2. TABLE OF CONTENTS
Page
Executive Summary
1. Introduction
1.1 The proposal: Construction of NamTheun 2. hydropower project in Lao
PDR 1
1.2 Involvement of the World Bank 1
1.3 The International Advisory Group 2
1.4 Mandate. scope and interim nature of the report 2
1.5 Intemational context 3
2. The Lao context: broad.considerations 3
2.1 Special features of the Lao context 3
2.2 Conclusions and recommendations on broad development and project-
related issues 4
2.2.1 Broad development issues 4
2.2.2 Project related issues 5
3. Assessment of handling of social issues 6
3.1 Linked nature of social and environmental Issues 6
3.2 What are the large social issues? 8
3.3 Assessment of Social Action Plans 9
3.4 Compliance with WB s Operational Directives on social and indigenous
peoples Issues 10
3.5 Risks and opportunities involved for the WB on the social side 11
3.6 Conclusions and recommendations on the handling of social issues 12
4. Assessment of handling of environmental issues 13
4. 1 Environmental impacts 14
4.2 Some rnutigation approaches 15
4.3 Assessment of NNTCA Environmental and Social Management Plan and
NTSEP 17
4.4 How well does the overall handling of environmental issues complywith
the Bank's ODs? 18
4.5 Risks and opportunities on the environmental side 19
4.6 Recommendations on environmental Issues 20
S. Building international consensus on the project 21
3. Appendices
1. Composit3on of 1nternauonal Advisorv Group (lAG)and tec.himcalresource persons
2. Terms of Reference for LAGset out bv the World Bank
3. Working programme of IAG (May 28 - June 7 1997)
4. Reference documents used
5. Notes field visit (May 30 - June 1)
6. Compliance wvith Operaponal Directives (4.20 and 4.30)
7. Map of the project area
4.
5. Executive summary of International Advisory Group's report on social
and environmental impacts of the proposed Nam Theun 2 hydropower
project in Lao PDR
Gcneral Reconmyendations
While not part of Its mandate (which was confined to social and environmental impacts)
the LAGwishes to make the following general recommendations about arrangements
relevant to the management and financing of the project
* a compretent and independent negotiations advisory team. answerable_ oly to the
Lao Governt and its negotiators. should be brought together to match the
experience and information of those on the other side of the table in the several
important negotiations which lie ahead if the project proceeds;
* the Laos PDR Government should consider the international credibility advantages
of engaging an external auditor to monitor the substantial and complex financial
transacuons involved Ln this project (and others): and
i if the project proves to be -bankable- and the decision is taken to proceed. the
World Bank wiLlneed to substantially strengthen its resident office in Vientiane for
at least a decade in order to see the plans through to completion.
Findings and Conclusions
The three areas of social development. econorrscdevelopment and conservauon of the
biologically diverse environment are inextricably linked and need to be addressed in an
integrated way. Active promouon of an integrated approach is called for.
On balance. our conclusion at this point is that the develop menintpnYzr4Laela"o
and environmental benefits of the project su~ejghe negatve_aspects. So Ifthe energy
pThinrfgnj.financing and overall economics of the project prove to be viable (vital areas for
decision) the proposals should, in the view of thls Group. proceed to further appraisal.
That said. there are considerable risks involved In bringing this complex project to the
point where it meets the vanous objectives of all the stakeholders involved:
* there will be substantial environmental impacts: though these appear at this stage
to be offset to a large degree by the planned protection of a biodiversity hotspot of
global importance:
* resettlement exercises are always fraught: but the plan for thls one is comprehen-
sive and appears achievable with a substantial effort by all parties:
* the provision of improved livelihood options and better social services for affected
groups will not be easy to deliver- but this is crucial to the wider objectives of the
project and must be addressed as such;
6. success Ln all this is not guaranteed: pullng the several action plans together in
an integrated cross-sectoral approach is vital and explicit. bindmg and lQng-term
commitments from the Lao political leadership on using project revenues for
poverty alleviation and on offsetting biodiversity impacts and protecting the
watershed and extensions are essential. The project should not proceed without
such formal undertakings.
there must be proviQrn_ for regular assessment of progress: mroniltonng and
evaluation of all aspects. including delivery of undertakings by all parties, should
be a component of the project throughout. with continued World Bank inputs
dependent on the performance of others including the GoL. Leverage must be
retained.
The Bank's role is fundamental:
* With the weak institutions and inadequate manpower resources in Laos. the Bank
has a key coordination role Ln capacity building and achieving cross-sectoral
coherence.
* Given the complexity of this exercise. the Bank has to be geared up for the long
haul.
The Bank has a role in helpmg GoL address Its debt burdens and in seeking
additional resources for financing poverty alleviation and conserving the valuable
biodiversity of the countn-.
The handling of the social aspects of this complex project by the Bank has been in many
respects innovatory. The lAGs view is that the range of proposals and plans which make
up the social strategy represent an Impressive attempt by Bank staff and others to learn
from the past and to try to integrate social factors from the outset into a massive
infrastructure project and to turn activlties on the social side into a positive developmen-
tal contribution. The moriltonng and checking devices built into the process (including
an independent panel of experts and this LAGitself) represent an openness to extemal
scrutiny and evaluation which is welcome.
Mitigating the social impacts is the key to successful implementation of the project.
Without sensitive handling of human components such as resettlement of the plateau
people and providing improved social services and practical improved livelihood options
for the catchment area people. the projected financial. operational and environmental
benefits of the project will be senously undermined. Thls needs constant emphasis by
Bank and other staff.
The lAG's primary injunction is that the Bank project staff move quickly to pull together
a somewhat fragmented process on the social side by integrating more closely the several
parallel exercises. since each impacts on the others. Successful resettlement and
rehabilitation of the plateau people will disturb internal migration patterns in the
country. for example. That calls for planned responses. Pulling these exercises together
wlll not be easy for they have been researched and planned by-three different agencies
and will be implemented by several more.
7. Social engineering is more complicated than dam building. Success in this instance will
require:
a stepped up and sustained delivery of social servnicesbv the GoL and its agencies
particularly to the catchment area villages:
vigorous action by the leadership of the affected communities:
* a long-term input from NTEC. the Bank and other donors, extending well beyond
the five-year timeframe which seems to be the basis of much of the planning at this
point.
Poverty alleviation is a preoccupation of the GoL. the Bank and other donors. It is a
majorjustification for the project. So attention is needed both to negotiating an equitable
and secure revenue package for the GoL and to securing a firm commitment from the
GoL itself that it will use these revenues for the delivery of health and education services.
village water supply. job creation programmes. etc. The intemational commurity regards
such reciprocal undertakings as reasonable where the World Bank is going beyond its
standard practice in providing support and guarantees. The Bank should address in its
negotiations with GoL this key question of using project revenues for poverty alleviation.
It is important on many levels but not least in illustrating the social benefits of the
project.
At the same time. the IAG is not fully convinced that all povertv alleviation measures
which could emerge directly from the project itself have been adequately incorporated at
tLis point. For example. further work is clearly needed by the Bank and its collaborators
on producing a coheCnLction plan for improving livelihood optiQns fo-ttLe p,leoiein e
catchment area in particular. there is much scope for a proactive programme for
expanding the proportion of workers of Lao nationality on the project itself and for
promoting small-scale enterprises around the periphery. and the potential for improving
the lot of farmers in the Xe Bang Fai and the Savannakhet plain by using the diverted
waters needs cxploration.
Afurther ingredient of successful social action will be capacity building. Whlle time will
be bought by devolving some management responsibilities in the short term to the private
sector (NTEC)and to the Bank and other donors. Lao people and Lao institutions will in
the end most surely bring about the social actions called for by the project proposals. But
the infrastructure is weak and the number of trained Laotians is small. Again an
integrated approach is called for, the project demands a comprehensive campaign.
engaging both the World Bank and UNDP. plus NTEC. in helping GoL establish training
systems. formal and informal. to produce the range of trained people (at the local,
provincial and central levels) needed to ensure sustalnabUlity of the social as well as
managerial and technical processes.
On the institutional side. the most innovative proposal for enhancing capacity is the
watershed conservation authority. The lAG's view is that a device such as this will be
called for in order to ensure coordinated action on several fronts. that the present plans
need further refinement to ensure that all stakeholders are represented (including the
BPKP and, obviously. the village communities themselves) and that the mandate be
carefully drafted so that social and environmental responsibilities are balanced.
iii
8. The handling of the environmental impacts of the NT2 project is intmatelv linked with
the energy development side and the social side. Adegraded catchment environment will
produce heavv siltation of the relativelv shallow reservoir and shorten the Lifeof the
power generation svstem. To ensure sustainable use of globally important natural
resources like those in and around the project area. the human factor has to be kept
constantly in mind.
The NT2 proposals represent a drastic intervention in the Nam Theun and Xe Bang Fai
aquatic and terrestrial ecosystems. There are some big environmental offsets involved.
The consensus among environmentalists involved in the studies, a view supported by the
LAGon the evidence presented to them. is that the package of rpr as presented
represents the single best and mpst realistic prospect of preserving most of the globally
important and unique biodiversity of the project and contiguous areas.
