DEVELOPMENT OF WATER RESOURCE INFRASTRUCTURES AND LIVELIHOOD BENEFITS: A CASE OF THEUN-HINBOUN EXPANSION PROJECT, LAO PDR

Transcription

1 MEKONG PROJECT 4 ON WATER GOVERNANCE Challenge Program for Water and Food Mekong DEVELOPMENT OF WATER RESOURCE INFRASTRUCTURES AND LIVELIHOOD BENEFITS: A CASE OF THEUN-HINBOUN EXPANSION PROJECT, LAO PDR Vidaovanh Phounvixay 1, Lilao Bouapao 1, Chansamone Sayalath 2, Sonephet Phosalath 3, Vena Ngonvorarath 1, Amphavanh Sisouvanh 1, Kate Lazarus 1 1 Challenge Program on Water and Food Mekong 2 Ministry of Energy and Mines, Lao PDR 3 Nam Theun/Nam Kading River Basin Organisation, Ministry of Water Resources and Environment July 2013

2 TABLE OF CONTENTS TABLE OF CONTENTS... 1 LIST OF TABLES... 2 LIST OF FIGURES... 2 LIST OF ACRONYMS Theun Hinboun Expansion Project: An Overview About the Project Objectives of the THXP Location and THXP Zoning Key Actors/Stakeholders Livelihoods and Poverty Reduction Understandings of Poverty...14 International Organizations...14 Government of Laos...15 The Project Local People National Social-Economic Development Priorities National Growth and Poverty Eradication Strategy (NGPES) Bolikhamxay Social-Economic Development Plan Alignment in Plans and Priorities Resources, Livelihoods and Other Outcomes of Hydropower Villages Profile THPX s Livelihoods and Social Development Programmes Local Livelihoods and Hydropower-Induced Transformations Livelihood Resources Social Sector Development Community Infrastructure and Access to Road and Market Resilience Quality of Public Participation THXP Policy on Public Involvement (PI) Institutional Arrangements for Public Involvement Key Participation/Consultation events Technical Feasibility Study (Phase 1) Consultation on Resettlement and Compensation Procedures (Phase 2) Workshop, National and International Participation and Disclosure Access to Redress and Remedy Summary...41 REFERENCES...42 APPENDICES

3 LIST OF TABLES Table 1: THPC Annual Foreign Exchange Revenues... 6 Table 2: Project Zoning and Level of Impact... 9 Table 3: Profile of the Study Villages Table 4: THXP Income Target Table 5: Two Dimensions of Vulnerability Table 6: Livelihoods Post the THXP project Table 7: Public Involvement Phases Table 8: Public Involvement Methods LIST OF FIGURES Figure 1: Ownership Structure of Theun-Hinboun Power Company... 6 Figure 2: Financial Structure of Theun-Hinboun Power Company for Existing Project... 7 Figure 3: Resettlement Schedule Figure 4: The Power Cube: The Level, Spaces and Forms of Power

4 LIST OF ACRONYMS ABC ADB ANZ EdL EGAT EIA EMMP FGD GoL GWh IEE IR Lao PDR LWU MCP MDG MEM MoH MoU MW NG NGOs NGPES NORAD NTFP PAFO PI PPA PPA 2006 PSTEO RAP RBO RMU SED SEDP STEO Animal Breeding Center Asian Development Bank Australia and New Zealand Banking Group Limited Electricite due Lao Electricity Generating Authority of Thailand Environmental Impact Assessment Environmental Management and Monitoring Plan Focus group discussion Government of Laos gigawatt-hours Initial Environmental Examination International Rivers Lao People s Democratic Republic Lao Women s Union Mitigation and Compensation Plan Millennium Development Goals Ministry of Energy and Mines Ministry of Health Memorandum of Understanding Megawatts Nam Gnouang Non-governmental Organizations National Growth and Poverty Eradication Strategy Norwegian Agency for Development Cooperation Non-timber forest product Provincial Agriculture and Forestry Office Public Involvement Power Purchase Agreement Participatory Poverty Assessment 2006 Provincial Science, Technology, and Environment Office Resettlement Action Plan River Basin Organization Resettlement Management Unit Social and Environmental Division Social Economic Development Plan Science, Technology, and Environment Office 3

5 THPC THXP UNDP WREA Theun-Hinboun Power Company Theun-Hinboun Expansion Project United Nations Development Programme Water Resource and Environment Administration 4

6 1. Theun-Hinboun Expansion Project: An Overview 1.1 About the Project The Lao People s Democratic Republic (Lao PDR) is abundant in natural resources and the hydropower potential in different parts of the country, including that of the Nam Theun river, has been recognized for a long time. Acknowledging this potential, the United Nations Development Programme (UNDP) financed the site investigation of the Theun-Hinboun Hydropower Project. Following the investigation in 1992, a feasibility study was financed by a technical assistance grant from the Norwegian Agency for International Corporation and completed the following year. Subsequently, during a consultation mission in February 1993, Asian Development Bank (ADB) was assigned as the lead coordinating agency for negotiating with foreign investors on behalf of the Government of Lao PDR besides providing it financial and legal advice. It was on 23 June, 1993 that the government signed a Memorandum of Understanding (MoU) with two foreign investors, namely MDX Lao Public Company Limited (MDXL) and Nordic Hydropower AB (Statkraft SF), and the Theun-Hinboun Power Company (THPC) Limited was founded as the first hydropower IPP (independent power project) in the country. The government assigned the responsibility of nationwide generation, transmission, and distribution of electric power to Electricité du Laos (EdL), the state-owned power utility of the Lao PDR. While the EdL contributed 60 percent of the share capital, the two foreign investors pitched in with 20 percent each (See Figure 1 and Figure 2). Construction of the maiden hydropower plant began in late 1994 with commercial operations commencing in March The Theun-Hinboun Project was designed as a trans-basin diversion that diverted water from the Theun-Kading river in the Bolikhamxay province into the Hai and Hinboun river basins, and generated 210 megawatts (MW) of the installed capacity. Approximately 95 percent of its net available capacity, estimated to average 1,645 gigawatthours (GWh) per annum, was exported to the Electricity Generating Authority of Thailand (EGAT) through a power purchase agreement (PPA) with EGAT in June The government and EdL were expected to receive annual foreign exchange revenues of about USD 25 million from the project s royalties, taxes, and dividends. Table 1 summarizes the revenues, royalties and dividend payments from the project from 1998 to The license agreement with the government, signed in October 1994, allowed the THPC to plan, finance, construct, own, and operate the project for 30 years from the start of its commercial operations, with the provision of transferring it to the government thereafter. The agreement included provisions for a five-year tax holiday and a five percent royalty payment to the government, and limited THPC s overall responsibility for the mitigation of environmental and social impacts to USD 1 million. According to Probe International (1998), the mitigation of environmental and social impacts figure was based on the assumption of minimal environmental impacts as predicted by the Norpower/Norconsult environmental impact assessment (EIA). Later in 1996, an environmental study by the Norwegian Agency for Development Cooperation (NORAD) revealed that the projected environmental mitigation costs were very less, and did not portray the ground reality. This led many observers to question the lack of funding for mitigation or compensation measures. Therefore, in October 1996, the THPC signed a supplemental agreement with the government, increasing its budget for environmental mitigation and compensation from USD 1 million to USD 2.59 million. The company also agreed to a 5m3/second minimum downstream release, and to flush out sedimentation past the dam. 5

7 This agreement helped the THPC to meet any obligations related to mitigation or compensation measures for the life of the project, thereby facilitating the smooth operation of the project. Following the success of the Theun-Hinboun project, it was decided to extend it through an expansion project, which would double water diversions down the Hai and Hinboun rivers to a new total capacity of 500 MW. It has been decided that while the electricity output from the downstream power plant (440 MW) will be sold to EGAT pursuant to an amended Power Purchase Agreement, power from the upstream powerhouse will be sold exclusively to EdL. The government and the THPC signed an MoU on 5 March, 2004 for the Expansion Facilities Construction, following which the company was authorized to investigate the feasibility of expanding the project. The Expansion Project Feasibility study was completed in January 2007 and the construction of the Expansion Project began in It was completed in 2012 and inaugurated in January 2013 (See Box 1 for timeline). On October 8, 2008, THPC signed loan agreements worth USD 600 million with Export-Import Bank of Thailand, KBC Bank, BNP Paribas Australia and New Zealand Banking Group Limited, Bank of Ayudhya Public Company Limited, Siam City Bank Public Company Limited and Thanachart Bank Public Company Limited, to support the construction of the Expansion Project. A year later, on 12 November, 2009, the THPC signed new loan commitments valued at USD million with three development finance institutions, namely PROPARCO of France, FMO of the Netherlands, and DEG of Germany. The loans will fund the Expansion Project, along with the existing USD 600 million. Figure 1: Ownership Structure of Theun-Hinboun Power Company Source: ADB (December 2000) Table 1: THPC Annual Foreign Exchange Revenues Source: ADBI (2003) 6

8 Figure 2: Financial Structure of Theun-Hinboun Power Company for the Existing Project Source: ADB (December 2000) Box 1: Historical Timeline January 2007 Expansion Project Feasibility study completed August 2007 Draft Final EIA, Environmental Management and Monitoring Plan (EMMP), & Resettlement Action Plan (RAP) completed November 2007 Public Consultation completed 22 December 2007 Power Purchase Agreement signed between THPC and EGAT 29 May 2008 Power Purchasing Agreement signed between THPC and EdL 27 August 2008 Amendment to License Agreement signed between THPC and Government of Lao PDR 8 September 2008 Main Construction Contracts signed 8 October 2008 Financial Close 15 October 2008 Notice to Proceed for Construction November 2008 Start of project construction 5 May 2009 Ground breaking ceremony September 2011 Scheduled completion of transmission line September 2011 Scheduled completion of Nam Gnouang Dam Resettlement of reservoir villages started. 7

