A Dam Too Far in Laos

Melinda Boh
Friday, April 12, 2013

VIENTIANE - It was once referred to by US magazine Newsweek as a "kinder, gentler" type of dam. Since the Nam Theun 2 hydropower dam commenced commercial operations in 2010, the World Bank and other proponents of the multi-billion dollar power project have trumpeted it as an economic and social development success story for host country Laos.

But with the negative publicity and diplomatic tussles now focused on the proposed US$3.5 billion Xayaboury dam, which if built promises to hurt downstream communities and the environment in Cambodia, Laos and Vietnam, Nam Theun 2's emerging failures have largely escaped critical scrutiny.

In particular, there are rising indications that Nam Theun 2 and its massive 450 square kilometer reservoir are responsible for massive amounts of greenhouse gas (GHG) emissions, amounting to as much as one million tons of methane and carbon dioxide per year, according to recent independent academic studies, including a statistical assessment produced by the US's Duke University.

If accurate, that figure is substantially higher than the level of emissions initially estimated in the project's environmental impact assessment. Researchers from Toulouse University in France have concluded that Nam Theun 2 produces in excess of 40% of the GHG that would be emitted from a coal fired power plant of equivalent energy output, and far more than a natural gas-fired plant.

Hydropower proponents have long argued that dams like Nam Theun 2 represent a clean and green source of energy that contribute to economic development. According to the Nam Theun 2 Power Company's website, the 1,070 megawatt power producing dam has made a wide range of positive contributions to local communities, including improvement in rice yields, better health care, and the development of small businesses, among other alleged trickle down benefits.

Recent scientific studies of tropical climate dams such as the Nam Theun 2 show such claims are often more corporate social responsibility propaganda than grass roots reality. The World Bank, Asian Development Bank and other major backers of Nam Theun 2 had earlier faced critical questions about the dam's design, resettlement of local communities and alleged corruption related to logging and biomass clearance of the construction site.

Young children in a house on the Nakai Plateau which was inundated by the Nam Theun 2 Dam.
Young children in a house on the Nakai Plateau which was inundated by the Nam Theun 2 Dam.
Photo courtesy of Virginia Morris & Clive Hills

After three years of commercial operations and a vigorous public relations campaign, the dam is now contributing to wider, more intractable problems. These include emerging evidence that resettled villagers have resorted to poaching and illegal logging to sustain their communities as well as reports from the European Union-sponsored Global Climate Change Alliance that Laos has recently become a net emitter of GHG after previously serving as a valuable global carbon sink.

These problems have emerged in clear view while the World Bank-affiliated International Financial Corporation (IFC) cites the "success" of Nam Theun 2 to justify offers of new grants and policy assistance to the Lao Ministry of Natural Resources and Environment (MONRE) to support further hydropower development across the country.

Unquestioning mantras of how dams promote poverty alleviation have recently appeared more regularly in the state-dominated Lao media, coincident with the signing of new dam-related contracts. The IFC's offer of US$2.4 million in financial assistance for dam development also comes amid rising speculation among Vientiane-based independent observers of a significant surge in corruption at the MONRE.

In late March, World Bank vice president for sustainable development Rachel Kyte and regional director John Rome announced while visiting Indonesia that energy renewables and conservation were "vital" to combat rapidly escalating GHG emissions that contribute to climate change. Such statements, however, indicate a disconnect between the World Bank's environmentally conscious public statements and the affiliated IFC's lending activities. They also raise questions about the integrity of the World Bank's existing external monitoring role over Nam Theun 2's implementation.

Contrary to their clean and green image, hydropower dams are a larger source of GHG emissions than generally recognized. Most dams only measure their net emissions, or the GHG emissions measured at the surface of their reservoirs. A more holistic measure pioneered by Phillip Fearnside at the National Institute for Research of the Amazon in Brazil and now used by many scientists and environmentalists takes into account a dam's entire life cycle, including GHG emissions caused by related deforestation, land excavation, and carbon created during the production of dam-related construction materials.

Dams in tropical climates such as Laos' Nam Theun 2 produce especially high levels of methane emissions, which are thought be as much as 20-21 times more potent in preventing infrared radiation from escaping the planet and account for as much as one-third of GHG-driven climate change. Independent scientists and environmentalists estimate that the Nam Theun 2's massive 450 square kilometer reservoir will continue to emit methane into the atmosphere for at least a century, regardless of when the dam stops producing power and is decommissioned.