Environmental casualties will be the remaining. ifdegraded. biodiversity of the inundated
plateau area. nverine bird and fish species in the Plateau area. fish life on the lower Nam
Theun. a considerable impact on fish life in the Xe Bang Fai. and biodiversity in the more
accessible parts of the NBCA itself as the reservoir fills and facilitates access.
The explicit trade-offs on the environmental side is offsetting the above blodiversity losses
in the plateau and downstream areas against net blodiverslty gains sought by conserving
aquatic and terrestrial biodiverstty in the rich NNT-NCBA area and its proposed
extension. The risks involved are set out in the text below. the chief of which is that to
achieve what is planned will involve successfully managing a series of demanding. costly
and Ume-consunung processes.
The iAG's view is that on the environmental level the game is worth the candle: the worth
of the NNT-NBCA area Ln biodiversity terms is virtuallv incalculable and can only
increase exponentially with the passage of time. As important. no realistic alternative way
of preserving this already threatened area has been advanced. While some substantial
sums in terms of carbon sequestration or debt for nature- swaps might be raised to help
offset the lost opportunijty of not harvesting the highly valuable timber stands in the NNT-
NNCA area. it is unlikely that these would match the revenue flows expected from the
NT2 proposals and fund the conservation management and social action plans now being
contemplated.
On balance. the judgement of the JAG on the environmental side is that the globally
important biodciversity hotspot which is the NBCAand its extensions will be more surely
protected ifthe N`2 project goes ahead in association with the World Bank than if it does
noL Certainly a pnvate sector operation. unmonitored internationally. would be likely to
have an unfortunate outcome on both the social and environmental fronts. But the
caveat must be added that successful attainment of the major objectives of the project
will call. in the words of one study. for a Herculean- effort by all parties involved.
Public participation in the planning process for Ni has been actively encouraged by
NTEC and Bank personnel. Although the process tended to be very structured, the
perception of the JAGis that public participation was relauvely successful at the village
level in the directly affected areas. at least in terms of number:6 attending as contrasted
perhaps with levels of comprehension of the process. Participation at the national level
was not. however. as comprehensive as is desirable. In a sense this bifurcated
consultative process was to be expected in Laos - and it has iLsown utility. It cannot be
Iv
9. held to conform to international norms - but it was ground-breahkng in terms of Laotian
practice in open participation in a project Like this. There remains a clear on-going need
for participatory public educatnon and consultation programmes at the local level.
Components requiring further action
Although the lAG's view is that the Bank is becoming more of a listening organization.
has learned many of the hard lessons of the past in large dam projects and is applying
its own Operational Directives more faithfully, the Operational Directives themselves
are flawed. Most notably. there is no over-arching OD on social impacts. This should be
remedied. (We gather that the Bank/IUCN Large Dams Commission is to address this
sort of gap.)
The three OD's looked at in detail related to Indigenous Peoples (4.20). Involuntary
Settlement (4.30 and EnvironnTental Assessment (4.01). The paper on Natural Habitats
(0:0: 4.04) was also reviewed. The first appears to apply to almost all groups affected by
the projecL The Directives have been applied in most cases but It.is not clear-that
consistently effective consultations have been held with the most vulnerable populations.
parti ularl women and ethnc minor1t1es as requested under 4.20 and 4.30. Other areas
which need addressing are the adequacy of consultatuons and assistance to affected
communities on the upper Xe Bang Fal and the absence of any poverty alleviation
measures for people on the Savannakhet plain. The issue of population growth is not
specifically addressed in terms of para. 18. of OD 4.20.
In terms of compliance with the Bank's Operational Directives on the environment side.
the project team and advisors have done well in areas like early recognition of the
environmental consequences of the project proposals. protection of the watershed.
seeking independent advice. and provision for conservation of biodiversity and habitats.
There is a need for a more consolidated and coherent development plan for the watershed
area. Areasof sbortc2mg are overall coordination. especially cross-sectoral. environ-
menta1mianagement and capacity bulldine (difficult Ln Laos) involvement of NGOs and
ae rx affected groups. The Bank is invitcd to address these areas
further.
Mitigation measures on the environmental side will involve reaching a consensus with
the GoL and provincial authorities on a highly restricted road access into the catchment
area. seeking World Heritage status for the site (preferably extending into an adjacent
Vietnamese site). promoting the use of low impact intermediate technology in the
catchment area villages (micro/micro hydro devices. fuel efficient wood-burning stoves.
solar energy. small weirs using gravity feed channels not large weirs and pumps to
irrigate paddy fields). fostering plantation forests. etc. There is much yet to be negotiated.
An assessment of the risks and opportunities involved in the social side of the project is
set out in Section 3.5 of the report. Similarly. detailed recommendations on risks and
opportunities on the environmental side are set out in Section 4.6. Detailed recommenda-
tions on the handling of social aspects are in Section 3.6 and on environmental aspects
in Section 4.7.
The World Bank also sought advice from the LAG on steps to be taken to build
international consensus on the proposed project. The LAGnotes the implicit assump-
v
10. tions here that the project should and will go forward and that it should desurably do so
with the greatest possible international support.
A comprehensive consensus on proceeding with this or anv other large dam project is
unlikely. However. an open and transparent and intensive debate on the big issues will
have the mrent of iliuminatuig these issues.
The World Bank has recently taken one innovative step on this front In co-convening with
IUCN a representative workshop on the future of large dams. An independent team of
experts is to be comnmissioned to study the impacts of large dams on economies, the
environment and communities and come up with some new guideiines and standards for
the World Bank and developers. Some illuminating findings should emerge, which will
be a contribution to the wider debate on the future of large dams.
In the spectfic case of the Nam.Theun 2 proposal. the putting together by the World Bank
of the present Intemational Advisory Group itself represents an opportunity to begin to
create a consensus among a representative grouping of people from around the world.
The Group would note that the most frequent crticism of the Bank has been that the
Bank and associated pnvate sector developers have seldom adhered to the Bankcs own
crttena and Operational Directives in implementing dam bulding projects.
The World Bank remains on occasion more opaque In its act2vities than it needs to be.
It should endeavour to lift its game further in terms of achieving geneenc public education
and participation (through both are difficult to achieve in Laos).
v1
11. INTRODUCTION
1.1 The proposal: Construction of Nam Theun 2. hvdropower project
in Lao PDR.
The Narn Theun Electrncity Consortium (NTEC]proposes to build a hydropower
dam on the Nakai Plateau in the Khammouane Province in Laos.
A primary objective of the proposed project is to produce electrlcity for export
to Thailand. The proposal includes a 325 m long and 45 m high dam in the
Narn Theun nver. creating a reservoir of 450 km2. an underground power
house of either 908 MW or 681 MW (both configurations will be assessed)
located by the Nam Kathang, a minor tributary of the Xe Bang Fai. a
downstream partly constructed and partly natural waterway of 38 kmnand the
upgrading. re-routing and construction of some 165 kmnof rural roads. power
transrrussion systems of a total length of 140 km. connecting the power house
to the transfer point on the Thai-Lao border near Savannakhet.
The Nam Theun catch.ment area contains blodiversitv of recognized global
significance. The project would have major impacts on the environment and on
the natural values in the inundation area and downstream. The direct and
indirect Impacts on the catchment area's local population of considerable
ethnic variabUiity and on their complex social fabnc would be substantial. while
appro.ximately 4500 people now living in the inundation or plateau area would
be resettled.
1.2 Involvement of the World Bank
Armongst other sources of finance. World Bank (WB)assistance for the project
is sought. The WB is considenng support for Nam Theun 2 through two
separate operations: an IBRD partial nsk guarantee and an IDA Social and
Environmental Project (SEP)'I. The WB Group's International Finance
Corporation (IFC) may also be involved on the lending side. To help the WB
reach a decision on whether or not to support Nam Theun 2. the WB sought
further techrucal advice. This includes three studies arranged by the Govem-
ment of Laos (GoL): a Study of Altematives. an Environmental and Social
Management Plan for Nakai - Nam Theun Catchment and Conservation Areas
and an Economic Impact Study. Two further studies have been conducted by
NTEC: an Environmental Assessrrent and Management Plan (EAMP)and a
Resettlement Action Plan (RAP).These studies and programmes are planned
to be finished by August/September 1997.
I Lf the project goes ahead. the prolect developers have agreed to count the costs of project related SEP-
intervenUons as in-kind equity of the Govcrnment of Laos in the project.
12. 1.3 The International Advisory Group
In order to facilitate the decision making process and provide a differert
perspective. the WB established an International Advisory Group 1LAG).In the
words of the WB's mandate to the members of the IAG the objective in
establishing the Group was to obtain guidance 'on how it (the WB)can improve
its handling of environmental and social issues in the hydropower projects it
supports worldwide'. As an initial phase of this activity, the LAGwas to provide
an evaluation of the WB's handling of these issues in the proposed Nam Theun
2 project in the People's Democratic Republic of Laos and to make specific
recommendations on addressing these issues.
