The Environmental and Economic Impacts of the Nam Theun 2
Hydroelectric Project on Communities Living in the Xe Bang Fai River
Basin

If built, the Nam Theun 2 Hydroelectric Project in Lao PDR would:

• completely change the flow of the Xe Bang Fai River;
• cause severe impacts on the abundant fisheries and other resources that are fundamental to the food security
  hundreds of communities;
• cause severe impacts on the livelihoods, food security and economy of between 50,000 to 120,000 people living in
  the Xe Bang Fai River Basin.

The main environmental and social impacts of the Nam Theun 2 Hydroelectric Project will be on the Xe Bang Fai River in central Lao PDR, a major tributary of the Mekong River. Approximately 50,000
people live in communities located along the Xe Bang Fai River. Another 50,000
to 70,000 people are estimated to live along tributaries of the river, or in
the vicinity of these rivers. These people depend on the Xe Bang Fai River’s
fisheries and other livelihood resources (other aquatic animals, wetlands, wild
plants, riverbank gardens, floodplain agriculture, etc.) for their food and
livelihood security.

If built, the Nam Theun 2 project would divert 95 per cent of the flow of the
Nam Theun River through the project’s powerhouse and release this water into
the Xe Bang Fai River Basin. These releases of up to 330 cubic metres per second
(m³/s) would completely change the natural, seasonal flow regime
and aquatic habitat of the Xe Bang Fai River. Water discharged by the Nam Theun
2 project would effectively double the annual flow volume of the Xe Bang Fai
(as measured at the district town of Mahaxai) – from 7,745 million cubic metres
(MCM) to 14,745 MCM per year, and increase water levels in the Xe Bang Fai by
up to 4.5 metres.

According to the International Environmental and Social Panel of Experts for
the Nam Theun 2 project, “The PoE is of the opinion that one of the Nam Theun
2 project’s most serious impacts on livelihood can be expected in the densely
populated (over 50,000 people) Xe Bang Fai basin where greatly increased river
flows from the powerhouse can be expected to alter fish behavior, fishing technology,
and access to river bank gardens.” (p.30)

The Panel of Experts makes the mistake of considering only people living in
the vicinity of the Xe Bang Fai River to be dependent on the river. A much
more accurate picture of the situation is provided by a report entitled The
People and Their River, published in late 2001,

“According to statistics from district offices, recent research, and the study
team’s interviews with villagers, an estimated 120,000 to 130,000 people are currently deriving significant and important livelihood benefits from the Xe Bang Fai River. This population includes approximately 50,000 people living in at least 125 villages located
directly adjacent or very close to the Banks of the mainstream Xe Bang Fai from
its headwaters and its confluence with the Mekong River. Many other villages
are located along the eight main tributaries of the Xe Bang Fai and smaller
permanently flowing and seasonally flowing tributary streams within the basin.
The study team was able to estimate that 20,000 people live in villages along
four of the major tributaries. There are villages located along other major
tributaries but these populations could not be reliably estimated.

“People from communities located at distances up to 20 kilometres from the Xe
Bang Fai travel to the river to fish on a seasonal basis. Some keep their own boats
along the river near the houses of relatives, and have fruit orchards and cultivate
vegetable gardens near the river. According to local people living in riverside
villages, people from many villages located far from the Xe Bang Fai come to the
river to fish, collect other wildlife and plants, or to garden. Many communities living even further away from the river have important trading relationships with communities
along the Xe Bang Fai.” (p.XI)

According to the Xe Bang Fai Socio-Economic Health and Fisheries Survey,
2001 Basin by agencies of the Government of Lao PDR, “The importance of wild fish capture to households in all zones in greater than their financial value suggests. Fish appear to provide the major source of animal protein to these communities…Any significant change in fish stocks would likely have a substantial impact on the food consumption patterns and perhaps nutritional status of most households across all zones. Data suggests that this impact would be greatest amongst the poor.” (p.3-13)

While providing an accurate picture of the livelihoods and economies of the
people of the Xe Bang Fai River Basin, the Survey’s data is gathered from only
one-third (approximately 49,000 people) of the population of the basin. As
noted by the The People and Their River report, the number of people
for which a “significant change in fish stocks would likely have a substantial
impact” could be significatly greater than the estimate provided by project
proponents like the Nam Theun 2 Panel of Experts. However, at present the number
of people and families that would suffer the impacts of the Nam Theun 2 project
on the Xe Bang Fai is not known. It is the responsibility of the Nam Theun
2 Power Company (NTPC, the consortium proposing to build the project) to undertake
studies that would provide an accurate assessment of how many people will be
affected by the impacts of the Nam Theun 2 project.

Excessive Flooding

The middle and lower areas of the Xe Bang Fai basin are areas with
very productive rainy season rice crops, but are also susceptible to flooding
that can damage the rice crop. According to the Socio-Economic Health and
Fisheries Survey, in 53 villages with a combined population of 29,438 people
(49.8% of total lower Xe Bang Fai population), and 12 villages with a population
of 3,866 people (10.3% of middle Xe Bang Fai population), 86-95% of the surveyed
households cultivated lowland paddy fields. People have adapted their rice cultivation
and livelihoods to the natural floods of the Xe Bang Fai. Some years, the rice
harvest provides a two-year supply of rice for families. Other years, much
of the crop is damaged by excessive flooding.

In the middle and lower Xe Bang Fai basin, project proponents claim that, regarding
Nam Theun 2 discharges into the Xe Bang Fai, “The net result for the zone is
likely to be little change in the flood levels” but offer no substantive
evidence to support this claim.

