The Lao government’s ambition to become one of Southeast Asia’s biggest exporters of hydropower and wood chips is hurting the country’s small farmers and driving young people to neighbouring Thailand in search of better prospects, a recent Canadian-led study has found.

“If things continue the way they are going in this village, all the young people will have gone to Thailand. Only the older people will remain,” says a resident of Pak Veng,
one of nearly 60 communities adversely affected by dam construction and the conversion of forests to industrial tree plantations in central Laos.

The study, published by York University’s Centre for Asian Research and Probe International, among others, describes how Pak Veng’s economy is changing since the expropriation of the villagers’ ‘safety net’ of natural resources by outside developers.

Based on his interviews with villagers, government officials, and the developers, York University researcher Keith Barney found that the hydropower and plantation schemes introduced a decade ago have undermined food security in Pak Veng, a community of

260 people.

Pak Veng villagers are among thousands who have yet to receive compensation for lost farmland and income since the Asian Development Bank-financed Theun-Hinboun dam started operating nearly a decade ago. They’ve also lost the upland forests they’ve traditionally depended upon for food and income to industrial forestry plantations controlled by one of the world’s largest pulp and paper producers, Tokyo-based Oji.

The ecological damage caused by the 210-MW Theun-Hinboun dam has had devastating consequences for Pak Veng villagers, the study found. Prolonged flooding caused by the dam’s releases has made it impossible for villagers to grow their staple crop – wet season rice paddy – along the Hinboun river. Fish stocks, a key source of protein for villagers, have declined. And the river banks where villagers used to grow vegetables and other crops during the dry season have been severely eroded.

By the Theun Hinboun Power Company’s estimates, a total of 3,000 families in 57 villages along the Hinboun river need new income-generating opportunities to replace lost income and food production caused by the dam’s operations.

Forced to abandon their riverside rice fields, villagers now grow rice and other crops in the upland forests (a practise the central government wants to eradicate). But these upland plots yield only enough rice for a few months of the year. There are less fish available from the river to barter for rice. And as the natural forests are replaced with single-species tree plantations, the villagers lose a critical source of income from collecting forest products (i.e., bamboo, resins, mushrooms).

Villagers have had no choice but to adapt or perish. Almost every single young adult, about 20 percent of the village population, has left to work in Vientiane or neighbouring Thailand. Some are sending money back to support their families in Pak Veng. Other villagers borrow money at exorbitant interest rates to buy rice and other essentials. Some have earned income from dry season irrigation schemes that the Theun Hinboun Power Company subsidized in earlier years. Others work for the plantation company, cutting down trees, clearing land, digging holes, and weeding.

Attempts to replace the wet season rice crop over the last decade have not been sustainable, the study found. Initially, the Lao government – a part-owner of THPC and Oji – provided villagers with diesel pumps and tubing to support irrigated rice in the dry season. By year three, the few farmers participating had abandoned the scheme because the returns were too low to cover the cost of inputs, such as diesel fuel and fertilizer. Similar schemes followed but they too failed either due to poor returns or crop failure.

As for Oji’s plantations, the income for villagers is insignificant. In 2006, most households earned about $13 for a few days of weeding. Some earned more for cutting down trees, clearing land, and digging holes. But as one villager explained, “Work with Oji is not a real job. The work is available just a few days at a time. It is not sustainable work.”

The study describes how villagers were coerced by government officials to accept the zoning of their communally-held forests as “degraded,” which then made the area eligible for plantation development under the country’s new land and forest laws. In return for their forest-land, villagers were promised development funds for services that the government had until now failed to provide, such as health care and better road access. Villagers were also permitted to grow crops in the newly-cleared plantation area, but only for one year until the tree seedlings mature.

The study makes no definitive claim as to whether villagers are any better or worse off than they were before Oji and the Theun Hinboun dam. Some villagers interviewed said life is better today because they have better roads and easier access to health care. Others disagreed, including a highly respected elder, who said: “We are poorer because of the flooding [caused by the dam].”

Certainly, improved road access paid for by Oji has meant traders can now reach the village more easily and this has allowed villagers to sell more forest products and livestock to markets in Thailand. But increased cash income doesn’t necessarily mean villagers are better off given that they now have to buy rice and other essentials they once grew or gathered virtually for free. Also with better road access comes more extraction by outsiders of resources the villagers have traditionally regarded as common property (i.e., fish, bamboo, hardwoods).

In any case, the study found a community in transition from reliance on subsistence livelihoods to migrant labour wages and corporate-driven, cash cropping schemes. Whether Pak Veng will survive as a community is a question the villagers interviewed could not answer with any certainty.

Pak Veng’s experience offers critical lessons for government decision makers, developers, and development agencies. First, villagers are not getting a fair bargain for the resources expropriated, leased, or sold to outside developers by the central government. This is a major concern given that industrial forestry plantations are one of the fastest growing sectors for investment in Laos, along with mining and hydropower development. Second, the Theun-Hinboun mitigation and compensation program has not worked; neither the power company nor the plantation developer have taken effective action to compensate affected communities for their project-related losses.

A fair approach to developing the country’s resources would be based on respect for the right of villagers to be compensated directly for their losses, and to decide the fate of the resources upon which they depend for their livelihoods.

“Power, Progress, and Impoverishment: Plantations, Hydropower, Ecological Change and Community Transformation in Hinboun District, Lao PDR,” by York University student Keith Barney was prepared in cooperation with the National University of Laos and provincial forestry authorities in 2007. The 140-page report is available from Probe International’s website at https://journal.probeinternational.org/.