9 Resettlement of downstream areas started January 2012 Scheduled completion of the first Nam Gnouang (NG) generating unit March 2012 Scheduled completion of the Theun Hinboun Power Station January 2012 Scheduled completion of the second NG generating unit Source: THPC (2011) and Matsumoto (November 2009). 1.2 Objectives of the THXP The main purpose of the Theun-Hinboun Hydropower Project is to generate hydroelectric power for export to Thailand, to increase cash revenue and support economic growth in the Lao PDR by enhancing foreign exchange earnings. By encouraging private sector investment, it also represented the new policy direction adopted by the power sector (ADB, November 2002). The Theun-Hinboun Expansion Project (THXP) was designed to increase the capacity of the existing 220 MW run-of-the-river scheme to a new total capacity of 500 MW, and to offset losses from the pending completion of the Nam Theun 2 (NT2) project upstream on the Nam Theun besides regulating the inflow into the existing head pond through the construction of a dam on the Nam Gnouang. 1.3 Location and THXP Zoning Theun-Hinboun Expansion Project is located in both Bolikhamxay and Khammouane provinces (Map 1). In the Bolikhamxay province, the project area covers (1) Khamkeut district and Muang Cham Focal Zone, and (2) Pakkading district, while in the Khammouane province, it includes (1) Hinboun district, and (2) Thakhek district. The project will affect two large river basins: the Nam Theun/Gnouang/Kading system and the Nam Hai/Hinboun system. The dam and reservoir are on the Nam Gnouang in the present head pond of the existing project, 27 km above the confluence with the Nam Theun. The project area is divided into six zones: reservoir, head pond, recipient rivers, project construction lands, upstream areas, and resettlement areas. Resettlement and compensation policy varies, depending on the zone and the level of impact (Table 2). Areas with low level of impact will receive less compensation as compared to areas with high level of impact (See Annex 1). According to the THPC officials interviewed, the level of impact was assessed through data collection in the affected villages. High level of impact refers to permanent flooding in houses and plantation areas, while low level of impact implies two to three months of flooding after which the locals would be able to resume their normal life. This seems to reconcile with the feedback we received from villagers. They were mainly concerned about the impact of the dam on the land for cultivation and plantation. Table 2 provides information on zones and the affected population. The project will affect 190 villages with 9,000 households, of which 11 villages are considered highly affected, while 45 villages are medium affected. The highest impacts occur in Zone 1, the reservoir zone. The impact of the dam on the livelihoods of villagers in some of these zones, categorized as upstream, downstream, and resettlement villages, will be discussed in a separate section. 8

10 Table 2: Project Zoning and Level of Impact Zone Affected area 1 2 3a Reservoir (located in Khamkeut district) Head pond (located on the head pond of the existing Theun Hinboun Project below the NG dam site) Nam Hai and confluence with Nam Hinboun Area No. of Villages No. of Affected Households No. of People Affected Level of Impact ,186 High ,511 Low 11 1,042 6,199 Medium 3b Upper Nam Hinboun Area ,636 Medium 3c Middle Reach of Nam Hinboun Area ,040 Medium 3d Lower Nam Hinboun Area 20 1,494 8,279 Low -Medium 3e Downstream of THPP Dam Low 3f Pakkading Area 10 1,678 9,381 Very Low 4a-c Project Construction Land Low -Medium 4d-e Transmission Line Corridor ,636 Low 5a Upstream of the NG8 Reservoir 36 1,000 None- Low 5b Tributaries to the Lower Nam Hinboun None- Low 5c Upper sections of Nam Hinboun ,000 None- Low 6 Host Village ,268 Medium Total 190 9,001 55,627 Source: Concession agreement (2008) 9

11 Map 1: Project area Source: Theun Hinboun Expansion Project (2008) 10

12 Map 2: Project Zones Source: Theun Hinboun Expansion Project (2008) Map 3 : Project Location Source: Theun Hinboun Expansion Project (2008) 11

13 1.4 Key Actors/Stakeholders According to a THPC report (2008), stakeholders comprised five major groups: people directly affected by the project; GoL officials at the district, provincial and national levels; the broader interested regional and national community; Non-governmental Organizations (NGOs) operating in the country, particularly those in the project area, international NGOs, international organizations; and the local, regional and international media. During the consultation process, stakeholders consulted in 2006 included the directly affected people (100 villages in the two provinces of the project) and government agencies, which included the Governor s office, the Provincial Science, Technology, and Environment Office (PSTEO), the Provincial Agriculture and Forestry Office (PAFO), and the Lao Women s Union (LWU) in the two provinces. The THXP expects to involve private sector in the project area for tree plantation and mining concessions, besides others such as Nam Theun 2 Project, international NGOs, International Financing Institutions, etc. But there is limited data on the extent of involvement of these stakeholders. THPC categorizes stakeholders by degree of anticipated impact and according to the extent of power and influence wielded by individual/groups of stakeholders in connection with the project activities (Box 2). Box 2: Stakeholders by Degree of Impact and Extent of Power and Influence 1. Little or no influence/power over the project and a high degree of impact: THXP stakeholders in this category consist primarily of resettled villagers and host villages, but also upstream and downstream villages. 2. A lot of influence/power over the project and relatively high degree of impact: Local business communities and the private sector in general may be impacted positively since local contracts and a boom in the market could raise income levels, and boost the local economy. 3. Little or no influence/power over the project and a low degree of impact: Both consultants and international NGOs can be expected to have only indirect influence over the project and are not affected at all. 4. A lot of influence over the project and a low degree of impact: This group includes district and provincial line agencies, the central government, and financing institutions. Source: Theun-Hinboun Expansion Project (2008) Government of Lao PDR The national and provincial government plays a significant role in all stages of the project cycle. Key government ministries involved include the Ministry of Energy and Mines (MEM), Water Resource and Environment Administration (WREA), Ministry of Planning and Investment, Ministry of Finance, Ministry of Agriculture and Forestry, and Electricite due Lao (EdL), at both national and provincial level. The GoL Resettlement Committee, Resettlement Management Unit, District Working group and Village Development Committees are the key agencies that address resettlement issues on behalf of the government (See Annex 2). The committees are jointly formed by local authorities and THPC in accordance with the Decree on Compensation and Resettlement of People Affected by Development Projects (STEA, 2006), which required the project to collaborate with local governmental authorities and organizations to carry out necessary 12

14 surveys and field inventories of impacts by types and degree, and to determine entitlement to mitigation measures, including compensation for affected assets. Resettlement Management Unit (RMU), for instance, is the unit representing provincial authorities. The unit acts as a coordinating point for the project and affected people. Its main functions are to (1) collect any updates and assess the living condition of the villagers before and after resettlement, and (2) disseminate company s policies related to resettlement, relocation and compensation to the villagers. The unit comprises representatives from district authorities and the project. Theun-Hinboun Power Company The THPC, which is a joint venture between Electricite du Laos (EdL), MDX/GMS-Thailand and Nordic Hydropower, has a Social and Environmental Division (SED). Its overall responsibility is the day-to-day management and implementation of the resettlement process together with the Government of Lao PDR. SED consists of four units: (1) Resettlement Unit, (2) Social Development Unit, (3) Downstream Unit and (4) Environmental Unit. International Organizations and Independent Analysts Asian Development Bank: ADB is the main banker of the Theun-Hinboun Hydropower Project. The government has also requested ADB to act as the lead coordinating agency for its negotiations with foreign investors, and provide it financial and legal advice. The ADB has its own guidelines/safeguards including its Safeguard Policies on Involuntary Resettlements and Social Safeguards on Indigenous Peoples, which the project has to follow together with the company and country guidelines 1. Environmental Groups: Several environmental groups have been active in dam projects in the country, including the Theun-Hinboun Expansion Project. Among these groups, International Rivers (IR) is a major actor. These environmental groups petition for halting destructive river development projects and call for encouraging equitable and sustainable methods of meeting water, energy, and flood management needs. Lender Banks: They include Export-Import Bank of Thailand, KBC Bank, BNP Paribas Australia and New Zealand Banking Group Limited (ANZ), Bank of Ayudhya Public Company Limited, Siam City Bank Public Company Limited and Thanachart Bank Public Company Limited. The banks, especially ANZ, have certain policies/principles that they follow. Therefore, the project is under a high level of scrutiny from the banks, which send their officials to evaluate the project every six months. Other Independent Analysts: These include organizations such as the United Nations Development Program (UNDP) and the World Bank (WB), which have been involved in some consultation meetings of the project. Affected people According to Imhof (April 2008), the Theun-Hinboun Expansion Hydropower Project in central Laos will displace up to 4,800 people and negatively affect another 48,441 people living downstream, on project construction lands, and in host villages. According to the concession agreement, the estimated total number of people affected is 55,627. These groups of people 1 (Final RAP- NORPLAN) 13

15 rely largely on wild fisheries as their major income and protein source. Large dams have invariably led to a significant reduction in food for the people whose lives are intertwined with the cycles of this river system. 2. LIVELIHOODS AND POVERTY REDUCTION 2.1 Understandings of Poverty Two distinct types of poverty are presented in the vulnerability literature. These are consumption and investment poverty. Some people who are not consumption-poor may be investment-poor due to the decline of their asset bases over time and because of their inability to generate sufficient surpluses to protect, maintain, or enhance their assets (Reardon and Vosti cited in Alwang 2001, p. 10). In the context of poverty, vulnerability is the potential to fall into the poverty line as a result of a negative event whereby savings and/or other assets or claims do not compensate for losses and there is a need for households to reduce current consumption for survival (Alwang et al. 2001). Poverty affects vulnerability through people s expectations of the impacts of hazards and their ability to alleviate risks, to cope and recover from the events through directly constraining opportunities for coping and reducing the resilience to impacts (Adger 1999, p. 254). Poverty has a different meaning for different people, which may affect their priorities. The following section takes a look at the way poverty is viewed by different groups of people and organizations. International organizations According to the World Bank, poverty is defined as whether households or individuals have enough resources or abilities today to meet their needs. It defines extreme poverty as living on less than USD 1.25 per day, and moderate poverty as less than USD 2 a day. The definition excludes people or families with access to subsistence resources who may have a low cash income without a correspondingly low standard of living given that they are not living on their cash income (Wikipedia, 12 July 2011). Poverty is not just about material deprivation, but also about broader notions such as risk and vulnerability (World Bank 2006). The United Nations provides a far broader definition of poverty and livelihoods. At the UN World Summit on Social Development, the Copenhagen Declaration described absolute poverty as a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services (Gordon, 2005). According to UNDP-UNEP, poverty is defined as an unacceptable deprivation of multidimensional wellbeing. Individuals are poor in many different dimensions. They can be poor because, for instance, they don t have enough to eat, or poor because they only have dirty water to drink, or poor because they are illiterate, etc (2008, p. 7). The United Nations also focuses on the human development approach when it comes to poverty and livelihoods. In the 2010 global Human Development Report, human development is defined as:...the expansion of people s freedoms to live long, healthy and creative lives; to advance other goals they have reason to value; and to engage actively in shaping development equitably and sustainably on a shared planet. People are both the beneficiaries and the drivers 14