The composition of the LAGIs presented in Appendix 1.The Terms of Reference
for the LAGas set out by the WB are glven in Appendix 2. The initial IAG
nission took place from May 28 until June 7 1997. Appendix 3 gives an
overview of the working programme of the LAG.Appendix 4 lists the reference
documents used.
1.4 Mandate. scope and inter-im nature of the report
The scope of the work required to be undertaken by the Group may be
summarized as follows:
provide an independent assessment of the WB's handling of environmental
and social issues in the proposed Nam Theun 2 project:
* provide. as part of the above. an assessment of risks to the WB posed by
involvement in Nam Theun 2 and advice on what measures the WB should
take to address these nsks:
as part of the overall process. advise the WB on the project's compliance
with the WB's environmental and social Operational Directives in both letter
and spirit:
- advise the WB on steps to be taken to build intemational consensus on the
proposed Nam Theun 2 project:
* provide recommendations covenng the above areas.
In undertaking its task the LAGwas to take on board and 'incorporate' the
concerns and expectations of key Bank stakeholders.
As wlll be gathered fro,mthe above. the Terms of Reference of the Group were
limited to the social and environmental areas of the proposed project. This was
a large enough mandate to address in the'very limited time available without
attempting a wider assessment of the developmental. economic. financial and
political issues involved in a project of this magnitude and nature in a country
like Laos. It should be made clear that the LAGwas inserted into an evolu-
tionary process. still not completed. in order to provide a "snapshot" of the
Bank's handling of two sensitive areas of a controversial project. The overall
"bankability" of the proposals is not addressed in this report. Nevertheless the
LAGfelt that it could not do its work without appraising the broader context of
the hydropower project and will venture to express a view on some aspects of
these wider issues where it feels that this might be helpful to the WB and to
the Government and people of Laos.
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13. 1.5 International context
The rmssion took place against the backdrop of an active and ongoing global
debate about the results of investments in large dams around the world.
Many governments -but not all- and the pnvate sector continue to be
interested in the building of large scale hydroelectnc generation dams. Scores
more large darns are planned on most of the major river systems around the
world. There remain widespread concerns about the overall developmental.
economic. social and environmental consequences of such schemes. There are
differng views on the subject within multtilateral institutions including the WB
itself.
The LAGwas of course well aware of the widely divergent views in the world
community on large dams and on the Nam Theun 2 projecL These divergent
views were reflected in the LAGitself to a certain extent. The lAG's members
agreed to take part in this present exercise on the basis that a broad cross-
sectoral look at one current project in a poor developing country might help to
illumninate to a degree the wider debate about the impacts. benefits and costs
of large dams worldwlde.
One element of the consensus reached m the Group was the importance of
intemational transparency on Narn Theun 2. not only at the formulation stage
but for a considerable period of time to come If it is to attract support
internationally. Approaches to enhancing transparency will need to be
elaborated.
The LAGnotes also two regional contexts of some signtficance: the wider plans
for development of the Mekong River ecosystem and the entry of Lao PDR into
the Association of South-East Asian Nations (ASEAN).
2. TE LAO CONTEXT: BROAD CONSIERATIONS
2.1 Special features of-the Lao context
The Lao PDR is a poor country with limitedresources. At USS 350 p.a. per
capita income Is one of the lowest in the world. The incidence of poverty is high
(46. 1%). especially in the rural areas (53%). Integration of 68 ethnlic groups is
a considerable challenge. The Lao "economy In transition" has been going
through a difFicult period as it opens Itself to the world communilty. especially
since 1988. Agaanst the background of these multiple challenges. investment
in the social and environmental sectors. while not neglected. has not been a
high pnonty activitv. Health. incomes. educauon and housing conditions in the
rural communities. particularly in remote vlLUages.call for early attention.
The macro-economic perforrmance of the transition economy of Laos has been
remarkable with 6-7% annual growth (from a low base) In recent years and
with relatively low inflation rates. The good growth performance is expected to
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14. continue in the coming period. while there are alreadv some danger signals on
the irflauon front. However. Laos has not thus far been able to translate these
achuevements into substantial progress on the ground in alleviating rural
poverty in partucular.
Lim.ted trained manpower is a factor holding back the achievement of policy
objectives. Increasing gaps in income and lfe styles between urban and rural
areas is a major obstacle in allocating the scarce trained human resources to
where the needs are the greatest, since many trained Laotians are reluctant to
spend long penods in rural areas. Laos may have something to learn from its
southern neighbours. notably perhaps Malaysia. in "bringing bright lights to
the bush". Training in such areas as rural development and nature conserva-
tion are priority requirements and Laos needs a cadre of competent cross-
sectoral managers.
A key problem. linked to the human capacity one, is the weakness of
institutional arrangements. nauonaily. regionally and at village levels. It is of
particular importance to strengthen local and village level institutions if the
poverrv alleviation strategies agreed at the Partv Congress in March 1996 are
to be pursued effectively.
A further burden is the country's level of external debt. Resuiting in part from
past debt to the former Soviet Union but also from ongoing current account
deficits (USS 308.4 million in 1996. excluding official transfers). the situation
calls for imaginative approaches to debt relief and removal.
Despite the list of constraints set out above. Laos is not without resources and
opportunities. If fresh water is seen as the oil of the twenty-first century and
nch biodiversity is seen as the diamonds of the future. then Laos has two
commodities of great price. It might now be seeking to add value in these
sectors. looking to such possibilities as electricity intense industry. further
processing of Its timber in-country, eco-tounsm and cultural tounsm and
eventuallv to using Its low wage structure to seek comparative advantage in
manufacturing inside ASEAN. not least in silk and other textiles.
2.2 Conclusions and recommendations. on broad development and
project-related issues
While it is highly presumptuous of the LAGon the basis of one short visit to be
offenng any solutions to the development problems of Laos. we offer the
following passing thoughts as a contribution to an on-going debate.
2.2.1 Broad development issues
1) Participation in ASEAN. and perhaps eventual parucipation in the APEC,
will offer Laos an opportunity to pursue wider options if the Laotian
economy and its public and pnvate sectors gear up for these developments
with vigour. There are risks Involved. So It is probably not too soon for Laos
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15. to be addressing these new options and to be developing a broad based
strategy for its national development. building in the ASEAN dimension.
2) A renewed effort for capaclty building will involve clear identification of
priority areas. Primary education. including eradication of illiteracy with an
emphasis on girls and women. is one. Vocational trainng in agriculture and
in basic engmneenng also appears to be importanL Model far-msand centres
of appropriate technology might be useful. UNDP should desirably lift its
game in this area. becoming more proactive than it appears to be at
present.
3) Decentrallsation of the government structure by providing local communi-
ties not only with more authority, but also with more financial indepen-
dence would contribute to rural development in Laos. Signs of ingenuity
and entrepreneurial skills in the local communities are evident. By
providing opportunlties for communities to take their own lnitiatives, a new
landscape for the Laotian economy will open up.
4) It is irmportant for Laos to build up credibility in the world financial
community through its concrete actions. For this purpose. it seems
essential for Laos to establish that henceforth contracts for feasibility
studies. planriLng and implementation will be pursued through open and
competitive bidding processes. This does not appear to have been the case
in relation to this project. Additlonal credibility would come from the
introduction of a comprehensive national auditing system. preferably with
an external auditor involved.
5) It might be useful for Laos to establish an institute of applied economic.
social and environmental sciences, oriented to problem solving, in
Vientiane. Outside help from bilateral sources would doubtless be avallable.
It might become a focal point for Laos' international contacts. needs that
will increase rapidly with Its opening to the intemational community. It may
be useful initially for this institute to include intemational experts for the
purposes of strengthening the institute's capacity. Involvement in interna-
tional networks of research instituttons might also help strengthen its
capacity.
2.2.2 Project related issues
1) The time is fast approaching when two key negotiations on the project will
be initiated. It is of vital importance for the Laotian government to put
together a competent negotiations awdvisory team on Nam Theun 2
answerable only to the Laos side. The GoL needs to be able to match the
negotiating experience and Information of those on the other side of the
table. This will in the end be adrantageous to both sides. A start has been
made on accessing such advice but independent experts in finance. law and
energy negotiations need to be moulded tnto a team capable of providing a
coherent cross-sectoral brief for the Lao negotiators. Such a team should
spend substantial periods of time together in Vientiane rather than simply
flving in for short one-off visits.
2) Whether or not this project proceeds. there is a requirement for the WB to
strengthen its office in Vientiane. Competcnt resident experts will be
particularly useful in the coming ten years as Laos goes through a further
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16. difficult penod of transition. The newlv introduced svstem of having WB
Country Directors resident on the ground will benefit Laos.
31 Equity participation of the Laotian government in the project should include
a realistic valuation of the affected areas. not least the Inundated area. It
is recornmended that proposed compensatory contributions towards
watershed management costs be compared with other examples around the
world. e.g. the SinCuhydropower dam in Colombia managed by Empresa
Urra. which Is required to pay 3% of its income p.a. for watershed
management and 3% for local development schemes.
