Dam the consequences: Big, bad dams return to South-East Asia

Wednesday, June 13, 2007

Article from Economist.com

TWO years ago the World Bank returned, after a decade's absence, to the business of financing giant hydroelectric dams. This was in spite of a damning (pardon the pun) report in 2000 from the World Commission on Dams, which had been set up to investigate the many concerns of economists, environmentalists and civil-society groups about big hydropower projects. The commission's report confirmed many of their fears about the underestimated costs and over-hyped benefits of such schemes.

However, the project that the World Bank, along with the Asian Development Bank (ADB), backed in 2005-the $1.25 billion "Nam Theun 2" dam in Laos-was supposed to learn from the mistakes of all the controversial and bitterly-fought hydropower plans that went before it. Huge efforts were promised to minimise the environmental damage and ensure that local people who faced losing their homes or livelihoods were properly consulted, fairly compensated and helped to build new lives.

So what has happened? Nam Theun 2 is halfway through its four-year construction period, and on June 1st its managers issued a progress report. In terms of building the dam, its generators and power lines, all is going fine. Almost two-thirds of the 1,240 families whose homes will be inundated have already moved to a new, purpose-built village. But what will they do there? The report admits to slow progress on helping them find new farmland to cultivate or learn other ways to make a living.

In a report published two months ago the International Rivers Network (IRN), an environmentalist group, said many of the schemes to create new livelihoods for the displaced locals have failed and are being reinvented on the hoof: "as a result, villagers are becoming guinea pigs in a vast and risky resettlement experiment."

Yet another report, published in May by the World Bank's advisers on the project, shared IRN's worries about the villagers' future livelihoods, adding that locals were angry and confused at how poorly the compensation schemes had been explained to them.

Having got behind in clearing the trees and vegetation in the valley that will be flooded by the dam, the project's managers are now seeing if they can get away with leaving much of this greenery in place without seriously affecting the quality of the reservoir's water. But what about the broader environmental effects? Hydroelectric projects are touted as environmentally friendly, but all that vegetation rotting under water produces lots of methane-a potent greenhouse gas. The IRN points to research suggesting that dams have so far caused more than 4% of man-made global warming.

To their credit, the dam's managers are bending over backwards to answer their critics and explain what is being done to put right any problems. But one would have more faith in the project's fairness to locals and the claims made about its economic and environmental benefits if it were being built in a democratic country where those affected were free to complain and could force their government to pay attention. Nam Theun 2 may be built in Laos, but it will mostly supply Thailand, where there is a modicum of free speech (though currently not any democracy), and where, as a result, protesters have succeeded in stopping dubious dams on the country's own rivers.

Rapidly rising demand for electricity in the region has prompted Laos and next-door Myanmar-which has an even nastier dictatorship-to dust off lots of long-planned schemes to build giant dams. Myanmar has recently begun building several of them, with the help of Chinese and Thai firms.

Big dams such as the ones Myanmar is building along its Salween river, and Laos's proposed Don Sahong dam on the Mekong, seem likely to be forced through regardless of the suffering imposed on locals or the damage to the rivers' delicate ecosystems. It does not matter whether the World Bank or ADB are prepared to finance such projects-the two authoritarian governments know they can turn to their unscrupulous and power-starved neighbours, especially China, to stump up the cash.