EQUITY IN ALLOCATION OF BENEFITS, BURDENS AND … · i mekong project 4 on water governance...

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MEKONG PROJECT 4 ON WATER GOVERNANCE

Challenge Program for Water and Food Mekong

EQUITY IN ALLOCATION OF BENEFITS, BURDENS AND RISKS IN

HYDROPOWER DEVELOPMENT PROJECTS IN MEKONG COUNTRIES

Rutmanee Ongsakul1, Dang Ngoc Vinh2, Hoang Trung Lap2, Vena Ngonvorarath3,

Lilao Bouapao3, Chay Keartha4, Suon Seng4

1Asian Institute of Technology

2Centre for Sustainable Water Resources Development and Climate Change Adaptation, Vietnam 3Challenge Program on Water and Food Mekong

4Centre for Development Oriented Research in Agriculture and Livelihood System, Cambodia

July 2013

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Research Team

Asian Institute of Technology

Rutmanee Ongsakul, Output Leader

Edsel E. Sajor, Project Leader

Bernadette Resurreccion, Gender Specialist

Centre for Sustainable Water Resources Development and

Climate Change Adaptation, Vietnam

Dao Trong Tu

Dang Ngoc Vinh

Hoang Trung Lap

CPWF Mekong BDC, Lao PDR

Lilao Bouapao

Vena Ngonvorarath

Kate Lazarus

Centre for Development Oriented Research in Agriculture

and Livelihood System, Cambodia

Suon Seng

Chay Keartha

Seang Phyrom

iii

Table of Contents Title Page i

Research Team ii

Table of Contents iii

List of Tables iv

List of Figures iv

List of Boxes iv

List of Abbreviations v

1. Introduction 2

1.1 Context of the Study 2

1.2 Definitions of Key Concepts 2

1.3 Research Questions 4

1.4 Case Studies and Analytical Framework 4

1.5 Structure of the Report 5

Three Case Studies on Equity in Allocation of Benefits, Burdens and Risks in

Hydropower Project in Mekong Countries

6

2. Case Study 1: Yali Hydropower Project, Sesan River Basin, Vietnam 7

2.1 Water Storage Infrastructure in Vietnam and Description of Yali Hydropower Project 7

2.2 Outcomes: Benefits, Burdens and Risks Arising from Development of Yali Hydropower

Project

10

2.3 Procedures: Decision-Making Processes for Allocation of Benefits and Compensations

in Yali Hydropower Project

14

2.4 Key Issues on Distributive and Procedural Equity in Yali Hydropower Project 15

3. Case Study 2: Theun-Hinboun Expansion Project , Nam Theun/Nam Kading River

Basin, Lao PDR

17

3.1 Water Storage Infrastructure in Lao PDR and Description of Theun-Hinboun Expansion

Project

17

3.2 Outcomes: Benefits, Burdens and Risks Arising from Development of Theun-Hinboun

Expansion Project

20


in Theun-Hinboun Expansion Project

31

3.4 Key Issues on Distributive and Procedural Equity in Theun-Hinboun Expansion Project 36

4. Case Study 3: Lower Sesan 2 Project, Sesan River Basin, Cambodia 38

4.1 Water Storage Infrastructure in Cambodia and Description of Lower Sesan 2 Project 38


in Lower Sesan 2 Project

45

4.4 Key notes on Distributive and Procedural Equity in the Lower Sesan 2 Project 48

5. Synthesis and Discussion 50

5.1 Key Issues in Benefits Sharing and Compensations of Burdens and Risks in

Hydropower Development in the Mekong Countries

50

5.2 Key Issues in Decision-Making Process on Benefits Sharing and Compensation of

Burdens and Risks in Hydropower Development in the Mekong Countries

54

6. Conclusion and Recommendations 56

References

58

iv

List of Tables

2.1 Power Development in Vietnam, 2010 and 2025 8

2.2 Main Technical Parameters of the Yali Hydropower Project 8

2.3 Number of People and Properties Impacted by the Yali Hydropower Project 12

2.4 Example of Calculation Table for the Compensation of Agricultural Lands

(Decree No. 90/CP)

13

2.5 Compensation for Annual Crops (Yali Hydropower Project) 13

3.1 Impacts and Compensations of THXP, by Different Affected Groups 27

3.2 Process of Resettlement of Potential Disputes (THXP) 36

5.1 Summary of Benefits Sharing and Compensation of Burdens and Risks in the

Three Case Study Projects

52

List of Figures

1.1 Analytical Framework of the Study 5

2.1 Locations of Hydropower Projects in Se San River Basin 9

2.2 Flow of Revenues from the Yali Hydropower Project 10

2.3 Proposed Resettlement Areas for the Yali Project 14

3.1 Location of the Theun Hinboun Expansion Project (THXP) 19

3.2 Resettlement Areas of the THXP 19

3.3 Flows of Revenues from the THXP 20

3.4 Management of the Lao Government Budget 21

3.5 Organizational Structure in Decision-Making on Resettlement and

Compensation of THXP

34

4.1 Triangle Development Areas 39

List of Boxes

3.1 Impacts of THXP on Nongxong Village and Keosenkham Village 23

3.2 Environmental and Social Problems of Some Villages Surrounding the THXP 24

4.1 Good Practices in Compensation referred by RCC Members 47

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List of Abbreviations

ADB Asian Development Bank

DEDP Department of Energy Promotion and Development

EIA Environmental Impact Assessment

EPF Environment Protection Fund

EVN Electricity of Vietnam

GDP Gross Domestic Product

GMS Greater Mekong Sub-region

IWRM Integrated Water Resources Management

JICA Japan International Cooperation Agency

LMB Lower Mekong Basin

MAF Ministry of Agriculture and Forestry

MAFF Ministry of Agriculture, Forestry and Fisheries

MARD Ministry of Agriculture and Rural Development

MEF Ministry of Economy and Finance

MEM Ministry of Energy and Mines

MIME Ministry of Industry, Mines and Energy

MOC Ministry of Construction

MOE Ministry of Environment

MOF Ministry of Finance

MOIT Ministry of Industry and Trade’s

MONRE Ministry of Natural Resources and Environment

MOST Ministry of Science and Technology

MOT Ministry of Transport

MOTI Ministry of Trading and Industry

MOU Memoranda of Understanding

MOWRAM Ministry of Water Resources and Meteorology

MPI Ministry of Planning and Investment

MRC Mekong River Commission

MRD Ministry of Rural Development

NTFP Non-Timber Forest Products

NGO Non-Governmental Organization

NSEDP National Socio-economic Development Plan

NTPC Nam Theun 2 Power Company

NWRC National Water Resources Council

PPC Provincial People’s Committee

RAP Resettlement Action Plans

RBC River Basin Committee

RBO River Basin Organizations

RC Resettlement Committees

RCC Rivers Coalition Cambodia

RMU

THXP

Resettlement Management Unites

Theun-Hinboun Expansion Project

UNDP United Nations Development Program

WREA Water Resource and Environment Administration

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INTRODUCTION

Evaluation of Equity in the Allocation of Benefits, Burdens and Risks in

Hydropower Development Projects in Mekong Countries

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1. Introduction

1.1 Context of the Study

A hydro-electric dam is often considered the most important option for the development of clean

and renewable energy. Besides electricity, it brings along other benefits such as water supply,

irrigation, flood control and transportation. It’s for these reasons that the electricity-generating

hydropower schemes are being integrated into multi-purpose development programs. In view of

the rising demand for electricity, many countries today, particularly in the developing regions, are

increasingly undertaking large-scale hydropower projects as part of their key strategies for

national economic development. But the benefits of hydropower dams often come at significant

societal and environmental costs. A number of studies have documented the impacts of dams

around the world, highlighting the engineering and safety issues, loss of natural resources,

displacement of indigenous people, and problems related to water quality and health (Lerer and

Scudder, 1999; Jackson and Sleigh, 2000; Fried and Wuest, 2002; Hirsch and Wyatt, 2004; Kummu

and Varis, 2007).

Such trade-offs have put the spotlight on the issue of fairness, bringing into question how the

dams’ benefits are allocated, and how their burdens and risks are handled. Moreover, while the

primary beneficiaries of hydropower dams—in general, industries and urban-dwellers who

consume most of the electricity generated, or downstream cities that benefit from flood control

facilities—may be located far away from the dam sites, local people near the project areas are

often hit the hardest by the negative impacts of the dams. Hence, there is a strong ethical

argument for all relevant stakeholders to seek ways to ensure the equitable distribution of

benefits and fair compensation for costs borne by the affected communities, who forfeit their

access to and use of resources for the sake of macro-level development. According to Haas

(2009), the principle of benefit sharing reinforces social equity in infrastructure development, and

is also embedded in the broader mainstreaming trend in integrated water resources

management framework. Proper arrangement for equitable sharing may also transform potential

conflicts around dam planning and management into local cooperation.

This report is developed as part of the Mekong Project 4 on Water Governance, a project under

the CGIAR Challenge Program on Water and Food in the Mekong River Basin. The study reviewed

and evaluated the current distribution of benefits, burdens and risks in hydro-electric

infrastructure development based on three hydropower project case studies in Mekong

countries; it studied the structures and processes in which the agenda of equity has (or has not)

been framed during deliberations on the projects’ planning and management; and the existence

(or absence) of structures enabling the participation of the affected communities in discussions.

Through the analysis of these concerns, the study then identified the agenda of important equity

issues in the distribution of benefits, burdens and risks that ought to be brought into

deliberations and negotiations about hydropower development to promote more equitable

hydropower development in the Mekong Basin.

1.2 Definitions of Key Concepts

This study focuses on equity in the allocation of benefits, burdens and risks in hydropower

development projects. It examines the issue of fairness in all its dimensions— what is ‘fair’ in

terms of who benefit from the project development, who bear the costs, and what is the

compensation for their loss, and how are these decisions made. Given below are the broad

operational definitions of the concepts applied in this study. They are, however, refined for each

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local context during the process of data gathering and analysis, which is explained in the

subsequent sections of the report.

Fairness involves attitudes and beliefs about the combination of two concepts, namely,

distributive and procedural equity (Syme and Nancarrow, 2002). Distributive equity refers to how

much of a limited resource differing groups in the society deserve. Procedural equity argues that

if the procedures for making decisions are seen to be just, then the outcomes of the processes

are more likely to be accepted by the recipients. The perception about the two is correlated, and

it is this relationship that is the key to deciding whether the overall outcome is fair or not.

Distributive equity therefore focuses on the outcomes or results of the allocation while

procedural equity focuses on procedures and processes that lead to decisions about the

allocation. The latter involves giving people an adequate opportunity to speak and wield an

appropriate degree of influence over the outcomes of negotiations (Tyler and Blader, 2003). With

regards to this research, procedural equity focuses on inclusiveness of stakeholders’ participation

in the decision-making process, and the inclusion of their interests and stakes in the agenda set

for decision-making process for the allocation of benefits, burdens, and risks in hydropower

development.

Burdens and risks of hydropower dams refer to both their environmental and social costs.

Environmental costs refer to the negative impacts of dams on the ecosystem and biodiversity,

such as the loss of species and habitats, and harm to ecological functions in terms of duration,

scale, and degree of reversibility. Social costs are negative impacts on the people and their

livelihoods, social systems and cultures. These include, for instance, displacement, resettlement,

re-distribution of entitlement and access to natural resources.

Benefits of hydropower dams in this research refer to both monetary and non-monetary worth of

dams. According to Haas (2009), there are the following three broad approaches for sharing the

benefits of dam development with local communities and river basin populations:

1) Sharing of project services. Local populations are designed as target beneficiaries for

receiving access to water and energy services produced by hydropower projects to

support their welfare opportunities.

2) Sharing of non-monetary forms of benefits. For non-monetary benefits, the target

beneficiaries may receive entitlements for access to other natural resources, or support

for improving other forms of livelihood, which compensate for their loss of resources or

reduction in access to resources caused by dams. Such benefits could include, for

example, grant of fishing rights to resettlers in reservoirs, improved infrastructure, and

priority in hiring affected residents in construction or operational works of the project.

3) Sharing of monetary benefits. After reviewing a number of cases, Egre (2007) came up

with the following five types of monetary benefit-sharing mechanisms:

i. Revenue sharing, in which part of the dams’ revenues are redistributed among

local or regional authorities.

ii. Development funds, or the use of funds from the sale of hydropower services

(e.g. power sales and water charges) to foster development in the project-

affected areas.

iii. Sharing of ownership is a mechanism that allows local or regional authorities to

partly or fully own the projects. The partners thus share the risks of the venture

as well as the profits.

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iv. Taxes paid to regional or local authorities: In this model, the state may allow local

or regional authorities to directly tax dam operators on the basis of the value of

property or other criteria.

v. Preferential electricity rates or water fees: Local or regional authorities may

negotiate with dam operators for preferential electricity rates or water supply at

subsidized rates that benefit all consumers in the affected localities.

The definitions above show that there is a distinction between compensation and resettlement,

and long-term benefit sharing mechanisms. The latter addresses a wider range of affected

stakeholders and could serve as a mechanism for regional development. The notion of benefit

sharing goes beyond merely compensating the affected communities for their losses, and instead

recognizes their legitimate stake and key role in sustainable management of the projects. Such

schemes can be implemented even when there are no resettled communities. This study includes

this distinct notion of benefits in the assessment of benefit-sharing schemes of the case studies.

1.3 Research Questions

There are four main research questions for the evaluation research presented in this report.

Question 1: Distributive equity. What are the benefits, burdens and risks arising from dam

projects, and how have these been managed in the project planning and operation? The sub-

questions are:

1.1 What are the benefits arising from dam development, and how have they been

distributed, or are planned to be distributed?

1.2 What are burdens and risks as a consequence of dam development, particularly on the

issues of livelihoods, relocation, and other social costs, and how are they compensated?

1.3 What are geographic, ethnic, class, and inter-generational dynamics of distributive equity

issues?

Question 2: Inclusiveness of stakeholders’ participation. How have various stakeholders,

especially the directly affected communities, participated in the deliberations around the issues

of distribution of benefits, and compensation of burdens, and risks? Who represent their voices

and how?

Question 3: Inclusiveness of stakeholders’ interests in the agenda setting. How have local

communities’ interests and stakes been framed in agenda setting and decision-making?

Question 4: What are the major issues of fairness in the allocation of benefits, burdens and risks

of hydropower project development? And how accessible is the current structure of deliberation

and decision-making to local communities and marginalized groups?

1.4 Case Studies and Analytical Framework

Three hydropower projects in three Mekong riparian countries were selected to be study sites for

this research. The three projects are currently in different stages of development. While the Yali

Project in Vietnam has been in operational since 2002, the Theun-Hinboun Expansion Project in

Lao PDR is recently completed in 2012, and the Lower Sesan 2 Project in Cambodia is still in the

pipeline and expects to start construction soon. The key concept of fairness, and broad

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definitions of benefits, burdens and risks of hydropower projects gleaned from literature were

used to form an analytical framework to answer the research questions (Fig. 1.1).

Figure 1.1 Analytical Framework of the Study

The study first reviewed and evaluated the current allocation of benefits, burdens and risks that

are explicit or implicit in the design, plan, implementation and operation of the dam projects.

From these outcomes, the study then retraced the processes that led to these developments. It

examined the contexts, structures, and procedures that decided the allocations. The existence or

absence of opportunity structure for participation by affected communities was also investigated.

The descriptive analysis of each case was then synthesized to form an agenda template, covering

important distributive and procedural equity issues in the allocation of benefits, burdens and

risks that ought to be brought into deliberation and negotiation in project management. This

evaluation research mainly comprised reviews of official documents and academic reports, and

qualitative interviews with key stakeholders in public agencies, dam management, non-

government organizations and local residents affected by the projects. The two sources were

used both to supplement and cross-check the data from each other.

1.5 Structure of the Report

This report contains three major components. Following the first part on introduction, the second

part presents findings on the extent of equity in the allocation of benefits, burdens and risks in

hydropower projects in Mekong countries through the investigation and evaluation of these

three case studies. There are three sub-headings in each case: (i) an overview of water storage

infrastructure and hydropower development in the three countries, and brief descriptions of the

case study projects; (ii) description and analysis of the existing arrangements of distributive

equity, including discussions on benefits and benefits distribution, burdens and risks; and the

compensation; and the dynamics of the distribution of benefits, burdens and risks; and (iii)

description and evaluation of procedural equity in which decision-making processes regarding the

distribution of benefits, burdens, and risks were investigated with a particular focus on

consultation with affected stakeholders. Through the analysis of these three case study projects,

the last part then synthesizes, identifies, and describes the major issues of fairness in hydropower

development projects in the Mekong river basin. The report then finally ends with

recommendations and the possible policy implications of these findings for the authorities

concerned.