4) The so-called BOOT (build-own-operate-transfer) arrangement covering this
project is an unusual one in WB history. The justification is that the
arrangement reduces the equity requirement of the GoL and provides a
mechanism for the Government (which does not have the capacity to take
over the installation in the short term) to postpone assuming full responsi-
bility. Respective responsibilities of GoL and NTEC will be set out in the
concession agreement yet to be negotiated. It is not clear at this point how
adequately externalities such as unmitigated or residual impacts will be
captured in the final document. This reinforces the case made above by the
LAGfor the GoL to have available a competent team. loyal to the GoL only
and well versed in international energy negotiations. to provide advice to the
GoL negotiators dunng the BOOT negotiation and the accompanying tariff
negotiations with Thailand. Acquaintance with modern 'green accounting'
methodologies (propounded by the WB)would be one qualification for the
advisory team.
5) The livelihood proposals for the project focus on the agricultural and
forestry sectors. But the infusion of new funds and a migrant labour force
will open up opportnities for Laotian entrepreneurs. Whilst some business
openings may occur during the construction period (e.g. earthmoving.
catering. supplying of vegetables). the chalJenge will be to establish
enterppnses. NTEC can facilitate in these areas by arranging access to
credit. providlng training in entrepreneurial skills and access to technology.
and seeking joint venture partners for local enterpnses. This will help
ensure that local communities have an opportunity to benefit further from
the project.
3. ASSESSMENT OF HANDLING OF SOCIAL ISSUES
3.1 Linked nature of social and environmental issues
If this complex and many-faceted project goes ahead- a decision well beyond
the lAG's mandate or powers- then it mav well come to be regarded as in many
respects Lnnovatorv in the handling of social aspects. Curiously enough. the
WB has no consolidated set of rules on how to handle the social aspects of Its
projects where these Impact on other than Indigenous peoples. A number of
Operational Directives (ODs) touch on social Issues but these are not brought
together except in the case of indigenous people. The latter OD covers many of
-6-
17. those affected bv the Nam Theun 2 project but not all - the downstream
lowland Lao people are not covered for example.
That said. the range of project proposals which collectively malke up the social
strategy represent an impressive attempt to try and integrate social factors
from the outset into a massive infrastructure project and to turn a historically
weak facet of such WB projects into a positive developmental contribution. The
intent not simply to maintain living standards of those to be resettled, but to
lift those standards is entirely appropnate since the present baseline is low.
There will be flow-on effects if this policy is successfully achieved. Thus. there
Is considerable potential for the Resettlement Action Plan (RAP) resettlement
activitles (including upgraded houses, greater income. and social facilities) and
other induced activities around the reservoir to produce a disturbing effect on
internal migration. pattems. Will this bring people from other provinces to
Khammouane? Will It stimulate movement even within the project area? Might
It. for example. tempt Brou families from the watershed to move in with
relatives around the reservoir or with relatives in the area downstream of the
projected powerhouse. where the potential for Irrigation will increase conside-
rablv? (So long as this was a completely voluntary process it might have
conservation benefits). Little of this is able to be forecast at this point but a
degree of flexibility may have to be injected tnto social strategy with the
passage of time to cope with unforeseen Internal migrations.
The Group was not able to observe the degree of public participation in project
planning except in Vientiane itself. There. given the nature of Laotian society
at this time, there was little involvement of 'the public as such. There were
(intermittently) representatives of expatriate NGOs. many Lao officials and
some representatives of the people affected by the project but few others. The
process was open enough but stilted in tone. From what we were able to
gather. the process outside the capttal and particularlv in the villages facing
resettlement was more participatory and substantive. From the Group's own
contacts. however. it is apparent that therc were deficiencies in this process
(see Appendix 5). There Is a clear need for stepped up public education work
among the people In the plateau and particularly in the watershed area.
It must be repeated that in this project the three areas of social development.
economic development and conservation of the envtronment are closely linked.
Put baldly. if the people's basic social and economic needs are not met. they
wiU go on with their present sometimes destructive practices and the
watershed and its biodiversity and eventually the reservoir will be damaged. On
a more positive notc. the indigenous knowledge systems of the people in the
NBCA can be drawn upon in due course to help manage biodiversity of the
watershed and those involved will acquire a cash income from other than the
ex-ploitation of wildlife.
-7-
18. 3.2 What are the large social issues?
The scope for developing alternative models for social development in the region
is not great given funding and other constraints. Issues requiring attention
include:
1) Aliemation of poverty which calls for:
negotiating a concession agreement that will provide an equitable and
secure revenue package to GoL;
the GoL making a firm comritment to direct these revenues into the
delivery of practical poverty reducing programmes especially in areas like
health. education and agnculture:
institutional mechanisms for channelling funds from both bi- and
multilateral sources to the regional and local level in the wider region.
including the lower Xe Bang Fal (e.g. dry season irrigation);
a programme to deliver services and develop alternative livelihoods for local
communities within the NBCA as well as the Plateau.
2) Achieving a successful resettlement with expanded incomes for those
directly affected. (See Section 3.3 below.)
3) Not neglecting those people affected who are not to be resettled. Detailed
plans for compensation in the case of other affected people have vet to be
developed (e.g. those affected bv building of the transmission line to
Savannakhet) and by expanded water flows in the Xe Bang Fai). This area
needs further attention.
4) Handling migrant worker problems adequately. The social impact of an
influx of around 4000 construction workers and camp followers (one
estimate is as high as 6000 in total) Is considerable, bnnging social stresses
-nits train. Therefore. for example:
close supervision and reporting by sub-contractors on movements of
construction workers into the catchment area would be desirable. especially
after the reservoir is filled:
all construction workers and camp followers should be screened for
Se.x-uallvTransmittablc Diseases and HIVand should have access to basic
health services.
5) A proactive programme for expanding the proportion of workers of Lao
nationality on the project. The project might develop mechanisms to recruit
and train Lao workers for construction and other work and apply special
arrangements for Lao nationals such as affirmative action on training.
margin of preference in bidding. housing or boarding facllities etc.
6) Striking a balance between social services delivery and inducing adverse
environmental impacts. Infrastructure development to facilitate delivery of
services to communities in thz catchment area needs to be negotiated
further with GoL (including the Bolisat Phathana Khet Phoudol Group -
BPKP). Education and health services (particularly women and the young)
are a key pnonty for long term social and institutional development In the
plateau and catchment area. Funding may be sourced from the NTEC
annual contribution. which will almost certainly require substantial
augmentaLiorn.
7) Investigating alternatives to consolidation of communites in the catchment
area. Research findings suggest that the disruptive social effects of this may
-8-
19. outweigh the logistic advantages. But methods of delivery need further
thought (see envLronmental section below).
3.3 Assessment of Social Action Plans
The history of resettlements is a sorry one. so caution (and learning from past
mistakes) are necessary. The resettlement areas in this case are not far
removed - almost all lie within the existirng village boundaries.
The Resettlement Action Plan appears to provide a sound basis for achieving
a successful resettlement. Field visits suggest that further evolution of the
liveLihood model may be necessary and that the process requires a clearly
defined and more appropriate communication strategy (e.g. community
exchanges with Nam Ngum reservoir area people. use of models of the dam and
reservoir. and video presentations).
As a general observation. it might be noted that the RAPcalls for considerable
adaptation of livelihood skills by those to be resettled and for field proving of
new production techniques. What this and other factors suggest Is that a five
year tameframe for implementation of the RAP may well prove insufficient. A
longer t2meframe period by NTEC may prove necessary to assure sustainable
results. for social engmeering is more complcx than construction engineering.
Managing the very high expectations of those to be resettled will be necessary
(Refer field notes Appendix 5).
It should be noted that the RAP. comprehensive and imaginative though It is.
does not cover the social implications of enhanced internal migration brought
about by a successful resettlement. Imrrugration of non-Lao is not covered
either.
What this highlights is that the Bank's project managers, in consultation with
their GoL counterparts, need to address a range of social issues lying outside
the TOR of the RAP and other social action plans. The spontaneous Immilgra-
tion issues aside. there appears to be a gap in relauon to affected people in the
lower Xe Bang Fal and Savannakhet plain areas.
The draft of the NNTCA Environmental and Social Management Plan made
available in late July 1997 is comprehensive in Its reach and has the elements
of a useful basis for planning. At the same time it clearly needs further work
to pull the vanous components together. While the JAG wondered whether
setting conservation of biodiversity and ecosystem functions as 'the highest
management priorities" for the area was appropriate It decided that on balance
this Is true for this part of the project area. provided that sufficient weight is
given also to the principle that communities should be the "net beneficlaries'
of management interventions. T1 e Group also felt that more substantial
involvement in discussion and decision-making by stakeholders was needed
than through their `"widerepresentation ..... at meetings and report distribu-
tion'. There Is a need for inclusion of community representatives at all levels
of the management structures if there is a senous Lntention to involve the
villagers in a co-management system.