16 of human development as individuals and in groups. (Ministry of Environment Cambodia and UNDP Cambodia, 2011) The same document specifies the key elements of the human development approach to include: Sustainability: Development gains may be fragile and vulnerable to reversal. Special efforts are needed to ensure that human development endures that it is sustainable. Equity: Human development is also concerned with addressing structural disparities it must be equitable. Empowerment: People, as drivers of development, should be empowered to exercise individual choice and to participate in, shape and benefit from processes at the household, community and national levels. Taking these broad areas in mind, in September 2000, the United Nations adopted the Millennium Declaration of which the Lao PDR is also a signatory. The eight Millennium Development Goals (MDGs), which have to be achieved by 2015, are: Goal 1: Eradicate extreme poverty and hunger Goal 2: Achieve universal primary education Goal 3: Promote gender equality and empower women Goal 4: Reduce child mortality Goal 5: Improve maternal health Goal 6: Combat HIV/AIDS, malaria and other diseases Goal 7: Ensure environmental sustainability Goal 8: Develop a global partnership for development As a signatory to the Millennium Declaration, the Lao PDR is obliged and committed to achieving these eight goals by The Lao PDR has also set specific targets and indicators for each goal, which can be found in Annex 3. In general, the Lao MDG progress is mixed; Goal 1, 4, 6 and some indicators in Goal 7 are on track, while other goals are slightly off track. The country is on course to attain the MDG target of halving poverty by Government of Laos The Prime Minister s Instruction No 010/PM, June 25, 2001 on the eradication of poverty provides an operational definition: Poverty is the lack of ability to fulfill basic human needs such as not having enough food, lacking adequate clothing, not having permanent housing and lacking access to health, education and transportation services. The official definition of poverty under the instruction 010 is: Poor households are those with insufficient income to secure a minimal food ration of 2,100 calories/capita/day, equivalent to 85,000 kip/capita/month (1 USD was 7, Kip in June, 2013). This sum allows the purchase of about 16 kilograms of milled rice per person per month; the balance is insufficient to cover other necessities, such as clothing, shelter, schooling and medical costs. Poor villages are those where more than 51 percent of the households are poor and have limited access to schools, health facilities, roads and clean water. Poor districts are where more than 51 percent of the villages are poor and 40 percent have no access to schools, health, or clean water, and 60 percent have no access to roads. According to Wikipedia (2011), the basic needs approach is the one used for the measurement of absolute poverty. The approach defines the absolute minimum resources necessary for long-term physical well-being, usually in terms of consumption goods. The poverty line is then 15

17 defined as the amount of income required to satisfy those needs. A traditional list of immediate "basic needs" includes food (including water), shelter, and clothing. The current lists also include access to sanitation, education, and healthcare. We can clearly see that the national poverty eradication strategy is framed around the concept of basic needs. However, as mentioned in the earlier section, the country is also obliged to achieve the eight MDGs which look beyond these basic needs. Similarly, at the district level, the major constraints in poverty eradication in the poorest districts as identified in the National Growth and Poverty Eradication Strategy include: Lack of communications and access to markets. Inadequate social services, poor health and low educational levels. Linguistic barriers. Large families and high dependency ratios. Low productivity. Inadequate infrastructure, including roads and irrigation. Lack of extension services and knowledge of new technologies. Lack of access to markets and market information. Absence of rural credit and veterinary services. Considering these, the government s rural development strategy addresses essential development constraints, including inadequate infrastructure, limited and poorly developed human resources, poor health conditions, inadequate potable water and facilities, poor agricultural support and delivery services, limited access to inputs and markets, and lack of medium and short-term credit. Particular emphasis will be laid on improving the production capacity (inputs and technology, including improved rice seeds, crop diversification, animal health care, strengthening of the district extension service, and improved operations of existing irrigation systems); upgrading rural infrastructure to facilitate access to markets, rural credit, etc.; development of human and village/district-level institutions, and social services (education, health, clean water, sanitation). Another interesting aspect of the rural Lao is the linkage between poverty and environment, given that the country s income is primarily based on natural resources and the rural population is largely reliant on natural resources for its livelihood. According to MPI Lao PDR et al (2009), the primary cause of poverty in the Participatory Poverty Assessment (PPA) 2006 was identified by villagers as limited access to land for cultivation, especially for rice production. The scarcity of land resources was mainly because of land reform, attempts to consolidate villages or kumban, and to reduce or eradicate swidden cultivation. The PPA 2006 also draws two interesting conclusions: (1). Poor villagers recognize improvements in infrastructure such as health clinics, school buildings, and roads; (2) However, the essential elements of livelihoods, which include access to good land for agriculture, livestock, and forests, have either stayed the same or have worsened. While it is important to look at the national poverty eradication strategy as well as reviewing how rural development strategy is being addressed, it is also crucial to look at Bolikhamxay province s view on poverty given that it is directly affected by the project. The five criteria for poverty defined by the local government as per interviews with key provincial government officials in Bolikhamxay include: 1. Health and good hygiene, including clean water supply, toilet, vaccination 2. Shelter - permanent house, and rice field/garden for production; 3. Education - children of school-going age must be able to go to school; and parents should be able to read and write; 16

18 4. Income - must be at least 240,000kip/person/year; and 5. Ensure sufficient rice all year round; and have some left for sale. It is clear that the poverty eradication strategy of the Bolikhamxay province is also framed around the concept of basic needs though it is more focused on the traditional list than the national one, which is broader and could go beyond just the basic needs. By this standard, which sets the poverty bar low, it might appear that the project is helping to alleviate poverty in the province even though other needs are not being met. But if we were to assess the effects of the project according to the international strategy for poverty alleviation, the results would be disappointing. The Dam Operator It is important to find out the how the people involved in executing the project view poverty. A representative of the project, when interviewed, said poverty means insufficiency in food security and other necessary needs, lack of knowledge and knowhow, and associated with difficult living conditions. Therefore, one of the priorities of the project concerning livelihood improvement is support for rice cultivation, agriculture and livestock practices to ensure food security and excess produce for sales. It is important to note that the company, by virtue of being an exporter of electricity, is also obliged to implement a number of programs in accordance with the Lao law and Equator Principles for economic, social and environmental sustainability for the affected villages. In this regard, the company has committed funding for the Mitigation and Compensation Plan (MCP), which include funds for livelihood programs. Thus, it is difficult to conclude whether poverty and livelihood are the core objectives of the project or merely a part of the mitigation and compensation package of the company. Local People Commonly used terms to describe poverty by local people (based on interviews of a broad swath of villagers, including women and members of ethnic groups) include: food scarcity, lack of or limited access to electricity, water, road, school and health services (medicines). Poverty reduction is thus seen as an improved access to these. Here are some examples to illustrate how villagers think of poverty, and about being poor: Being poor to me means no income and lack of ability and opportunity to do so despite having sufficient to eat Access to education will improve our life in a better way Improved infrastructure like road access will give me and the villagers opportunity for market access, which will bring in more cash income for us It is also interesting to note that for some people poverty is associated with lack of assets such as land for production, capital, and external support when needed. Overall, most villagers agreed that development for them implies access to social services and basic infrastructure, besides having sufficient to eat and meet their basic needs. 17

19 2.2 National Social-Economic Development Priorities The 7 th National Social-Economic Development Plan outlines key priorities of the Government of the Lao PDR for The overall objectives in the 7 th five-year plan are to (1) maintain economic growth at more than 8 percent per year; (2) achieve MDGs (including poverty reduction) by 2015, and exit from the Least Developed Country status in 2020; (3) ensure sustainable development by integrating economic development with socio-cultural development and environment protection to the nation s advantage; and (4) ensure political stability, fairness, and order in the society and maintain public security; and be open to regional and international integration. Overall, the key priorities to be achieved by 2015 in relation to rural development and poverty reduction include: Reduce the poverty rate to less than 19 percent of the population, and poor households to less than 11 percent of the total households by Implement programs through the Poverty Development Fund to include three times the number of villages and Kumbans (group of villages) currently included. Pull villages out of their low development levels to become development villages according to four contents, four targets and the Prime Minister s Decree no. 13/PM. The targets: To transform about 50 percent of the large-sized villages in a district into development villages; transform at least one Kumban in each district into a small town, and create conditions for the poor districts to get rid of abject poverty. The idea behind the Kumban initiative is to group villages in far-flung areas and move them to areas of greater accessibility in order to provide the villagers with more opportunities and an easier access to governmental assistance. Resettle displaced people by developing new agricultural lands and living facilities for them on a permanent basis; completely halt (and reverse) deforestation; and bring an end to shifting cultivation. Village grouping, resettlement and livelihood: Continue Kumban development and village grouping (and resettling) as anti-poverty and rural/human development approaches. Extend the road network to poor districts to permit travel throughout the year, especially in the districts of Dukjeing, Kaleuam, Samoua, Saisathan, Phonthong and Saichamphon; and connect by roads all Kumbans and other priority areas. Expand rural electrification: The target is to provide electricity access to 80 percent of the households across the country, and extend permanent electrical networks to all the municipalities. Employment, youth and poverty cross-cutting issue: While the proportion of people below the poverty line is falling, the extent of hunger and food-security, especially seasonal food security, is a concern that the plan will aim to address. The government recognizes that it is not enough to grow food to meet food security targets; people should also have entitlement to food round the year, on a sustained basis. Growth, distribution, safety nets and gender cross-cutting issue: As growth in some sectors such as mining and hydropower, which are the drivers of development in the society, is not employment generating, there is a clear case for bringing the benefits of growth to the larger masses through some other means. A development approach will be devised that benefits the poor as well, like the employment assurance program. Such an approach when targeted at the poor (with special focus on women) can also act as a safety net. The plan also addresses the development targets of the energy sector. The natural resource sector has contributed approximately 2.8 percent to the economic growth in 2009 and

20 percent in Therefore, one objective of the plan is to proceed with the implementation of hydropower projects for revenue collection from electricity export. The energy and mining targets for 2015 are (1) to invest in 18 mega-projects, a step which is expected to generate a revenue of USD 175 million per annum; and (2) construct medium and large hydropower projects in the Northern, Central and the Southern parts of the country to generate enough electricity to meet the domestic demand by the year 2012 so that 80 percent of the total households across the country can get electricity by Development targets in the energy sector are also linked to trade targets in the seventh fiveyear plan, which aims to increase exports by approximately 18 percent a year, and imports by 8 percent. The majority of export commodities include mining products (silver, gold and copper), garments, agricultural products (including coffee), electricity, and wood and wood products. 2.3 National Growth and Poverty Eradication Strategy (NGPES) The NGPES is a comprehensive framework for growth and development with a particular focus on the improvement of the poverty situation in the poorest districts. It has a dual objective: enhancing growth and development, and reducing poverty. The NGPES has identified four main focus sectors for the government: agriculture/forestry, education, health, and infrastructure, especially rural roads. It has also defined supporting sectors (potential growth sectors) which comprise the emerging industrial development through energy and rural electrification, agro-forestry, tourism, mining and construction materials industries. In relation to hydropower and energy sector, the NGPES states: The Lao PDR s hydropower potential is very considerable and its development offers extensive benefits for the country. Hydropower is already a major contributor to economic output, government revenues, and export earnings. However, only 623 Megawatts (MW) of an estimated 18,000 MW (or 3.5 percent) of hydropower potential has so far been developed. The Lao PDR has one of the lowest levels of electrification in Asia; only 20 percent of all villages and 34 percent of households have access to electricity. The development of the country s hydro-electrical potential and rural electrification is thus integral to the national development framework. The government considers revenue from hydropower significant for poverty reduction. There is little information available, however, as to how revenue from this source is used, particularly for poverty reduction (or livelihood improvement) for the affected communities. Rural electrification is important because it is identified as an important factor for poverty reduction by the government. 2.4 Bolikhamxay Social-Economic Development Plan Bolikhamxay is a small province in the central Laos with a population of approximately 247,556 people in It is the 10 th largest province in the country with an area of around 15,977 square kilometers. The province comprises six districts, including Paksan, Thaphabath, Pakkading, Borikhanh, Viengthong and Khamkeuth. According to the Bolikhamxay Social Economic Development Plan (SEDP), the economic growth of the province is pegged at around 9.57 percent per year. Poverty decreased from 48.3 percent to 20.1 percent in the FY In the same period, agriculture, industry/construc on and service sector accounted for percent, percent, and percent of the economy, respec vely. Hydropower is a key sector for the Bolikhamxay economy. The province is facilita ng site inves ga on as well as construc on of Nam Ngiep, Nam Theun 1, THXP and Theun 4 (Nam 19

