012)provideacomprehensiveassessmentofthehydrologicimpactsofdamdevelopmentintheNamNgumBasin.Here,wefocusonthecombinedeffectsofadditionaldamsandthealternativeirrigationdevelopmentscenariosontotalbasinoutflowstotheMekonginordertocharacterizethepotentialhydrologicimpactsofthesedevelopments.Asdiscussed,thereisa

substantialdifferenceintemporalandspatialwateravailabilityacrosshydrologicalscenarios.Figure10illustrateshowthesedifferencestranslateintobasinoutflowsoverthecourseofayear.

Table4.DevelopmentScenariosandNetEconomicBenefits(AverageYear)

Outcome Current

Conditions

HP Expansion

HP + ID1

Expansion

HP + ID2

Expansion

HP + ID3

Expansion

Irrigated area (‘000 ha) 20.8 20.8 32.1 70.1 119

n.a. $97.6 $97.6 $97.6 $97.6

n.a. n.a. $5.6 $16.1 $32.0

$427 $525 $530 $541 $557

$449Total Benefits; ‘low’ ag. Returns (millions of $)

Costs (millions of $) of… 150 m3/s Thai diversion 300 m3/s Thai diversion

n.a. n.a. n.a.

$0.35 $22.3

$0 $36.2

Costs (thousands of $) of… 95% Flood control 90% Flood control

n.a. n.a. n.a.

$777 $2,260

Table5.DevelopmentScenariosandNetEconomicBenefits(WetYear)

Outcome Current

Conditions

HP Expansion

HP + ID1

Expansion

HP + ID2

Expansion

HP + ID3

Expansion

Irrigated area (‘000 ha) 20.8 20.8 32.1 70.1 119

n.a. $121 $121 $121 $121

n.a. n.a. $5.6 $16.1 $32.2

$442 $564 $570 $580 $596

Total Benefits; ‘low’ ag. Returns (millions of $)

$488 $488

Costs (millions of $) of… 150 m3/s Thai diversion 300 m3/s Thai diversion

n.a. n.a. n.a.

$0 $2.0

$0 $3.1

Costs (thousands of $) of… 95% Flood control 90% Flood control

n.a. n.a. n.a.

$643 $2,061

Akeyresultfromthemodelisthatagriculturalexpansionhasaminimalimpactonmonthlyoutflows,evenwhilechangesinwateravailabilityleadtohighvarianceintotalbasinoutflows.ThegreatestdifferencebetweentheirrigationdevelopmentscenariosandthestatusquoconditionoccursinFebruary‐April(atthepeakofthedryseasonwhenirrigationdemandsaregreatestincomparisontoriverflows).Table6displaysthepercentchangeinannualbasinoutflows,relativetothenoirrigationdevelopmentcase.ForIP1thisreductionislessthan1%acrossallwateravailabilitycases.ForIP2,thisreductioninoutflowsrangesfrom1.3%‐2.7%(fromwettodry—thechangeintotaloutflowsisgreatestwhenflowsarereduced).Finally,forIP3,thereductionintotalbasinoutflowsranges2.7%‐5.3%.Thereisthusasmall,butpotentiallymeaningfulhydrologicaltrade‐offbetweenflowsintotheMekongandexpansionofirrigationintheNamNgumbasin,andthistradeoffisgreatestatthepeakofthedryseasonwater.

Figure10.Comparisonofhydrographsacrosshydrologicconditions

TransferstoThailandhaveamoresubstantialimpactonannualoutflowstotheMekong.Forthe150m3/scase,reductionsinannualbasinoutflowrange17%‐32%(rangingfromwettodry),andtheseincreaseto33%‐39.3%underaverageandwetconditions,respectively.AstheNamNgumsupplies4%ofthetotalannualMekonginflowsand15%ofdryseasonflows,thistransferwouldreducetotalflowtotheMekongRiver,andcouldaffecteconomicactivitiesandecologicalprocessesdownstreaminthatsystem.Floodcontroldoesnothaveasignificantimpactonannualoutflows,thoughwefindsubtlechangesinmonthlyoutflows.