The GoL and Bank should consider further the timing and funding implications
of the Catchment Management Plan. The processes envisaged in the Plan have
the potential for lifting living standards but will require the communitties to
change substantively their daily behaviour patterns not least If they are to
-9-
20. adopt some of the livelihood options now presented. This will call for a
sustained investment of resources in terms of achieving social change. In the
LAG'sview. NTEC's financial commitment to development in the catchment
area will need to be stepped uF onsiderabiv if the plan s objectives are to be
achieved and the Bank's own .KTSEP provisions will also have to expand.
Additional donor funds will also have to be sought. A commitment stretching
over perhaps two decades will be involved. We trust that both NTEC and the
Bank are prepared to make this long term investment.
The Bank still has much to do in stitching together and reconciling the social
development aspects of the RAP, the NNTCAManagement Plan and its own
NTSEP. None can be implemented in isolation from the others.
The Bank's own NTSocial and Environmental Project (NTSEP) has not yet been
finalised. for in a sense It is a backstop and a supplement to the other
management plans. plugging gaps and meetlng additional needs. One result
is that in late July 1997 the NTSEP had coherent sets of proposals only in
relation to three sectors - resettlement. public health and education and
traunng. Each of these is important (as communities said to the LAG)but the
Project as it stands at present appears somewhat fragmentary. The LAGwill be
interested in seeing the firal version of this useful Bank initiative, for the
Group has scressed the need to pull the vanous plans together and this project
provides one mechanism to help achieve this.
3.4 Compliance with WB's Operational Directives on social and
indigenous peoples' issues
As noted above. a number of the Bank's Operatuonal Directives (ODs) touch on
soctal issues but these are not brought together except in the case of
indigenous peoples. This latter OD (4.201in fact covers most of those affected
by NT2 but not all. the downstream lowland Lao people not being included. But
the lack of a more widely applicable OD on social Impacts is a serious
deficiency which should be addressed, perhaps In the context of the planned
Bank/lUCN Large Dams Commission. One way forward would be to adapt.
update and widen the scope of the Bank's Social Assessment Guidelines.
converting them into an OD. The three ODs surveyed related to Environmental
Assessment (4.01). Involuntary Settlement (4.301 and Indigenous Peoples
(4.20). A paper on Natural Habitats (O.P.4.04) was also reviewed. The Group
would not claim to have made a comprehehsive assessment of the application
of all of these papers in the case of NT2 (this is a technical process which
would have required more time than the Group had available). Nevertheless.
a brief survey was undertaken. the detailed results of which appear in
Appendix 6. While It may be salid that those (NTEC) drawing up the RAP were
clearly well aware of the requirements of the OD's. this is not as apparent in
the case of those (IUCNteam) who drew up the NNT Environment and Social
Management Plan (ESMP).
There are several technical deficiencies in the ESMP in compliance terms. not
least in respect of OD 4.20 although the social analysis work is exccllent. Since
the indigenous peoples in the watershed area are vulnerable. the deficiencies
need remedying. As noted in AppendIx 6. much of what is missing relates to
baseline data. information on the legal status of the indigenous groups and
-10-
21. iand, and (most important). provision for pulling together. monitonng and
evaluating a consolidated development plar. relating to indigenous people. It is
necessarv at the moment to read the ESMP and the NNT Social Action Plans
togetner to get the full picture in terms of a development plan. Editing is called
for.
In the case of the Resettlement Action Plan. the ODs have been applied in most
cases but the IAG has doubts about the effectiveness of consultations on the
ground with the most vulnerable populations. particularly women and ethnic
minorities (as required under OD's 4.20 and 4.30). Its own direct contacts with
these groups. though not extensive. suggest that the level of comprehension of
project proposals and their impacts Is low. A stepped up programme of public
consultation is important. not least to encourage "ownership" of the proposals
by those affected. Other areas which need addressing are more Intensive
consultation with and assistance to the affected communities on the upper Xe
Bang Fai and the absence of any poverty alleviaton measures for people on the
Savannakhet Plain. The issue of populatLion growth is not specifically addressed
in terms of paragraph 18 of OD 4.20.
Once criticism of the RAP process is that it seems doubtful that the range of
resettlement options and alternatives envisaged in OD 4.30 were put to the
communities though some were.
A second point is that the methodology of holdLng large collectuve meetings in
the villages may have precluded less poweriful groups, notably woman, from
always being heard.
IUCN's consultative approaches took place over a sLx-month period only.
Nevertheless. its more anthropological approach in watershed villages was
more f1exIbleand probably "empowered" communities in their interaction with
researchers more than was true of the NTECapproach in the plateau and other
downstream villages. The responses were thus more spontaneous.
It goes without saying that final judgements on compliance with the Bank's
ODs await the outcome of negotiations yet to occur and implementation
procedures and practices yet to be put in place.
3.5 Risks and opportunities involved for the WB on the social side
Risks on the social side will anse If:
1) The RAP is not fully Implemented. proves deficient In practice. is not
adaptable to new circumstances or is terminated prematurely.
2) The RAP in practice does not result in an increase In incomes of directly
affected communities. The concession agreement should clearly indicate
Income targets.
3) The Catchment Social Management Plan's proposals for additional
livelihood options prove impractical on the ground.
4) Consultation processes at the local level are not sufficiently thorough and
meaningful to bnng in the communitv stakeholders.
5) Spontaneous migration of people from the catchment area occurs without
an adaptation of social strategies.
6) Negative impacts on livelihoods (including loss of access to protein sources)
of downstream communiLies occur.
7) Weak- insttutions fail to implement management and mitigation plans.
-IlI
22. 8) Adequate WB oversight resources on the ground in Laos are lacking.
9) WB and NTEC involvement is of short duration: this is a complex and
many-faceted operation. which will not be concluded in a five year time-
frame.
The opporturuties on the social side are:
1) To illustrate that it is feasible in plannng and implernenung a large dam
project to produce positive social and environmental impacts on the
situation of affected communities including indigenous people.
2) To foster the habit of joint cooperation between the private sector.
government. NGOs and civil society at community level in large Infrastruc-
ture projects.
3) To foster social cohesion rather than social disintegration of communities
on the Plateau. the NBCA and downstream commuun.tites.
4) To strengthen GoL overall social delivery capacity as a model for other areas
in Laos.
5) To promote recognition of the traditional knowledge of indigenous peoples
and the substantive contribution it has to make to conservation of
biological diversity.
3.6 Conclusions and recommendations on the handling of social
issues
This is a complex cross-sectoral project on the social side. It will therefore be
very difficult to manage. It Is innovatory in approach and Is an impressive. if
thus far not entirelv integrated. attempt to incorporate social factors from the
outset into a large infrastructure project. There will be flow-on effects in terms
of promoting internal migration as a result of a successful endeavour to raise
incomes and living standards among the resettled.
Success is not guaranteed. being dependent not onlv on a stepped up and
sustained deliverv of social services by the Lao government and a vigorous
response by the leadership of the affected communities. but a long-term input
from both the World Bank and NTEC which needs to extend bevond the
present timeframe. In the end. the resettlement element of the project and the
amelioration of the situation of the downstream people may prove simpler to
achieve than improving the lot of the people in thc watershed. Getting the latter
aspect right. but wlthout further damaging the watershed and Its rich
biodiversity. is the fundamental challenge and will be a final determinant of the
technical, environmental and social success of the project as such. There is the
potential here for making a real. mreasurable and lasting impact on the basic
needs of the Lao people as a whole if the many loose threads are woven into
one of those harmonious fabncs produced by the many ethnic groups in Laos.
Some intenm recommendations by the [AGarc to be found in the section above
on the large social issues (para. 3.2.). Others arc:
I) Pav enhanced.attention to integrating the planned social activities across
the whole scope of the project area (there is occasional evidence of a
fragmentary approach: what is becoming clear is the interaction and impact
-12-
23. of social activities undertaken in one part of the province on people
elsewhere).
2) Capacitv building in human terms is a crucial element of all aspects of the
proposals and should desirably engage both the WB and UNDP. in addition
to NTEC. in helping GoL establish decentralised t-aing systems and
networks.
3) Address poverty alleviation through more direct means than lifting national
revenue flows and tmplementing the RAP (e.g. step up overall resource
mobilization activities nationally expandjob opportunities for Lao nationals
In the construction and related phases of the project. interest UNDP or a
bilateral donor in bringing dry season irrigation to the lower Xe Bang Fai.
etc.).
4) Address the impacts on such other affected communities as those affected
by the transmission line to Savannakhet.
5) In looking to improve the living standards of those in the NBCA. research
and employ appropriate or intermediate technologies which are low tmpact
(e.g. viewing the reservoLr as a road. consider the use of aluminium
jetboats. (found elsewhere on the Mekong) to provide wet season access to
the NBCAvillages. expand the existing use of micro/micro hydro devices to
bring electricity lights to the villages. build a series of small weirs employing
gravity feed mechanisms rather than large weirs and pumps to expand
paddy rice areas).
6) Impress on both expatriate and Lao participants that the social and
Livelihoodprogrammes are not an add-on but a quite crucial element of the
whole project -and in the final analysis one of the ultimate justifications for
it.