[2] [1]

Development of case study

hydropower projects

Outcomes

(distributive equity)

Processes

(procedural equity)

Benefits Costs

Monetary Non-

monetary

Environment Social

Inclusiveness

of local

participation

Inclusiveness of

local interests

into agenda

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CASE STUDIES Three Case Studies on Equity in Allocation of Benefits, Burdens and Risks

in Hydropower Development Projects in Mekong Countries

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2. Case Study 1: Yali Hydropower Project, Sesan River Basin, Vietnam

2.1 Water Storage Infrastructure Development in Vietnam and Description of the

Yali Hydropower Project

Located in a tropical monsoon zone, Vietnam has in general plenty of natural water sources. Its

annual runoff is around 847 billion m3, of which 327 billion m3 is generated within the country

and 520 billion m3 is from neighboring countries. However, water resources distribution is very

uneven, both in space and time. Around 70 percent of the annual flow is concentrated in three to

four months of the rainy season, while the surface flow is only 5-8 percent in the three months of

the dry season. Therefore, drought often occurs in many regions of the country, and management

of water resources is crucial. Further, Vietnam’s economy has grown rapidly over the past few

decades, and the industrialization process has accelerated significantly. Today Vietnam has

become one of the fastest growing economies of the world, and development has resulted in

rising demand for water resources and need for water storage infrastructures.

According to the Ministry of Agricultural and Rural Development, Vietnam presently has 75 large

irrigation and drainage systems and 1,967 large and medium-scale dams (of which 130 reservoirs

have a capacity of more than 10 MCM, while over 1,800 reservoirs have a capacity of more than

0.2 MCM). A total of 3.4 million hectares of land is fully irrigated and over 1 million hectares is

partially irrigated by these infrastructures. It is claimed that these water storage infrastructures

help preventing salt water intrusion for 0.8 million hectares, improving 1.6 million hectares of

acid sulphate soil; and supplying 5 billion m3 of water for domestic and industrial uses. Irrigated

areas of paddy, upland crops, vegetables and short-rotation industrial tree plantations are

continuing to increase even now.

An adequate and reliable energy sector is the foundation of any modern economy. The current

estimated growth of demand for power in Vietnam is around 15 percent a year. Currently, the

industrial sector accounts for 44 percent, while around 50 percent of this demand is from the

South. From 1995 to 2005, Vietnam’s capacity for power generation almost tripled, with an

average growth of 12.7 percent a year. However, this increase has yet to meet the country’s

electricity demand, and today power outages are commonplace even in the major cities.

Electricity generation is therefore being constantly boosted, and hydropower has increasingly

played an important role in contributing to electricity, particularly in the past decade.

According to the Electricity Vietnam (EVN), the country has a hydro-electricity potential of 123

billion kWh. Vietnam is continuously constructing new hydro-electricity dams, most of which are

found in the Red-Thai Binh, Dong Nai, and Sesan River Basins. By 2006, the country had built 15

large dams and reservoirs for producing power. These included Hoa Binh (1,920 MW), Yali (720

MW), Tri An (400 MW), Ham Thuan (300 MW), Da Mi (175 MW), Da Nhim (160 MW), Thac Mo

(150 MW), Thac Ba (108 MW), Can Don (78 MW), Song Hinh (70 MW), Vinh Son (66 MW), Se San

3 (260 MW), Plei Krong (110 MW), Se San 4 (110 MW), Se San 4a (60 MW). There are also many

small reservoirs with capacity equal to or less than 50 MW. From 2007 to 2010, EVN invested in

building 19 reservoirs with hydro-electricity plants, of which the Son La project (2,400 MW) has

the highest capacity and Quang Tri (64 MW) the lowest.

Vietnam plans to generate 10,766 MW of hydro-electricity from 2010 to 2050, (see Table 2.1),

thus increasing the supply of hydropower to 20,178 MW in 2050. Hydropower would then

constitute 22.7 percent of the total power supply in the country, second only to coal-fired

thermal power.

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Table 2.1 Power Development in Vietnam, 2010 and 2025

Key power sources 2010 (MW) 2025 (MW)

Hydro power 9,412 20,178

Coal – fired thermal power 6,595 36,290

Gas thermal power 9,072 17,224

Diesel and oil power 472 2,400

Nuclear power 0 8,000

Imported power 658 4,756

Total 26,209 88,848

Source: Hoach (2007)

EVN is currently planning to construct seven more hydropower dams, namely, Lai Chau (1,200

MW), Trung Son (250 MW), Song Bung 2 (100 MW), Song Bung 4 (145 MW), Song Bung 5 (60

MW), Khe Bo (90 MW) and Upper Kon Tum (220 MW). Besides EVN, many other developers,

mostly domestic enterprises contracted with EVN through BOT, BOO, or IPP schemes, are

building dams and reservoirs to generate hydropower. In addition, imported hydropower from

neighboring countries, including Laos, Cambodia and the People’s Republic of China, also

constitutes a large share of the national power development.

Yali Hydropower Dam

Yali Hydropower Dam project is funded by the Vietnam Government and controlled by EVN.

Located on the Sesan river,the dam is 69 meter high with a 1,190-meter–long reservoir, a high

water level (HWL) of 515 meters, and a low water level of 490 meters. The surface of the

reservoir at the HWL covers 64.5 km2; the gross storage capacity is around 1 billion m3 , and the

operational storage is 779 MCM. The installed capacity of Yali is 720 MW, and the annual average

energy production is 3,680 million KWh.

The Power Engineering Construction Company No1 (PECC1) undertook the field work and

technical designing for the Yali project from 1981 to 1992, and its feasibility study was approved

by the Prime Minister on 24 September, 1992.

Table 2.2 Main Technical Parameters of Yali Hydropower Project

No. Basic parameters Unit Quantity

I RIVER SYSTEM Sesan

II CONSTRUCTION SITE Sa Thay - Chư Pah Districts

III STATUS Under operation

IV CHARACTERISTICS OF THE BASIN

Basin area Km2 7455

Mean flow m3/s 262

Flood peak flow P=0.1% m3/s 14800

V RESERVOIR

High water level m 515

Low water level m 490

Designed flood level p=0.1% m 518

Gross volume (Wgr.) 106 m3 1037

Operational Volume (Wop.) 106 m3 779

Dead volume (Wd) 106 m3 258

Area of surface at HWL Km2 64.5

VI MAIN DAM

9

Type of dam Earth fill dam

Length of the dam (crest) m 1190

Height m 69

VII SPILLWAY

Type of spillway With gates

Designed discharge m3/s 13700

Elevation of discharge threshold m 499

Number of chambers chamber 6

VIII FLOW THROUGH PLANT

Maximum flow(Q max) m3/s 420

IX CAPACITY

Installed capacity (N) MW 720

Based capacity at p= 90% MW 226

Annual average generation 106 KWh 3680

X FLOODED AREAS

Flooded land Ha 6450

No of people resettled People 5384

Source: Power Engineering Construction Company No1 (1992)

Figure 2.1 Locations of Hydropower Projects in Sesan River Basin

Source: Hoach (2007)

The construction work of the Yali hydropower project was started on November 4, 1993. The first

unit began supplying electricity to the national power grid in May 2000. The project was finally

completed, and became fully operational in April 2002.

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2.2 Outcomes: Benefits, Burdens and Risks Arising from the Development of the Yali

Hydropower Project

Benefits and Benefits Sharing in the Yali Hydropower Project

Yali Dam generates 3,680 million kWh of electricity a year, all of which is supplied to the EVN’s

national power grid. The price of electricity has gradually risen from 700 VND in 2006 to 1,242

VND in 2011.

Figure 2.2 Flow of Revenues from the Yali Hydropower Project

Source: Key informants’ interviews, December, 2011.

Part of the revenue generated from the dam is used to pay three kinds of taxes:

i. Payment of natural resources tax (according to Finance Ministry's Circular

No.05/2006/TT-BTC dated January 19, 2006) accounts for 2 percent of the

commercial hydropower revenue. Every year, Yali Hydropower Company pays about

70 billion VND (equivalent to 3.5 million USD) as natural resources tax. Seventy

percent of this tax goes to the Kon Tum province, while 30 percent is given to the to

Gia Lai province. This division is based on the areas submerged in the two provinces

due to the Yali Project. The provincial budget is then used by the respective provincial

governments for their annual expenses.

ii. Value added tax payment (according to Finance Ministry's Circular No.45/2009/TT-

BTC dated March 11, 2009). The annual VAT for Yali Dam is about 192 billion VND

(equivalent to 8.1 million USD). This sum is equally divided between Kon Tum and Gia

Lai provinces, and is used for social welfare and economic development by the

provincial governments.

iii. Tax on forestry and environmental services (according to Decision of the Prime

Minister No.380/QĐ-TTg dated April 10, 2008). This tax accounts for 20 dong/1kwh of

commercial hydropower revenue, that is about 74 billion VND (equivalent to 3.7

million USD) annually. The recently introduced forestry tax was first applied in Lam

Dong, Son La, Dong Nai, Hoa Binh, Binh Thuan, Ninh Thuan and Ho Chi Minh City. This

tax goes to Forest Protection and Development Fund, a provincial-level funding for

forestry management

The electricity generated by the Yali Power Plant is supplied to the national power grid along with

electricity produced from other sources to supply power to the whole country. Both Kon Tum and

Gia Lai provinces receive electricity supply from the country grid and pay the same electricity

rates as other areas. But water from the reservoir is provided to the resettlement areas for

Yaly

Hydropower

Company

Electricity users

EVN power grid Natural resource tax

Value added tax

Forestry tax

Kon Tum

70% (NRT)/ 50% (VAT)

Gia Lia

30% (NRT)/ 50% (VAT)

Provincial fund for forest

protection

Annual provincial budget

11

irrigation free of charge. The Yali reservoir provides water for semi-submerged lands of around

774 ha from seven pumping stations, six of which are in the resettlement areas of Kon Tum City

while one is in Sa Thay district. However, the study found that some of these pumping stations

had stopped working or were malfunctioning, leading to inadequate water for irrigation in some

areas.

Burdens and Risks, and Compensation in the Yali Hydropower Project

More than 1,000 hectares of fertile agricultural land was lost due to the development of the

project. The project displaced 1,149 households or 5,384 people belonging to 26 villages of eight

communes in three districts of Kon Tum and Gia Lai provinces. Ten of these villages were fully

flooded (Kênh, Juts, Tum 2, Tum 1, Chờ, Chấp, Diệp Lốc, Bình Nam, Bình Sơn) while 16 villages

were partly flooded (Chứ, Bình Giang, Kbay, Hamlet 1, Hamlet 2, Kroong tu, Kroong Klah, Dakleck,

Mang La, Kơ năng, Konhgo, Phương Quí, Trung Thành, Konhoktu, Ia Kim, Tà rộp).

According to data from the communes, the ethnic minorities account for 59 percent of the total

population that has been resettled, of which Gia Rai tribals form 35 percent (1,857), Ro Nga 19

percent (1,019), and Ba Na 5 percent (243). The rest of the 2,265 people are the Kinh majority

(Kinh or Viet people make up almost 90 percent of Vietnam’s population).

Most of the resettlers are involved in agricultural activities, in which rice and upland crops (corn,

green bean, and cassava) are grown in valleys and along streams, while perennial crops (rubber,

coffee and cashew) are grown on the hill slopes. Some people also rear animals such as pigs and

chickens with only a few raising cattle. The Kinh people usually live near access roads and are

members of agricultural cooperatives, that occupy fertile land to grow food crops (rice, corn, and

beans) and industrial crops (rubber, coffee, cassava, and cashew). Unlike them, ethnic people

largely practice swidden or shifting cultivation. Each household generally clears 1000-5000 m2 of

forest to make ‘milpa’ for cultivating upland rice, cassava, corn, and vegetable for three to four

years. When the land loses fertility, they move to another forest area to make milpa.

As most of the land in the reservoir area is eroded, ethnic people have to move farther away to

cut down forests for swidden cultivation. Consequently, some ethnic households have milpa as

far as 15 km or more from their houses. Lack of land is a very serious issue with the ethnic groups

in the dam area. Besides houses and agricultural land, around 3,400 ha of forest and other public

works utilities were also inundated by the dam (Table 2.3).

In addition to the flooded land, there are other impacts of the dams that are difficult to quantify.

Some species of fish, for instance, were lost, and the destruction of forests has had a negative

effect on the biodiversity. The annual flow of the river has also increased by 1.64 times, from 260

m3/s to 426 m3/s, after the dam construction. This, in turn, has adversely impacted the

downstream communities, particularly at the Vietnam-Cambodia border since 1996. In 2002,

when all four units of the Yali Dam were fully operational for the first time, the increased flow

resulted in flooding of cultivated land in the downstream lowland area in Cambodia, destroying

lives and crops.

In its study, Oxfam estimated that the 3,434 households in Rattanakiri province of Cambodia

affected by flooding from 1996 to 1999 suffered an annual income loss of USD 2.5 million (Oxfam

America, 2001). The report also cited other tangible losses such as loss of fishing equipment,

boats, livestock, housing, and rice products. Other non-quantified impacts included deaths and

illness due to poor water quality, and negative effects on natural resources. In response, an

inspection team was set up to regularly monitor the water flow in Sesan, and a regulation dam

12

was built at the border to regulate the flow to Cambodia. But to date, the affected people have

not been given any compensation by the Yali Dam authorities.

Table 2.3 Number of People and Properties Impacted by the Yali Hydropower Project

No Items Unit Quantity

I Population relocated People 5,384

Number of households Household 1,149

II Buildings

1 Number of houses moved House 841

2 Areas compensated for householders m2 44,841

3 Area of kitchen compensated m2 9,749

4 Animal cages (Buffaloes and cows big) m2 7,653

5 Warehouses m2 5,989

6 Fences m2 174,471

7 Wells unit 300

8 Water tanks m3 59

III Public Works

1 Asphalt road km 6.8

2 Rural roads km 25.6

3 Bridges Unit 4

4 Irrigation dam Unit 2

5 Telephone lines km 6.8

6 Permanent schools m2 665

7 Temporary schools m2 172

8 Kindergarten m2 115

9 Clinics m2 135

10 Small shops m2 98

11 Long houses (traditional houses of ethnic people) m2 120

12 Houses of People’s committee of communes m2 1,080

IV Types of land Ha 6,450

1 Agricultural land Ha 1933

2 Forest Land Ha 3,492

3 Housing land Ha 85

4 Other land Ha 940


The project provided compensation to relocated settlements whose agricultural land and houses

were flooded. Semi-submerged land near the reservoir was given to local agricultural

cooperatives in the reservoir’s communes for agricultural production. These cooperatives then

allocated the land to their members who were local farmers. Compensation was also paid for

inundated agricultural plots, crops, houses and other properties. Monetary compensation for

inundated agricultural plots was worked out by taking into account different types of crops as

well as quality of the plots (cf., Table 2.4).

13

Table 2.4 Example of Calculation Table for Compensation of Agricultural Lands (according to

Decree No. 90/CP)

Type of Crops Land

quality

Area

(ha)

Unit price

(million VNĐ)

Amount

(million VNĐ)

Two crops rice field 2 168 68.6

One crop rice field 3 703 45.5

Sloping permanent land field 5 204 22.0

Sugarcane 3 447 45.5

Banana 3 30 45

Coffee 1 3 49


Different types of crops were also surveyed and compensated based on the area on which they

had been grown (Table 2.5). Similarly, different types (bricks, wood houses) and components of

houses (kitchens, barns, warehouses, toilets, wells, and water tanks) were surveyed, their cost

calculated, and compensated.

Table 2.5 Compensation for Annual Crops (Yali Hydropower Project)

Crops

Total

compensation

(Million VNĐ)

Kon Tum Province (Sa Thay

district and Kon Tum city) Gia Lai Province

Area

(ha)

Unit price1

(Million

VNĐ/ha)

Total

(Million

VNĐ)

Area

(ha)

Unit

price2

(million

VNĐ/ha)

Total

(million

VNĐ)

2 crops 2419 157 14.4 2260 11 14.4 158

Sugarcane 20785 447 46.5 20785 0

Cassava 109 142 1.8 109 0

Total 23314 23156 158

Note: 1 “Price list of compensation for release work of Yali reservoir area of Kon Tum Province"

of Kon Tum province - No. 483/QD/UB dated December 7, 1993 2 "Price list of compensation for release work of Yali reservoir area of Gia Lai Province" of Gia Lai

province - No. 269/QD/UB dated April 6, 1994.


Standard houses were constructed and allocated to each household in the resettlement areas.

Other facilities such as road networks, electricity lines, water supply wells, bridges, schools and

clinics were either built afresh or upgraded. Relocated residents were also provided food and

transportation during the process of their resettlement.

Compensations made to affected communities in the Yali case were systematically arranged and

based on the same procedures across all households and ethnicities. However, most of the

compensation was reserved for the communities that were flooded during the dam construction,

and downstream communities were not considered to be affected by the project. They were

therefore not investigated for possible effects and were also not entitled to any compensation.

The effects after the period of construction too were not anticipated. But since the project has

been in operation for over a decade, the actual effects that were unanticipated have become

obvious. Prior to 2009, there were many incidences of large water releases from the dam,

resulting in a sudden flooding of the semi-flooded area around the reservoir, causing damage to

the crops. Later, this issue was resolved by an agreement whereby the dam operation schedule

is relayed to the locals in advance so that they can protect themselves from the surges in the

14

water level. But negotiations and arrangements in the case of trans-boundary, inter-country

impacts have proved to be more difficult. Losses suffered by residents around the Vietnam-

Cambodia border since 2000, though well documented, have not been taken into account for

compensation till now.