6.Discussion

Thispaperdevelopedandappliedahydro‐economicoptimizationmodelforassessingtheeconomicconsequencesassociatedwithvariousinfrastructuredevelopmentandwatermanagementstrategiesintheNamNgumBasin.Avoluminousliteraturehasappliedsimilarhydro‐economicoptimizationmodelstoaddressanarrayofpolicyandenvironmentalissuesinvariouswatershedsworld‐wide.Thesemodelingtechniquesaremostoftenusedinregionssufferingfrom

Total basin outflow(m

Dry Year

Average Year

Wet Year

waterscarcityand/orover‐allocationofexistingwaterresources,wheremarginalchangesinwateravailabilityordemandinduceimportanteconomictrade‐offs.Thecontributionofthisstudyistoassesstheimplicationsofvariouslevelsofdevelopmentthatwouldincreasewaterresourcedemandsinarelativelywaterabundantwatershedbyalargeamount(e.g,uptoasix‐foldincreaseinirrigatedarea,orlargeinter‐basintransfers).Weconsiderwhethersuchincreasescouldinducemeaningfuleconomictrade‐offsamongwaterusers.

Table6.Percentagechangeinannualbasinoutflowsrelativetofuture8damscenario

Dry Average Wet

HP + ID1 Expansion ‐0.76% ‐0.48% ‐0.39%

HP + ID2 Expansion ‐2.66% ‐1.62% ‐1.33%

HP + ID3 Expansion ‐5.28% ‐3.22% ‐2.65%

HP + ID2 Expansion + 150 m3/s Transfer ‐32.32% ‐20.89% ‐17.11%

HP + ID3 Expansion + 150 m3/s Transfer ‐32.34% ‐22.49% ‐18.44%

HP + ID2 Expansion + 300 m3/s Transfer n.a. ‐39.37% ‐32.91%

HP + ID3 Expansion + 300 m3/s Transfer n.a. ‐39.40% ‐34.23%

HP + ID2 Expansion + 95% Flood Control n.a. ‐1.62% ‐1.33%

HP + ID3 Expansion + 90% Flood Control n.a. ‐3.22% 3.54%

HP + ID2 Expansion with Low Returns ‐0.10% ‐0.06% ‐0.05%

HP + ID3 Expansion with Low Returns 0.00% 0.00% 0.00%

Specifically,theprimaryobjectiveoftheanalysiswastoquantifythepotentialeconomictradeoffsamongenergygeneration,irrigation,floodcontrol,andtransboundarywatertransferobjectives.Weconstructedaseriesofsensitivityscenariosunderdry,average,andwethydrologicconditions,withvaryinglevelsdamdevelopment,irrigatedagriculturalexpansion,agriculturalreturns,floodcontrolstoragerestrictions,andwaterdiversionstoThailand.

Ingeneral,resultsindicatethattradeoffsbetweenhydropowerproduction,irrigation,andfloodcontrolaremodest.Hydropowerandagriculturalexpansionarefoundtobecomplimentaryunderhighlevelsofwateravailability,aseventhemostambitiouslevelofirrigationexpansion(ID3)wouldreducetotalhydropowerproductionbyonlyamodestamount(lessthan2%annuallyforallhydrologicconditions).ThissuggeststhatenergyexpansionandexpandedfoodproductioncouldgohandinhandintheNamNgumBasin.ThetradeoffsbetweenhydropowerandfloodcontrolalsoappeartoberelativelysmallintheNamNgumBasin.AllowingforfloodcontrolbymaintainingreducedstoragelevelsinthereservoirthatislargestandfurthestdownstreamontheNamNgum(NN1)decreaseshydropowerbylessthan1%.Similarly,additionofthewatertransfertoNortheastThailanddoesnotgreatlyaffecthydropowergeneration.Alloftheseresultsgenerallyfollowfromthefactthatthedamswouldoptimallybeoperatedtomaximizestorageduringthefloodseasonandtoslowlyreleasewaterduringthedryseason,whichisalsobeneficialintermsofirrigationrequirements,ecologicallowflows,anddownstreamfloodcontrol.Wenote,however,thatcritical