21 Heng). Currently, the province meets 75 percent and 90 percent target of the 6th SEDP in term of electricity genera on and electrifica on within the province. For Bolikhamxay, the provincial targets for poverty reduction for include (1) reduction of poor households 2 to 10 percent besides pulling up 85 percent of villages above poverty line 3 ; and (2) completion of land allocation for resettlement villages, and an end to the shifting/swidden cultivation. One key rural development priority of Bolikhamxay is related to Kumban (group of villages) development policy. The province supports the relocation of far-flung villages to one area in order to further the development agenda by providing the villagers an easy access to road and other amenities. The government will help improve the livelihoods of Kumbans by building their knowledge and know-how in agriculture and livestock. The relocation/resettlement will take into account serious site investigation, planning and compliance with development policies to ensure improvement in the livelihoods of the resettled villages. The province s five-year priorities linked to the eight MDGs are: Increased enrolment rate of pre-school and primary education to 29.9 percent and 99.8 percent, respectively. Take literacy rate to 95 percent Assuring equitable access to education to both males and females Reduce under-five mortality and infant mortality rate to less than 36 and 28 per live births, respectively Reduce maternal mortality to 124 deaths per 100,000 live births Reduce death rate associated with malaria to 0.2 per 100,000 population Increase the proportion of people using an improved drinking water source and sanitary facilities to 80 percent and 60 percent, respectively Promote environment protection and sustainability Promote partnership for development 2.5 Alignment in plans and priorities Overall, the top government priority is poverty eradication and rural development with the overall objective to exit from the Least Developing Country status by Promotion of energy sector development is a key source of revenue generation for achieving this goal. When analyzing different stakeholder views on poverty/livelihoods and their corresponding concerns and priorities, we can see that they are somewhat in line with those of the government and the project, for instance on the complete halt of deforestation and shifting cultivation; on Kumban development, extension of the road network to poor districts, and expansion of rural electrification. In terms of poverty reduction, both claim to have the same goal. But it is 2 According to The Prime Minister s Decree No 285/PM, October 13, 2009 on Standard of Poverty and Development , a poor household is defined as a household that has an average income per person per month less than (1) 192,000 kip/person/month nationwide, (2) 180,000 kip/person/month in the rural areas, and (3) 240,000 kip/person/moth in the urban areas. 3 According to the Prime Minister s Decree No 285/PM, October 13, 2009 on Standard of Poverty and Development , poverty at village level is defined as a village that has (1) more than 51% of poor households, (2) no primary school or has one located at more than an hour s walking distance, (3) no medical kits, pharmacy or the heath center or hospital is located at more than one to two hours of walking distance, (4) no access to clean water, and (5) no road access or it is accessible in only one season. 20

22 interesting to note that information on how the revenue generated from hydropower will be channeled and redistributed to rural and affected communities is limited. 3 RESOURCES, LIVELIHOODS AND EFFECTS OF HYDROPOWER In order to assess how local people are being impacted by the project, the researchers visited villages in the affected areas over a nine-day period (May 20-29, 2011). The researchers were accompanied by officials from MEM, provincial WREA, MEM and River Basin Organization (RBO). Four villages were visited to find out the effects of the project in three distinct areas the upstream, resettlement areas, and downstream. The second field visit was organized again during November 1-8, 2011 to the four villages visited in order to collect the missing data and information and to update the information and situation in the villages. In addition, the team also visited the RMU, THPC and other provincial and district government offices. These interviews encompassed a wide range of groups, including village headmen, women, men, old and young people from different occupations. Focus group discussion (FGD), a widely used tool for social research, was used for this study. In October 2012, central, district and provincial authorities, villagers and representatives of the project were invited to a workshop in Bolikhamxay to validate the findings, and collect feedback and recommendations, which were then incorporated into the final draft of the study. 3.1 Villages profile The four villages visited were Ban Keosaenkham, Nongxong, Phonsay and Pak Veng. Ban Keosaenkham: It s a new resettlement village of approximately 280 households from the villages of Phonkeo, Saensy, Thambing and Sopchath in Xaychamphone district. The resettlement to Keosaenkham was officially started on 22 May, During the time of our first team visit, the resettlement of some villagers was still taking place. Keosaenkham was selected as a village that experiences upstream effect from the project. Most of the people in the village are poor. They don t have enough rice to eat the whole year round. Most of them are ethnic minorities living in remote rural areas (Interview, May 2011). Besides rice, their other sources of nutrition are fish and other forest products such as bamboos and mushroom. When the locals do not have enough rice to eat, they adopt a number of coping strategies that include, but are not limited to, smaller meals, eating less, borrowing money to buy rice, borrowing rice, and relying on relatives. Hired labor is sometimes available and is a solution to rice shortages. Ban Nongxong: Approximately 109 households in two villages of Somboun and Phabang in the Nam Gnouang dam project area have already been moved to Nongxong village in Khamkeut district, Bolikhamxay province. Together with the host village, there are a total of 244 households in Ban Nongxong. Ban Phonsay: Situated 5 km from the bank of the Nam Kading river, it is located on a tributary (Houy Phang) of the Nam Kading river. Ban Pak Veng: Located on the bank of the Hinboun river, Khammouane province. According to 21

23 the company, the plan is to start the relocation of villagers in 2012, which is expected to be finalized in Table 3 provides the basic profile of these villages. Table 3: Profile of the Study Villages Location Demographic Main livelihoods Ban Keosaenkham Located in Saychamphone district, Bolikhamxay province Households: 280 Ethnicity: Lao Lum Old village: Swidden cultivation, cassava and tapioca plantation, livestock (buffalo, cow), reliance on non-timber forest products (NTFP) such as mushroom and bamboo shoots Ban Nongxong Households: 244 (Host village: 35) Ban Phonsay Located on Route 13 from Pak Kading, 5 km from Pakading river. Ban Pak Veng Along the mid-lower Hinboun River, 10 km upstream from the district town of Ban Songhong, and 8 km by unsealed road to Highway 13. Lao Loum: 118 households Hmong: 107 households Lao Theung:19 households Total Pop.: 1,320 (Female: 768) Households: 151 Total pop.: 766 (Female: 342) Ethnicity: Khmou Households: 62 Total pop.: 288 (Female: 143) Ethnicity: Lao Lum New village: Livestock and rice cultivation Old village: Swidden cultivation, fishing, and livelihoods are also dependent on NTFP and wildlife such as birds, squirrels, etc; and on sale of surpluses of NTFP, fish and pumpkin to neighboring villages New village: Rice 100%, collect NTFP such as bamboo shoots, cassava and Yangbong plantation, rear pigs and chicken, work as farm laborers, and sell Keua Nem (NTFP) as product Rice and cassava plantation, work as laborers on rubber plantations Plantation, livestock (cow, buffalo, pig, chicken), fishing, reliance on NTFP, sale of vegetables, particularly cabbage, work as laborers Source: Household survey, March THPX s Livelihoods and Social Development Programs According to the THPC (2011), the average total household income across all THXP zones was slightly above 10,000,000 kip per year in 2007 or approximately USD 1,250. Agricultural production, mainly rice followed by livestock, is the main source of income for people in the THPX zones. Rice production involves both paddy and swidden cultivation. While agricultural production (including livestock) is the main strategy for local livelihoods, villagers also depend on forest resources, particularly NTFPs and other natural resources such as fish and other aquatic animals for food and some income. On average, approximately half of the total cash income comes from local businesses, wage labor, public service, NTFP sales and trade (THPC, 2011). Note that this includes both urban and rural average. 22

24 Threats to the local livelihoods include floods and drought, believed to be caused by the hydropower project (Interview 2011). Consequently, the THXP has instituted a policy regarding resettlement (THPC Resettlement Policy) with the aim of minimizing the impact. This includes site selection with the following criteria: 1. Each household should have a plot of farm land with a slope of not more than 25 percent 2. The site should have a potential for irrigation 3. Soils should be sufficiently fertile to provide a suitable net return on paddy and other crops, without requiring large applications of fertilizers 4. Where possible, all households should have contiguous farm plots 5. Year-round road access 6. Forest areas that can be exploited in a sustainable manner 7. Proximity of existing locations and within the same district; 8. Areas affected by other project impacts will not be selected as resettlement sites; 9. Host villages should be fully consulted, and should agree to receiving resettlers before such an option can be considered viable; and 10. If villagers want to move to areas with similar ethnic groups, their demand should be considered. This might lead to some villagers wanting to move the entire village to a new location, while others may prefer moving according to clan or kinship systems. Figure 3 shows the detailed Resettlement Schedule that details the relocation to resettlement sites of 11 villages over a three-year period, and a commitment to achieving income targets before Figure 3: Resettlement Schedule Source: THPC (2011) THXP has made a commitment to support the affected people until they reach specified income targets, which vary between zones. As indicated in Table 3 below, the income target for the zones 23

25 include (1) Lao PDR Kip 18,102,566 for Zones 3D and 6; and (2) Lao PDR Kip 14,690,823 for Zones 2, 3A, 3B, and 3C, based on average household size of six persons, adjusted for inflation. Under the Concession Agreement, the household income target means the yearly target for the resettler, host or downstream households, including income in cash and in kind, to be achieved at the end of the Resettlement Implementation Period, based on a village average sampling. Household income targets for resettlers/hosts, which were based on surveys of village average at the 2008 rates, will be reached or exceeded at the end of the Resettlement Implementation Period. These household income targets will be tied to the official GoL cost of living index and adjusted each year starting in The rates of increase will be about 4 percent to 4.5 percent annually depending on the Lao Government cost of living index. These annual increases in the income targets will bring these to levels in accordance with GoL s Poverty Reduction Plan. According to THPC, the project will provide support to all livelihood activities start-ups. After these activities are able to generate income, the THXP support will be scaled down to technical advice. Resettlement villages will continue to receive support until their incomes have stabilized above the income targets set by the project (Table 4) for two consecutive years for 80 percent of the monitoring households. All impacted communities will be monitored by independent reviewers until sustainable income and social development targets are achieved. Table 4: THXP Income Target Source: Theun Hinboun Expansion Project (2011) However, except for Ban Keosaenkham village that has prepared the village development plan well, people we interviewed in other villages still expressed concern about their livelihoods after the project stops giving them support, as not all households have received land for plantation and cultivation as promised. The income target plan, although providing benchmarks to be measured, may overlook other factors affecting the resettlers livelihood and socio-economic differences among different groups in the communities. Livelihood support activities for resettlers include demonstration farms to support agricultural extension; livestock and fishery extension and veterinary services; land clearing and preparation; construction of irrigation schemes for rice farming; and provision of food or cash-for-work activities for the purpose of food security during the transition period. According to the THXP, livelihood activities differ in different areas. In areas downstream from the power station, villages will be relocated to flood-safe areas and are participating in livelihood restoration programs. For downstream and head pond areas, support includes: Animal Breeding Center (ABC) to produce and distribute well-bred offspring and training Rice production alternatives (flood-resistant rice, paddy clearance and dry-season irrigation options) 24