2.3 Procedures: Decision-Making Processes for Allocation of Benefits and

Compensations in the Yali Hydropower Project

Decision-Making Processes for Allocation of Benefits and Compensations

National institute of Agricultural Planning and Protection (NIAPP), an agency under the Ministry

of Agriculture and Rural Development, was responsible for the development of the resettlement

areas for the Yali Project. The final decision on the resettlement plan was then made and

approved by the People’s Committee of Kon Tum and Gia Lai Province. The Institute of

Agricultural Planning and Development (IAPD) devised a process for the selection of resettlement

locations, which was conducted through the following steps: First, aerial photos and topographic

maps were analyzed to shortlist possible areas of resettlement, which were then discussed with

district officials and communes along with migrant plans for each village. Second, government

representatives of provinces, districts and communes, particularly the village chiefs and elders,

were involved in the primary appraisal to identify the actual potential of the shortlisted areas and

gain the consent of villages and local authorities on resettlement locations. Third, surveys were

conducted on the expected resettlement areas and details were prepared on topography, soils,

and hydrogeology to assess the comprehensive potential of settlement area for design and

planning works. When the detailed survey results confirmed that the areas were suitable for

resettlement, they were officially adopted.

As shown in Figure 2.3, in the case of Yali project, the survey resulted in nine potential areas. Five

resettlement areas (i.e. number I, V, VI, VIII, IX) were then selected based on the results of

discussions and detailed surveys.

Figure 2.3 Proposed Resettlement Areas for the Yali Project


15

Like the resettlement plan, other decisions on the distribution of benefits and compensation

were also made by the People’s Committee at the provincial level. A number of decrees were

made to facilitate the compensation process. Among others, the important ones are Decision 186

HDBT on the ‘Compensation of agricultural land, forest land when switching to other purposes’

dated May 31, 1990; ‘Price list of compensation for release work of Yali reservoir area of Kon Tum

Province’ No. 483/QD/UB dated December 7, 1993; ‘Price list of compensation for release work

of Yali reservoir area of Gia Lai Province’ No. 269/QD/UB dated April 6, 1994; and Government

Decree No. 90/CP dated August 17, 1994 on ‘Compensation for damage when Government

recovers land for purposes of Defense, Security, National Interests, and Public Interests’.

In general, the principle of compensation is exchanging land for land. Agricultural lands lost were

compensated for by land of equivalent size or more. The compensation process started with the

identification of land and properties lost through household survey by the Institute of Agricultural

Planning and Development. Provincial People's Committees of Kon Tum and Gia Lai Provinces

issued the regulations on compensation unit prices and allowances for land, crops and other

properties. The estimated amounts were also compared with market prices provided by the

Department of Finance so that the regulated unit prices were relatively close to the market

prices.

Representatives of the affected communities were involved in these processes, particularly at the

district and commune levels. The meetings were generally held at the district offices and

attended by representatives of District People's Committee, district departments, Party

Committee, commune leaders, youth organizations, women’s organizations, veteran’s

organizations and fatherland front’s organizations. The representatives were selected by

respective groups to voice their demands and keep them informed about the compensation and

relocation process.

For most local people, the compensation packages provided were satisfactory. However, as

population in resettlement areas has increased, lack of cultivation land has been on the rise. In

view of this, the local government has proposed to develop a new resettlement plan for the

project.

2.4 Key Issues of Distributive and Procedural Equity in the Yali Hydropower Project

� The major benefit of the dam (i.e. electricity) is claimed to be distributed to all citizens of

the country through the national power grid. There has been no special advantage to the

affected communities in terms of electricity supply or special fee. Parts of revenue

generated from the sale of electricity return to the provincial government of the affected

area in the form of taxes. Yet, the amount has been put into the annual provincial budget

and there has been no particular mechanism to ensure the use of these tax revenues

specifically for the enhancement of the well being of the affected residents and

development of the resettlement/affected areas.

� Costs of dam development that were implied and operationalized tend to cover only

direct costs due to dam construction, particularly areas flooded to create the reservoir.

Therefore, the persons eligible for the compensation package were only those who lost

their assets during the construction. The residents impacted during the post-construction

and operational period were not considered by either the relevant government units or

dam managers. They were not only excluded from the compensation package, but were

also not informed of the possible impacts they may suffer, and thus were not able to

16

prepare for it. The damages to the downstream area and river banks on the Cambodia

border were also the consequences of the dam construction. Although some issues have

been addressed to some extent to prevent future harm, the past losses have not been

considered for compensation. Further, we still need continuous monitoring of arising and

anticipated impacts as well as mechanisms to respond to them.

� The participation level of local communities in the decision-making process on

compensation allocation is still questionable. In terms of representation in the

consultation committee, majority of the members were government-mandated

organizations. Their role in representing their respective groups and issues is also not

clear (it is not clear whether they were involved in identifying the resettlement land,

fixing compensation prices and deciding other needs of the groups). Also, there was no

member to represent ethnic groups in particular even though majority of the relocated

residents were ethnic minorities. Further, the report of the dam manager seems to show

the satisfaction of resettled residents with all the facilities and compensations provided

whereas there is no mechanism for people to make a claim if they are not satisfied,

especially after the completion of the compensation process.

17

3. Case Study 2: Theun-Hinboun Expansion Project, Nam Theun/Nam Kading River

Basin, Lao PDR

3.1 Water Storage Infrastructure Development in the Lao PDR and Description of

the Theun-Hinboun Expansion Project (THXP)

The Lao PDR holds the largest territory and water flows of the Mekong River among the six

riparian countries (China, Myanmar, Thailand, Vietnam, Cambodia, and Lao PDR). It covers about

25 percent of the Mekong River Basin (202,000 km2) and approximately 35 percent of the water

flows (MRC, 2005). Besides, most of the rivers in the Lao PDR (about 39 main rivers) are

tributaries of the Mekong. Amongst these, 11 rivers have a catchment area of more than 5000

km², including Nam Ou River Basin; Nam Suang; Nam Khan located in the Northern part of the

Lao PDR; Nam Ngum; Nam Nhiep in the Northern-Central part; Nam San; Nam Theun/Kading;

Sebangfay in the Central part; Sebanghieng; Sedone, located in the South; and Sekong that flows

in the South-Eastern part of the country. These together have a total watershed area of almost

183,000 km². Besides, there are two main rivers, namely, Nam Ma and Nam Ka, that have a

watershed area of 13,000 km2. These two rivers flow outside the Mekong to the North-Eastern

region toward Viet Nam from where they fall directly into the South China Sea.

The enormous river network has huge benefits for the country, ranging from water for irrigation,

transportation, and fishery to, most importantly, hydropower generation. As Lao PDR races to

realize its national development agenda of moving out of the least developed country status by

2020 and achieving the Millennium Development Goals (MDGs) by 2015, the government is

striving to ensure that the economy grows rapidly and sustainably. One of the major export

commodities of the country is electricity from hydropower. Overall, the electricity sector made up

for 18 percent of the exports in 2004, 15 percent of the total industrial production, and 3 percent

of the GDP. At present, there are 27 dams across the country with a capacity of 2,561 MW and

11,514 GWH. Furthermore, six additional dams will be constructed during the Seventh Five-Year

National Socio-Economic Development Plan (NSEDP) with a capacity of 662 MW. Of these, the

dam construction of Se Kaman 3, Nam Ngeum 5, Nam Yon and That Salan was completed in 2011;

while those that were to be completed in 2012 include Nam Se Xong dams and the Theun-

Hinboun Expansion Project.

In addition, NSEDP has set clear targets for achieving MDGs by 2015; of which, expansion of

electrification to 80 percent of the total households by 2015 is a priority. Thus, the government

will continue constructing medium- and large-scale hydropower projects throughout the country

in order to have enough electricity to meet the domestic demand. It will also invest in building

power stations with an installed capacity of 2,865 MW during 2011-2015 to generate an

anticipated revenue of USD175 million per annum. It also aims to carry out the integration of

power grids between the Northern-Central and the Southern parts of the country with 115-KV

transmission lines besides connecting 500-KV transmission line systems with neighboring

countries, especially Thailand and Vietnam.

At the household level, rivers in Lao PDR serve not only an economic purpose by providing

occupation, food, income, and transport, but also have a social and cultural significance. People in

rural areas use rivers to transport goods from village to village. Rivers are also used for some

religious ceremonies as well as recreation. Currently, water transport accounts for 18 percent of

the total volume of transport in the country. The NSEDP aims to upgrade the waterways in the

northern part of Mekong to permit boats carrying goods up to 300 tons to sail. However, the

construction of a large numbers of dams and hydro-electricity plants is not only directly impacting

the livelihood and environment of the people, but also their social and cultural life. Even though

18

projects such as Nam Theun 2, have made protection of environment part of their mandate, there

is still a need to comprehensively examine these projects from the point of view of environment

as well as local people’s well-being.


Location and purpose

The Theun-Hinboun Expansion Project (THXP) is located in the central Lao PDR, between

Bolikhamxay and Khammouane Provinces. It is an expansion of the existing project, namely,

Theun-Hiboun Power Plant (THPP). THXP includes a new dam located on Nam Gnouang, hence

called ‘NG Dam’, about 27 km upstream from THPP that will create water flows from Nam

Theun/Nam Kading Basin into the Nam Hai/Nam Hinboun River Basin, and then flow into the

Mekong to the Southern part of Lao PDR (see Figure 1). This new dam will help in increasing the

level of water in the dry season for the existing Theun-Hinboun Dam, as it will create water flows

in the Nam Hai and Nam Hinboun River. In the NG reservoir, the maximum water discharge will be

220 m3/s in the rainy season, whilst the flow will be almost continuous in the dry season. The NG

dam will also create an upstream reservoir on the Nam Gnouang, about 100 km upstream from

the dam.

Capacity

The reservoir of Nam Gnouang (NG) has a full capacity of 2,450 MCM and will cover an area of

about 105 km2. Water releasing system will discharge water from the NG reservoir to supply

water to the Theun-Hinboun power stations as needed. It is estimated that the water level of the

NG reservoir will vary seasonally to maintain a volume of 2,262 MCM for live storage, with the

lowest level at 189 MCM in the reservoir surface area of about 15 km2.

The NG dam will have five radial gates built with a Roller Compacted Concrete (RCC) system. A

power plant will be built at the dam site to discharge water downstream to the Nam Theun,

which will have an installed capacity of 60MW. This will add a capacity of 220MW to THPP, thus

taking their combined output to approximately 500MW. The electricity produced by NG dam will

be sold and transferred to Electricite du Laos, a state-owned enterprise, for domestic

consumption through a 115-KV transmission line. In 2009, a project operation monitoring report

had projected that the THPP that normally produces 1,450 GWH a year would decrease its output

to 1,257 GWH a year. But if THXP succeeds, it will be able to increase the production capacity of

the existing Theun-Hinboun dam to 3,020 GWH a year.

Project development:

The Government of Lao PDR and Theun-Hinboun Power Company Limited signed a Memorandum

of Understanding on the Theun-Hinboun Expansion Project (THXP) on 5 March, 2004, after a

series of amendments. Pursuant to this MOU, a number of activities have been accomplished,

including completion of the expansion project feasibility study; Environmental Impact

Assessment, Environmental Management and Monitoring Plan, and Rapid Assessment of

Perceptions.

THPC and Electricity Generating Authority of Thailand (EGAT) signed a Power Purchase Agreement

as did THPC and EDL. THPC and the Government of Lao PDR also signed an amendment to the

license agreement between them besides inking a construction contract. The project construction

finally began in May 2009. In September 2011, THPC held the ground-breaking ceremony of the

new dam. Currently, the THXP is in the process of completing the resettlement of affected

villagers to keep pace with the completion schedule of the Nam Gnouang dam in January, 2012.

19

Figure 3.1 Location of the Theun-Hinboun Expansion Project (THXP)

Source: Theun-Hinboun Power Company (2011) www.thpclaos.com

Selected study areas:

The study aims to cover diverse issues of upstream, downstream, resettled, non-resettled, and

ethnic villages. To meet this objective, four villages were selected to carry out in-depth

interviews. The first village was Ban Koesaengkham, a resettled village located in the upstream of

the THXP. It hosts residents from former five villages resettled from around the reservoir. The

second is Ban Nongxong, a resettled village consisting of multi-ethnic groups (i.e. Lao, Hmong,

and Khmu). The village houses both resettled and host villagers.

Figure 3.2 Resettlement areas of THXP

Source: Theun-Hinboun Power Company (2011) www.thpclaos.com

T-H Expansion Dam

20

The other two study sites are Ban Pakveng and Ban Phonsay, villages located downstream of the

THXP. Ban Pakveng, a Lao village, is located on the Hinboun River in Khammouane province while

Ban Phonsay, a Khmou village, is located on the Pakadding river in Borikhamxay province. With

their distinct characteristics in terms of location, impacts, and diverse ethnicities, the four case

study villages provide a holistic and in-depth look at the dynamics of the distribution of benefits,

burdens and risks in THXP in the following sections.

3.2 Outcomes: Benefits, Burdens and Risks Arising from the Development of the


Benefits and Benefits Sharing in Theun-Hinboun Expansion Project

Monetary benefits from the dam are basically distribution of profit after tax among the

shareholders of the company. THXP is a tri-shareholding company comprising EDL, and two

foreign companies, namely, MDX Lao Public Company Limited (MDXL) and Nordic Hydropower AB

(Statkraft SF). While EDL is the major shareholder with 60 percent shares, the two foreign

companies hold 20 percent shares each.

It is estimated that between 2012 and 2028, THXP will generate USD 2,053 million of revenue.

THXP is committed to paying royalty to the state at the rate of 5 percent of the gross operating

revenues from the effective date to 2028 after which it will pay at the rate of 7 percent.

Additionally, the company is subject to tax at the rate of 15 percent on the net payable income.

All revenue collections will contribute to the state budget, which is managed by the Ministry of

Finance (MOF). Regarding the revenue collected from royalty, the provinces covered by the

project will receive shares in royalty collection in accordance with the Law on Royalty Collection.

In addition to this, according to an interview with EDL (Fieldwork, 2011), 35 percent of its profit

after tax will go into the government budget.

Figure 3.3 Flows of Revenue from THXP

Source: Key informants interview, September 2011.

In general, MOF allocates the budget according to the government’s development priorities. The

key governmental agency that is directly responsible for prioritization of the Public Investment

Programs (PIPs) is the Ministry of Planning and Investment (MPI). MPI consolidates and prioritizes

THPC

Royalty 5-7% of

gross operating

revenue

Tax 15 % of net

payable income

State’s

budget

(Min. of

Finance)

Budget allocation

according to

national socio-

economic dev plan

Min. of Planning

and Investment

35% of EDL Profit

after tax

21

plans from each ministry and eventually develops the National Socio-Economic Development Plan

(NSEDP). According to the 7th NSEDP (2011-2015), major budgetary allocations of 35 percent

each have been made to the social, and infrastructure and construction sectors, with only 30

percent allocated to the economic sector.

In addition, an interview with the THPC officials revealed that the company will provide USD

1,000,000 through the Social and Environment Department, the environmental section of the

company, for environmental assessment and monitoring in the project areas (key informant

interview, September 2011).

Figure 3.4 illustrates the management of the government budget. The Ministry of Finance (MOF)

manages the overall budget at the provincial level through its departments in each province and

the Vientiane Capital Department of Finance. Tax management is also managed by MOF and

follows the same structure of government budget management. However, customs management

at provincial level is slightly different in terms of organizational structure, as they have customs

offices at each border checkpoint instead. On the other hand, the central government budget is

managed directly by the National Treasury and the budget is allocated separately from the

provincial budget.

Figure 3.4 Management of the Lao Government Budget

Source: MK4 Fieldwork (2011)

As observed in the above management structure, there is no specific and explicit plan that

indicates budget allocation for the improvement of vulnerable people’s livelihood, especially

those who live near the project site, and the people who are directly affected by the project

development.

At the local level, indirect monetary benefits include possible increase in wage employment

through the involvement of local people in the construction, operation, and maintenance works,

although not many local people are qualified and involved in these activities. According to the

Monitoring Report (Theun Hinboun Expansion Project, 2010), the number of households planting

one hectare or more of rice in 2010 has decreased, partly because of the wage labor available to

people adjacent to the project. But the situation is expected to change in 2012 when the

construction work is completed and demand for unskilled and semi-skilled workers decreases.

Others indirect monetary benefits include increasing opportunities for sale of agricultural

products such as chicken and ducks to project-based workers, particularly when they come to

work in the village. Local products such as surplus of rice and NTFPs can also be sold in local

markets due to the improved road access provided by the project. This is true for resettlement

Customs Department

Customs office at

border checkpoints

Ministry of Finance

Tax Department

Provincial/Vientiane

Capital Tax Department

Provincial Capital

Treasury

National Treasury

Line Ministries

22

villages, but not for downstream villages such as Ban Phonsay, which have not seen any

improvement in infrastructure due to the project.