informationontheimpactthatdamdevelopmentwouldhaveonfreshwaterbiodiversityandfishpopulationsinthebasinislacking,soassessingtheeffectsofhydrologicalchangesonecosystemsrequiresadditionalresearch.WedidalsofindthattheamountofwaterflowingoutoftheNamNgumandintotheMekongcoulddecreasebyupto5%withfulldevelopmentofirrigation.

Resultsalsosuggestthateconomicoutcomesarehighlydependentonwateravailability.Systemproduction(ofhydropower)wasgreatlyreducedunderdryhydrologicconditions,andirrigationconsumedrelativelymorebasinwater.Forexample,hydropowerdecreasedby60%fromtheaverage,andirrigationrequirementsreached5%oftotalbasinflowunderthemostambitiousexpansionscenarios.Ifflowsweretodecreasetosuchlevelsonalong‐termbasis,theeconomicproductivityofthebasincouldthusbeseverelyhampered.Ontheotherhand,‘wet’conditionsonlyleadtomodestimprovementsinenergygeneration,sincedamandturbinecapacitiesarequicklyreached,andirrigatedlandpotentialinthebasinisfairlylimited.Theseresultsillustratetheimportanceofaccountingforclimatevariabilityandpotentialchangeincost‐benefitanalysisofinfrastructureprojects,eveninwatershedsthatarerelativelywaterabundant.

Furthermore,indryyears,watertransfersoutoftheNamNgumtoNortheastThailandwouldcreatetradeoffsbetweenwaterallocatedtodryseasonirrigationandthatremainingforecosystems.Indeed,largetransferswerefoundtobeinfeasibleinsomemonths.Largewatertransfers(300m3/s)wouldalsoleadtoreducedeconomicbenefitsandbasinoutflowsunderaverageandwetconditions,particularlywhencoupledwithirrigationexpansion.Overall,a150m3/swatertransfertoThailandcouldreducebasinoutflowsby32%indryconditions,andalarger300m3/stransferwoulddecreasetheseoutflowsby40%underaverageconditions.

Overall,ourresultshavetwoimportantpolicyimplicationsforthehydropowerandagriculturesectorsinLaoPDR.WiththerecentcontroversyresultingfrompoorlymanagedwaterreleasesatNN1duringthetyphoonof2011thatresultedinsignificantcropdamagesintheVientianePlain,theminimaltrade‐offbetweenhydropowergenerationandfloodstoragesuggeststhattheLaogovernmentcouldchangeoperatingrulesforNN1toensureadequatestoragecapacityduringtherainyseasontobuffersuchevents.Fordomesticagriculturalpolicy,ourresultsindicatethateffortsbytheLaogovernmenttoturntheVientianePlainintoasignificantlyexpandedriceproductionareaareeconomicallyfeasible,ifhighagriculturalreturns–intermsofyieldsandprices–remainpossible.Ifreturnsdecrease,however,thebenefitsofsuchanexpansionpolicywouldneedtobeconsideredcarefully,sincethecapitalcostsofcanalexpansionandlandclearingmightoutweighthebenefitsobtained.

TheimplicationsofdevelopmentintheNamNgumonthewiderMekongarealsoimportanttoconsider.Ontheonehand,fullhydropowerdevelopmentandirrigationexpansionwouldonlyreduceflowsintotheMekongbyroughly10%onanannualbasisunder‘dry’conditions,andwouldbemuchlower(4‐6%)underwetandnormalconditions.CoupledwithlargewatertransferstoNortheastThailand,however,theseeffectscouldbecomemoresignificant.Inaddition,thetimingofflowsintotheMekongwouldchangemarkedlyduetotheeffectsofstorage,withlowerpulsesduringthewetseason,andhigherdryseasonflows(Lacombeetal,2012)potentiallynegativelyimpactingflood‐pulsedependentecosystemsdownstream.CarefulanalysisisneededtobetterunderstandtheimplicationsofsuchchangesforthewiderMekongregion.