26 Horticulture development Land clearance for rice fields Forage production and improved ruminant husbandry, as well as veterinarian services Plantations and orchards Cottage industries Upgraded irrigation schemes for rice farming Provision of food/cash-for-work contributing to food security Other THPC social development programs cover health, education, vulnerable group support, institutional strengthening and community development. The THPC budget includes USD 850,000 as compensation for lost assets of those displaced from the reservoir area, around USD 2.5 million for livelihood programs over an 11-year period for the 4,800 people displaced from the reservoir area, and USD 3.9 million for livelihood programs over 11 years for the 29,500 affected villagers downstream. This amounts to about USD 47 per person per year for resettled communities, and a meager USD 12 per person per year for downstream communities. Little information is available on how the budget has been allocated. As documented in the Section 1, the Lao Government and EdL estimated that the annual foreign exchange revenues will be about USD 25 million, which would add up to around USD 275 million in 11 years. But the total amount of compensation budget allocated in 11 years is a mere USD 6.4 million, which is only 2.3 percent of the expected revenue. 3.3 Local livelihoods and hydropower-induced transformations The livelihood concept is broad, considering the complexity and multidimensional relationships between the social and biophysical environments, and highlighting the vulnerability context in which decisions about livelihood strategies are taken. Livelihood systems include contexts, conditions and trends, livelihood-related resources, institutional processes, organizational structures, livelihood strategies, and livelihood outcomes (DFID 1999). This study will, however, focus on a limited number of dimensions within the livelihood assets (such as agricultural lands, rivers, and forests), livelihood strategies (such as livelihood activities), and livelihood outcomes (such as food, income, poverty, and vulnerability), based mainly on data and information derived from the four villages surveyed. We also discuss participation, and access to information, redress and remedy, which influence livelihood strategies to generate livelihood outcomes Livelihood resources Natural resources are important sources of livelihoods in the villages we visited. Most of the households depend on agricultural lands, rivers, and forests for their income and for food security. Here are a few snippets from our interviews with villagers that reflect the changes in the resources they depend on: Old village is closer to the river so I have more access to fish for food and for sale. A villager at Ban Keosaenkham 25

27 Fertilized plots and land are owned by the host village so our rice yield decreased notably over the year, compared to our old village. In the former village, we had easier access to forest and less restriction on land use. Villagers at Ban Nongxong Due to flooding, we experienced reduction in fish, and rice paddy has been heavily affected. Villagers at Ban Pak Veng The fieldwork confirmed that adaptation to new livelihood strategies such as textile and handicraft, and from swidden agriculture to paddy cultivation is not easy for many households. Although wage labor is not new, it is more widespread after the severe floods and droughts caused by the project. Wage labor is a form of employment, equally shared by both men and women. The majority of the households are subsistence farmers. They produce primarily for consumption. Only a small surplus is sold for cash to buy basic needs such as utensils, medicines, and clothes. The villagers mainly consume rise, their staple food. The local households are also highly dependent on NTFPs, fish, and other aquatic animals, for food. Box 3: Case interview with a Nongxong villager I was born in 1963 in a poor Hmong family in Ban Houa Lerk, Bolikhamxay province. The village had no school, hospital or road access. My family earned its living mainly from swidden cultivation and livestock activities. Because it was difficult to make a living there, our family decided to move to Ban Phabang, Bolikhamxay which has a school, hospital and yearround road facility. Unfortunately, I was not able to attend school due to our family condition. In 1980, I got married and moved out in Our family is very poor and our livelihood is still very much dependent on natural resources. I have nine children (six girls and three boys) of whom three could not attend school. Three already have a family, and the fourth one is studying at the National University of Laos. In 2005, my living condition improved. I had some excess production for sale and was able to make some savings to buy a vehicle for family use. Since the project started, THXP has assisted the villagers in production training besides giving advice on livestock and other activities which has helped to improve our living conditions. In 2008, THPC started their assessment; they interviewed us and urged the villagers to stop some plantation, for instance of sugar cane, casava, banana and some other fruit plantations. Then, we were informed that we will be affected by flood from the dam construction. Therefore, the project will resettle us to another village providing (1) compensation for the lost assets, (2) land for cultivation, (3) housing, (4) electricity, (5) road access, (6) health center, (7) water supply, and (8) food support for three years (rice: 440 kg/person, canned food, etc). Provincial and district officials, representatives of the company, village chief and other village organizations were involved in all these discussions and information sharing. Due to this and the fear of flooding, villagers agreed to move in the hope that life in the new village will be better. Before moving to the new village, THXP provided two chickens to each family to carry out some rituals. They also informed us that each family will receive rice support as promised, no matter how much rice we have now. In addition, electricity was to be provided free for the first three years. However, when we arrived at the new village, an officer from THXP came to each family to assess the rice we had brought along. Eighty bags, I said, and I was informed that since we had brought rice from the old village, we will not receive rice support from the project in the quantity promised earlier. In addition, the company has also changed the amount of rice support - from 440 kg/person to only 220 kg/person. The company also did not keep their promise on electricity provision. Only three month after the electricity connection, we were charged with a bill. All of us were very upset with the situation, and we complained to the village chief, district and provincial authority. But until now, no issues have been resolved, including that of land allocation. The villagers are yet to get land for crop production and plantation. If the situation does not improve, I would like to take my family to another village where we can start our livelihood activities such as plantation, farming and livestock like in the old village. After moving to Nongxong, we were directly affected by the project. I think we are worse off here as compared to the old village. 26

28 Rice: Interviews with villagers revealed that the common issues about rice production faced by the affected people fall into three categories: delay in land allocation, quality of the lands allocated, and change of mode of production. In the old villages or before the project, the interviewees said most of them had sufficient rice to eat the whole year round. After moving to the new village, some villagers have rice from cultivation for only a few months in a year, and have to rely on support from the project and other food sources such as bamboo and mushroom from the forest. Some interviewees said the shortage is being caused by the delay in land allocation. In Nongxong, for instance, only seven out of 28 households have been allotted land. Villagers from Ban Keosaenkham, although faced with a similar situation, are experiencing lesser impact partly because they have just recently resettled in the new village. Villagers in Ban Nongxong complained that their rice yield has decreased significantly compared to the yield in their native villages because of the poor quality of land here. They said that plots of land suitable for agriculture were owned by the host villagers. Their situation has worsened due to the change in the mode of rice cultivation, from shifting cultivation to paddy land agriculture or vice versa. This is partly because the villagers are not familiar with the new methods of cultivation. One villager in Pak Veng said: The majority of the population had to shift from rice paddy to swidden cultivation due to flooding from the rising water level, which led to reduction in yield. Before the change, households had sufficient rice for food and excess for sale. After the change, they sometimes do not have enough food. One response from the company has been to provide food support under its Compensation and Resettlement policy. Ever since the resettlement, villagers from Ban Nongxong and Ban Keosaenkham have been dependent on rice support of 220kg/person/year from the project. Ban Phonsay and Ban Pak Veng, however, are not provided this support because of small impact. In addition, the project provides livelihood training such as agronomy techniques and other new livelihood information. Villagers from all villages, except for Ban Phonesay, will receive such support from the company. Livestock: Livestock is an important livelihood asset, and it is an indication of household capacity to recover or withstand shock. A case study elsewhere in Laos reported that losing livestock in a flood event is the most serious loss of long-term livelihood and household security. Buffalos and cows are used as a safety mechanism. The sale of livestock is important for large expenditure when a disaster strikes or there is a medical emergency. Livestock serves as a safety net and is often the most valuable asset in a household. Cows and buffalos also play an important role in livelihood as draught animals in the paddy fields (Mekong Wetland Biodiversity Programme 2005). After any extreme event such as flood and drought, the loss of livestock renders households more vulnerable due to the diminishing of the safety net. Households that were previously quite wealthy may suddenly find themselves in a precarious situation. Their sense of security falls because of the degradation of the important household assets (ibid). In the villages we visited, interviewees indicated that the number of livestock has been affected due to a shift from farm-based occupations, dwindling grazing lands, and stricter land use rules in the new villages. Ban Keosaenkham and Ban Nongxong now raise mainly fowl such as duck and chicken instead of cows and buffaloes. One villager said: In the old village, one of my main livelihood activities was to raise cow and buffalo. However, due to resettlement, it was easier to get cash for these animals than to bring them to the new village 27

29 Similarly, villagers from Ban Pak Veng said raising small animals is easier and safer although it has less savings potential as compared to the big ones. The small fowl can be moved quickly in case of floods (as a result of water release). With the relocation of their houses (expected to start in 2012) it would be beneficial for them to maintain their livestock activities. Fish and aquaculture: Fish and other aquatic creatures are a key food product and the main source of protein for the rural Lao. Almost all affected villages have fish as important part of their daily diet as well as for sale. Interviewees in all villages we visited said their fish catches had declined. They have less food to eat. They believe that this has been caused not just by the fluctuation of water level, but also by water quality. This may be associated with the decline in the nutritional value provided by fish. In Ban Pak Veng, as a response to the decline in fish availability, the company supported small fish (fish fingerling) for villagers who have fish ponds. However, villagers said this is not very helpful because the project did not support fish ponds, and hence the fish fingerling project has not been sustainable. Change in the distance from the river was also cited as a problem in Ban Keosaenkham and Ban Nongxong, particularly by men. Villagers from Ban Keosaenkham said they have to spend more time to travel for fishing because the way to the river is longer. They are relocated to a village farther away from the river in which they used to fish. A villager in Ban Nongxong said: Unlike here, I did not need money to survive in the old village, food and fish were plenty In the old village, I earned income from selling fish, vegetable and NTFPs to some merchants near Nam Ngoung. The new village is not only farther from the river, it is also difficult to access markets and buyers here. Other plantation activities: Homestead vegetable production is another source of income and food. Villagers stated their willingness to continue this activity. However, access to land and water was their challenge. NTFPs and forest products: Forest products, including wildlife such as birds, and NTFPs such as bamboo shoots and mushrooms are important sources of food in the villages we visited. In Ban Phonsay and Pak Veng, the hydropower development had little impact on NTPFs and forest products. Villagers could still access the forest, although forest areas had declined due to a number of reasons such as rubber plantations. Villagers from Ban Keosaenkham and Ban Nongxong, said they had easier access to the forest and their products in the old villages. This is believed to be partly because of stricter classification of land use, and lesser availability of forest resources in the new villages. 28