Regarding the electricity supplied by the project, it is officially documented that ‘100 percent of

the energy produced at the expanded THPP powerhouse from THXP will be sold to EGAT’ (Theun

Hinboun Power Company, undated). All the local households in the THXP areas, however, are

also expected to get better electricity supply as interviews suggest that electricity generated by

all hydropower dams in the country is generally linked. If this is the case, it would imply that part

of the electricity generated by the THXP is used throughout the country.

THXP has committed to provide irrigation for 300 ha of the resettlement areas. The project will

also contribute to the government irrigation improvement projects and the construction of

concrete canals for water release in the resettlement areas. The villagers will be charged monthly

for the utilization of irrigation water. The fee covers the cost of electricity used for pumping and

the quantum of water, which depends on the production areas determined by the Ministry of

Agriculture and Forestry.

Burdens and Risks and the Compensations in the Theun-Hinboun Expansion Project

Hydro-electric sector generates a large amount of revenue, and provides some benefits to the

local people through facility improvement and compensation package from the project

developer. By contrast, the rapid development of the sector also causes a number of adverse

impacts on local people. Livelihoods of project affected persons (PAPs) can be threatened by

adverse impacts from the project, including impacts on their agricultural products due to changes

in the level of water and degradation of water quality.

According to interviews with villagers in Keosengkham (a village located upstream of the project),

information of water discharge is not conveyed regularly to the villagers. Most farmers suffer

from water shortage in the dry season and floods in the rainy season. Most PAPs are vulnerable

and ill-equipped to deal with these impacts. Besides, information regarding access to land is not

clear to the villagers. They are not aware of the government regulation on the use of land, and

land classification so far is still obscure. As an old man in Keosengkham village said: “The land is

entitled to many parties. When I want to cultivate this land, they say it belongs to the project and

when I want to cultivate that land, they say it is the Government’s. I don’t know which piece of

land I can cultivate” (MK4 Fieldwork, 2011).

Relocation and resettlement

According to the Resettlement Management Unit in Khammouane Province, a total of 51 villages

were flooded by the dam construction and 24 villages were relocated. In general, resettlers noted

that they enjoy better living conditions, including new houses in the new villages. However,

problems still arise as they are adapting to a new environment and most importantly, a new legal

system. Impacts of relocation also differ from one group to the other. As illustrated in Box 3.1,

impacts vary according to the locations of the villages.

In addition to difficulties of resettlement, frequently cited environmental costs of the study areas

include loss of fish, other aquatic species, forests, water quality, and changes in the flow regime.

All villagers interviewed experienced a decline in the fish catch. More severe flooding events

were observed in Ban Pak Veng and Ban Phonsay, the two villages downstream of the project.

And in Ban Keosaengkham, the upstream village, villagers reported shortage of grazing lands.

They noted that in the old villages, they could take their livestock anywhere for the whole year

23

round, but this was not the case in the new location. Consequently, many households have given

up raising livestock, a critical livelihood asset in times of hardship.

Some downstream villagers reported that they faced shortage of groundwater during the dry

season, and were forced to use water from the river, which was of poor quality. The villagers

complained that the water from the Hinboun River was dirty, noticeably after the operation of

the dam. Water released from the dam, especially in the months from January to March, also

causes river bank erosion and damages the villagers’ plantations (Box 3.2).

Box 3.1 Impacts of THXP on Nongxong Village (Resettlement Village) and Keosenekham Village

(existing villages in Upstream Area)

Nongxong is a resettlement village comprising both new resettlers and host villagers. It has

three ethnic groups, with common problems about rights over land use and land allocation. At

the time of the team visit, 20 households had not received land for agricultural production for

over two years. Their income had fallen as they were forced to change their cultivation

practices. They were also dissatisfied with the provision of rice for resettled households, but

could do nothing about it due to limited knowledge about grievance/feedback procedure,

Keosengkham, on the other hand, is a newly-established village in the upstream area of the

THXP. The project-affected villagers who have been resettled here are finding it difficult to

adapt to the new environment.

“In the new village, we have been informed that 100 percent of the households will do paddy

rice farming, but I have never done paddy rice farming as I have always practiced shifting

cultivation. Additionally, a piece of land allocated to my family is not flat, and is difficult to

cultivate… all the good land belongs to the host villagers who have been living here” (A man in

Nongxong Village).

“In the old village, I could go hunting in the forest to get boars, squirrels and collect some

bamboo shoots; and I could go to the nearby river to catch fish. The fish were enough to eat

and I even sold surplus to the market. Here, our village is located far from the river and forest. I

cannot fish or hunt or collect bamboo shoots like before. I also have to pay for electricity and

water. To cover all these living expenses, I have to do farm labor for others. My earning from

this is around 30,000 kip per day or sometimes 100,000-300,000 kip per job (four days).

Without subsistence assistance from the project, including provision of rice and some canned

food, I don’t think I can survive” (A man from Nongxong Village).

“In the old village, the soil condition was better than in the new village. I could grow cabbage

without using any fertilizer and the cabbage I grew weighed 2-3 kg. The river is also very close

to our old village and there are fish available all year round” (A woman from Keosenekham

Village).

“I do not know about the new village very much, but it is the government that asked us to

move out of our old village, and we followed” (A man from Nongxong Village).

Source: Interviews with residents of Nongxong Village and Keosenekham Village, Bolikhamxay

Province, 15-19 May 2011.

The affected communities are also concerned about the issues of malnutrition, health risks

associated with transmission line, and the prevalence of HIV/AIDS/ STD . It is feared that the

24

increase in population accompanied by a decrease in natural resources, particularly fish and

NTFPs, in resettled villages will lead to increase in malnutrition, unless measures are taken to

compensate for the loss of natural resources and provision is made for alternative resources.

There are also apprehensions about the negative impacts of the increasing use of insecticides and

fertilizers in an effort to intensify agricultural production, and the side-effects of electro-radiation

on people living near the transmission line. Further, respondents from the health sector are

concerned about the potential increase in HIV/AIDS/STD due to the increase in the population of

workers in the local communities. Some of the respondents from local hospital, however, said

that the project involved awareness raising, and hence health problems, including sexually

transmitted diseases, may witness a decrease.

Box 3.2 Environmental and social problems of some villages surrounding THXP

“Before the construction of the dam, there were more fishes in the river. I could just go

down the river and catch them with my fish net. Now it takes a day to find fish and

maybe a whole day passes and I cannot find any fish” (A man from Pakveng Villagein the

downstream area).

“My family faces decreased rice harvest because of the floods. When there is a flood, I

have to buy rice from others because the high level of water usually remains for 10 to 20

days and afterwards all my agricultural products are gone. Before the existence of the

dam project, the water was not of bad quality. Although the flood would last for 15 days,

our rice field was still resilient to it”. (A woman from Pakveng Village in the downstream

area).

“In May each year, we face a problem of ground water drying out. We have to drink and

use water from Hinboun River which is so dirty”. (A woman from Pakveng Village in the

downstream area)

Source: Interviews with villagers in Pakveng Village and Keosenekham Village, in the downstream

area, Bolikhamxay Province, 15-19 May 2011.

Some villagers in the resettlement villages said that they get stressed out due to the pressure to

change their traditional and cultural practices and/or potential social incompatibility between

villagers of different ethnic groups. Ban Nongxong, for example, is a village of multiple ethnicities,

including Hmong, Lao, and Khmou. The affected people were resettled in the village from

different villages populated by single ethnic groups. It will take some time before people from

different cultures adapt to each other.

Based on the compensation principles indicated in the Decree on Compensation and

Resettlement of Development Project (reference no. 192/PM, dated 7 Jul 2005), the

development project shall compensate PAPs for their lost rights to land use and for their lost

assets (structures, crops, trees and other fixed assets) affected in full or in part, at the

replacement cost. According to Article 7 of the decree, PAPs have the right to receive

compensation for items listed below until their income levels and living conditions are stabilized:

a. Transport allowance or assistance in kind to transfer to the resettlement site or their

choice of relocation;

b. Food allowance, in cash or in kind, to compensate for income lost, during the

transition period; and

25

c. Development assistance after displacement during the transition period until they

are able to restore their incomes or improve their living standards.

Compensation amounts were established based on market price and expert judgment, with the

approval of the Provincial Governors. The prices were set equally across locations and social

groups (MK4 Field work 2011). The interviews showed that most resettlers were satisfied with

the compensation package, although they noted that it would have been better had they been

asked about what they thought was the cost of their lost properties. The loss of non-physical

resources such as graves, which are very important to the Hmong, cannot be compensated.

Interviewees representing the project noted that compensation was dealt with on a case-by-case

basis, involving lot of investigations.

Allocation of resources was made on the basis of local characteristics, not necessarily the same

across resettlement areas. For example, resettlers in the downstream village, Ban Nongxong,

received one hectare of land each, while those in the upstream resettlement village, Ban

Keosaenkham, received 4 hectares of land each . Nongxong is suitable for paddy, while

Keosaenkham is suitable for shifting cultivation and therefore more land is needed so that

rotation is possible. On average, one household in Keosaenkham will use 1 hectare regardless of

land condition or quality and practice four-year rotation.

In addition to land, other forms of compensation included new houses and livelihood training for

long-term support; and rice, canned food, and dried meat for short-term support. Houses have

been constructed with permanent materials (such as wood and brick) with electricity and pipe

water connection. Generally, the resettled households had four options of houses. Any

household with more than seven members could get two houses. Expenses associated with

shipping of household assets were the responsibility of the project. Each household was also

promised 220 kg of rice together with some canned food and dried meat every year. Clean water

supply for the resettled villages was provided through spring water and groundwater with

electricity pump. On average, about seven households have access to springs and 15 households

are provided water by a well (MK4 Field work, 2011).

THXP has made a commitment to support PAPs in the resettlement villages until they reach

specified income targets. The income target is 17,497,750 kip per household per year, except in

the head pond and Upper Hinboun areas, where the target is 14,200,000 kip per year. Income

targets have been derived in accordance with needs assessment and the Lao cost of living index,

which is currently 5 percent per year. But this commitment is not valid for those with impacts of

less than 20 percent on livelihood and/or those choosing self-resettlement.

Project affected persons will be eligible for resettlement/relocation and compensation package if

they fulfill the following criteria:

- All persons who lose agricultural lands, structures and production but not those who

reside outside of the NG Reservoir flood area;

- Persons and households registered by the “cut-off date” (household surveys

commencing on 1st March 2007) and their children who may have formed new

households but not other relatives previously residing outside the area; and

- Persons later accepted for inclusion by the Grievance Committee

According to the Resettlement Action Plan of the THXP, socio-cultural principles have been

applied for identification of suitable resettlement sites, including: a) proximity of existing

locations and within the same district; b) areas affected by other project impacts will not be

selected as resettlement sites; c) host villages should be fully consulted and should agree to host

26

resettlers before the resettlement takes place; and d) if villagers prefer to move to areas with

similar ethnic groups, the option should be considered. In response to this, the project provided

resettlement assistance to some villagers wanting to move the entire village to a new location,

and some villagers who preferred moving according to relations or kinship networks.

Besides housing, other facilities were also provided. Resettled villages were given access to roads

that were constructed or improved by the THXP. Access to road networks helps in increasing

access to information, health, education services, and markets. An ADB (2004) research suggests

that having access to health information, especially Mother and Child Health (MCH) and use of

relevant services can also reduce maternal and infant mortality and improve child nutrition (ADB

2004, cited in NHDR 2006).

THXP built school buildings and health centers for the resettlement villages of Nongxong and

Keosengkham. Villagers of Keosengkham, however, complained of lack of teachers and nurses,

possibly due to the on-going process of resettlement. At the district level, the project supplied

some medical equipment to the local hospital of Khamkeuth district. Arrangement was also made

for the short-term training of the hospital staff. As part of the compensation package, the project

provided the affected people with livelihood access to electricity, irrigation, road, permanent

school building, and health centers. However, the use of these amenities requires expenses.

People have to pay electricity bills and bear transport costs, which were not part of their

household expenses earlier.

Dynamics of the Allocation of Benefits, Burdens and Risks in the Theun-Hinbound Expansion

Project

Majority of the electricity generated by the THXP will be exported to Thailand as suggested by

documents, and therefore beneficiaries in term of electricity use will be the Thai people. The

social and environmental costs are, however, borne by the local people in the THXP affected

areas. To make up for their loss, compensation packages were provided. Yet, there were

differences in the distribution of compensation with different implications for various groups of

affected communities. Burdens and risk distribution are found to vary between locations/villages,

gender, and ethnic groups.

Keosengkham Village (located in the upstream area) and Nongxong Village (resettlement village)

received more development support compared to other villages studied. The support included

newly-built houses with permanent materials, electricity connection, irrigation and water supply.

Keosaengkham has a newly-built unpaved road, while Nongxong has an improved road,

accessible in all seasons. Both villages have new school buildings and health centers. This is

because the two villages are eligible for THXP support, while Pakveng and Phonsay Villages

(downstream villages) are not eligible for receiving these benefits.

27

Table 3.1 Impacts and Compensations, by Different Affected Groups

Affected groups Burdens/Risks from dam development Compensation received from THXP Notes on key issues

By locations

Keosenekham Village

: A newly established

resettlement village in the

upstream area of THXP. The

villagers moved from the affected

area of the project construction

- Resettled residents lost their houses and

agricultural land in the construction areas

- Decreased agricultural productivity as the land

allotted is largely hilly, far from the river, and has

poorer soil quality

- Shortage of grazing lands which has led to

abandoning of livestock, a major livelihood asset.

- Shorter period for rotation of shifting cultivation

due to land size received

- Newly constructed houses in the

new village

- Have electricity and pipe-water

supply connection

- Newly-constructed and improved

roads lead to easier access to

health/ education services and

markets

- Newly-constructed school and

health center (but teachers and

nurses are still inadequate)

- Support for livelihood until

villagers meet their income target

- Confusion about land

entitlement. Some villagers are

still uncertain of where to

cultivate

- Villagers are not informed of

water released from the dam

and therefore they cannot

prepare for the impacts

Nongxong Village

: A resettlement village

comprising resettled residents

who moved from the affected

area and host villagers. There are

currently three ethnic groups in

the village

Resettled residents

- Lost houses and agricultural land in the

construction areas

- Experienced the stress of changing agricultural

practice (from shifting cultivation to paddy rice

farming)

- Lost income from fishery and NTFPs since the

resettled village located far from river and forest

- Potential conflict between the host villagers and

resettled villagers on the inequality in the access

to production land

Host villagers

- Change in traditional village dynamics

- Increasing in-migration leads to competition in

existing land-use and exploitation of new

accessible land

- Increased living expenses in the form of electricity

and pipe-water supply bills

- Current problem on land rights.

In 2011, there were still over 20

households that had not yet

received agricultural land

- At present, the resettled

residents still rely heavily on

the daily project assistance

(e.g. provision of rice and

canned food) and are incapable

of achieving self-sufficiency.

28

Pakveng and Phonsay Village

: Existing villages located

downstream of THEP.

- Decline in the fish catch.

- Experience more severe flooding which also

impacts their rice harvest. Some need to change

their crops.

- Water shortage during dry season

- Poor water quality in Hinboun River

Not eligible to receive compensation

from THEP

By gender

Men - Unable to support households through fishing as

the resettled villages are far from the rivers and

there is a decline in the fish catch.

- Able to work longer hours at night

due to availability of electricity.

- Save time to repair old houses.

Women - Experience more intense stress associated with

resettlement as they are attached to social assets

in the old villages.

- Further marginalization due to loss of natural

resources and degradation of water quality.

- Save time spent on fetching water

from streams.

- Improved health condition due to

less exposure to in-house cooking.

- Better access to health facilities

- Possibility of increase in school

enrolment of female students.

In practice, women have fewer

roles in village consultation as

most of the family heads are men

and therefore compensation

package may not fit their

particular needs.

By ethnic groups

Hmong - Experienced stress of changing agricultural

practice from shifting cultivation to paddy rice

farming; unable to fish and collect NTFPs.

- Loss of ancestors’ graves, which are vital to their

belief in the well-being of their off-springs and

thus of unquantifiable value.

Compensation packages allocated to

all resettlers based on the same

policy, regardless of ethnicity.

Delay in the allocation of

agricultural land is a serious

problem for Hmong and Lao, but

not for the Khmou households.

Lao - Experienced stress of changing agricultural

practice from paddy rice farming to other

plantation due to change of land.

Khmou - Less impact compared to others since their

livelihood before and after the project is based on

daily labor.

Source: Key informants’ interviews and focus groups discussions (2011) and World Bank (2010).

