New Laos Dam Test for Hydropower Projects

Associated Press
Thursday, December 9, 2010

NAKAI TAI, Laos – One of Asia's poorest countries officially inaugurated a $1.3 billion hydroelectric dam Thursday that is earning badly needed revenue and could set new global standards for limiting environmental damage and improving the lives of those displaced.

The dam in central Laos was the first major hydroelectric project supported by the World Bank after a long hiatus in the face of criticism that dams harm communities and the environment.

Activists warned that it's too early to call the project a success, noting questions remain about the dam's impact on water quality and fisheries and whether the resettled will be able to support themselves economically.

The prime minister of neighboring Thailand—which will buy 95% of the dam's electricity—joined Laotian leaders and international officials in unveiling a marker at the site.

The dam, which has been operating since April, is expected to bring in $2 billion over the next 25 years, money the government has pledged to spend on reducing poverty in this landlocked nation with few resources besides its mountains and rivers.

The World Bank estimates the project will account for almost 40% of Laos's economic growth this year.

"The idea of the Laotian government is to become the 'battery' of Southeast Asia, because they've got tremendous hydropower potential, so what we're trying to emphasize is, please take the model and the lessons," World Bank President Robert Zoellick said after a visit to the project with The Associated Press in October.

He said that hydropower, done right, has great potential as a clean-energy source, and that the World Bank is considering further projects in Laos.

Between 1950 and the 1980s, some 35,000 large dams were built around the world, extolled as engines of economic development and a renewable energy source that doesn't require polluting fossil fuels.

But a 12-member commission, set up by the World Bank and the World Conservation Union, issued a highly critical report in 2000, pointing out the downsides: 40 million to 80 million people displaced, an irreversible loss of aquatic life and the flooding of acres of forest and wetlands.

The commission set criteria for future projects, but its guidelines have not always been followed.

The new Laotian dam, called Nam Theun 2, holds back a 450-square kilometer reservoir on a tributary of the Mekong River. Six giant turbines pump out 1,070 megawatts of electricity.

The government and its foreign partners—power companies EDF from France and EGCO from Thailand—say social and environmental concerns are as central to the project as turbines and power lines.

"It's a unique opportunity to set a new standard and to say that today a hydroelectric project has to take this new approach on board," EDF's regional director, Jean-Christophe Philbe, said.

A 4,100-square kilometer protected area has been established to safeguard flora and fauna.

Seventeen villages that had to be moved have been rebuilt. The power company has made a legally binding commitment to double the living standards of the 6,300 residents within five years.

Before resettlement, they were among the poorest of the poor. Now they have electricity, sanitation, clean water, all-weather roads and better access to schools and health care. According to the World Bank, 87% of those resettled believe life is much better than before.

"In the old village things just weren't convenient," said Tiea, 25, a villager whose family is doing so well that it is enlarging its new home. "It wasn't a pretty place, the houses weren't very nice, and we didn't have power. In the new village we have electricity, we can see better. In the old place we had to use burning torches."

But one activist said it isn't clear whether the villagers can adapt to new ways of making a living.

"People get schools, new roads, new houses and health care. People are very happy with this, but the real problem is how to restore sustainable livelihoods for communities who used to rely on the natural resources, forests and fish—and now they've lost these natural resources," said Ikuko Matsumoto, the Laotian program director for International Rivers, a group that has long campaigned against the dam.

More information: 
  • This article appeared in the Wall Street Journal
  • Press Release : Nam Theun 2 Dam Inauguration Hides Real Costs of the Project (December 7, 2010)
  • Civil society letter to the World Bank and ADB (December 6, 2010)
  • Fact sheet on the Nam Theun 2 Hydropower Project (December 2010)
  • 9 minute video program on Nam Theun 2: “Risky Business”