More importantly, project proponents do not assess the inevitable increase
in the duration of harmful floods in the middle and lower Xe Bang Fai basin
as a result of the Nam Theun 2 discharges. According to NTEC’s Concession Agreement
with the Government of Laos, Nam Theun 2 can discharge water into the Xe Bang
Fai until the combined natural volume and the Nam Theun 2 discharge equals 2,270
m³/s at the district town of Mahaxai in the upper basin. Thus, for example, if the natural flow of the Xe Bang Fai were 1,800 m³/s,
Nam Theun 2 could discharge an additional 300 m³/s – an additional
1,000,000 cubic metres per hour – for for a total flow at Mahaxai of 2,100 m³/s.
This flow exceeds the mean annual peak flow at Mahaxai over the 15-year period
between 1988 and 2002 (Mean Peak = 2,053 m³/s, Environmental Assessment
and Management Plan, p. 6-27).

Thus, over a period of days or weeks during the rainy season, the volume of
the Nam Theun 2 discharges adds to the Xe Bang Fai River would increase water
volumes in the middle and lower Xe Bang Fai River, and thereby increase the
duration of flooding. Such an increase could have severe impacts on the productivity
of the rainy season rice crop of thousands of families living in the middle
and lower Xe Bang Fai basin.

As reported in the The People and Their River report,

“All of the villages situated along the lower and middle sections of the Xe
Bang Fai River do at least some lowland [rainy season] rice farming (het
na), and people in many villagers identify lowland rice cultivation as their
most important livelihood activity.”

“The success or failure of rainy season rice farming is closely related to the
natural floods of the Xe Bang Fai River.

“Planting rice is a yearly gamble in which farmers invest in seeds, labour and
other inputs in the hope that the floods will not be severe. According to villagers
there are very tight flooding margins involved in growing rice in the rainy
season, and relatively small increases in the depth and/or duration above the
optimal flood can make the difference between having a large harvest of rice
or no harvest at all.” (pp.38-39)

Project proponents and the EAMP for Nam Theun 2 have not studied (and, indeed,
have dismissed) the potential impacts of extended flooding on rainy season rice
cutlivation in the middle and lower Xe Bang Fai basin. These impacts would
negatively affect the production of rice, the staple food for tens of thousands
of people in the middle and lower Xe Bang Fai River Basin. Again, it is the
responsibility of the Nam Theun 2 Power Company and other project proponents
to undertake studies that would provide an accurate assessment of how many people
will be affected by the impacts of the Nam Theun 2 project.

The False Promise of Mitigation

Project proponents have suggested that dry season pump-based irrigation
of rice and other crops would mitigate the impacts described above. There are
at least four reasons to question the practicality of such proposals.

• Recent experience with dry-season
  irrigation indicates that porous soils, pests, the high-price of electricity
  and diesel fuel to power the pumps, and poor economic returns of dry-season
  rice cultivation have convinced many people to abandon dry-season irrigation
  along the Xe Bang Fai River.

• Proponents of dry-season irrigation
  suggest that as Nam Theun 2 outflow will substantially increase water levels
  in the Xe Bang Fai River the use of irrigation pumps more economical.
  Even if dry season irrigation projects are successful, only those
  families living along the Xe Bang Fai River would be able to use the increased
  flow volumes discharged by Nam Theun 2.
  Thousands of families living further away from the Xe Bang Fai, or
  along its tributaries, would not receive dry-season irrigation.

• The riverbanks of the Xe Bang
  Fai are already the location of highly productive vegetable and cash crop
  gardens that would be permanently flooded by the Nam Theun 2 discharges.
  Even if dry season irrigation projects are successful, these crops would
  only be replacing (and possibly slightly increasing) existing riverbank
  crop production. Dry season irrigated crops will require the purchase of
  expensive fertilisers and chemical pesticides which are seldom used on the
  fertile riverbank gardens. Overall,
  there will be little, if any, gains in productivity or income for affected
  families.

• Severe damage to the habitat of
  the Xe Bang Fai River would substantially reduce populations of fish and
  other aquatic animals that are the most important – and freely available
  – source of dietary protein for families in this river basin. Even if dry season irrigation projects
  are successful, rice and other crops will not be a substitute of the protein
  and nutrition presently gained by local people from their consumption of
  fish and other aquatic animals.

The severe damage, and possible destruction, of the fisheries of the Xe Bang
Fai, and other livelihood resources such as dry season riverbank gardens, by
the Nam Theun 2 Hydroelectric Project would cause irreversible long-term impacts
on the livelihoods and economies of tens of thousands of people living in the
Xe Bang Fai River Basin. The water discharged by the Nam Theun 2 project into
the Xe Bang Fai will increase the duration and severity of flooding in the middle
and lower Xe Bang Fai basin, negatively impacting the rainy season cultivation
of rice of thousands of families.

Project proponents consistently claim that the Nam Theun 2 Hydroelectric Project
is a “multi-purpose development project” that would “conserve the environment
and alleviate poverty” in Lao PDR. Although the number of people who would suffer
the environmental, social and economic impacts of this project can only be estimated,
it is evident that the Nam Theun 2 project would cause the impoverishment and
immiseration of tens of thousands of people living in the Xe Bang Fai River
Basin.

_____________________

References:

The People and Their River: A Survey of River-Based Livelihoods
in the Xe Bang Fai River Basin in Central Lao PDR, by Bruce Shoemaker, Ian
G. Baird, and Ms Monsiri Baird, November 2001.
A Report on the Xe Bang Fai Socio-Economic Health and Fisheries Survey, 2001
Basin, Nam Theun 2 Electricity Consortium and Government of Lao PDR, 2002.
Fifth Report of the International Environmental and Social Panel of Experts,
by Thayer Scudder, Lee M. Talbot, and T.C. Whitmore, 22 January 2001.
Nam Theun 2 Hydroelectric Project Environmental Assessment and Management
Plan, prepared by Seatec International, March 2003.