4. ASSESSMENT OF HANDLING OF ENVIRONMENTAL ISSUES
The studtes on environmental Impacts and activities relevant to the proposed
NaamTheun 2 project are the Environmental Assessment and Management
Plan. the Resettlement Action Plan. the project outline for the Bank's own NT
Social and Environmental Project. the reports ofthe International Environmen-
tal and Social Panel- of Experts and NNTCA Environmental and Social
Management Plan. The LAGalso had a range of material available to it which
were contributions to the above studies including internal WB reports. a range
of publications on the biodiversity of all affected areas by fleld biologists of the
Wildlife Conservation Society and a number of field reports by specialists of
IUCN-the World Conservation Union.
It should be underlined once again that there are very close links between the
environmental Issues raised by the project proposal and the social and
developmental issues. Experience elsewhere suggests that to ensure sustain-
able use of natural resources let alone a high level of conservation of a region's
biodiversity the human factor has to be kept firmly in mind from the beginning.
Reduced to a simplified form. the balancing act required to protect the project
watershed and its world class flora and fauna involves findin& v4able and
sustainable alternative sources of food and income to Lhehuman inhabitants
present cultivation methods, hunting and overfishing. and devising etficient
-13-
24. ways of brngmng much needed social and economrc services to the watershed's
human inhabitants without building a network of all-weather roads. Ln the
case of Laos it should be noted that an added dimension is the need to reach
an understanding with neighbours. notably the Government of Viemam. on
cross-border incursions by traders seeking nature products. A transboundary
reserve with World Heritage status might be a constructive approach.
4.1 Enviro=nental impacts
The Nam Theun 2 proposals represent in sum a drastic intervention in the
Nam Theun and Xe Bang Fai aquatic and terrestrial ecosystems. This is a
reality. So are there less drastic ways of achieving the conservation of
biodiversity in the region which the Bank or the GoL might have endeavoured
to put in place? There Is a surprising consensus of vtew among the environ-
mentalists who have studied the situation on the ground that the Nam Theun
2 proposals. to the degree they have been agreed thus far. represent the single
most realistic prospect of preserving as extensive a proportion as possible of
the unique biodiversitv of the project and contiguous areas. The LAGdoes not
dissent from this finding.
There are some large environmental offsets involved. There will be considerable
environmental impacts If the Nam Theun 2 scheme goes ahead. The cumulative
aquatic impacts will doubtless be severe at several levels. Inundation of the
Nakai Plateau. originally rich in biodlversity. will reduce the remaining
biodiversity. How serious is this? One study2" comments that: 'other than a few
patches of pine, of mixed broadleaf forest and possiblv some riverine strips.
most of the terrestrial area of the plateau is considered to be substantially
modified by human activity and from a biodiversity standpoint substantially
degraded from its onginal status'. A second fleld observer'l states: 'Today...
much of the Plateau is heavily degraded due to clear cutting operations and
human settlements. While the remaining forest patches on the plateau contain
a btrd and mammal diversity that. for the most part. equals some areas inside
the NBCA Itself. the abundance of most bird and mammal species observed on
the plateau is very low'.
It is clear that riverine bird and fish species in the Plateau will be affected, the
latter more seriously perhaps than the former. The nver is reported to provide
a haven for some rare species of birds. notably the threatened whilte winged
duck. Such species may be lost to this particular area if it is inundated. There
are several signiflcant species of fish in the plateau rivers. Further studies are
progressing on how unique these are to the area. Only when these studies are
completed will a forecast of the ,ull gravity of the biodiversity impact be
feasible.
Downstream of the proposed dam the nver flow will be heavily cut. while the
additional flow is diverted to a separate rver system in the Xe Bang Fal. The
impact on fish lifc in the lower Nam Theun will be severe. The impact on the
Xe Bang Fai has not vet been calculatcd. but is likely to be considerable,
2 First Report of the InternauonaJ Environmental and Social Panel of Experts.
3 Rabinowutz. Alan Wildlife Conservauon Society paper.
- 14-
25. although the canal designers are building in aeration buffers and a very wide
bed to accelerate oxygenation and to attempt to equate water temperatures.
Further mformation is needed here. The effects of the introductaon of exotic fish
species are likely to be as ciisastrous Ln this ecosvstem as elsewhere and
should be stnctly avoided.
Atotal of five construction camps will be temporarily constructed to house the
2000 workers needed during construction works. Expenences with the
construction of the Theun Hinboun dam show that an additional 4000 people
could enter the area as merchants. temporary and informal workers. This could
result. amongst others. in illegal logging, intensive hunting and non-timber
forest products collection.
4.2 Some mitigation approaches
As noted. most oTthe environmental reports from field scientists appear to
accept and endorse a quite explicit trade-off through offsetting biodiversity
losses in the plateau and downstream areas against net biodiversity gains
sought by conserving both aquatic and terrestrial biodiversity in the extremely
nch upstream NNT-NBCAarea and Its extensions. Why do the field people who
are advising the Bank accept what they see as the inevitability of this offsetting
project. unusual as It Is? The answer appears to be the pragmatic one that the
Nam Theun 2 project proposals. designed to preserve the catchment from
logging and erosion. and hence from siltation of the very shallow reservoir and
loss of power production. appear to offer 'the best available chance to save at
least key parts of this (NBCA and extensions) truly important area and Its
biodiverslty''. They point to undertakings from the developers to allocate
substantial funds for catchment protection and the ongoing negotiations with
the GoL regarding legal and other undertakings to exclude logging and hunting
from the catchment area as evidence of a resolve to conserve the NBCA.
How valid are the expectations of the Bank's advisors of a successful offsetting
operation. what risks are there in it and what are the alternatives? A final
judgement cannot be made on this key equation at this point. More information
on the overall biodiverstty impacts and on the nature and sustainabillty of the
undertakings by the GoL is needed. Perhaps most important in the end, an
answer will depend on an assessment of the capacity of the Lao side to
undertake successfully an unprecedented (for Laos) senes of complex
programmes to get the people in the catchment area onside. to help them
develop alternative livelihoods to sometimes destructive swidden cultivation
practices and hunting. to bring them better social services- and at the same
time to effectively preclude logging andother damaging harvesting activities in
the catchment and contiguous areas. to undertake the training and institution
building required to put in place an efficient protected area regime and to
achieve socio-economic progress without building a network of all-weather
roads into the catchment. These are all demanding. costlv and time-consuming
processes which will be very difficult to manage given the present development
phase of the country.
4 First Rcport of the Internauonal Envnronmental and Social Panel or Experts
*15-_
26. So is the game worth the candle in environmental terms? Is it worth losLng
much of the limited but still sianifizant biodiversitv value of the inundaton
zone and downstream areas in order to trv and preserve the NBCAand Linked
areas? The eventual answer may weil be a qualified yes. for there is unanmnity
of view that the NBCA and its proposed extensions are extremelv significant
from a global biodiversity perspective. It is probably the most rchest and
largest wild area remaining in Lao PDR and one of the largest in South East
Asia'51 Little botanical research has been done but there are at least 14
globally endangered large mammals. 8 globally endangered birds and 20 bird
species considered globally rare or endangered in the region. This is an
unusually valuable site. its worth being virtually incalculable and certainly an
order of magnitude beyond the value ascribed to it using the methods
emploved in economic impact studies or in the calculations thus far of the
opportunity cost of not logging the area. for example.
At a more detailed level. mitigation measures might include:
promoting a public debate on the alternatives to all-weather roads into
NBCAeg. see the reservoir as a road from the Nakai admnistrative centre
to the NBCA area. with access tracks for motorcycles or small four-wheel
dnve vehicles from the reservoir via the nver gorges to individual settle-
ments or use of jet boats in wet season (as on Mekong):
taking active steps. desirably in cooperation with Vietnam. to enhance the
biodiversity protection level of the NBCA and 'Northern extension' area
through seeking World Heritage Status for the site (extending over the
border into related Vietnam reserve). There may be long term potential spin-
offs in eco-tounsm terms though cxperience elsewhere suggests that
expanded incomes for local people are hard to achieve through this means.
Potential for eco-tounsm on a national scale could well be a way to raise
Income for NBCA's but infrastructure costs would be high:
investigating the potential for further enhancing the biodiversity protection
level of the NBCAand the 'Northem extension' through carbon sequestra-
tion or 'debt for nature' swaps with donors/debt holders. Funds thus
acquired would inter alia facilitate the establishment of the proposed Sai
Phou Lovang National Park. The Northern extension is a catchment area for
the Theun Hinboun project. so the same technique could be adopted by the
project developers ,here (amongst others. the Asian Development Bank):
promoting (for social and environmental reasons) the use of appropriate
technology in the NBCAvillages eg. provision of low cost micro/micro hydro
devices. solar energy. fuel efficient woodburrung stoves:
investigating the feasibility of very small weirs rather than larger ones for
paddy rice irrigation where thiz is planned.
In Khamrnouane province a study is needed to compare potential sustainable
timber production in production forests with the currently installed processing
capacitv. Capacity will have to be adapted eventually to available sustainable
produced timber.
Construction phase miueation measures -especially around the dam site wvhich
is located near the so-called Comdor Protected Area- could be improved bv
S First Report of the Internauonai Environmental and Social Panel of Experts.