29

Although lands are allocated to all resettlers, villagers in Ban Keosengkham, the upstream village,

said they had limited access to fertile soil, as most of the village areas are hilly and far from the

river compared to their old village. As a result, agricultural productivity has decreased and the

households face food shortages. In Pakveng (a downstream village), the negative impacts are

more intense as their compensation and benefits scheme is marginal compared with the other

two villages (Keosengkham and Nongxong). Pakveng is a village with no electricity and pipe-water

supply. Villagers said their life had become more difficult after the start of the project. They

suffer from poorer water quality and less food. There has been a decline in both the availability of

fish and agricultural production. Villagers know little about the water release schedule of the dam

and have been experiencing more frequent and severe flooding after the commencement of the

project.

So far, most villages noted that they had not received any assistance for flood protection,

although a plan for relocation of the village to a higher elevation had been prepared and

discussed with the villagers. Like Pakveng, Ban Nongxong (a resettlement village) also has to cope

with degradation of water quality, which increases the risk of disease for the inhabitants of these

two villages. Hydropower development elsewhere in the world too carries potential health risks

such as vector-borne and water-borne diseases, particularly during the construction phase

(World Bank 2010).

Ban Nongxong consists of both resettlers and host villagers. There are concerns over the issues of

inequality in access to land for agricultural production, which may lead to conflict between new

and old settlers. Respondents said that host villagers owned pieces of lands more suitable for

agricultural production, compared to land allocated to the resettlers. There is also a potential for

increased conflict between households due to increasing competition over the use of natural

resources, particularly land. Moreover, in-migration of ‘outsiders’ into the area for jobs and to

utilize land, newly accessible due to the construction of roads may pose an additional problem for

the resettlement village (World Bank, 2010).

The newcomers in Ban Nongxong face multiple challenges, including new agricultural practices

(From upland to lowland paddy, or vice-versa), electricity and water supply bills, and other

constraints such as delay in land allocation. Most Hmong people, for example, used to practice

upland rice in their old villages. In the new setting, they are forced to cultivate paddy rice.

Similarly, the Lao ethnic group in Ban Pakveng used to grow paddy rice, but because of the

frequent floods brought about by the project, they have had to switch over to swidden

agriculture and/or rubber plantation.

Unfamiliarity with the new methods of crop production causes a lot of stress, leading to decrease

in the productivity of crops. Group discussions in Ban Nongxong also highlighted the issue of land

allocation. Villagers complained they had not been allocated land on time. Together with other

factors such as change in the mode of production, this had led to a decline in their crop

production. THXP monitoring data for 2008-10 shows an increase in the duration of rice

shortages by a month, although the Monitoring Report of 2010 blames it on climatic factors,

rather than project impacts.

Ban Keosaengkham resettlers did not need to change the method of production, and are

continuing with shifting cultivation but the period of crop rotation has decreased. The villagers

received four hectares of shifting cultivation plots per household, implying a four-year rotation

period if one hectare is used each year. But they complained that in order to be productive, the

rotation period has to be of more than four years.

30

In terms of gender, electricity and water supply together with the newly-built houses by the THXP

will have a positive impact on both men and women. Some respondents said that time spent by

women and children on fetching water from natural streams or springs far away from the houses

in their old villages can be productively utilized in the new villages which had pipe-water supply.

Women and men can work longer hours at night for handicraft production due to the availability

of electricity. Men can save time spent on repairing old houses or in constructing new houses

because many of the households lived in houses made of temporary construction materials (such

as grass and bamboo) in the old village as compared to the permanent houses provided by the

project.

Women in particular can benefit from opportunities for better health and education. With the

health facilities provided by the project, it is hoped that women will benefit not only from the

general medical services, but also from the improved knowledge about mother and child health

(MCH). As a result, child nutrition is expected to improve, and the mortality rates will decline.

Improved knowledge about health care among women is critically beneficial, given that most, if

not all, women are primarily responsible for housework such as cooking, cleaning, and looking

after children. It will also contribute to improvement of the family’s health as a whole. The

enrolment and attendance rates of female students is also expected to pick up with the school

building provided by the THXP within the village itself.

Based on the MK4 Field Work 2011, there is a clear division of work between males and females.

Almost 80 percent of women are engaged in duties like water collection, home gardening,

cooking, and food collection from the forest, while almost 90 percent of men are engaged in

fishing, fuel wood collection, and hunting. But the environment of the new resettled villages puts

more stress on women than men as there is lesser land for home gardening and no forest to visit

for food collection.

In the villages that are not eligible for compensation, women are affected by the poor availability

and quality of water. Men too are impacted by the project, partly because of the fact that the

resettlement takes fishing households farther away from the rivers besides causing a decline in

fish availability. Men spend longer time to travel to fishing sites, yet they catch lesser fish than

before, resulting in less food and cash income. Note that fish and other aquatic animals such as

frogs, shrimp, and insects are the main sources of animal protein in Laos, including Khammuane

and Borikhamxay provinces. Contribution of fish to the total protein intake is approximately 80

percent (World Bank, 2010). Households with shortages of rice or delays in land allocation

processes as discussed earlier will probably need to do more fishing than other households, as

this is the only major source of nutrition available to the local people.

In the villages eligible for compensation, the packages are distributed to all resettlers based on

the same policy regardless of ethnicity or gender. The benefits include improved housing, access

to electricity, irrigation, water supply, and social infrastructure such as roads, schools, and health

centers. The same size of land and the same amount of rice and meat are provided to each

household. The project recruits staff members who are ethnic minorities, such as Hmong, as part

of consultation and livelihood restoration team to ensure good understanding of issues between

the project management and the affected communities.

Nevertheless, ethnic minorities tend to be the most affected by the resettlement because of

losses not limited to physical assets alone. For them, wealth includes livelihood, cultural

practices, and the ability to accumulate, maintain and transfer these. The project compensation

that focuses on the loss of physical assets at current market prices cannot comprehensively cover

the loss of non-physical assets. For example, Hmong people believe that well-maintained graves

31

of older family members are very important for the well-being of their off-spring. Disappearance

of these graves due to flooding by the dam would have caused a lot of concern among these

people that cannot be compensated in cash.

In terms of livelihood, Khmu were probably the least affected by the project. It is commonplace

for the Khmu to work as daily wage laborers. Khmu respondents in Nongxong said the

resettlement did not have any impact on their livelihood because they can still go out to work as

wage laborers and get paid every day. Meanwhile, the Hmong respondents said they missed their

old villages a lot because there they did not need to wait for the project to allocate agricultural

land to them. They could do the cultivation on time, collect NTFPs, and go fishing. The delay in

the allocation of agricultural lands is a serious problem for the Hmong and the Lao.

3.3 Procedures: Decision-Making Processes for Allocation of Benefits and

Compensations in the Theun-Hinboun Expansion Project

Decision-Making Processes for the Allocation of Benefits and Compensations

The resettlement plan of the THXP was formulated through four phases: (i) information

dissemination; (ii) feedback for planning of the Resettlement Action Plan or RAP (completed in

2007); (iii) detailed participatory planning (2007-2010 depending on which groups are involved as

programs are finalized); and (iv) participatory implementation (as of 2008).

� Information Dissemination

This phase consisted of consultations with PAPs for data gathering and information dissemination

to them. At village-level, the consultations were undertaken in the form of informal

discussions/interviews with PAPs in village-wide meetings. The Environmental Management

Division of THPC was in charge of the data collection with the PAPs. There was public

involvement at this stage to ensure that the PAPs well understood the project. The project and

public consultation team also provided PAPs information on the anticipated impacts during the

construction process (noise, dust, traffic, etc.).

Advisory committee meetings and district stakeholders meetings were organized at provincial

and district levels. Workshops and meetings were organized with other stakeholders such as the

private sector, national and international NGOs, other hydropower projects and international

financial institutions, at the national level. Project documents in English were disseminated via

websites, and an information centre was established for the purpose of information

dissemination.

� Feedback for Planning of RAP

Consultation with PAPs was organized in the form of community consultation groups and sub-

groups. Village public participation teams were appointed to foster the participation of PAPs

(detailed organizational structure of public involvement is provided in the following section).

Additionally, THXP recruited Lao men and women from Lao and Hmong ethnic groups in the

public participation team to facilitate consultation on the ethnic and gender concerns. The team

also included key representatives of local, provincial and district government agencies (see details

below).

� Detailed Participatory Planning

The Environmental Management Division (EMD) of THPC and the public consultation team

conducted consultations with PAPs to register assets; select site (usually in the existing traditional

32

territories to reduce disruption or stress); and to indicate villagers with land that was likely to be

affected by the project directly. Hence, information was provided to PAPs in greater detail, which

allowed for much deeper discussions on resettlement, compensation, and mitigation options. For

example, house designs, livelihood models, rituals, village composition, et al, were conceived,

planned and developed based on continuing public involvement with the stakeholders

concerned.

� Participatory Implementation

The next set of consultations was conducted with PAPs to inform them of their entitlements,

project resettlement plans and to seek their agreement and inputs on the plans. Additionally,

national workshops were and will be organized with representatives of government agencies,

private sector investors, NGOs and other members of the public to present annual reports and

progress reports of the project implementation.

Key actors involved in these four phases include project affected persons (PAPs), public sector,

THXP, and other stakeholders consisting of national and international NGOs, private sector, and

International Finance Institutions.

Relevant government agencies:

The organizational structure of the government involvement in these processes consisted of four

different levels, including Resettlement Committee (RC), Resettlement Management Unit (RMU);

District Working Groups (DWGs); and Village Development Committees (VDCs). It is proposed to

add a fifth level to ensure thorough implementation, namely Village Facilitators (VF) (See Figure

3.5).

Resettlement Committee is tasked with reviewing and approving the Resettlement Action Plan

for the THXP. It has to provide organizational support and direction for the RMU; to liaise with

GoL organizations at the national, provincial and district levels; and identify roles and

responsibilities of various GoL agencies. The composition of RC includes PM Office

Representative, Director of the Water Resources and Environmental Authority (WREA),

representative of the Governor of Bolikhamxay Province and representative of the Governor of

Khammouane Province.

Resettlement Management Unit (RMU) is responsible for coordination of all GoL organizations,

and for ensuring that RC priorities are addressed from project start-up. RMU’s organizational

structure constitutes of RMU Manager – a senior, qualified manager with proven experience in

resettlement, compensation and rural development issues; Deputy Manager from Khamkeut

District, and based in Lak Sao, to oversee coordination in resettlement, headpond, catchment and

project construction land areas; Deputy Manager from Hinboun District, based in Hinboun

District Capital to oversee coordination in downstream and project land areas; support staff to be

located at the District Project Offices where project reports and documents are kept for public

viewing; and a representative of the Land Asset Registration and Titling Unit for both the districts

to facilitate evaluation of assets and deal with claims and complaints about compensation.

District Working Groups (DWGs) have the key task of collaborating with the Social Environment

Division team of THXP, provide technical input to the resettlement and livelihood restoration and

improvement process; participate in capacity building for village facilitators – at times as trainers

and at other times as trainees. The DWGs have representatives from Governor’s Office and

Administrative Staff; District Communications, Post, Transport and Construction Office (DCPTC);

District Agriculture and Forestry Office (DAFO); District Health Office (DHO); District Education

Office (DEO); Lao Women’s Union (LWU); Lao Front for National Construction (LFNC); Youth

33

Organization (sao num); District Information and Culture Office; and District Land and Taxation

Office; District Labor and Social Welfare Office; and Police, Militia and Army.

Village Development Committees (VDCs) are assigned to formulate village policy on resettlement,

besides overseeing the resettlement process, recruiting village facilitators (see below), leading

the community participation process and other identified tasks. The members of the VDC will

receive a regular honorarium for this work, and will have funds to engage a full- or part-time

secretary to ensure that all delegated issues are tracked and addressed. VDCs will also employ

village facilitators to act as the focal point of village-level activities. The facilitators will ideally be

young women and men, respected and trusted by their fellow villagers, and their work will

potentially extend over many years. A lead facilitator will be employed by the Project to

coordinate the activities. This person will not be a villager in order to avoid and control bias. This

approach will be adopted based on agreement among villagers and village authorities, including

the Village Development Committee.

THXP:

Social and Environmental Division (SED) was established as the Project structure responsible for

all social and environmental activities and will work in close cooperation with GoL organizations

and agencies, especially at the district level. SED deals with skilled and experienced international

and national staff to carry out all mitigation measures and achieve income restoration targets;

ensure sufficient funding for implementation of resettlement and social development activities;

and provide prompt and fair compensations for all in accordance with established policy and

entitlements, including viable resettlement sites, adequate housing and sustainable livelihood

systems. SED members comprise representatives of the Resettlement and Project Construction

Lands Unit; Social Development Unit; Downstream Unit; and Environment Unit.

National and International NGOs:

Activities under the resettlement plan can be supported by national and international NGOs. The

support by organizations such as, MRC, Global Fund, UNICEF, WHO, JICA, ADB, WB and some

others is usually provided to sector-wise programs under the Resettlement Plan.

Local Communities’ Interests and Stakes in Decision-Making Processes

Local people’s interests are best reflected in their perception of well-being, which in this case was

to have ‘a store full of rice and house full of children with good education and good health’.

Needs frequently mentioned by local people interviewed in this study include enough land for

agricultural production, wide area of grazing lands for raising livestock, forest for collection of

NTFPs, clean rivers for fishing, and enough rice and food to eat all through the year. Other needs

include good schools and health centers. A few respondents also mentioned permanent and

beautiful houses, perhaps partly because in their former villages, houses did not need to be

permanent, and often had to be rebuilt after a few years.

Without going into detailed analysis of the consultation and decision-making processes, it is clear

that part of the popular demands of the affected people were met by the project resettlement

policy, plans, and implementation. Resettlement villages received new school buildings, health

centers, and houses with permanent materials (better than their former houses, in many cases).

Most, if not all, interviewees said they received compensation for their lost properties such as

agricultural land and fruit trees.

34

Figure 3.5 Organizational Structure in Decision-Making on Resettlement and Compensation of

THXP

Source: Resettlement Action Plan of THXP, 2008

Men and women were involved in the consultation processes, although it is not clear about the

extent of their involvement, and whether all the voices were heard. However, THXP does

maintain gender disaggregated baseline data on some applicable livelihood restoration activities.

After the resettlement and compensation processes started, complaints and concerns began to

arise. Some frequently raised concerns of the affected people include delay in land allocation and

rice insufficiency, pressure for electricity and water supply bills, limited options for income

generation, payment for schooling of their children, change in cultural and traditional practices,

and fear of being taken advantage of by outsiders in the resettlement areas once it becomes

more developed. There are also concerns, particularly about the gap between the company’s

promises and their actual implementation. Resettlers were promised that they would be

provided with 440kg of rice per household per year, but actually they received only half of this

amount. Similarly, they were promised other short-term amenities for three years, but these

ended earlier.

35

Box 3.3 voices the concerns of the local people about the THXP impacts. Most of the concerns

and complaints are being addressed by the project and/or the local authorities, specifically

through the grievance processes, described later.

Box 3.3 Examples of Concerns from Project Affected People

Source: Interviews with villagers in Nongxong Village, a resettlement village in Khamkeud District,

Bolikhamxay Province, 15-19 May 2011.

The THXP established the Grievance Committee in collaboration with the government authorities

from village level to the national level to ensure that the basic rights and interests of resettled

villagers and other affected people are protected, their concerns adequately addressed, and

entitlements delivered. A grievance procedure has been designed for the THXP. The agencies

involved in the grievance procedure are:

(i) Village Grievance Committee (VGC), composed of an equal number of women and

men and elders (san kai kia) and other respected persons in the community;

(ii) District Grievance Committee (DGC), which comprises officials of the District Justice

Department, assisted by three other people from (a) the District cabinet, (b) the

LWU, and (c) the LFNC to deliver gender balance in the review process;

(iii) The Provincial Grievance Committee (PGC), which is the Provincial Court; and

(iv) The National Grievance Committee (NGC), which is the National Court.

According to the Resettlement Action Plan (RAP), the Committees must maintain public records

showing all claims received, and the decisions made; and decisions must be reached within 30

days. The process starts with conflict avoidance, which aims at moderating disagreements and

conflicting positions. The phases of conflict development and appropriate interventions in

accordance with the traditional Lao village conflict resolution strategies are summarized in Table

3.3. There are three basic steps to resolve grievances. The first step is for a householder or a

group of householders to approach the Village Development Committee (VDC) and present the

problem and then allow its consideration at the lowest level of the resettlement hierarchy by the

Village Grievance Committee, where in most cases, issues can be resolved through discussions

and mediation. If the VDC cannot resolve the complaint or if the claimant is not satisfied with the

decision, the next step can be taken, either by the claimant or the VDC on his/her behalf.

“My family was hugely affected by the resettlement as the project did not follow the promise

that we first agreed on before moving to the new village. In the agreement, the project was to

provide 440 kg rice per household per year but actually the project only provided 220 kg per

household per year. The food allowance has also stopped before the agreed period of three

years. A number of households are lacking land for cultivation. I used to raise this issue at

village level and then went to district level, but so far this issue has not been resolved for me.”

(A man from the Hmong ethnic group in Nongxong Village).