Katy Ashe, a PhD candidate in physics at Stanford University in the US, wrote in her recent dissertation that "the tropics are especially a bad place for reservoirs to occur because the higher temperatures and flooding of large amounts of biomass leads to high levels of methane production over the lifetime of the dam. It has been estimated that artificial reservoirs that have been created in the tropics could be emitting about 64 megatons of methane each year, which would account for 90% of the methane emissions that occur in the tropics."

Methane, nitrous oxide and carbon dioxide are now literally bubbling up from uncleared, rotting vegetation in Nam Theun 2's reservoir. Because the dam's reservoir is largely anaerobic with negligible levels of dissolved oxygen, the water is toxic to aquatic life and has accelerated to a potentially debilitating degree the amount of iron sedimentation in the dam's outlet channels.

Tropical methane emissions could grow exponentially if Laos makes good on its IFC-promoted dam-building aspirations. Lao officials have indicated hopes to build another 124 dams across the county, leading to a potential 7,500 net megatons of new methane emissions per annum, according to independent scientific assessments. Already dams like the China-backed, Sinohydro-built Nam Lik have had to evacuate nearby villages as methane and hydrogen sulfide emissions posed risks to human health.

As protests and opposition to dams grows in the developed world and in developing countries where civil society groups are allowed a voice, hydropower proponents and their associated financiers are increasingly shifting their dam-building ambitions to underdeveloped totalitarian states like Laos, where protesters against state-led development schemes are habitually arrested and often disappeared. Economic reports from McGill University in Canada have recently questioned the reality of benefit sharing from state development projects in nations such as Laos where the people have no rights.

On March 14, 2005, more than 150 Thai villagers gathered in front of the World Bank’s Bangkok headquarters to protest the Nam Theun 2 Dam in Laos.
On March 14, 2005, more than 150 Thai villagers gathered in front of the World Bank’s Bangkok headquarters to protest the Nam Theun 2 Dam in Laos.
Photo courtesy of Premrudee Daorung

"It seems that opposition to damming in one place is more fluidly than ever leading to a fairly simple displacement of damming activities to more receptive areas nearby," said Jackson Ewing, an academic at Singapore's Nanyang Technological University, in email correspondence with Asia Times Online. He cited the shift in dam-building activities from places like Thailand, where civil society has in recent years strongly opposed such projects, to Laos, where the government brooks no dissent.

Underdeveloped nations like Laos have only recently become net emitters of GHG, due mainly to unchecked rampant deforestation including massive land areas cleared for dam-building. Those emission figures, however, will grow enormously if Laos builds another 124 new dams, as government officials have outlined in recent hydropower development plans. To compound the problem, the lands cleared for dam reservoirs will destroy more old growth forests capable of sequestering carbon dioxide.

Clogged potential

Hydropower dams on the scale of Nam Theun 2 generally have a productive life span of between 20 to 30 years. However, Nam Theun 2's productive period may be much shorter than originally envisioned as preliminary surveys apparently failed to account for the area's specific geology.

Typically environmental impact assessments do not weigh the potential for seismic activity or other geological factors. The fact that rocks around the Nam Theun 2's reservoir contain high levels of iron was apparently overlooked by the dam's designers and engineers. According to an informed source who spoke on condition of anonymity, Iron leachates are now increasingly clogging Nam Theun 2's outlet channels.

"Currently they are losing around five days of generating capacity per year due to narrowing of the channels," the source claimed. "They have tried acid in the heat exchangers but the effect is negligible. If the dam was not almost completely anaerobic then it would be less of a problem as [the iron] would oxidize and be carried away. But the iron-containing sludge settles on the bottom near the outlets. I can't imagine the dam has much life left in it."

Nam Theun 2 Power Company's official website offers a more upbeat assessment of the dam's lifespan, saying that the Lao government and private shareholders will operate the project for the "first 25 years of its operation''. It's unclear if the nine international commercial banks, including ANZ, BNP Paribas, ING and Standard Chartered, and seven Thai commercial banks, among them Bangkok Bank, Kasikornbank and Siam Commercial Bank, providing Nam Theun 2 with long-term loans are aware of the dam's apparent mounting technical difficulties related to iron-clogged outlets.

At this early stage of its hydropower development, Laos has made no financial provision for decommissioning dams, a process that in some cases can be more expensive than actual construction. Moreover, even after dams have stopped producing power their associated reservoirs often continue to emit methane and other GHG for many decades, as biomass continues to degrade and is washed down into the reservoir from surrounding areas. The World Bank has admitted to significant landslides and slumping around Nam Theun 2's reservoir.