Thereareanumberofimportantlimitationstoouranalysis.First,acriticalassumptionoftheoptimizationmodelusedhereisthatoperationofcontrolinfrastructuresinthebasincouldbecoordinatedacrossdamsandovertime.TherealityofmanagementofdamsintheNamNgumisthattheyarelesscoordinated,however,asindividualdamsappeartobemostlyoperatedbyindependentcompanies.However,ElectricitéduLaos(EDL)isamonopolisticbuyerofhydroelectricenergy,andimprovingsystemoperationwouldlikelybeinitsbestinterest.Evenso,energyproductionisclearlynotthesoleobjectiveinthebasin,sothebenefitssimulatedhereprobablyrepresentanupperboundontheeconomicproductionthatwouldbepossiblegiventhemodeledsuiteofinfrastructures.Second,modeloutcomesarehighlydependentoneconomicandhydrologicalparameters.Asshown,thenaturalvariabilityinthesystemhasadramaticeffectonpowerproductionpotential.Similarly,factorssuchasagriculturalreturnsinfluencetheextentofefficientirrigationexpansion.Third,theassumptionofprofitmaximizingbehaviormaynotreflectlandmanagementdecisionsinaregionwithahighlevelofsubsistencefarming.Wehopetoaddressthislimitationinfutureworkbyincorporatingrecentlyassembledinformationonlandownerpreferencestomoreadequatelyaddressthepotentialimpactsofagriculturaldevelopmentonlivelihoodofsubsistencefarmers.Fourth,themodeldoesnotvaluechangesinflowthataffectareasoutsidetheNamNgum(i.e.downstreamintheMekong),nordoesitexplicitlyvaluethechangeinecologicalservicesthatwouldresultfromchangingthenaturalhydrologyoftheNamNgum.Withregardstoclarificationofthesepoints,additionalresearchisneeded.

Acknowledgements

TheauthorswouldliketothankPeterMcCornickforhissupportintheinitialstagesoftheresearchandMartaDarbyforherexcellentworkinsupportingthedatadevelopmentprocess.WealsowouldliketothankDr.JohnWardandCSIROforsupportingthelargerMekongFuturesprojectthatmadeourresearchpossible.Lastly,wewouldespeciallyliketothanktheNicholasInstituteforEnvironmentalPolicySolutions;itsdirectfinancialsupportmadetheprojectpossible.

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Appendix:AdditionalModelingDetails

LocalInflows

Thesub‐catchmentscorrespondingtomodelnodeswereobtainedusingspatialflowmodelingandadrainagemapdevelopedinArcGIS10.Beginningatthenodefurthestupstreaminthecatchment—representingthesurfacediversionfortheXiangkhoangPlateau—nodesub‐catchmentareasweredeterminedusinga50meterresolutionDigitialElevationModel(DEM),aGISpolylinefileofthemainstreamsinthebasin,andtheArcHydropackageofspatialhydrologytoolsinArcGIS10.Creatingthedrainagemaprequiredafourstepprocess:1)“burning”ofthestreamfileintotheDEMthroughsimplesubtractiontoensureaccuraterepresentationofrealstreamconditionsinthebasin;2)filling“sinks”intheDEMtoaccountforsmallnon‐drainingirregularitiesintherelativelylowresolutionelevationmapdata;3)usingthe“FlowDirection”tooltomathematicallydeterminehowcellsdraindownstream;and4)usingtheFlowAccumulationtooltodeterminethedrainageareaateachpointontheriver,basedonthedirectionoftheflowdeterminedinthepreviousstep.Themapcreatedthroughthisprocesscontainsdataonthenumberof50mby50mcellsthatdrainintoanypointalongthetributariesandmainstemoftheNamNgumriversystem.

