Hydropower dam in Laos generates fury and threatens environment

The World Bank's decision to finance the construction of the US$1.2 billion Nam Theun II (NT2) hydropower dam in Laos has generated fury and resentment from green campaigners who say it will threaten both the environment and the people who live in the region.

Global conservation charity WWF claimed that the Bank has never provided a "convincing and rational explanation of the need for the additional electricity produced", especially as 90% of the power produced will be sold to neighbouring Thailand.

World Bank President, James Wolfensohn, said the US$1.2 billion NT2 loan was the biggest single project undertaken in Laos and was expected to provide up to US$150 million in additional annual revenue. This could then be put towards basic health and education spending.

"Laos has an average income level of less than a dollar a day, and in many rural areas, it is considerably less than that. Children still suffer malnutrition in many parts of the country, and too many young people receive little or no formal education," he said. "We believe that a sound approach to selling hydroelectricity, supported by improved government policies, is the best way for the country to increase the amount of money it can invest in health, education and basic infrastructure for the benefit of the poor."

However, WWF point out that electricity supply in Thailand already outstrips demand and that, even allowing for significant growth in demand over the next decade, any additional needs could be met more sustainably through energy efficiency measures and small scale renewable projects rather than through hydropower which will be more expensive than other options.

The project will involve a major diversion of water from the Nam Theun River to the Xe Bang Fai River, flooding 40% of the Nakai Plateau. WWF say this will threaten the wildlife of the region, particularly the endangered wild elephant populations, as well as causing major disruption to the farming and fishing activities of up to 130,000 people.

Around 50 million people who live in the lower Mekong basin are dependent on fish as a major source of protein, yet dams such as NT2, are a major threat to fish populations WWF say, and call for a proper assessment of the cumulative impact of the growing number of hydropower projects in the Mekong Basin.

"We fear that this dam rather than reducing poverty will only increase human misery and environmental degradation," said Ute Collier of WWF's Dams and Water Infrastructure Programme. "We challenge the authorities in Laos and the World Bank to prove that this is not the case."

Mr Wolfensohn said he accepted that the project was "quite complex" and would pose some "serious implementation challenges", but that the risks could be managed.

Conservationists disagree. David Hales, Counsel for Sustainability at the WorldWatch Institute, writing on the institute website, says even World Bank staff noticed the flaws in the proposals for the dam:

"Although detail can be piled upon detail, one conclusion is inescapable. This is exactly the kind of project proposal that the safeguard procedures of the World Bank and the Asian Development Bank are designed to prevent. The risk of further impoverishment of the people, of corruption and mismanagement, and of financial failure of the project is just too high. If Nam Theun is approved, with its inadequate and incomplete documentation, it is hard to imagine a project that would not be. The World Bank will have written a brand new definition of 'blank check.'"

WWF has produced a report of the top 21 Rivers at Risk from dams being planned or under construction. It shows that over 60% of the world's 227 largest rivers have been fragmented by dams, leading to the destruction of wetlands, a decline in freshwater species and the forced displacement of tens of millions of people.

By David Hopkins



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