Diminished returns from the dam's operations will likely mean even less trickle down of benefits to the local population. Jared Bissinger, a PhD candidate at Australia's Macquarie University, has observed broadly that economic development based on natural resource extraction and energy, the model now being promoted in Laos, seldom if ever contributes to broad-based economic well-being. "It's not that the resource industries and the extractive industries are in and of themselves bad. It's just that they require good governance, and that's the missing link." he recently wrote.

Others see potentially corrupt motivations for dam-building in Laos. "I think the only reason that Laos builds so many dams is so they can cut the trees legally," an environmental scientist based in Bangkok who referred to herself only as ''Miss Nah'' told Asia Times Online. "All the high-value trees were taken from the [Nam Theun 2 site] but saplings and low-value trees were left behind as the profit from potential sales did not warrant the effort of removal.

If Laos follows through on its proposed 124-dam building spree, Phonesack Vilaysack, one of the country's most renowned loggers, will be well-placed to clear the areas for construction. His Laos-based construction and timber company, the Phonesack Group, profited from the trees cut for Nam Theun 2's construction, according to the Environmental Investigation Agency, which has reported in-depth on his company's alleged deforestation activities.

There is emerging evidence that villagers resettled from the Nam Theun 2 reservoir site onto poor quality lands elsewhere have assisted the well-connected Phonesack Group to log forests on the Nakai Plateau where they were relocated. According to a foreign academic familiar with the situation who accompanied the World Commission on Dams Panel of Experts to Laos last year, villagers in the area were illegally cutting trees to sustain themselves.

"We asked a lot of questions, and found the people were illegally logging the rosewood and other high-value trees to make a living. They said they sold the trees to Phonesack [Group]. Other people said they were poaching endangered species of animals and birds for sale to China and Vietnam," said the academic, who requested anonymity. The Phonesack Group did not respond to messages seeking comment for this article.

In March, the Phonesack Group signed a memorandum of understanding with the Lao government to undertake an 18-month feasibility study for another large hydroelectric dam project, Nam Theun 1, in the lower part of the same watershed as Nam Theun 2. The proposed dam has already courted controversy as it would require the deforestation and inundation of thousands of hectares of the Nam Kading National Protected Area, a globally significant biodiversity hotspot. It would also force the resettlement of some 10,000 people from valley communities.

Phonesack Vilaysack is related to one of Laos' leading political families, the Pholsenas, and is viewed as ''untouchable'' by Lao people familiar with his company's activities. That's in part because the Pholsenas are so strongly represented in the Lao government.

Khempheng Pholsena, one of Phonesack's relatives, was formerly a vice president of the Asian Development Bank and Lao vice foreign minister before he was given responsibility to oversee the country's national hydropower development plans. His wife, Madame Khempeng, is now minister to the Lao prime minister's office. Sommad Pholsena is currently minister of public works and transport while Phonethep Pholsena is president of cultural and social affairs committee of the National Assembly.

Nam Theun 1 was scratched from Laos' national power development strategy in 2004 because it was considered economically unviable from a cost perspective. Now resurrected, the dam would be situated in the verdant Nam Kading protected area, opening one of the country's last genuinely wild areas to poachers and government-linked loggers.

Despite its large land mass, Laos has very little arable land due to mountainous terrain and an increasingly fragile environment. Estimates of land suitable for farming are often put at around 6%-10% of the country's total area. Many of those areas are situated in river flats which are often inundated by reservoirs, or other downstream areas that suffer from regular bank erosion due to the on-off surges of water caused by existing upstream dams.

The same land squeeze applies to local communities that are resettled to make way for dams. "It's getting hard, almost impossible, to find suitable replacement land for resettled communities," said Lao hydro-engineer Doavanh Khamsouth while working on an unrelated dam project in northern Laos.

"We ended up sending the people on our project back up the mountain. Frankly speaking they had been sent down to the valley so the forest could be logged, then they had to move again as their valley was going to be flooded. I really don't think we can offer a good livelihood for them. We have offered them cows as they can't grow rice, but there are no vets or enough grass for the cows. The people who suffer do not have dishwashers or air conditioners. It's only the wealthy who benefit from hydropower."

Melinda Boh, a pseudonym, is an independent journalist.

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