“I don’t know about the grievance committee. When there is a problem relating to the project

compensation, I just go to talk to the Village Chief and let him pass on our proposal to the

Project. Until now, I have not received land allocation for cultivation” (A man from the Lao

Teung ethnic group in Nongxong Village)

36

Table 3.2 Process of Settlement of Potential Disputes

Source: Resettlement Action Plan of THXP, 2008.

The second step is to present the grievance or complaint to the Grievance Committee at the

District level. This committee will have representatives from the Justice Department, the Cabinet,

LWU and LFNC. This Committee must respond to any claim within 15 days. If the decision at the

district level does not provide a satisfactory result, the claimant has the right to forward the case

to the Provincial Grievance Committee, the third step. If the above action does not result in

satisfaction of the claimant, the fourth step will allow the claimant to present his/her case to

National Court, which is the last resort. It will be in the interest of the THPC and GoL to resolve

issues before they are brought to the National Court.

However, these steps are barely known to the PAPs. The villagers have limited access to

information. In Nongxong village alone, there are about 50-60 cases that have not yet been

settled for three months after resettlement. Most of the cases concern inadequate land

allocation and missing items from compensation package.

3.4 Key Issues in Distributive and Procedural Equity in the Theun-Hinboun

Expansion Project

� Consultation meetings and participation events were organized mainly during the design

and planning stages of the project, whereas most changes in the local livelihoods

occurred at later stages of the project construction and operation. This suggests a need

for continued consultation, participation, and monitoring mechanisms even at the later

stages of project development.

� The project’s support to livelihoods focused mainly on production of rice, cash crops, and

rubber plantations, to ensure rice sufficiency and increased income. But local livelihoods

are also highly dependent on natural resources such as fish, non-fish species, and NTFPs.

In this backdrop, it is important to maintain or enhance the natural resources. Livestock

plays an important role in the livelihoods of the majority of the Lao people. Enhancing,

restoring, and maintaining the availability of natural resources, particularly grazing lands,

would be valuable for the affected people. These should have been included in the

livelihoods program.

� If only one indicator were used to assess well-being and vulnerability, villagers would use

rice sufficiency (i.e. a family must have a sufficient amount of rice for the whole year).

37

The increase in the duration of rice insufficiency as indicated by the monitoring program

of the THXP project therefore suggests that there is a need for revision of measures to

support local livelihoods.

� Most resettled residents reported to be satisfied with the compensation provided by the

project. However, the level of acceptance would have increased significantly had people

been consulted at each stage of the decision-making process. For example, the decision

on the cost of properties was based only on market prices and experts’ opinions, whereas

the local residents should also have been asked for their opinion before finalizing this

decision.

� There are distinctions between upstream and downstream, resettled and non-resettled

villages, between ethnic groups, and between men and women, in terms of benefits,

burdens and risks received. The current trend suggests an increase in fisheries in the

reservoir, benefiting the upstream villages, while there is a declining trend of fish in the

downstream villages. There is a need to assess these differences as much as possible

through various tools such as consultation events and needs assessment to address the

needs of specific groups and locations, and to better deliver equitable outcomes.

� There is lack of clear and accountable mechanism for redressing the grievances and

complaints of resettled people after their physical relocation. The resettled families do

not know who is officially in charge of addressing their complaints; nor do they have

access to the relevant persons or office that is supposed to process or act on their

complaints. Further, there is no tracking mechanism available to the complainants and to

village leaders. Thus, there have been a number of extremely delayed responses by the

grievance committee.

38

4. Case Study 3: Lower Sesan II (LSII) Project, Sesan River Basin,

Cambodia

4.1 Water Storage Infrastructure Development in Cambodia and Description of the

Lower Sesan II Project

The Development Triangle Area (DTA) at the borders of the three countries of Vietnam, Laos and

Cambodia was established in 1999 under a decision taken by the governments of these three

countries. The Triangle comprises ten provinces that share borders. These include Kon Tum, Gia

Lai, Dak Lak, Dak Nong (Vietnam), Sekong, Attapeu, Saravan (Laos) and Stung Treng, Rattanakiri,

and Mondulkiri (Cambodia). The Triangle covers an area of 111,000 sq. km. which had a total

population of 4.8 million persons (population density of 43 persons per sq.km.) in 2009. The

three provinces of Stung Treng, Rattanakiri and Mondulkiri in the Northeast of Cambodia, which

are a part of this Triangle, span 37.086 sq. km. and have a population of 320,900 people, with a

population density of 9 persons/sq.km.

The main objective of forming this development triangle is to stimulate regional economic

development in which greater benefits can be obtained through sub-regional cooperation than

would be possible through independent action. Perennial industrial crops have been developed

rapidly in the area to boost agricultural production. Laos and Cambodia have granted licenses for

rubber cultivation to enterprises on over 26,700 ha and 22,800 ha of land, respectively, in the

provinces of the Central Highlands. Cambodia is going to grant licenses to enterprises for an

additional 42,000 ha. At present, Mondulkiri has 11 companies investing in rubber plantations

over a total area of 71,753 ha; Rattanakiri has seven companies investing in rubber plantations on

33,767 ha; and 12 companies are investing in rubber plantations and other trees on a total area

of 156,841 ha in Stung Treng.

In recent years, Cambodia DTA area has seen a noticeable shift in agricultural practices from

slash-and-burn to permanent rice cultivation. Dry season rice is only cultivated in Kratie because

of the availability of irrigation systems. Of the 285 irrigation systems in the area, 181 are in Kratie

province, only 28 in Stung Treng, 58 (four in operation) in Rattanakiri, and 18 (none in operation

but five under repair) in Mondulkiri. The area under dry rice cultivation in Kratie has increased

from 8,052 hectares in 2004 to 14,036 hectares in 2009. With the development of irrigation

systems, CDTA still has room to increase rice production by planting dry-season rice (double crop)

without expanding the rice growing area.

The potential for rubber plantations is also high because the soil is particularly suitable for

growing this crop. Rattanakiri, for example, has 323,460 hectares of potential land for growing

rubber trees. The government has given 676,952 hectares of land concession to companies to

develop agro-industrial crops. Most of this concession land is planted with rubber trees.

In term of industry, investments have been made, capacity expanded and output increased in all

the industries of agro-processing, electricity, mineral processing, and construction materials. DTA

strongly promotes investment cooperation, and key project investments have been made in the

areas of hydro-power, mineral extraction and processing, and processing of high-value industrial

crops.

39

Figure 4.1 Triangle Development Areas

Source: Cambodia – Laos and Vietnam Development Triangle (http://clv-

triangle.vn/portal/page/portal/clv_en/817327) (2010)

Vietnam and Cambodia have agreed to develop a project on ‘Geological Mineral Mapping’ on the

scale of 1:200,000 in the Northeast region of Cambodia and the border areas adjacent to Vietnam

with a grant from Vietnam. By 2009, there were 54 mine exploration companies in the area

making a capital investment of over USD30 million and generating employment for more than

500 workers, compared to only two companies and USD 300,000 worth of capital investment in

2004. This sharp rise in investment is due to the huge potential of mines and minerals in the area

coupled with improved infrastructure.

A number of hydropower and other energy supply projects have also been developed under the

development triangle program. These include:

(i) Hydro-power projects, particularly for Vietnam-Cambodia cooperation, include Lower

Se San 1/ Se San 5 (90 MW), Lower Se San 2 (400 MW), Prek Leang 1 (64 MW), Prek

Leang 2 (64 MW). While these projects are under feasibility study by Korean

companies, the feasibility study of Sambo (2,600 MW) is being conducted by CSG

(China). The Vietnam-Laos cooperation projects include hydro-power stations of

Sekaman 1 (450 MW), Sekaman 4 (600 MW), Dak Y Mon and Sekaman 5 (253 MW).

(ii) Renewable Energy Development projects include a pilot project of biomass gassifier,

a solar home system, wind power, bio-fuel pilot project, and biogass digester for rural

energy.

40

(iii) Electricity transmission grid connecting hydro-power stations in Laos and Cambodia

to Vietnam’s national power grid for selling electricity to Vietnam.

For Cambodia, according to the letter of Samdach Dechor Hun Sen (Cambodian Prime Minister)

to Son Chhay (Parliamentarian)1, hydropower development is a strategy to support local

economic growth, to maintain foreign investment (to keep low tariff for electricity to gain

comparative advantage over other countries in the region) and to attract more economic

investment (both local and foreign investment).

Infrastructure has also been developed to stimulate economic growth in DTA. One of the most

important achievements has been the construction and up-gradation of the transportation

networks, especially the national roads connecting the DTA area with Vietnam’s sea ports and

other countries in the region. Irrigation and water supply have also been receiving attention for

investment by the governments of the three countries. Large-scale reservoirs, dams and

electricity pumping stations have been constructed for irrigating cultivated crops as well as for

supplying water for industrial and domestic use ,and for contributing to improving the

environment. However, the development in water sector has largely been made by individual

countries. And it has not yet been included in bilateral agreement under the DTA framework.

Lower Sesan II (LS2) Project

LS2 Project is located on the Sesan River between Plouk village and the convergence of Sesan and

Sre Pok rivers (PECC1 and KCC, 2009). Sesan, Sre Pok and Sekong (3S) river basins contribute 19

percent of water and 18 percent of sediment flow to the Mekong. The basin areas are

approximately 78,650 km2 and cover parts of Cambodia (33 percent), Laos (29 percent) and

Vietnam (38 percent) (Middletion, 2007). LS2 Storage is approximately 335 km2. It is estimated

that around 5,000 people will be affected directly by the dam development. The affected groups

are in four communes, namely, Srae Kor, Plouk, Ta Latt and Kbal Romeas. LS2 Hydropower Plant

is expected to generate about 400 MW. It has two main owners, as originally noted in the media,

with 51 percent of the project owned by Electricity of Vietnam (EVN) and 49 percent by the Royal

Group of Cambodia2. Yet, during the national consultation workshop on 31 May, 2011, the

participants claimed that EVN owns only 49 percent, while the Royal Group of Cambodia owns 51

percent3 of the plant. The ownership of the project is so far not yet clear to the public. At

present, the feasibility study and EIA process for the project have been completed. The

agreement on the dam construction was signed between the Royal Group and China’s

Hydrolancang International Energy in November 2012 and the construction is expected to

commence in 2014.

Key chronological events:

In August 2006, the governments of Cambodia and Vietnam held an initial discussion about the

possibility of building the dam in August 2006. In 2007, a memorandum of understanding was

signed4 between Cambodia's Ministry of Industry, Mines and Energy, and Electricity of Vietnam

(EVN).

1 Letter from Samdech Dechor Hun Sen to H.E Son Chhay, 29 July 2011.

2 Cambodia Daily (24th January 2011) and http://en.wikipedia.org/wiki/lower_Se_San_2_Dam.

3 Personal conversation with participants in the national consultation workshop on LS2, 31 May 2011.

4 www.banktrack.org/show/.../lower_sesan_2_hydropower_project (retrieved on 29 August 2011)

41

A review done by the River Coalition in Cambodia (RCC)5 on PECC1’s Environment Impact

Assessment for Feasibility Study of Lower Sesan 2 Hydropower Project, Stung Treng Province, was

completed in October 2008.6

The report on ‘Best Practices in Compensation and Resettlement for Large Dams: The Case of the

Planned Lower Sesan 2 Hydropower Project in Northeastern Cambodia’ was launched in 2009.

On 5 May, 2009, the Ministry of Environment (MOE) organized a consultation meeting on the first

full draft of LS2 project’s EIA reports. During the meeting, MOE requested for the inclusion of

water data of the project into the EIA7.

In November, 2010, the government of Cambodia approved the EIA report and power purchasing

agreement with EVN was under negotiation 8.

From December 16 to 17, 2010, a training workshop on final EIA report of the project was

organized at Stung Treng by NGO groups such as NGO Forum, CEPA, CVS, FACT, 3SPN and CD

Cam9. EIA training to all RCC members at NGO Forum office in Phnom Penh was given from

March 21 to 24, 2011. The purpose was to enhance the capacity of RCC members to comment on

EIA reports of government’s projects, particularly LS210.

On 31 May, 2011, a National Consultation Workshop on Lower Sesan 2 was organized in Phnom

Penh by NGO groups such as NGO Forum, CEPA, CVS, FACT, 3 SPN and CD Cam. About 50 of the

participants were representatives of the affected communities. Members of RCC and government

officials also participated in the workshop. Project investors were invited but they did not come11.

Emerging issues

Traditionally, the provinces in the northeastern region of Cambodia (Stung Treng, Rattanakiri, and

Mondulkiri provinces) have been known as isolated provinces and people have a culture of

economic self-reliance due to the wealth of their natural resources (Jeremy, 2010). However, due

to improvement of the road infrastructure, the region is now connected with other provinces and

the central government. Therefore, there is tension and uncertainty around the changing nature

of the traditional culture and self-reliance (Suon, 2001). Reactions to the central policies vary

from place to place due to the differing influence of the central government, particularly on

public services. Natural resources have been degraded in the last decade (Jeremy, 2010). This

creates more pressure upon the local livelihoods.

5 RCC – is the River Coalition in Cambodia. – A movement of Civil Society Organization, it highlights works

on the negative affectingimpacts of hydropower projects on environment, in particular related to

hydropower issues. 6 http://www.internationalrivers.org/node/4578 (retrieved on 20 August 2009)

7 Letter from Samdech Dechor Hun Sen to H.E Son Chhay, 29 July 2011.

8 http://www.banktrack.org/show/dodgydeals/lower_sesan_2_hydropower_project (retrieved on 26 May

2011). 9

Minutes of the workshop: Agenda framing by RCC on behalf of NGO Forum for social fairness in the

under-construction LS2 hydro-power project (2010) (the authors participated in the workshop as

observers). 10

Minutes of the workshop: EIA Training, organized by RCC on behalf of NGO Forum (2011) (the authors

participated in the workshop as observers). 11

Minutes of the workshop: National Consultation Workshop on Lower Sesan 2, Phnom Penh Hotel, 31

May 2011 (the authors participated in the workshop as observers).

42

In 2005, the northeastern region of Cambodia was classified as food insecurity area and thus

become a target for food security projects of EU-Call12. The Government also considered the

northeastern area as poor, but with high potential for development. This prompted the IFAD

Project Formulation Team to select Rattanakiri, Kratie and Preach Vihear as the target provinces

for a USD 15 million project in 200613.

To overcome poverty and food insecurity in the northeastern provinces, the government not only

depended on bilateral and multi-lateral aids, but also initiated its triangle development master

plan for the region. Hydropower development and economic land concessions are considered the

driving forces for creating job opportunities for local people (CLV Development Triangle Report,

2010). However, land concession and hydropower development plants are perceived negatively

by some stakeholders as well as local communities14. Therefore, it is doubtful whether these

development initiatives will be undertaken smoothly. As some experts argued, such development

will provide benefits to urban rather than to local and rural communities15.

It should be noted that there have been conflicting positions between the government and

NGOs/CBOs in Cambodia concerning hydro-power development and land concession projects16.

NGOs argue that the government takes into consideration only the macroeconomic picture, while

neglecting the negative aspects of development at the local level. There is a concern that if this

stalemate continues, the Government might take steps to rein in the activities of NGOs/CBOs,

particularly those related to resource governance. At present, a new NGO Law is being drafted

and will be submitted for legal approval in the near future. Most information related to LS2

project is to date not truly transparent to the public.

4.2 Outcomes: Benefits, Burdens and Risks Arising from the Development of Lower

Sesan 2 Project

Benefits and Benefit Sharing in the Lower Sesan 2 Project

Electricity generation is a primary benefit of hydropower. This could help meet the demand for

electricity in Cambodia, where the electricity supply is a major problem at present. Currently,

only 29 percent of the Cambodian households have access to electricity. While around half of

urban households have power supply, this number drops to a mere 13 percent in rural areas

(Cambodia Outlook CDRI and ANZ, 2011). The availability of reliable electricity supply will enable

or stimulate the industrial sector and enterprise development, which in turn will boost economic

growth. This will also help create job opportunities for Cambodians, particularly the new labor

force (NSDP, 2009-2013)17.

The total expected electricity generation from LS2 is about 400 MW (PECC1 and KCC, 2009 and

also letter of PM Hun Sen). The EIA report states that about 90 percent of the generated

electricity will be exported to Vietnam, and the remaining 10 percent will be consumed in

Cambodia. However, this matter is still under discussion. The latest letter of the PM stated that

100 percent of the electricity generated will be used in Cambodia. However, the 3S Under Threat

report states that according to the agreement between Cambodia and EVN, there will be 50:50

12

Personal communication with EU-funded projects CEDAC, DPA, IADC, HKI implemented in Stung Treng

and Rattanakiri province (17-22 June and 10-16 July 2011) 13

Personal conversation with a Consultant on livelihood assessment and project formulation, August 2011 14

http://www.ngoforum.org.kh/eng/core/en_project_artticle.php?artticle=8 (retrieved on 15 March 2011) 15

Personal communication with UNDP staff in July 2011 16

http://www.cnv.org.kh/ (retrieved on 15 March 2011) 17

Letter from Samdech Dechor Hun Sen to H.E Son Chhay, dated: July 29, 2011

43

power distribution between the two countries, with Cambodia using 50 percent of the power

generated for domestic consumption and exporting the rest to Vietnam (Mark, 2012). All these

contradictory statements make it difficult to understand the power distribution model of LS2. The

last update from the draft law on LS2 compensation in 2013 made it clear that 100 percent of the

electricity will be used in Cambodia.