Movingfromupstreamtodownstream,themappedsub‐catchmentareaofeachnodewasthenconvertedintohectares,withdownstreamareasdeterminedviasubtractionofupstreamareasfromtotalcatchmentarea.Forexample,whilethedrainageareaforNamNgum4wassimplyitsupstreamcatchmentarea,thenextdownstreamnode,theconfluenceoftheNamTingandNamNgumrivers,wasdeterminedbysubtractingtheNamNgum4catchmentareafromthetotaldrainageareaattheconfluencepoint(measuredontheNamNgum)togettheuniquecatchmentsub‐catchmentareaforthisspecificnode.Allsubsequentdownstreamnodesub‐catchmentsweredeterminedsimilarly.

Onceallsub‐catchmentareashadbeensodetermined,thelocalinflowsforeachnodesub‐catchmentwerecalculatedbymultiplyingthetotalflowsattheclosestdownstreamgaugebytheratioofthatsub‐catchment’sareatothatoftheentirecatchmentdrainingintothepointcoincidingwiththatgaugingstation.Forexample,localinflowsfortheNamNgum2damwerecalculatedasfollows:

NN2inflows=BanNaluanginflows*(HaNN2subcatch/HaBanNaluangsubcatch) (A1)

Forintermediatepointsbetweengaugingstations,theincrementalchangeinflowsbetweenstationswassimilarlyascribedtothesub‐catchmentslyingbetweenthosestations.Thiswasthenreplicatedforeachnodeforeachofthethreeclimatescenarios:wet,dry,andaverage,resultinginthreeseparateyearsofinflowsforeachnode.

TherewerealsotwoimportantexceptionsinthederivationofflowsrelatedtodiversionsinandoutoftheNamNgumBasin,specificallythediversionsintotheNamNgum1damreservoirfromtheNamSongRiverinthebasin,andfromtheNamLeukDamoutsidethebasin.Inmodelingthesediversions,actualhistoricalflowsobtainedfromtheGovernmentofLaoweredirectlyincludedas

flowsintoandoutofthecorrespondingnodes,sincewedonotknowthepreciseoperatingrulesgoverningtheamountsofthesediversions.

Thismethodologyalsohassomekeylimitations.BecauseeachcellintheDEMcontains2,500m2

surfacearea,itmissesmuchofthefinerresolutionsurfacegeology,resultinginsmallerstreamsandriversdrainingincorrectly,confluencepointsmappingtoincorrectlocations,aswellasotherproblemsrelatedtospatialscale.Theflowaccumulationmodel,andthusthesub‐catchmentareasthatarecalculated,arenotexactrepresentationsoftheriversystem.Ideally,LIDAR,orotherfinerresolutionimaging(unobtainableforthisstudy)couldbeusedtodeterminetheexactflowpathsandaccumulationsforthesmallerstreams,resultinginamoreaccuratehydrologicalmodelforthebasin.Thelower‐scaleresolutionspatialmodelingwasdeemedsufficientforthepurposesofbasin‐scaleoptimization.

CurrentandPotentialIrrigatedArea

Threedatasourceswereusedtodeterminecurrentandfutureirrigatedareas:1)satelliteimageryfromthedryseason;2)pumpingstationcapacityandirrigatedareaperpumpingstation(datafromtheMAF);and3)localsurveysofactualandplannedirrigatedareasbydistrict,weightedaccordingtotheirportioninthebasin(DepartmentofIrrigation(DOI)andJapanInternationalCooperationAgency(JICA)2009).Theimagesusedwerefreely‐available,highresolution(0.46to0.60m)satelliteimagestakenduringthedryseasonmonthsofMarch2002,April2003,December2007,January2008,andDecember2010,anddisplayedinGoogleEarth.ThehighresolutionandcontrastbetweendryandcultivatedlandintheimagesallowedforrelativelystraightforwarddelineationofcurrentlydevelopedirrigationareaslocatednearexistingcanalsandpumpingstationsintheVientianePlainusingArcGISsoftware.Unfortunately,similarimagesdepictingdryseasonproductionarenotavailablefortheupstreamareasofthebasinwhereadditionalirrigatedproductionoccurs,sogroundlevelDOI/JICAdatabydistrictandgovernmentdatafromplanningdocumentswereusedforestimatingproductionareasintheXiengkhouangPlateau.FutureexpansionpotentialwasthenestimatedasdescribedinSection4.4above.