30 Box 4: Case interview with Pak Veng villager I was born in 1961 at Ban Pak Veng, Hinboun District, Khammouane Province. I have three siblings, and my family was self-sufficient through farming and plantation activities. I was able to attend school only until primary level because my parents passed away and I had to take care of my family. I have a total of five children, a 21-year- old daughter working in Vientiane, a 20-year-old son helping me at home here in Ban Pak Veng, a 15-year-old daughter also working in Vientiane. The fourth one (10-year-old girl) is attending primary school here at Ban Pak Veng and my youngest child is only three years of age. Our family s main livelihoods activities include farming and plantation activities, livestock, NTFP sales, fishing, animal hunting and rubber plantation with support from THXP for the seeds. I have 1 ha of land for rice cultivation, 1 ha for rubber plantation, and two cows. Most of the cash income of approximately 300,000 kip per month comes from my two children working in Vientiane. I am also the deputy head of the village funds program supported by the THXP for almost three years now. After the dam construction, THPC sent officers to assist the villagers in terms of livelihood improvement activities, including providing small fish (fish fingerling) and pigs and giving advice on how to breed them. They also provided some rubber and fruit seeds for plantation, and one pump for the whole village. The villagers requested for another breed of pig but it was not approved by the project. The dam caused flooding in the rice fields and other plantation areas. This is an annual problem which makes it difficult to do homestead farming near the river. Our catch of fish and quality of water has also deteriorated. Due to these problems, my family has less to eat and we have to send our daugters to work in different provinces. The villagers discussed these problems and have informed the district authority. However, the company is yet to resolve our issues. They have only told us that we will be relocated to higher land near the village in The project has made some assessment and has agreed to provide 6mx6m house to each household besides compensation for the loss of the old house. They have also promised to provide access to electricity and road and other necessary facilities when we move. Personally, I agree with the idea of moving as it is very difficult to make a living in the village now. The new area is close to the old village, and we will still be able to carry out agricultural activities in the same area in the dry season. Bamboo and mushroom are said to be still widely available but the consumption of wildlife is reported to be less in Nongxong and Keosaenkham where villagers have been resettled. As pointed out by a villager in Ban Nongxong: In the new village, I have not been able to find squirrels, wild boars, and birds for food. In Ban Nongxong, in particular, cash income from NTFP sales has decreased because the villagers reported having limited access to the market as well as the NTFPs in the new village. Non-farm activities: Given that land has not been adequately distributed to the resettlers, many have decided to undertake other forms of livelihood and income generation activities. Men in three villages except Bank Keosaenkham, go to work in a nearby farm or rubber plantation and earn a daily income of approximately 20,000-30,000 kip. It is said that this cash is mainly used to buy necessary household items for the family Social sector development According to the decree on Compensation and Resettlement of People Affected by Development Projects, project owners shall compensate the affected people for their lost rights to use land, and for lost assets. The Decree clearly states that all affected people severely affected by the project due to loss of 20 percent or more of productive income generating assets, means of livelihood, employment or business and access to community resources shall be entitled to sustainable income restoration measures in addition to their entitlement for compensation and other allowances enabling them to attain pre-project livelihood levels. Housing: The company built new houses for the affected households. Any household with more than seven people is entitled to two houses and villagers could choose the housing structure based on 29

31 ten models made available by the company. Our interviews showed that the villagers appeared happy with the new houses: I am happy with the new house because it has better facilities such as electricity, water, and toilet Now I feel equal, everyone has the same house Education: According to the Decree, and as specified clearly in the concession agreement regarding educational facilities and educational improvements, the company is required to replace the schools or upgrade the existing facilities in the host villages, besides training the existing and new teaching staff, and providing equipment, materials and furniture as necessary. THPC has plans to construct over 23 schools throughout the resettlement and downstream areas, and provide stipends for teachers, school books and basic stationery. In addition, THPC supplies and will continue to supply sports equipment besides supporting regional competitions between schools. According to our interviews, most villagers are happy with the educational facilities and improvement program that the company is offering. All villages have basic primary schools. These are consistent with what was available in pre-project areas as determined by the THPC together with the provincial authority and the villagers. But no secondary school has been constructed in Ban Nongxong, resulting in a high level of dropouts, especially among girl students, as parents are reluctant to let them travel to secondary schools in nearby village. The provincial Education Department is also happy with the education development done by the company, and stressed that resettlement has made it easier for them to access villagers as compared to the old villages. However, interviewees expressed concern over lack of a secondary school for the resettlers at Ban Nongxong. They said this issue has been raised but is yet to be resolved. Healthcare: The company has to ensure that all households have access to health centers within 5 km of residence. The company has constructed a new health center in each resettlement site and provided medical kits to each household in Ban Pak Veng. In addition, the company has assisted in constructing toilets in the resettlement sites besides helping to build water supply system so that villagers have access to clean water. However, villagers in Keosaenkham reported that water is still not accessible at all times. The company mandate is to complement and support the Lao PDR government health program. According to the project policy, a health team under the Social Development Unit, comprising a staff of six to eight persons, has to carry out a baseline study, surveys, and liaise with the Ministry of Health (MoH) at provincial and district level on operational issues besides coordinating with donors and agencies. It is also expected to coordinate with the other THPC units to monitor the social, economic and health status of the communities affected by resettlement, and to develop proactive strategies to address their health issues. The villagers reported an improvement in the healthcare system in the new villages after receiving assistance from the project. However, despite this, the resettled villagers face the risk of nutritional degradation due to the decrease in food sources as compared to their native villages, and a potential increase in HIV/AIDS/STI prevalence due to changes in the traditional culture. 30

32 3.3.3 Community infrastructure and access to road and market The company is expected to provide all-weather roads to each resettlement site, year-round water supply as well as electricity connections to the houses. Villagers said that they were very keen to receive support from the project in building and improving the basic community infrastructure which has the potential for village development. Respondents in Ban Keosaenkham said: Road is very important as it makes it easier to access the market, thus improving the living standards. The same is true of the villagers resettled in Ban Nongxong, who complained their old village was inaccessible by road during the rainy season. Nevertheless, villagers are concerned about the infrastructure. In Ban Keosaenkham, for instance, where the resettlement process has just been started, electricity is still not available all day long. Irrigation system for the community is also not in place Resilience Resilience is an important factor in sustainable livelihoods framework. It is related to vulnerability context, which can have a direct impact on people s assets and the options available to them to pursue beneficial livelihood strategies. The vulnerability context of poor people s livelihoods is usually influenced by external factors outside their direct control and is dependent on wider policies, institutions and processes. According to Alwand et al. (2001), livelihoods vulnerability has been seen as a balance between sensitivity and resilience of livelihoods systems. Highly vulnerable systems are characterized as having low resilience and high sensitivity, while low vulnerable systems have low sensitivity with high resilience (Table 5). Livelihood resilience allows a system to absorb and utilize (or even benefit from) change. Where resilience is high, it requires a major disturbance to overcome the limits to change in a system. Livelihood sensitivity is the degree to which a given system undergoes change due to natural forces, following human interference (Davis, quoted in Alwang et al. 2001, p. 12). Table 5: Two Dimensions of Vulnerability Sources: Alwang et al. 2001, adapted from Davies These villagers also employ coping and adaptation strategies used by local communities to meet their basic needs. However, these strategies are threatened because these villagers are being now relocated to other places, where time is needed for adaptation, and where natural resources have become scarcer. This suggests the need for sustained support by the project, not only at the stage of resettlement, but beyond. The resilience capacity of the many affected households in the four villages visited by the team have been weakened due to the loss of important household assets such as grazing lands for raising livestock, and declining natural assets such as fish, other aquatic animals, and NTFPs. New settlers in Ban Nongxong said they could never access natural resources like they used to in their former villages, and they wondered if they would ever be able tide to over this difficult time. In short, interviews and observations about the project show that it has brought about improvement, to a certain degree, in road accessibility, education (school building), health (medical centers), water supply and sanitation in some villages. However, this applies mostly to villages that are affected directly. A villager in Ban Keosaenkham sums up the sentiments of many when he says: 31

33 I am happy with the resettlement, particularly the housing and facilities such as electricity, water and road access. However, I am a bit disappointed at the delay in the allocation of land for rice cultivation. What will I do if I receive no more support of rice from the project Summary of reported changes to livelihoods and livelihood assets The tables below provide a summary of key reported benefits and impacts on household livelihood/ livelihood assets. Table 6: Livelihoods of Post-resettlement of THXP Project Ban Keosaenkham Ban Nongxong Ban Phonsay Ban Pak Veng Livelihood resources Social sector development Community infrastructure and access to roads and markets Reduction in rice yield due to delay in land allocation Increase in fish and aquaculture, but some experienced less access to fish for food and for sale due to longer distance to river bamboo and mushroom are still widely available Better housing improved educational facilities Better access to healthcare Increase in the number of incidents of thefts Better access to road and market Better access to clean water Electricity access for more households although it is not available all day long Rice yield decreases because of (1) change from swidden to rice cultivation, (2) delay in agricultural land allocation, and (3) fertilized plots and land are owned by the host villagers Increasing trend of raising mainly small domestic animals rather than cow and buffaloes Less fish consumption and sale Less access to wildlife; bamboo and mushroom are still widely available Cash income from NTFPs sales decreased No. of men working in nearby farms or rubber plantations increase Sales from homestead garden decrease improved educational facilities but secondary school has not been constructed Better access to healthcare Increase number of thefts, drug use, etc. Rise in conflict among different ethnic groups Can access road throughout the year. But transportation to the closest market is limited and costly Irrigation system in place but does not function Source: Household survey and focus group discussions, March-April 2011 Little impact on NTFPs and forest products No. of men working in nearby farms or rubber plantations increase Poorer water quality No support from the project in terms of housing, education or healthcare No support from project on this Increasing trend of raising mainly small domestic animals Reduction in fish. Rice cultivation has been heavily affected due to flooding Poorer water quality Reduction in yield because of the need to shift from rice paddy to swidden cultivation due to flooding Little impact on NTFPs and forest products Increase no. of men working in nearby farms or rubber plantations Inadequate water supply in April and May, have to rely on water well Better access to healthcare (first aid kit for each household) Increase social disruptions No support from the project in terms of electricity, road and market Received support for water well construction 32

34 Table 7: Reported Impact and Benefits to Household Livelihood Assets after the Project Asset Key terms Response Human Food security, degradation of nutritional status Ability to access education/send children to school Fall in disease incidence After the project, there has been a decline in food sources, particularly rice, fish, and wildlife across the four villages, which has potential impact on the nutritional status of the villagers. The affected villagers still rely on food and rice support from the project. Improved educational facilities. Only Ban Nongxong has no secondary school, making further education a challenge, particularly for female students There is high possibility of less incidence of diseases due to improved healthcare system, better access to clean water, particularly for the resettlement villages Social External support Only Ban Phonsay received support from other organizations, such as. Luxembourg. Kumban initiatives make it easier for the government to provide support to the villagers Cultural changes Social disturbances Conflict Potential increase in HIV/AIDS/STI prevalence due to potential changes in traditional culture, and increasing social problems Increase in number of incidents of social disruptions Rise in conflict among different ethnic group (Nongxong) Financial Trade/ Sell goods Road and resettlement provide enabling environment for trade. However, some villagers complained of poor access to fish and NTFP for sales More livelihoods activities Increase in number of men working on nearby farms or rubber plantations. Some households receive support from family member who go to work in the city or Thailand (small number) Physical Housing New/upgraded houses with access to electricity, water and toilets Road, convenient, trade Schools Improved healthcare system Clean water Irrigation Upgraded village road access more convenient and creates enabling environment for trade. However, some challenges exist, such as in Ban Nongxong, where transportation to the closest market is limited and costly New/upgraded schools. But no secondary school has been built in Ban Nongxong Health center is built in the resettlement site, first-aid kits have been provided to all households in Pak Veng With clean water to each household in the resettlement site and a water well for Pak Veng, villagers save time in filling water (time for other activities) Irrigation system in place but does not function effectively Environment NTFP Impact on the access to NTFPs and forest products not severe. However, resettled villagers require longer time to familiarize themselves with the new area, experience stricter classification of land use, and access to wildlife tends to drop. Land Water resources Access to fertilized land and plots for agricultural purposes is still a challenge due to the delay in land allocation as well as availability of fertilized plots and land Water quality tends to be poorer in the downstream villages. Some villagers complained of longer distances to the river as compared to their old villages Source: Household survey and focus group discussions, March-April

