Ten years after the World Bank last helped build a big dam, and five
years after the World Commission on Dams cast doubt on the benefits of
such projects, the bank is back in the dam business. Last week, it
agreed to lend the government of Laos $270m to build a dam on the Nam
Theun river, a tributary of the Mekong. The Asian Development Bank
followed suit on April 4th with a loan of $120m. The developers expect
the remaining financing for the $1.25 billion project to fall into
place quickly. Construction should begin in June.

Thailand’s state-owned power company has already signed an agreement to
buy most of the electricity generated by the dam. That should bring
Laos’s cash-strapped government, which currently depends on foreign aid
to fund its budget deficit, up to $2 billion over the dam’s first 25
years of operation. Much of that money, in turn, could be used to fund additional development schemes for ordinary Laotians.

The World Bank claims to have learned the lessons of equally
worthy-sounding schemes that went badly awry, including a dam on the
Mun river in neighbouring Thailand, which left many fishermen destitute
as their catch disappeared. Locals have been consulted until they are
blue in the face. The developers are setting aside money to resettle
displaced villagers, restock the two affected rivers with fish, and
manage a new wildlife reserve no less than nine times bigger than the
area to be flooded by the dam. The government has also agreed to
channel much of its
revenue from the dam towards health, education and rural development.

But Laos’s inscrutable communist regime will still be managing the
money, policing the wildlife reserve and implementing any schemes to
improve the lot of local people­not the sort of tasks at which it has
excelled in the past. What is more, many economists say Thailand could
buy power more cheaply elsewhere. Laos, on the other hand, could
certainly find less demanding financiers. It is currently planning
three more dams, which it will build not with the help of the bank, but
of fellow communists from neighbouring Vietnam.