Hydropowerdata

TheparametersforhydropowerdamsarepresentedinTableA1.Theseparameterswereobtainedfromvarioussources:basindevelopmentreports,projectprofiles,damdevelopers,theelectricityauthorityofLaoPDR,ElectricitéduLaos(EDL),andtheDepartmentofEnergyPromotionandDevelopment(EPD)oftheMinistryofEnergyandMines(MEM).

TableA1.Modelinputsforhydropowerdams

Name Dead Storage (Mm3)

Total Storage (Mm3)

Turbine Height (M)

Minimum Operating Height (M)

Maximum Operating Height (M)

Spillway Capacity (Mm3)

NN1 2330 7030 75 196 212.3 70.3

NN2 2269 4886 181 345 378.75 48.86

NN3 337 1316 220 660 720 13.2

NN4A 111 443 65 1025 1045 4788

NN5 65.2 314 99 1060 1100 31.4

Nam Lik 1‐2 270 1095 103 270 305 11.13

Nam Bak 2B 65 238 85 1010 1050 1.86

Nam Bak 1 147 473 83 600 640 4.73

Notes:CompiledfromEPD,2012;Lacombeetal.,2012;ADB,1996;VattenfallPowerConsultantsAB,2008;andSD & XP Consultants Group and Nippon Koei, 2009.

Additionalresults

AdditionalresultsforhydropowerandagriculturalwaterusebyscenarioandhydrologicalconditionsaresummarizedinTablesA2andA3below.

TableA2.Annualhydropowerproductionbyscenario

Current (3 dam) Scenario 2,547 6,891 7,454

HP Expansion Only 6,104 9,857 10,632

HP + ID1 Expansion 6,103 9,856 10,631

HP + ID2 Expansion 6,087 9,849 10,623

HP + ID3 Expansion 6,074 9,840 10,614

HP + ID2 Expansion + 150 m3/s Transfer 5,975 9,848 10,623

HP + ID3 Expansion + 150 m3/s Transfer 5,973 9,839 10,614

HP + ID2 Expansion + 300 m3/s Transfer NA 9,510 10,580

HP + ID3 Expansion + 300 m3/s Transfer NA 9,500 10,558

HP + ID2 Expansion + 95% Flood Control NA 9,834 10,611

HP + ID2 Expansion with Low Returns 6,104 9,861 10,632

HP + ID3 Expansion with Low Returns 6,104 9,857 10,632

TableA3Totalagriculturalwaterusebyscenario

Current (3 dam) Scenario 262 262 262

HP Expansion Only 262 262 262

HP + ID1 Expansion 431 431 431

HP + ID2 Expansion 823 830 830

HP + ID3 Expansion 1,375 1,390 1,398

HP + ID2 Expansion + 150 m3/s Transfer 308 824 824

HP + ID3 Expansion + 150 m3/s Transfer 548 1,384 1,392

HP + ID2 Expansion + 300 m3/s Transfer n.a. 538 824

HP + ID3 Expansion + 300 m3/s Transfer n.a. 548 1,392

HP + ID2 Expansion + 95% Flood Control n.a. 830 830

HP + ID3 Expansion + 95% Flood Control n.a. 1,390 1,398

HP + ID2 Expansion + 90% Flood Control n.a. 830 830

HP + ID3 Expansion + 90% Flood Control n.a. 1,390 1,398

HP + ID2 Expansion with Low Returns 284 284 284

HP + ID3 Expansion with Low Returns 284 284 284

Analyzing Economic Tradeoffs of Water Use in the Nam Ngum … · 2019-09-20 · projections of...

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