-16-
27. learning from comparable expenences in protected areas eisewhere unthe world
(e.g. the laxus oil-dnUling concession mnYasuni National Park in Ecuador).
Measures occasionaliv found effectuve elsewhere include.
bussing of workers to and from the darn site from a camp outside the
construction area;
access to the (road to the) construction sites by perTnut only:
secunty and policing by an agency under contract to the main contractor(s);
* provision of complete food supply to construction workers. accompanied by
a ban on fishing. hunting or wildlife purchases:
* the exercise by government of some control over spontaneous resettlement.
4.3 Assessment of NNTCA Environmental and Social Management
Plan and NTSEP
In terms of its environment aspects. the draft Catchment Management Plan
displavs sensitivity to development/people/conservation links and interde-
pendencies. The emphasis on priority to be given in management terms to
conservation of biodiversitv and watershed protection. balanced bv a commit-
ment to making communities within the NBCA net beneficianes of manage-
ment interventions. is an equitable approach. Aspects that need special
attention are: more comprehensive resource use plannlng. preparations for
possible voluntary resettlement. disaggregation of social issues by ethnic
minority/group. establishment of low impact irrigation schemes in the NBCA
and demarcation of agricultural zones around villages (monitoring by aerial
photography?).
That said, it would appear that the draft Catchment Area Management Plan
has not been put together with the level of involvement by communities or GoL
officials which is desirablc. This became apparent during public consultations
in Julv when ofricials appeared to contest some aspects of the Plan. parUcu-
larly as it applied to roading plans. More effort is clearly needed to bring all
parties on-side.
Remaining requirements include:
* some complex new legislation and administrative/communication plans:
* a strategy for fund raising for the new expanded budget:
* the proposed NT Watershed Authority and associated institutions to be
more inclusive in form. The more collaborative the management structure.
the better:
* donor assistance for Environmental Impact Assessment (ELA3regulation
and capacity building. including the introduction of an independent
reviewing body for this and other projects:
* the Bank's NTSocial and Environment Project (NTSEPIis. as already noted.
not yet in its final form and concentrates for the most part on mitigating
social impacts. Some of the mitigation measures suggested in 4.2 above.
not least in relation to the introduction of appropnate technologies in the
NBCA villages. should desirablv be inciuded in the final version of the
NTSEP. The project should be planned to extend over two decades.
I17-
28. 4.4 How well does the overall handling of environmental issues
complv with the Barnks ODs?
Measuring the handling of environmental issues against the Operational
Direcuve on Environmental Assessment (4.01) the following conclusions may
be arrved at:
* early recognition of most environmental consequences: achleved:
* ritigation proposals. especially in protecting the watershed: a breakthrough
in terms of past practice;
* intended WB coordination: only coming together now: cross-sectoral work
should have been pulled together earlier on. particularly in the case of the
social action plans:
* environmental management capacity building: in Laos an uphlill struggle
but the WB is gradually engaged:
environmental assessments: should be an ongoing aspect of this project i.e.
need constant monitonng (perhaps by an independent agency):
* independent environ.mental advisory panel of experts: already engaged (the
Panel of E-xperts plus the IAG itself);
* involvement of NGOs: OD 4.01 para 19 and 20 discuss the involvement of
affected groups and NGOs. Laos does not have local NGOs. only branches
of intemational NGOs that implement development projects in Laos. These
NGOs have been invited to participate In the public consultation events.
Their participation suffered a setback when the GoL decided mnearly 1997
to dissolve the NGO forum. However. it has to be observed that a public
consultation process is something new in Laotian society and that the
efforts that have been invested to make it a success have been considerable:
* affected groups: consulted but not yet fully aware of the consequences for
them (especially in NBCA):
* information disclosure: still slow and not spontaneous but overall an open
process:
provision for conservation of biodiversity and habitats: made an integral
part of the overall proposal:
- supervision arrangements: not yet apparent (need bigger resident WB
mission):
* compliance with natural habitat OD: is adequate If it is accepted that
degradation of the Nakai Plateau by flooding and hence the loss of
biodiversity there is offset adequately by serious conservation action in
NBCA and other more valuable areas:
* capacity building measures: remains to be proved that these will be
adequate and able to be implemented effectively in this case:
compliance with OD on Enviroiimental Policy for Dams and Reservoirs: is
not possible to assess until final versions of all reports and management
plans are avallablc.
-18-
29. 4.5 Risks and opportunitaes on the environmental side
There are big nsks involved on the environment side in proceeding with this
project as at present speLled out. These are summarnsed below:
Macro level nsks would include:
the projects comple,x and ambitious objectives not being met because of
mismanagement on WB's part including a failure to invest sufficient human
resources in ensuring coherence and compliance on the ground in Laos
(need larger and more technical resident WB mission in Vientiane);
* the project's objectives not being met because of a lack of GoL commitment.
capacity and longterm resolve to meet especially the watershed conservation
requirements (biggest potential risk);
* as a consequence of one or several of the above, the WB's overall reputation
suffers damage. its future involvement in hydropower projects is jeopardized
and confidence in the institution by inter alia the pnvate sector is
undermined:
* as a result of the above, hydropower projects undertaken by the private
sector only in future with few projects meeting WB Operational Directives
on the social and environmental sides- a disastrous outcome. with huge
r-isks for those countries not able to protect their own interests adequately.
Project level risks:
inability to secure attractive tariffs for electricity from EGAT (Electricity
Generating Authority of Thailand) and/or to negotiate a configuration with
return commensurate to interest and risks results in dimLnution of interest
in social and environmental aspects (a risk enhanced to a degree by the
current economic downturn in Thailand):
* ineffective conservation of the NBCA and associated areas or insidious
encroachment and logging results in a breakdown of the basic offset
arrangement:
possible unplanned and unfunded migration of people in and from the
NBCAarea promotes intemational criUcism which undermines commitment
of stakeholders to the project.
Opportunities:
* this is a chance to conserve a series of natural sites of high global value
and to enshnne them as the jewel in the Laotian crown. preferably with
World Heritage Status conferred:
* managed effectively (not guaranteed) the NT Biodiversttv Conservation Area
could become a model for the Lntire Laotian protected area network and
form the basis for a stnng of NBCA's along the Annamite chain leading on
to a spectacular border-long national park of global importance.
-19-
30. 4.6 Recommendations on environmental issues
Additional to recommendations in the paragraphs above, some thoughts are:
since handling the human factor is so vital to ensunng that conservation
objectives are met. project implementers will need to concentrate on this
factor over the initial phases:
- the capacity building (institutions, people) aspect of the project is so vital
to achieving the environmental objectives that a consolidated capacity
building work plan rnight be advantageous:
* further research is called for on aspects of the hydrology and particularly
the aquatic biodiversity of the nvenne systems, with a clear picture sought
on the numbers of endemic fish:
* there should be no introduction ofexotic fish into the reservoir and a public
education campaign should be undertaken to guard against accidental or
unplanned introduction:
* some of the WB's emerging "green accounting" concepts might usefully be
Lnjected into the overall financial equation of the project:
while all-season roads into, across or through the watershed beyond Ban
Navang would destroy the basis for the present biodiversitv offset arrange-
ment and should be explicitly precluded in the negotiated documents, an
open debate on the alternatives (using the reservoir as a road, utilizing
shallow draft jetboats to go up the nvers in the wet season. cutting access
tracks for motorcycles and small four-wheel dnve vehicles?) should be
urgently undertaken to facilitate access for introducing social and economic
programmes:
* a World Heritage site nomination for the NBCAand Its contiguous northern
extension. possibly linked with equally valuable biodiversity sites in
Vietnam. should be prepared at an early date:
* invesLigation should be undertaken of the potential for negotiating carbon
sequestration and/or debt for nature deals to help protect the NBCA
further. to provide further incentives for GoL to conserve the area on a
longterm basis and to help fund the national network of NBCAs:
* the concept of the NNT NBCA being linked up to other NBCA's and thus
forming the basis for a national park along the Annarute chain should be
further developed:
* appropnate technology techniques should be investigated to provide
solutions to service needs in the NBCAcommurnues (eg rrucro/micro hydro
devices. fuel efficient stoves):
* donor assistance should be sought to build a permanent ELA-capaclty in
the GoL system.
-20-
31. 5. BULDING U;TERNATIONAL CONSENSUS ON THE PROJECT
The WB sought advice from the LAGon steps to be taken to build international
consensus on the proposed project. The LAGnotes the WB's implicit assump-
uons here that the project should and will go forward and that it should
desirably do so with the greatest possible Lnternational support.
We would comment that mithe light of the wide spectrum of opinion globally
on the desirability or otherwise of constructing large darns. a comprehensive
consensus on proceeding with this or any other large dam project is unlikely.
As m the case of seeking a wide consensus among environmentalists on the
sustainable use of wildlife, the endeavour is doomed to failure. However, an
open. transparent and intensive debate on the big issues will at least have the
ment of illuminating the dark corners of the controversy and may even bring
those at opposite ends of the spectrum to a degree of understanding of the
position of others.