35 4. QUALITY OF PUBLIC PARTICIPATION As is well known, quality of participation and power also plays an important role in sustainable livelihoods. As identified in the IDS Strategy citizens have greater power to influence the state and private institutions to work in ways that accelerate poverty reduction and promote social justice. According to Gaventa (2006), power and participation are related to how citizens recovered a sense of their capacity to act, and how they mobilized to get their issues heard and responded to in the public agenda. In this regard, the power cube is used for analyzing the spaces, places and forms of power and their interrelationship. The spaces used for participation include: Closed or uninvited spaces: bureaucrats, experts, elected representative make decisions with little broad consultation or involvement Invited spaces: people are invited to participate by various kinds of authorities Claimed/created spaces: spaces claimed by less powerful actors from or against the power holders, or created more autonomously by them Places or levels of participation where critical social, political and economic power resides are divided by local, national or global arenas as locations of power. In analyzing the dynamics of participation in different spaces and places of power, it is also important to distinguish between the visible, hidden and invisible (or internalized) forms of power. The analysis of the power cube is shown in figure 4 below. This analysis is a powerful tool and an analytical device, which can be used along with other approaches to reflect on and analyze how strategies for change in turn change power relations. Figure 4: The Power Cube: The Levels, Spaces and Forms of Power Source: Gaventa (2006) It is on the basis of this theory of quality of participation that we will now attempt to understand how the affected people engage in and influence (or not) project decisions that affect them so that we can improve our understanding of their livelihoods. To achieve this, we will analyze participation and information available to stakeholders at each stage of the project life cycle, ranging from formulation, planning, and implementation to monitoring. 34

36 4.1 THXP policy on Public Involvement (PI) According to the THXP policy and plan, a comprehensive consultation process was to be undertaken to ensure participation by all affected stakeholders. This is in accordance with the government s aim to include local community participation in planning, implementation and monitoring of hydropower projects to ensure that benefits reach the affected people. Here, Public Involvement or PI, which is the process through which the views and opinions of all interested parties or stakeholders are integrated into project planning, implementation and monitoring, holds the key to the THXP participation policy. The national guidelines and regulations on public involvement such as (1) Technical guideline on Compensation and Resettlement for Development Project (Nov 2005), (2) Environment Management Standard, and (3) Ministry of Industry and Handicrafts regulation No. 447/MIH, required that public involvement include notification and dissemination of information, consultation and response to the affected parties, opportunity for public comment for project approval, and participation of affected parties in the project implementation. THPC followed these guidelines as well as those of ADB, which require the affected people to be fully informed and closely consulted. In addition, it is required that the affected people, GoL, local NGOs and all other stakeholders are consulted during the preparation of Environment Management and Resettlement Action Plans. Interviews with project staff members and villagers showed that consultations undertaken by the project were designed to inform local people about the project development and its impacts, as well as to obtain an overview of their concerns, requirements and preferences in relation to compensation, relocation and livelihood restoration. The consultations took into account cultural as well as ethnic and gender-sensitive issues. For instance, in the resettlement village where there were ethnic minorities such as Hmong, the company followed the ritual process before moving their ancestors bodies besides paying respect to other local beliefs before moving to the new village. To facilitate this process, local translators or persons who know the local language were often involved in the consultation process. Similarly, the company took steps to involve women in the participation and consultation process, recognizing the constraints they face in expressing their concerns and opinions by involving the Lao Women Union (LWU) for notifying women of consultation meetings and encouraging them to participate. According to the Theun Hinboun Expansion Project (2008), the consultation process can be divided into four major phases (! ก ): Information Dissemination Feedback for Planning of the RAP (Completed in 2007) Detailed Participatory Planning ( depending on which groups are involved as programs start and are finalized) Participatory Implementation (as of 2008) Table 7 and Table 8 summarize the phases, methods and levels of involvement of key stakeholders of THXP (Affected people, government at national and provincial level, and other stakeholders such as international organizations, NGOs, etc.). According to the project, the affected people have a high level of involvement and engage in information gathering and dissemination, consultation as well as participation. 35

37 Table 7: Public Involvement Phases Source: Theun Hinboun Expansion Project (2008) Table 8: Public Involvement Methods Source: Theun Hinboun Expansion Project (2008) 4.2 Institutional Arrangements for Public Involvement Role of GOL: Advisory committees have been established in Bolikhamxay and Khammouane provinces to involve key stakeholders at provincial and district levels. As per regulation MIH (DOE) No 447/MIH, the Department of Energy of the Ministry of Industry and Handicraft (now Ministry of Energy and Mines) is the agency responsible for undertaking screening, Initial Environmental Examination (IEE) and project implementation stages (Resettlement Action Plan of THXP, 2008). Key officials of local, provincial and district government, including from STEO, Industry, Agriculture, and LWU, were also represented in the THXP consultation teams. Village-Level Involvement: Currently, there are approximately 250 PI workers representing the community. Their key roles are to communicate between the company and the community, to disseminate information from the company to the community, and to transmit any concerns, questions and requests from the villagers to the company. This group focuses on facilitating discussions and meetings in the community besides organizing events. 36

38 THXP Consultation Teams: THXP has established a Public Involvement Team, which includes representatives from the provincial government. The team also comprisess an international coordinator to help guide the team for the PI process. A mechanism is already in place to provide all key stakeholders, including government authority, the project and community a key role in public participation to make sure that the company policy is being communicated to the community, and the concerns of the villagers are being addressed by the project. The section below provides a clearer picture about each phase of public involvement, and shows how the stakeholders mobilized to get their issues heard. 4.3 Key participation/consultation events Technical Feasibility Study (Phase 1) The Technical Feasibility Study Phase took place in At the village level, this phase consisted of consultation in 77 villages, along the Nam Hai and Nam Hinboun, and 10 villages along the Nam Kading (Resettlement Action Plan of THXP, 2008). The village consultations started in the Downstream Areas and included the recipient rivers of Nam Hai, Nam Hinboun and the Nam Kading. Consultations in the Head pond and Reservoir Areas followed and covered 11 villages located along the Nam Gnouang and six villages in the Head pond. In this phase, in addition to the affected peoples, the Office of the Governor and other provincial government departments such as the Science, Technology, and Environment Office (STEO), Department of Industry, Department of Agriculture, LWU were also consulted. It is reported that comments and concerns of the villagers received during the consultations in the first phase were taken into account in the project planning phase, which developed recommendations on the flood model as well as compensation and resettlement. This implies certain space of participation was available for the local people. It is, however, not clear whether factors such as ethnicity, gender, and age of the affected communities were provided representation to ensure that concerns of various groups of people were voiced. Respondents said they first learnt about the project in 2007 when asset registration activities began to take place. No information was available about consultations in the earlier stages such as feasibility or environmental impact assessment (EIA) studies. From our interviews with villagers, we gleaned that their participation in the meetings was limited in all the four villages. Only the village chief and authority reported their participation in the meeting during the planning process to draw a village development plan and address their concerns and comments (in the case of Ban Keosaenkham) Consultation on resettlement and compensation procedures (Phase 2) Based on recommendations of Phase 1, Phase 2 focuses on providing information about the resettlement and compensation procedures to the affected people. Phase 2 of public involvement aims at providing information in greater detail, which allows for much deeper discussions on resettlement, compensation, and mitigation options with key stakeholders. For example, house design, livelihood models, rituals, village composition, etc, find a place here. It is interesting to note, however, that there was more of information sharing and notification than discussion on some issues, and some villagers claimed they were not involved in the process at all. Asset Registration: Asset registration for villages to be resettled in Ban Keosaenkham and Ban Nongxong took place in A joint THPC and GoL consultation team conducted the registration over three days in each village. During the interview, one villager said: 37

39 I was interviewed about the assets and the number of people in my household. The project took pictures of all my assets. Together we agreed on the assets I owned. I was told any asset such as a tree planted after asset registration would not be compensated. Villagers were informed about the compensation policy for those who would relocate to the resettlement site (pai nai), and about the cash compensation they would receive if they chose to go elsewhere (pai nok). But the sum of cash compensation was not revealed to the villagers at this stage. One of the reasons given was that villagers might be tempted to take the cash compensation and spend the money unreasonably. Hence, this practice is not encouraged by both the government and the project. The value of assets was determined by the THPC and the relevant provincial authorities, based on the local market price. The rates were prepared by the technical staff members, and the list was submitted to and signed by the Provincial Governor. Compensation, hence, was implemented based on a decree of the Governor. Villagers said they were not consulted about the rates. Some respondents said they would have been happier had their opinion been taken. Selection of resettlement sites: Criteria for site selection are provided by the resettlement and compensation procedures. According to the THPC policy, the primary factor in determining the size and location of the resettlement villages must be the preference of the affected people, linked to the capacity of the sites to provide the necessary economic opportunities. It should also take into account any traditional practices and resources used as well as the cultural ethos of the people to reduce disruption or stress created by the resettlement process. Consultation preferences for resettlement included: Strong desire to stay within the area and within the district Preference to move to a village with similar ethnic groups Close to a main road and markets Within mobile phone coverage Our interviews revealed that participation and consultation for site selection was conducted only in the village of Keosaenkham. A villager said: We proposed this site, which is near our old village, to the company in Joint investigation of the site took place in 2010, and the company agreed that this area would be the new resettlement village for us. The resettlement started in Keosaenkham was considered a special case because the district authority has a policy of encouraging people to live in this area and allows villagers to relocate within the district. Unlike Keosaenkham, villagers from Ban Nongxong stated that they were informed, rather than consulted about the location of the new village. Further Village-level Consultations: Following the consultation in reservoir areas, the villages of Tasala, Kengbit, Napawan, and Paka were consulted in June Consultation meetings were held in each village to explain the project plans as well as anticipated impacts during the construction process. Similarly, the villages of the Nam Hai and Upper Hinboun were consulted in August Potential impacts of the project, particularly from flooding, were shared with villages allowing in-depth discussion on village relocation out of the likely flood zone. Consultation in host villages: As the site selection process progressed, consultations were conducted in potential host villages, informing them of their entitlements, project resettlement plans, and seeking their agreement and inputs. 38

