Nam Ngum Hydropower Cascade Threatens Poverty Reduction in Laos

International Rivers
Tuesday, January 22, 2008

Poor sector planning, lack of public participation aggravate social and environmental impacts described in ADB report


A report presented in Vientiane today on the cumulative impacts of hydropower development in Laos' Nam Ngum river basin indicates that proposed dams would have serious impacts on the livelihoods of tens of thousands of Laotians. But the flawed planning process makes it unlikely that this Asian Development Bank (ADB)-supported cumulative impact assessment (CIA) will have any influence over decisions taken on whether or how to proceed with these hydropower schemes.

The CIA considers various scenarios for hydropower and irrigation development which include one dam in operation, another under construction, and at least six more proposed projects in Laos' Nam Ngum basin.[1] The study finds that blocked migration routes, destruction of riverine habitat, and water quality problems caused by these dams would gravely threaten the basin's fisheries, including the productive fishery of the existing Nam Ngum 1 reservoir.

"Subsistence farmers, the poor, the landless, ethnically and otherwise marginalised groups with few alternatives are likely to be hit hardest by any impact on habitats and wild-capture fisheries. The new reservoirs are mainly expected to have moderate (Nam Ngum 2) to low potential for reservoir fisheries," notes the CIA's Executive Summary.

The hydropower cascade could undermine the Lao government's poverty reduction commitments, particularly in the absence of revenue management or legally enforceable contracts to share benefits with affected people. "The impact of hydropower development on the rural poor will depend largely on the existence of concrete mechanism that would guarantee that affected villagers are benefiting directly from the revenue earned by hydropower projects through formal benefit-sharing mechanisms," says the CIA.

Workshops on these hydro projects, like the one held today to discuss the CIA, are being hastily organized, and little if any project information is made available to the public. Although the full CIA and other environmental and social studies have not yet been finalized and disclosed, some dam projects, such as Nam Ngum 2, are already moving forward.

"Decisions have been taken to proceed with hydropower projects even before their individual and cumulative environmental and social impacts have been fully assessed," says Shannon Lawrence, Lao Program Director at International Rivers. "Uncoordinated development and poor basin management pose major risks to local communities, as well as to investors."

No environmental impact assessment or resettlement plan has been disclosed for the Nam Ngum 2 dam, under construction since 2006, in violation of Laos' National Policy on the Environmental and Social Sustainability of the Hydropower Sector. The CIA raises specific concerns about this project, which is led by Thai developers Ch. Karnchang and Ratchaburi: "The on-going resettlement activities for the Nam Ngum 2 project are judged to suffer from several key shortcomings, and if these are not urgently addressed, it is most likely that land provisions will prove insufficient and other compensation aspects will also largely fail to address people's concerns."

Upstream, the proposed Nam Ngum 3 project's developers recently announced a "stakeholder workshop" in Vientiane on short notice and without disclosing the project's environmental and social assessments. But the lead sponsor, Thailand's GMS Power, has already reported that initial construction activities will start next month. GMS Power is seeking loans from the Asian Development Bank for Nam Ngum 3, although under current conditions it seems unlikely that the project will meet ADB's standards for disclosure, consultation and supervision.

The CIA also points out that more than 6,000 square kilometers of mining concessions have been approved in the Nam Ngum basin since 2006, further jeopardizing water quality and local livelihoods. At least one major cyanide spill has already occurred at the area's largest mine, Phu Bia, which is owned by Pan Australian Resources.


[1] Nam Ngum 1 (operation); Nam Ngum 2 (construction); Nam Ngum 3 (proposed); Nam Ngum 5 (proposed); Nam Lik 1 and 2 (proposed); Nam Bak 1 and 2 (proposed). The Nam Ngum river basin includes parts of the Xaysomboune special zone, Vientiane and Xiengkhuang provinces.