Business, Finance & Economics

In Laos, a tale of two dams (Video)


A model of the Nam Theun 2 dam at the Visitors Center in Thakek, Laos.


Brendan Brady

NAKHAI PLATEAU and XAYABURI PROVINCE, Laos — In an isolated valley in central Laos where people live mostly in wooden stilt homes accessed by dirt roads, the thick concrete slabs and towering mechanical apparatuses of the Nam Theun 2 dam stand at odds with their surroundings.

Stark though the contrast may be, those behind the project’s development say the dam, which produces 1,070 megawatts of electricity — enough to power more than a million homes — is an unequivocal contribution to, rather than imposition on, the communities it displaced along the Nam Theun river, a tributary of the Mekong.

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The Laos government and World Bank pledged to resituate displaced families with enough farmland and credit that their yearly income would double — a benchmark that has nearly been reached, they say — and many villagers were given a say in the process, according to developers.

“The living condition is much better than before,” said Thoui Souvanalath, who was one of 6,300 people relocated to newly constructed villages on higher ground. “Life has become easier.” Thoui says she now has round-the-clock electricity, a nicer home and access to better heath and school facilities.

The picture isn’t entirely rosy, though. Some environmental groups and locals contend that the dam has depleted the fish supply and worsened the water quality.

Still, by and large, Nam Theun 2 has gotten high marks for how its social and environmental impact was managed. The Laos government, World Bank and Asian Development Bank — which also backed the project — all billed it as a model of a measured approach to big dam construction.

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The story of the Xayaburi dam, however, appears to be following a different course – one that critics say could accelerate the deterioration of one of the world’s most productive rivers.

The Laos government plans to drastically expand its hydropower capacity as part of a plan, it says, to increase government finances and extend better public services and infrastructure to rural parts of the country.

With tributary dams like Nam Theun 2 up and running, the government has set its sights higher, on the powerful main-channel of the river for nine new dams. The first of these is a $3.5 billion, 1,260-megawatt project slated for Xayaburi province, in the country’s north.

“We realize it’s much cheaper to develop [on] a larger scale and use the export earnings to subsidize rural electrification,” said Viraphonh Viravong, director of the Laos Department of Electricity and the government’s point-person for the Xayaburi dam. “That’s why the project started to get bigger and bigger.”

Plentiful rivers, mountains and rainfall collectively give Laos high hydropower potential, and its more industrialized neighbors Vietnam and Thailand are eager buyers of electricity; the government has already pledged to sell 95 percent of the electricity generated by the Xayaburi dam to Thailand.

“Some time ago, people were starting to question whether hydropower should be done at all,” said William Rex, who leads sustainable development operations for the World Bank office in Laos.

“I think, globally speaking, there is a growing recognition that hydropower is an important part of an overall energy mix and the question is increasingly turning to how to do hydropower better,” he said, adding that he believed the Nam Theun 2 was a model case.

Contrary to this trend, say critics, Laos' new roadmap to development through mainstream dams is skewed, and carries potentially catastrophic results.

Tom Fawthrop, who recently produced a documentary film about Laos’ hydropower ambitions, says the government has fallen into an enticing but risky role:

“You’re surrounded by energy-hungry countries. [So] your role, your script is simple: you can be the battery for the region,” he said.

For Fawthrop and other observers, this lofty prospect hides what is ultimately a Faustian deal.

Experts warn that Laos’ proposed cascade of mainstream dams would disrupt the migration of fish and farm-fertilizing sediment upon which tens of million of people downstream rely for their daily catch and farming.

China has already installed four dams on the main stream of the Mekong, and has been blamed over the years for fluctuations in the river. Now, in Laos, environmentalists are trying to hold the line, saying such drastic mainstream dam expansion plans could push the river’s already-damaged ecosystem beyond the brink.

Recent studies support their warnings.

Laos’ proposed cascade of mainstream dams would cause a “fundamental break” in the Mekong’s “equilibrium,” according to a detailed report published last year by the Australia-based International Centre for Environmental Management. Specifically, the report predicted a roughly quarter decline in the Mekong’s fish stocks and load of sediment to pass through the river’s lower reaches.

The World Bank and Asian Development Bank say the country’s tributaries offer sufficient potential, with far less risk, for robust hydropower development, and have recommended a 10-year delay in any plans for the Xayaburi and other mainstream dams.

“We feel it is too early to make such decisions,” said Barend Frielink, chief economist for the Asian Development Bank in Laos, adding that “not enough is known about [the Xayaburi’s] impacts.”

Such uncertainty about the dam’s potential effects is not reflected in the Laos government’s line to communities inside the country.

The government has pitched the Xayaburi dam to local fishermen, who earn around several hundred dollars per year, as a first step to modernization and a more stable life.

“I feel the dam is a good development,” said a fisherman named Dy. “We will have a road to travel on and enough electricity.”

When authorities visited the 65-year-old’s community to discuss the Xayaburi dam, they said little about its risks.

FROM CAMBODIA: Fishermen drowning under threats to livelihood

The government has paid some heed to the growing chorus of international criticism. In May, it said it would defer its decision on the Xayaburi dam, pending further research. And, in regional talks in Bali attended by the U.S. Secretary of State Hillary Clinton, it reiterated this stance, prompting Clinton to praise Laos for showing “a forward-leaning position.”

But construction on access roads and a work camp continues near the site of the Xayaburi dam, and leaked documents suggest Laos’ officials have told the Xayaburi dam’s developer, Thailand’s CH. Karnchang Public Co., to complete the project.

In a letter postmarked June 8 and addressed to the Xayaburi’s developer, the head of Laos’ energy department says the government had allowed its neighbors to “evaluate, discuss and comment on the Xayaburi Project,” and “we hereby confirm that any necessary step in relation to the 1995 Mekong Agreement has been duly taken in a spirit of cooperation …”

As construction on the Nam Theun 2 dam was underway, Newsweek praised it for raising “the ethical bar for the world’s megaprojects.” Critics contend that, if it goes ahead, the Xayaburi dam will lower the standard back down.

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Tagged: Asia.