In terms of revenues, the project expects to generate about 121 million USD per year (PECC1 and

KCC, 2009). According to the tax policy, the royalty tax on investment in power production in

Cambodia is 20 percent on profit (Vanderbruggen and Sim, 2010).

The region will also profit from the triangle development. Road infrastructure and

telecommunications, a part of the development strategy in the triangle, are expected to facilitate

exchange of commodities and farmers’ access to markets. There are also plans to bring farmers

to settle along the main road or provide easy access to government in order to benefit the people

(CLV Development Triangle Report, November 2010).

Jobs are considered one of the benefits of hydropower development. It is expected that the LS2

will reserve jobs for local people as elaborated in the table below.

Table 4.1 Job Opportunities for Local People during the Project Construction (LS2)

Year of Construction 2010 2011 2012 2013 2014

No of job placement 500 2000 3000 3000 1000

Source: PECC1 and KCC (2009)

In addition, after completion of the construction, local communities will have access to low-cost

electricity, which will also improve the community mobilization. The price of electricity from LS2

to EDC is 0.062 USD per kWH, as indicated in the MOU between MIME and EVN. But the price of

electricity for the local consumer has not been raised (PECC1 and KCC, 2009). Therefore, local

communities would be strengthened as they would enjoy relative autonomy because of the

availability of jobs and inexpensive electricity.

According to the webpage of EVN, the dam developer will allocate a budget for initiating

development projects for local people living along the Sesan and Srepok rivers upstream of the

dam site on the border between Cambodia and Vietnam. The total committed fund is USD

3,234,500 for 10 years, and the spending will start from 2014. Another part of the budget will

support development projects for communities living on the project site, and the committed

amount is USD 1,638,000 for five years, which will start flowing in 2014. But it’s not clear as to

who will implement these development projects (PECC1 and KCC, 2009).

Some other indirect public benefits of the LS2 are health services and road infrastructure.

Konmom Health Centre (a district health centre of Rattanakiri) will be upgraded and equipped to

serve the local communities. In addition to health services, education and livelihood related

activities will also be supported. For this activity, as stated by PM Hun Sen, the project has

reserved 8.27 percent of the project budget. The EIA report indicates a sum of USD 78 million for

the restoration of social, economic and natural environment. Prior to the construction work, the

compensation for resettlement activities is pegged at USD 53,431,168. During the construction

phase, all negative environmental impacts will be tackled with the allocated budget of USD

2,226,416 to address this concern; and USD 22,202,500 will be used after the construction to deal

44

with the negative impacts on the environment (PECC1 and KCC, 2009)18. However, so far no

detailed plan has been released on the utilization of these funds.

NGOs and CBOs have raised the fear that large-scale plantations or affluent people living in urban

areas will benefit the most from the hydropower project (MIME and CNMC, 2003). However, it

depends on the performance of different sectors and their driving forces. The strategies to

develop each sector need to be considered and supported; otherwise, they might not benefit

from the hydropower development.

Burdens, Risks and Compensations in the LS2 Project

According to the letter of PM Hun Sen, seven villages (with 1,025 families, 4,624 persons) will be

relocated and 34,307 ha of land will be flooded due to the project. Around 83 ha of this land is

residential, while 910 ha is used for cultivating rice. So far, no compensation scheme has been

finalized. But it is understood that there will be both monetary and non-monetary compensation.

Monetary compensation will be provided to individual affected families for loss of assets (lands,

productive assets, and other physical assets). It is important to note that only upstream people

who are subjected to relocation will be eligible for the compensation (PECC1 and KCC, 2009).

Public services in the affected and resettlement areas will also be improved. Konmom Health

Center, a district health centre of Rattanakiri, for example, will be upgraded and equipped to

serve local communities. Further, education and livelihood development will also be promoted.

PM Hun Sen stated that the project will reserve 8.27 percent of the project budget for this

purpose, and it was consistently stated in the EIA report that USD 78 million will be used for

restoration and development of the social, economic and natural environment. Specifically, USD

53,431,168 will be used prior to the start of the construction work to compensate for

resettlement activities; USD 22,226,416 will be used during the construction phase to address

negative environmental impacts; and USD 22,202,500 will be used after the construction to

restore the environment (PECC1 and KCC, 2009).

Generally, compensation for development projects is managed by the Department of

Resettlement under the Ministry of Economic and Finance (MoEF). But in case of hydropower

projects, the management is responsible for compensation. New information from the consultant

during the LS2 forum, however, suggested that the management of LS2 compensation has been

given to the Electricity Authority of Cambodia (EAC). The management committee for LS2

compensation has been established, but names of its members have not been made public, only

names of the institutions have been listed. It should be noted that since 1999, Cambodia has set

up an inter-ministerial settlement committee at the national level to solve the resettlement

compensation issues.

Dynamics of the Allocation of Benefits, Burdens and Risks in Lower Sesan 2 Project

Geographic coverage: It is still debatable as to who will be affected the most. In general

understanding or in the course of discussion, upstream people are considered as the most

affected since their settlements and farm lands are flooded and will no longer be usable.

Therefore, they are directly impacted, and need to be compensated appropriately. Downstream

people, so far, are not considered as directly affected since they are still able to stay in their

villages and access their farmlands. Their main loss is access to natural resources downstream,

such as, fish. However, fish are considered public resources, which are not exclusively for them.

Therefore, the loss of access to fish is not a major concern of government officials. Moreover, fish

18

This was also confirmed by the Letter from the Prime Minister of Cambodia.

45

raising is now being considered a livelihood restoration strategy. With ADB support, the fisheries

administration is all set to install fisheries’ hatchery station, and provide fingerlings to people for

fish farming. But fish aside, the downstream people are also concerned about the degradation of

soil, which will affect their rice production.

Participants at the validation workshop19, however, argued that both upstream and downstream

communities will be equally affected; sometimes the impacts downstream are even more severe

than upstream. Upstream communities will be affected by the dam at the beginning and at once;

while the downstream communities are affected by the gradual impacts (Mark, 2012). But

downstream communities are not yet included in the compensation scheme (PECC1 and KCC,

2009 and CNMC, 2005).

Ethnic coverage: For the LS2, it is learnt that about 5,000 people from about 1,000 families will be

directly affected in the upstream area, and thus, they need to be relocated. People from Stung

Treng province will be hit the hardest. Most of them belong to the Lao ethnic group, followed by

three other groups, namely, Phnong, Lon and Prav.

Economic strata and gender representation: Local communities expressed the concern that

better-off people will be affected more than the poor since they own more personal resources.

But in terms of burden, poor people will be affected more than their wealthier counterparts.

Until now, there is little clarity about the distribution of the compensation package (LS2 Minute

Report, 2010). It is not clear whether it will be shared equally among the number of families in

the communities, among the total population of the communities, or proportionally shared

according to the current levels of resource holdings that individuals have or would be different

for male and female-headed families.

It is understood that the poor and woman-headed families will experience greater burden when

they relocate to new places (LS2 Minute Report, 2010). Therefore, these groups need to be

carefully examined and supported. As previously discussed, NGOs and CBOs are worried about

the competition for the development space from the urban people, but in addition, poor people

will also face another competition for development space from local elites.

4.3 Procedures: Decision-Making Processes for the Allocation of Benefits and

Compensations in the Lower Sesan 2 Project

Decision-Making Processes for the Allocation of Benefits and Compensations

So far, processes for the allocation of benefits and compensation for LS2 project have not been

publicly disseminated. Compensation for hydropower projects is also managed differently on

case by case basis, and therefore it is difficult to assume any pattern of procedures for LS2.

As mentioned earlier, the direct benefit from hydro-power is electricity, while indirect benefits

are job opportunities from dam construction, industrial and other enterprise development,

enabling of a development environment, including improvement of road infrastructure

connecting rural to urban areas and providing farmers an access to markets, and upgradation of

public services. Urban centers of Kratie, Stung Treng and Rattanakiri provinces are expected to

19

The validation workshop was organized on 19-20 February 2013. Thirty key informants participated in

the workshop. They are government officials at the national and sub-national levels from Steung Treng and

Ratanakiri, academia and NGOs working in the study site and on related issues.

46

get electricity from the LS2 project. It is important to note that for the time being, all these

benefits are just in the planning stage20. There is no concrete information in the official

documents on how to realize such benefits and how to fairly regulate the distribution of benefits

among the stakeholders concerned.

It is noteworthy that generally NGOs and CBOs argue that urban sectors and better-off people

will benefit the most from hydropower development, while local communities will not be able to

translate the hydropower potential into benefits due to the knowledge and financial constraints

as well as traditional cultures21.

Broadly speaking, in the Cambodian culture, planning is not a matter of going into small details

since it involves many uncertainties. Therefore, a plan only carries the main ideas. Moreover,

human resources in Cambodia are limited. Learning by doing is still regarded as a valid practice in

many organizations, including private, state and civil society organizations. The Prime Minster of

Cambodia has stated that it is too early to say how the benefits will be distributed or used, but it

is time to say how to generate incomes.

Compensation made is based on the impacts identified in the EIA report. Compensation fund will

be provided by the project developer and is part of the project’s budget (PECC and KCC, 2009). A

Compensation Committee has been established to study the loss suffered by the communities

and identify the packages to be provided. However, till now there has been no official document

and information prescribing a compensation package or making any agencies responsible for the

allocation. The possible agencies expected to be involved include the Ministry of Economic and

Finance as per the usual practice in case of irrigation and road construction projects, Electricity

Authority of Cambodia as a main actor for LS2 project, and Ministry of Land Use Planning and

Urbanization.

Non-monetary compensation is not the responsibility of the committee but it will be in the

framework of the master development plan for the project. The ‘Livelihood and Infrastructure

Development’ Component or so-called socio-economic component of the project’t is in charged

by the Sub-National Democratic Programs for Decentralization and De-concentration. The plan

made will then be executed by the line ministries of the national agencies.

Local Communities’ Interests and Stakes in the Decision-Making Processes

Some affected communities interviewed said that they do not want the hydropower project in

their vicinity since they had experienced the impacts of the Yali Dam even though it is located far

from them. However, they understand that LS2 is a government project and they cannot reject it.

What they need is a fair compensation to secure their livelihoods. So far, they have learnt that

they will receive monetary compensation and agricultural land. However, there are still a number

of uncertainties and concerns, such as the quality of new farmlands. Some interviewees pointed

out that they would have to toil for several years to get to their present level of livelihood. A fruit

tree, for instance, takes at least 5 years to flower. In the new settlement, they would need more

time to restore their livelihoods22.

Local residents noted that having electricity is good but they are used to living without electricity

almost all their lives, and they might not be able to make use of it for productive purposes. What

20

In 2007, a memorandum of understanding between Cambodia's Ministry of Industry, Mines and Energy

and Electricity of Vietnam was signed. 21

Personal communication with RCC members, June 2011. 22

Personal communication with NGO officers working in Rattanakiri and Stung Treng province, May 2011.

47

is more important to them is to have sufficient food, particularly rice. With hydropower project,

they wish only to ensure a better livelihood23. Some said that they would be satisfied if there is

fair compensation of the assets they lose, and job opportunities in the resettlement areas24.

Agenda setting and decision-making in three major consultation events

A number of consultation events were organized throughout the development of the project.

Three major events examined below include community consultation on LS2 in Stung Treng,

national consultation on LS2 in Phnom Penh, and RCC bi-meeting of NGO Forum.

Compensation as presented in the EIA report was the main subject for discussion in the

community consultation on LS2 organized by the NGO Forum and RCC members in Stung Treng.

The meeting, however, did not attempt to examine the risks, burdens and actual interests of the

affected communities before discussing compensation. It was also guided by a facilitator who

stressed on the negative impacts of the hydropower plant and urged the locals to express their

views on compensation. The discussion was useful insomuch as it helped in gauging local

perceptions. But it also tended to create expectations amongst locals, which could lead to

conflicts with the government over compensation.

Box 4.1 Good Practices in Compensation Referred to by RCC Members

Ian G. Baird: The best practices are related to social and environmental impact assessment for

large dams, and in resettlement and compensation planning in particular. The compensation

needs to consider various practices applied in other places, and then try to combine and adapt

them to meet the particular needs of the people involved.

1) Participation of Affected People

2) Transparency

3) Full-Cost Accounting and Unconditional

Compensation

4) Focus on Vulnerable Groups

5) Trans-boundary Impact Assessment

6) Environmental Flows

7) Cumulative Impacts

8) Considering other Options

9) Guiding Principle-based Compensation

10) Result-Based Compensation

11) Compensation +1

12) Long-Term Perspective

13) Payments for Ecological Services

14) Livelihood Restoration

15) Making Dam Affected People into Full

Project Shareholders

16) Secure Land Rights

17) Formalization of Plans and Appropriate

Implementation

18) Timely Compensation Payments

19) Grievance Redressal Procedures

20) Vietnam’s ‘Benefit Sharing’ Scheme – I s it

a Step Forward?

Source: Baird (2009)

In the national consultation too, the interests of the affected communities were not the main

topic of discussion. The participants were mostly government officials associated with the project

and representatives of NGOs. The meeting seems to have been aimed at lessening NGOs’

opposition to dam development. The government officials said though the government had taken

into account the interests of all affected people, in the end, there will need to be a trade-off

between development of the country and conservation interests. Surprisingly, there were no

representatives of the affected communities and it was assumed that some NGOs would

represent them. However, the role of NGOs in representing the affected communities is doubtful

since most of them may not even know or understand the local interests.

23

Personal communication with NGO officers working in Stung Treng and Rattanakiri province, May 2011 24

Personal communication with affected communities and NGO officers in Stung Treng and Rattanakiri

province, November 2010

48

The bi-monthly meeting of NGO Forum-RCC focused mostly on EIA and compensation. Most RCC

members said the compensation prescribed in EIA was not enough. However, they did not come

up with any proposals regarding the right compensation. Instead, they often referred to good

practices of compensation advocated by Ian G. Baird (Box 4.1).

Since RCC members are not only working on LS2 but also on issues around overall river

development, the RCC bi-monthly meetings have gradually changed their focus to Xayaburi Dam,

and seem to hold up issues regarding the LS2 project.

4.4 Key Notes on Distributive and Procedural Equity in the Lower Sesan 2 Project

� The northeastern region of Cambodia is known as an isolated area where people have

limited opportunities and support from other development initiatives of the state. With

hydropower project under the framework of triangle development plan, it is being

claimed that the local residents would have more opportunities, both in terms of support

from the central government and the project. It is also being touted that the project will

be good for Cambodia as it would help in meeting the shortfall of electricity in the

country. Provision of electricity is essential for the development of industries and other

enterprises, and thus this project will boost overall economic growth. However, such

expectations don’t seem to be logical, given the project’s profile. First of all, the

ownership of the project is still unclear and if the government of Cambodia does not own

the project, most of the profits made will also not return to the government. Second,

most of the electricity generated (around 90 percent) will be exported and will therefore

not help in reducing the country’s shortage of power. And third, except for the

development fund mentioned in the EIA, there is no other mechanism in the project to

provide financial support, specifically to develop the areas affected by the project.

� People in the Sesan basin have learnt from their experiences of Yali project that negative

impacts of a dam affect not only the upstream area that is flooded during dam

construction, but can also affect downstream areas during dam operation. Yet, in

planning for LS2, there has been no discussion on the anticipated impacts on

downstream residents, and they have so far not been entitled to any compensation.

� There has been limited involvement of local residents in consultation events regarding

the project. It is also observed that although some NGOs have been working on the issue

with local communities, they seemingly fail to represent their concerns. Most NGOs seem

to hold their own mandates and institutional agenda during meetings with the

government. On the other hand, affected communities have not had effective chances to

adequately and meaningfully participate in the consultation and decision-making process.

49

SYNTHESIS AND DISCUSSION Key Agenda on Distributive and Procedural Equity in

Hydropower Development Projects in Mekong Countries

50

5. Synthesis and Discussion

Electricity demand in the Mekong region is expected to grow continuously and there have been a

number of plans to develop hydropower projects to meet these projected demands. A pattern is

increasingly emerging in which poorer economic countries will supply hydropower to their

wealthier neighbors through the regional energy market. International financial institutions are

also heavily involved in supporting this process through funding and by supplying technical

expertise for hydropower development in the basin. Particularly in the lower Mekong, more than

3,235 MW of power has been generated through facilities built largely over the past ten years. An

additional 3,200 MW of electricity is currently in the pipeline, and over 130 projects are being

planned (MRC, 2005).

Development of hydropower projects in the Mekong Basin is however highly controversial.