40 4.3.3 Workshop, National and International Participation and Disclosure Regional workshops and meetings: A number of workshop and meetings were held with district and provincial authorities during the planning process. The main aims of these meetings were to (1) provide information on project design and impacts to relevant GoL departments to obtain feedback and incorporate concerns in the ongoing consultation and planning process; (2) discuss the structure and roles of various committees involved in the resettlement process at the provincial levels, and hone the mechanisms to coordinate with THXP; (3) allow villagers to express their concerns about the predicted impacts of THXP; and (4) update GoL on the progress of THXP (EIA, EMMP, & RAP) National workshop: This was conducted at the beginning of October 2007 to discuss the Draft Final documents with all directly and indirectly concerned stakeholders. Draft Final documents were made public at the beginning of September. Copies of the reports were distributed to all District, Provincial offices and National government offices through the Ministry of Energy and Mines (MEM), and to the THPC public information centers, to be located in affected districts, provinces, and at the central-level offices of WREA, MEM, THPC and THXP. Following the meeting in October, a Project Information Meeting was held in November 2007, and it was attended by officials of government agencies, private sector investors, NGOs and other members of the public. Results of the workshop and meeting were incorporated into the final document along with other relevant comments from other stakeholders. Disclosure: Besides the annual reports and progress reports distributed to GoL, key documents would be made available upon request to the public during implementation and operation. 5. ACCESS TO REDRESS AND REMEDY According to the concession agreement between the THPC and Government of Lao PDR, grievance procedure could take up to four steps: through Village Grievance Committee, District Grievance Committee, Provincial Grievance Committee, and the Lao Court ( Figure 5). Together with the Grievance Committee, the Resettlement Management Unit (RMU) is one actor strongly involved in the grievance process. RMU has the role of informing the company of any claim as well as final resolution at each level though the Social and Environmental Division (SED). Through the field visits, we learnt that the villagers, particularly the Village Chief and authority know about these unit and committee, and have filed some claims through them. For instance, Ban Keosaenkham filed claims on compensation and contract issue, while Ban Nongxong took up the issues of land allocation, assets calculation, and rice distribution with the committee and RMU. While some villagers are aware of this process, others have limited knowledge about their legal rights and the legal process they can follow. Most villagers said that when faced with a problem, they complain to the Village Chief who approaches higher levels and the company to redress the issues. Villagers of Ban Keosaenkham, however, said they approach the company staff and district representatives stationed at the village directly. Perhaps, this is because Keosaenkham has not been fully established. It is a resettlement village with households from multiple affected villages. The 39

41 Village Chief has not been elected. Some villagers are reluctant to make any claims and said they just follow the instructions of the company and the district authorities. Figure 5: The Steps in Grievance Process Source: Theun Hinboun Expansion Project (2008) So far, the key claims arising from the project affected villagers relate to the calculation of assets and compensation for land and plants, allocation of paddy and agriculture plots in the new village, and distribution of rice to each household. A villager from Ban Keosaenkham, for instance, complained that when the company conducted asset registration, they recorded only his plot of land but not his banana yield. He filed the claim to the village and district authority, and it was settled with the company compensating him for the yield. Rice distribution is a far more serious issue. As stated in the concession agreement, the company was to provide approximately 440 kg/person/year of rice to the affected people. However, the amount allocated to each individual has been far less in reality. This issue was discussed at a major forum attended by representatives of the company, national and provincial authorities. The company responded that the amount was incorrectly noted in the concessional agreement because food distribution should be classified into food for work. Subsequently, the district authorities, RMU, the village chiefs, and the company have been working together to address the problem and explain it to the villagers. 40

42 In short, the affected people know their rights and legal processes although some of the mechanisms such as the grievance systems established by the project have not been effective, and should allow more options to the villagers. Limited information about the grievance system among the affected villagers may be among the factors that have rendered it ineffective so far. 6. SUMMARY AND DISCUSSIONS To sum up, the objective of this study is to understand how and in what ways water resources projects deliver livelihoods benefits. The project would bring about many millions annually to the government, contributing to its development effort, including poverty reduction. Local people in the project affected areas should benefit from this effort. Exactly how much of the revenue would benefit the local people, however, remains for clarification. It is anticipated that once the decision is finalized for the on-going discussion between key ministries and stakeholder on how many percent of the revenue will go back to the affected communities for this kind of investment, it will be clearer on the benefit the affected group would receive from this development than just the compensation from the project. This way the contribution from the project will contribute directly to poverty reduction rather than as a poverty prevention measure as it was. Information obtained through the study suggests that local people and their livelihood interests are seen as potential impacts rather than direct beneficiaries to the project. Though, these packages do fit with the local needs, interests and aspirations in some areas. Based on the official definition of poverty by Borikhamxay province (that includes health, shelter, education, income, and rice sufficiency) the project contributes significantly to the improvement of the first three criteria for the resettlement or severely affected villages. Less severely and indirectly affected villages such as Ban Phonesay do not seem to benefit this way. At present condition, however, the last two criteria (income and rice sufficiency) of many households of the affected communities remain for further effort to be above the poverty line. This requires both short- and long-term measures such as continuation of rice support and livelihoods training already planned by the project until they have adapted to the new conditions. While resettlement itself affects these criteria due to changes in the access to natural resources (such as decline in forest resources, grazing lands, fish, and other aquatic species) and in methods of production (such as from swiden agriculture to paddy cultivation or vice versa), implementation processes such as on-time compensation and land allocation affect rice sufficiency and income generation. Identification of and taking measures to fill in such gaps would support adaptation of the affected people. Flexibility of the project in providing extra support to the effected people when and where necessary within the scope of its responsibility would help. Participation and consultation were important to the project to ensure that comments and concerns of the affected villages were taken into account during the project planning and implementation, particularly for compensation and resettlement purposes. It has not been clear, however, about representation of and information and remedies made available to various groups in all stages of the project lifecycle. Such a lack makes it difficult to meet the poverty reduction objectives of the government, as shown by certain livelihood problems such as rice shortages, concerns and dissatisfactions of some households. If local people are involved more in each project cycle from the starting up process, some pending issues and problems may be mitigated. Last but not least, through the study including validation workshop, some key recommendations gathered in order for the water resources projects to deliver livelihoods benefits better include (1) improved coordination mechanism from project to the village and vice versa, (2) timely respond to the villagers requests particularly to what stated in the concession agreement, (3) clear instruction and timeline for redress and remedy process. In addition, continued support to improve their 41

43 livelihoods particularly on land allocation, skill development and provide other means to support their livelihoods activities are necessary to sustain their livelihoods after the support from project. REFERENCES ADB Project completion report on the Theun-Hinboun Hydropower Project (Loan 1329 Lao [SF]) in the Lao PDR. Asian Development Bank. Webpage available at: < (Accessed??? ). ADB Project performance audit report on the Theun-Hinboun Hydropower Project (LOAN LAO[SF]) in the Lao PDR. Manila: Asian Development Bank ADBI Power, progress and corporate partnership. Webpage available at < Adger, W. Neil Social vulnerability to climate change and extremes in coastal Vietnam. World Development, 27, Alwang, J., S.B. Paul, J.L. Steen Vulnerability: A view from different disciplines. Social Protection Discussion Paper Series. Report No New York: Social Protection Unit, Human Development Network, the World Bank. Bolikhamxay DPI Bolikhamxay third five-year social economic development plan ( ) (Lao version) Concession agreement (Lao version) DFID Sustainable livelihoods guidance sheets. Department for International Development < tion%202.pdf>. (Accessed 21 October 2010). Gaventa, John Reflections on the uses of the power cube approach for analyzing the spaces, places and dynamics of civil society participation and engagement. CFP Evaluation Series : No. 4. Den Haag: MFP Breed Network. Gaventa, John Finding the spaces for change: A power analysis. IDS Bulletin, 37(6), Gaventa, John Participation and citizenship: Exploring power for change. Presentation in the ODI/IDS Development Horizons Seminar, Institute of Development Studies, 22 January Gordon, David Indicators of poverty and hunger. Govt of Lao PDR and the UN Millennium Development Goals report Lao PDR Webpage available at: < Haidar, Mona Sustainable livelihood approaches: The framework, lessons learnt from practice and policy recommendations. Paper presented in the expert group meeting on Adopting the Sustainable Livelihoods Approach for Promoting Rural Development in the ESCWA Region, Beirut, December Imhof, Aviva Review of draft final resettlement action plan for Theun-Hinboun Expansion Project, Lao PDR. International Rivers. Webpage available at: < (accessed on 15 May 2011) 42

44 Matsumoto, Kuko Expanding failure- An assessment of the Theun-Hinboun Hydropower Expansion Project s compliance with Equator Principles and Lao law. BankTrack, FIVAS, International Rivers, Les Amis de la Terre, and Justice and International Mission Unit, Uniting Church in Australia. Webpage available at: < Hinboun_Dam_Laos.pdf> (Accessed 14 July 2011). Mekong Wetland Biodiversity Programme Vulnerability assessment of climate risks in Attapeu province, Lao PDR. A publication of the Mekong Wetland Biodiversity Conservation and Sustainable Use Programme: A joint UNDP- IUCN-MRC GEP Funded Programme. Ministry of Environment Cambodia and UNDP Cambodia Cambodia Human Development Report MPI Draft The Seventh National Socio-Economic Development Plan ( ). Executive Summary. Webpage available at < (Accessed 14 July 2011). MPI, WREA and UNDP Lao PDR Poverty Environment Initiative (PEI) Framework in Lao PDR PMO The Prime Minister s Instruction No 010/PM on the eradication of poverty Probe International Trouble on the Theun-Hinboun: A field report on the socio-economic and environmental effects of the Nam Theun-Hinboun Hydropower. Webpage available at: < (Accessed 14 July 2011). The World Bank Lao PDR poverty assessment report: From valleys to hilltops- 15 years of poverty reduction. New York: The World Bank Theun Hinboun Expansion Project Final resettlement action plan. NORPLAN. Theun Hinboun Expansion Project SED monitoring 2010 final report. THPC Compensation < id=35:social-development-programmes&itemid=114>. (Accessed 15 June 2011.) THPC Education < 5:social-development-programmes&Itemid=117>. (Accessed 15 June 2011.) THPC Health < ocial-development-programmes&itemid=115>. (Accessed 15 June) THPC Resettlement < (Accessed 15 June 2011.) 43

45 THPC Timeline < (Accessed 15 June 2011.) UNDP Millennium Development Goals. United Nations Development Progamme. Webpage available at: (Accessed 14 July 2011). UNDP-UNEP Poverty & environment indicators. St. Edmund s College, Cambridge: Capability and Sustainability Centre. Vostroknutova et al Lao PDR Human Development Report- natural resource management for sustainable development: Hydropower and mining. New York: The World Bank Wikipedia Poverty < (Accessed 15 June 2011). Wikipedia Basic needs < (Accessed 10 October 2011.) 44

46 APPENDICES Appendix A1: Entitlements for different Project Zones 45

47 46

48 47

49 48

50 49

51 50