Debates about it abound in academic literature and popular media, and are a focus of many

social and environmental activists. This is largely due to the list of great benefits that is reeled out

to make an argument in favor of building hydropower projects on the one hand, and their

negative consequences for the environment and affected people on the other hand. The key lies

in the distribution of these outcomes. In this study, three hydropower projects in Mekong

riparian countries were examined in terms of the what and how of the sharing of benefits,

burdens and risks – what are the benefits and how are these shared; and what are the burdens

and risks arising from the project development, and how are these compensated for and handled

by the authorities. This part of the report presents key issues based on the findings from the

three case studies. These will further be framed into an agenda template that ought to be

brought into deliberation to enhance the issue of fairness in the distribution of benefits, burdens

and risks in Mekong’s hydropower development.

5.1 Key Issues in Benefits Sharing and Compensation of Burdens and Risks in

Hydropower Development in Mekong Countries

Due to the differences in the socio-political contexts of each country, some issues observed are

case-specific, nonetheless they can be lessons learnt across the countries. By comparing the

three case studies (Table 5.1), some common patterns were also identified. The key issues are

presented in the following paras.

Local communities have not been regarded as the main target group of beneficiaries of

hydropower development projects.

Electricity generated in all cases is supplied to the national power grid and often claimed to

benefit local communities through this channel. Yet, without providing supporting facilities

linking the system to individual households, there is no guarantee that the local residents can get

access to or will be able to make use of this electricity. But more importantly, to what extent

supply of electricity to these communities – incidental as it is – will concretely and directly

translate into major livelihood improvement and welfare has not been problematized.

Availability of electricity supply to these communities as a critical factor to poverty alleviation

under their given conditions is an unchallenged assumption. Industries and urban dwellers in

these countries continue to remain the major targeted beneficiaries of electricity produced from

the dams. And in case of THXP and Lower Sesan 2, most of the power supply will actually be

exported to neighboring countries. Besides power and water for irrigation, most projects

generally provide infrastructure facilities to local communities in the form of houses, road

networks, schools and health centers. However, other non-monetary benefits, particularly those

51

relating to the enhancement of livelihood options, such as providing fishing rights in the

reservoirs, job placements in the projects, or introduction of and training for alternative income-

generating activities have not been explored much.

As for monetary benefits, the projects often provide these in form of development funds and

taxes required to be paid to the authorities. Nevertheless, there has been no mechanism to

ensure that the revenue is specifically utilized for the welfare of the affected communities. This is

even more difficult to secure when the tax revenue is disbursed to the budget of the central

government. Further, more direct sharing schemes of monetary benefits, such as revenue sharing

and ownership sharing, have not been considered at all in the cases studied.

Impact areas of dam development that are implied in planning and operationalized in practice

usually recognize only the areas flooded to create the reservoirs and tend to exclude other

anticipated impacts and possible impacted areas.

As a result of such scoping, the persons eligible for compensation are only those who actually

lose their physical assets during dam construction. In all cases, other communities that would be

affected during the post-construction and operational periods of the projects are not considered

fit for compensation either by government offices concerned or the dam managers.

Nevertheless, experiences of past projects have shown the range of impacts occurring in the later

stages of the project, and they are sometimes found to be at a much farther distance and to a

much greater extent. These impacts include, among others, more severe floods, less fish catch,

water shortage, and poor water quality. They are often difficult to be estimated beforehand, yet

crucial to the local livelihoods.

Moreover, in most cases, these affected groups are not only excluded from the compensation

package, but they are also not provided with adequate information about the projects and

possible impacts they may face. As a result, they often are not able to prepare for prevention of

damages. There is a need therefore for a thorough study of both actual and anticipated impacts

as well as constant monitoring of unanticipated and continuing impacts of the projects in the

medium- and long-term. This would lead to reconsideration of the scoping of impacted

populations, and inclusion of these groups of stakeholders in information sharing.

52

Table 5.1 Summary of Benefits Sharing and Compensation of Burdens and Risks in the Three Case Study Projects

Outcomes Case study projects/ Countries

Yali, Vietnam THXP, Lao PDR LS2, Cambodia

Sharing of benefits among local residents

1.1 Sharing of project services

Electricity �through national power grid �through the national power grid �through national power grid

Water supply �supply to resettlement areas (free) �supply resettlement areas (with fee) �

1.2 Sharing of non-monetary benefits

Entitlements in access to resources � � �

Priority in hiring affected residents � �during dam construction �during dam construction

1.3 Sharing of monetary benefits

Development funds � �provided & managed by dam operator �provided by dam operator/

managed by the government

Taxes paid to local authorities � paid to provincial governments � paid to national government � paid to national government

Revenue sharing � � �

Sharing of ownership � � �

Compensation of burdens and risks to affected residents

2.1 Compensation to resettlers

Houses � new houses built � new houses built

Details are not available.

However, it is expected that

compensation package in terms

of cash and lost assets will be

provided to the resettled

communities.

Agricultural land � land sizes of each HH were

surveyed and allocated accordingly

� average land size is determined and

allocated across all HHs.

Crops �through monetary calculation �through monetary calculation

Public utilities � road/electricity/ water wells � road/electricity/ pipe water

Health and education facilities � health centers/ schools � health centers/ schools

Other supports � agricultural extension � food supply until income target reached

2.2 Compensation to other affected

communities

�Compensation made to residents in

Cambodia after the flooding

incidents.

� �

2.3 Compensation for the loss of

ecosystem and biodiversity

�Forestry tax provided to provincial

governments

�Budget provided and managed by the

project to restore environment

�Budget provided to restore

environment

Source: Key informants interviews and focused groups discussions in the three case study projects, March-December 2011.

53

Negative impact on ecosystem and biodiversity is another important area that has not been

adequately addressed in the allocation of revenue.

In continuation of the earlier point, scoping and identification of the extent of environmental

costs too is still debatable. Being a mute stakeholder that has no particular agent representing it,

environment has therefore not been thoroughly considered for compensation. Particular details

about the environmental costs such as loss of species and habitats, and damage to ecological

functions due to dam construction, and management in terms of duration, scale, and degree of

reversibility are usually limited. In the three cases studies, Yali Dam has forestry tax that goes to

Forest Protection and Development Fund of the provincial governments, and Lower Sesan 2 has

specific budget for ‘restoration of environmental impacts’. Nevertheless, in both projects, there

has been no clear plan of what impacts are to be addressed, how this plan would be

implemented and how would the restoration work be monitored.

Although agricultural land is normally included in compensation package for resettled

communities, there are often subsequent important concerns related to land arising after

allocations that are not addressed at all.

In all cases studies, the main principle for compensation of agricultural land is to provide an

equivalent area of land lost to the affected households. However, the type, quality and

characteristics of land allocated is often unknown to the recipients. In the case of THXP, for

example, different quality of land provided to different villages and households led to the

impression of unfair allocation among the villagers. In the village that consists of both resettlers

and host villagers, the newcomers tend to believe that the host villagers own pieces of land that

are more suitable for agricultural production. In another case, the resettlers were provided with

land that was not appropriate to the crop types or even agricultural practices that they used to

follow in the old settlements. These then forced the resettlers to change their way of living, and

adaptation involves stress and investment in time and resources.

Compensation package provided by the projects may not correspond to the actual needs of the

affected communities.

Access to electricity, for example, is generally a part of new utilities provided to resettled

communities. It was however noted by some interviewees that although they recognize the

convenience of having electricity, it comes with a new expense they have to bear when they are

actually used to living without it. Neither is it seen, as mentioned earlier, as a critical need for

alleviating their current poverty situation. On the other hand, as noted by residents in cases of

THXP and LS2 project, rice has been insufficient for many households after relocation despite the

fact that rice sufficiency is the most important concern of the villagers. In addition, compensation

packages are often provided uniformly across all resettled communities whereas there is actually

diversity in their locations, ethnicities, and gender. Their distinct characteristics, which lead to

differences in their needs and priorities, are overlooked. A careful analysis of different groups of

affected residents and their direct participation in the planning process would help in enhancing

the efficiency of compensation allocation.

54

5.2 Key Issues in Decision-Making Process on Benefits Sharing and Compensation of

Burdens and Risks in Hydropower Development in Mekong Countries

The primary discourse to legitimize hydropower projects makes a case for national macro-

economic development; benefiting the local project areas and people are generally not the

principal concern.

In all cases, rationales of necessities for hydropower projects are to generate electricity for

fueling industrialization and urbanization and/or to contribute to overall national economic

development of the countries. With such motivations, benefits to the locals are generally not

considered as the central focus. In addition, even when the project is claimed to benefit the local

areas first, such rationales in project development discourses may not correspond to the actual

outcomes. In the case of Lower Sesan 2, for example, while the justification for the project is that

it will make up for the country’s shortage of electricity and stimulate economic growth of the

poor region, the project planning and arrangements however turn out to be different. Most of

electricity generated from Lower Sesan 2 will actually be exported to Vietnam, half of the

revenue from the project will go to the foreign investor, and there is still ambiguity about how

the local governments will receive and utilize the revenue from tax payment. As such, growth in

the region where the project is located may not necessarily be stimulated as claimed.

Furthermore, since the basic wellbeing of the locals is not considered as a main agenda in project

development, decision-making concerning benefits consequently also tends to exclude the

participation of the affected communities. In all cases, decision-making on benefits distribution of

hydropower projects, both monetary and non-monetary, is generally done confidentially through

memorandum of understandings or concessional agreements between only few government

agencies and dam developers. The local communities, who actually have a direct stake through

receiving impacts, are viewed to be irrelevant in decision-making on benefits. As noted in the

case of Cambodia, most local interviewees tend to believe that only the government can take all

decisions concerning project development and they have to accept all the consequences.

Key government agencies responsible for hydropower development generally come from the

energy sector and are therefore predisposed to overlooking social and environmental aspects in

project development.

In case of Vietnam, for example, while water for domestic supply and irrigation, which is the type

of water use directly tied to local livelihoods, is the responsibility of the Ministry of Agricultural

and Rural Development, hydropower development is entirely the responsibility of Ministry of

Industry and Trade. Other countries also have similar structures. The primary mandate of specific

authorities in charge of water use for hydropower, such as Electricity de Laos (EDL) and Electricity

Authority of Cambodia (EAC), is generally to provide energy supply. Use of water for livelihood

and environmental purposes as well as changes to these uses due to project development are

only secondary or could be neglected. Mechanisms to support and enhance dialogues among

agencies in charge of all water uses in project planning and development, such as, an inter-

ministerial committee, could enhance the role of hydropower projects by integrating them with

multi-purposes water development schemes.

Experiences from previous projects have not been reflected evidently in the enhancement of fair

compensation in design and development of new projects.

In case of Cambodia, for example, there are lessons learnt from Yali Dam located in Vietnam. It

demonstrated that the impacts from the project were not only limited to communities flooded

during construction of the reservoir, but could also extend to communities downstream during

dam operation. Other two previous hydropower projects in Cambodia too show that there were

other issues to be considered beyond compensating the resettled households with land and

55

money. Yet, these lessons were brought up only in the meetings among NGOs, but have yet to be

integrated into the actual planning process of Lower Sesan 2 or other projects in the pipeline.

Providing space to discuss these lessons learnt and agreeing on measures to address similar

anticipated issues could be a way to lessen opposition for the new projects from concerned

stakeholders, and enhance efficiency in project management.

Majority of impacted residents are ethnic minorities, and therefore addressing their needs

requires thoughtful assessment and understanding of culturally nuanced needs.

Dams in Mekong are generally built in mountainous locations where most ethnic minorities live.

In the case of Yali Dam, 58 percent of resettled communities are ethnic groups such as Gia Rai,

Bana, and Ro Nhao. Similarly in Lower Sesan 2, most affected residents in Stung Treng are Lao,

Phnong, Lon and Prav. Each ethnic group has its own traditions, beliefs, and way of life, and these

consequently lead to different kinds and magnitudes of impacts from the projects. Providing a

uniform compensation package across all groups cannot therefore address these diversities. In

most cases, efforts are also needed in translation and interpretation during communication with

villagers in order to understand their actual needs and problems.

Gender difference has not been critically considered, particularly in the accounting and decision-

making for compensation of affected groups.

Gender analysis exposing different characters, problems faced and needs of affected men and

women has generally not been included in the survey or other compensation procedures of the

authorities. As a result, there has been lack of understanding about the principal livelihoods of

men and women, both in the affected and resettlement areas, and hence it is difficult to provide

proper support systems to enhance the required resources for them. Even though female-headed

households have often been identified as one of the most vulnerable groups affected by project

development, no special consideration to address their specific difficulties was found in all the

three case studies.

There has still been limited representation and meaningful participation of local communities in

project development in general, and in decision-making on compensation allocation in particular.

In all the three cases, participation of affected communities in the decision-making process is still

lacking and if consultation events are organized, their actual outcomes are still questionable. The

Environmental Impact Assessment reports of both Lower Sesan 2 in Cambodia and THXP in Lao

PDR were prepared by consultants hired by the dam developers, and they have often been

criticized for their accountabilities and for not involving the local communities in producing these

reports.

The consultation events organized in Phnom Penh consisted mainly of government agencies.

Local governments of affected provinces and NGOs working in the areas were invited particularly

to represent the local residents. The quality of discussions, however, was observed to be poor

since these participants too had limited understanding of communities’ concerns and generally

failed to voice the needs of the locals. In Yali Dam, resettled communities were directly involved

in certain procedures of compensation process, but this too did not guarantee that their voices

were heeded while making the final decisions. For example, they were involved during the survey

of their lost assets, but were not consulted and could not decide on the prices at which their

losses could be compensated. Similarly, the communities were involved in choosing the

resettlement areas by way of information sharing about the potential sites prescribed by the

company, but their preferred locations were not taken into consideration in the final decision-

making.

56

In addition, local communities have often been considered as homogeneous, disregarding social

differences, especially of gender, among villagers. There has still been limited effort to obtain the

representation of various groups in consultation, negotiation and decision-making processes.

Addressing these gaps in local participation will significantly enhance understandings of local

needs, increase liability of the project in response to these needs, and hence raise the

acceptability of project development and management.

There is often no appropriate post-resettlement mechanism to address continuing concerns of

resettled communities after the compensation allocation process is done.

The official reports of all the cases generally noted that the resettled residents have accepted and

agreed to all the compensation packages allocated. The study however found that there are

always concerns that arise after relocation, which may not necessary be covered in the allocated

compensation packages. Nevertheless, in most cases, there is no clear mechanism for local

residents to make claims if they have disagreement with what was provided and/or to raise their

new concerns. The only exception is the grievance process set up in the case of THXP. Yet, it was

found to be time-consuming, and a number of cases have been awaiting the decision of the

committee for years. Further, most villagers were also found to have social barriers and limited

access to such formal procedures. Traditional ways of addressing local problems, such as

involving elders and village chiefs in communicating with local villagers, could be considered to

enhance the effectiveness of this system.

6. Conclusion and Recommendations

Although the key equity issues identified in this study were based on the findings of the three

case study projects, they are common to other water storage infrastructure projects in the

Mekong riparian countries. In overview, benefits arising from hydropower projects, either direct

services produced or revenue generated, are still purposively planned and distributed mainly to

the industrial and urban sector that is normally located far from the dam sites. Local communities

in and around the project areas are not the primary beneficiaries though they are affected the

most by the negative impacts of the project.

There have been various attempts through different schemes to compensate the project-affected

people for their losses. Yet, as the study pointed out, there is room to improve the outcomes as

well as the procedures leading to these outcomes. The following are some recommendations that

should be taken into consideration to enhance equity in hydropower development and

management in the Mekong Basin, based on the analysis of this study.

� The affected communities should directly and meaningfully participate in the decision-

making process, particularly related to their livelihoods. Different groups of affected

people (diverse in their locations, ethnicities, gender, and socio-economic status)

should be taken into account in order to assess and respond to their different needs

and priorities.

� There should be a feedback mechanism that allows affected people and other

concerned stakeholders to provide comments on the project operation and

management. Monitoring and evaluation of impacted and resettlement areas should

be carried out regularly throughout the projects’ lifetime to address people’s concerns

that could change over time.

57

� Impact assessment of the dam projects should not be done only during the project

planning and EIA process, but needs to be continuously monitored for the entire

lifetime of the project. Scoping of the impact area should be able to be adjusted to

provide mitigation measures accordingly.

� Budget must be allocated to address the project’s negative impacts on the

environment. Clear policy and action plans need to be developed on ways to restore

the ecosystem and biodiversity of the dam site and its surroundings.

� Besides infrastructure and physical assets, means to enhance income generation and

improve the livelihoods of the local people need to be explored in consultation with

the affected people. Since land is a limited resource, young generation in particular will

need, for instance, vocational training on non-land based occupations to provide them

with alternative livelihood options.

� In the long run, it is necessary to redistribute the revenue of the projects to directly

benefit the affected communities. The local residents should be considered as direct

beneficiaries and the authorities should seek ways to share the benefits of the dams

with them. This could enhance equitable allocation of benefits and result in fair

compensation for costs incurred by the locals, who have to give up their access to

resources and suffer the impacts of project development. The extent to which these

revenues can be resdistributed, however, depends very much on the socio-political

contexts of each country in general and on institutional arrangements in water

resources and hydropower development in that country in particular.

58

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