The WB has recently taken an innovative step on this front in co-convening
with IUCN a representative workshop on the future of large dams in general.
This meeting of dam builders. funders. environmental scientists and environ-
mental econorrusts. and NGO activists opposed to large dams. proposed that
an independent team of experts should be commissioned to studv the impacts
of large dams on economies. the environment and communities and come up
.with some new guideLines and standards for the WB and developers. This has
been agreed to by the WE President.
Some illumnating findings should emerge. which will be a contribution to the
vwder debate on the future of large dams.
In the specific case of the Nam Theun 2 proposal. the putting together by the
WB of the present International Advisory Group itself represents an opportu-
nitv to begLn to create in a minor way a consensus among a representative
grouping of people from around the world. The Group would simply note that
there is little doubt that the WB has a credibility gap on large dams, that this
is based on past performance and that the most frequent criticism has been
that the WB and its associated pnvate sector developers have seldom adhered
to the WE's own critena and Operational Directives in implcmenting projects.
The LAGwould also point out. however. that the most likely alternative to the
WB being associated with planning and implementing large dam projects is the
undertaking of such,work by developers with little or no international
monitoring and few guidellnes or restrictions. The preferred option even for
fenvid opponents of dams seems obvious. .
That said. the WB remains on occasion more opaque in Its activties than it
needs to be. It should endeavour to lift its game further in terms of achieving
generic public education and paricipation (both are difficult to achieve in
Laos). If the proposal goes ahead. then a vigorous public education campaign
both internally in Laos and in influential world capitals would be worthwhile.
At the same time the WB should not expect to achieve a comprehensive
consensus on the desirability of buildin, a large dam such as this one in a
countrv likc Laos
-2 1-
32.
33. APPENDICES
with the
World Bank's handling of social and environmental
issues in the proposed Nam Theun 2 hydropower
project in Lao PDR
(appendices 1 to 7)
34.
35. APPENDIX 1
Composition of IAG and technical resource persons
Intemational advisorv group
Mr. Dick de Zeeuw. Deputy Chai-rnan of Netherlands Commission for Environmental
Impact Assessment (Convenor)
Mr. David McDowell. Director General of IUCN-The World Conservation Union
Mr. Emil Salin. Former Minister of Environment for Indonesia
Mr. Kazuo Takahashi. Director of the International Development Research Institute. Japan
Ms. Meg Taylor. Former Ambassador of Papua New Guinea to the United States
Mrs. Ineke Steinhauer. Technical secretarv to the LAG
Technical Resource Persons
Mr. Manish Bapna (WB)
Mr. Chnstopher Chamberlin (WB)
Mr. Robert Goodland (WB)
Mrs. Anita Gordon (WB)
Mr. Lars Lund (WB)
Mrs. Kathryn McPhail (WB)
Mr. Arend Jan van Bodegom (independent)
36.
37. APPENDIX 2
Note on International Advisory Group on Bank Hydropower Projects
Purpose of LAG
1. The purpose of establishing an International Advisory Group (IAG)is to obtain the best
available expertise and experience to guide the Bank on how it can iprove its handling
of environmental and social issues in the hydropower projects it supports worldwide. As
an initial phase of this activity, the Bank will request the IAG to provide an evaluation
of its handling of these issues in the proposed Nam Theun 2 project and specific
recommendations on how to adress them appropiately. The Group would consist of 4-6
eminent personalities in-the field of environmental and social development: one of the
Advisors would be appointed as convenor of the group and would assume responsibility
for providing the Group's secretariat. The Bank has invited the foUowing individuals to
participate on the LAG:David McDowell (Director General of IUCN). Emil Salimn(formner
Minister of Environment for Indonesia). Kazuo Takahashi (Director of the Intemational
Development Research Institute. Foundation for Advanced Studies in International
Development). Meg Taylor (forrner Ambassador from Papau New Guinea). and Dick de
Zeeuw (Depurv Chairman of Netherlands Commission for Environmental Impact
Assessment in Utrecht).
Scope of Work
2. The IAGwould initially be requested to provide independent assessment and recommen-
dations to the Bank on its handling of environmental and social issues related to the
proposed Nam Theun 2 hydropower project. This would include an assessment of risks
to the Bank posed by involvement in Nam Theun 2. and advice on what measures the
Bank should take to address these risks. As part of this process. the LAGwould also
advise the Bank on the proposed project's compliance with the Bank's environmental and
social Operational Directives in both letter and spirit. The [AG would incorporate the
concerns and expectations of key Bank stakeholdcrs and advise thc Bank on stcps to bc
taken to build international consensus on the proposed Nam Theun 2 project.
3. At a later stagem the Envirorlment Departnent would also seek the advice of the LAGon
how to improve hydropower development in an erivironmentally and socially sustainable
manner for Bank-supported projects worldwide. Hertc. the IAG would draw upon the
lessons learned from the ongoing experience with Nam Theun 2 and to the extent
possible. Bank experiences with other hydropowver developments. The concerns and
expectations of key Bank stakeholders would also inform this critique.
Reporting Arrangements
4. The LAGwill provide its findings and recommendations to the Vice-President of the Eas
Asia & Pacific Region with a copy to the Chair of the Bank-wide Steenng Committee on
Nam Theun 2 (Director of EAI) regarding workcrelated to this project (see paragraph 2).
The LAGwould also begin discussions with the Director of the Environment Department
regarding improving hydropower development worldwide (see paragraph 3).
38. Process and Outputs
5. The LAGwould assemble LnBangkok in late Mav. 1997 where thev would be briefed on
the project bv Bank techrucal staff and management. The LAGwould then proceed tc
Vient,ane where meetings uith the Government. private developers, and other important
stakeholders would be arranged. A field visit to the project site would be organized where
a deeper understanding of the proposed project. and in particular. of the environmental
and social impacts can be developed. After the site visit and following further discussion
with Government and other stakeholders. the LAGwould prepare a summary note to the
Bank on (i)their evaluation of how the Bank has handled the environmental and social
issues posed by the proposed Nam Theun 2 project: (ii) their recommnendations on what
further measures the Bank should undertake to improve their handling of the
environmental and social issues of the project. This note, accompanied with a written
Bank response. will be made available to the pubLic within 45 days after delivery to the
Bank. Shortly after preparing this note. the LAG(or a subset of the Group) would visit
Bank Hg to discuss thew findings and recommendations with the Bank-wide Steering
Committee on Nam Theun 2. During the above visit to Washington. the LAGwould
discuss with senior Bank management broader issues of the Banks Lnvolvement with
environmentallv and socially sustainable hvdropower development worldwide and finalize
arrangements for effectivelv carrving out the role that would be assigned to LAG.
AppendLo 2. page ii
39. APPENDIX 3
Working programme of LAG
Wednesday 28 May Arrival of IAG members in Bangkok
17.00 his Meeting of the convenor of the JAG with
Mr Shivakumar and Mr Bapna of World Bank
19.30 hrs Welcoming cocktail IAGand Bank technical team
Thursdag 29 May. 09.00 hrs Technical briefings with Bank staff (Mr Shivakumar.
0 Mr Bapna. Mr Chaimberlin. Mr Goodland)
13.00 hrs Lunch break
13.45 hrs Conference call with Mr Talbot (panel of experts)
14.00 hrs Technical briefings with World Bank continued
(Mr Lund and Mrs McPhail)
16.00 hrs Briefing with Project Developers (Mr Iverach.
MrPhilippe and representatives of 3 Thai firms), presentation
held by mr Iverach
19.30 hrs Dinner with Mr and Mrs Arnaud of World Bank Regional
Mission in Bangkok
Friday 30 May 09.00 hrs Technical briefing on Study of Alternatives by Lahmeyer by
Mr Oud
10.30 hrs Brief introduction on the Environmental and Social Action
Plan for NNTWatershed by Mr Chamberlin
11.00 hrs Short overview of results of Economic Impact Study by Mr
Bapna
12.00 hrs Lunch break
13.30 hrs Charter flight Bangkok - Nakhom Phanom. cross river and
passport clearance
17.00 hrs Arrival at Thakhek in Lao PDR
19.00 hrs Dinner with Provincial Officers of Khammouane province
Saturday 31 May 09.00 hrs Take off from Thakhek by helicopter. follow Xe Bang Fal.
overfly Mahaxai. fly to Nakal Neua (see map)
10.00 hrs Land at Nakz' Neua to visit Resettlement site seedling farm
and visit township
11.00 hrs Depart Nakali Neua
11.15 hrs Land at Theun Douane Test Farm. visit to test farm
12.00 hrs Lunch break
13.00 hirs Fly to South Eastem NBCA. fly over catchment area. visit
townships of Ban Theung and Ban Tai Po in catchment area
16.30 hrs Land at Lak Sao
17.00 hrs Meeting wihL Mr Cheng Sayavong of BPKP group (Bolisat
Phathana Khet Phoudol)
19.00 hrs Dinner with IAG. Bank staff. BPKP and provincial officers
Sunday 1June 09.00 hrs Take off from Lak Sao
09.30 hrs Visit to Hmong villagc
40. 10.30 hrs Flv over Nakal Plateau. with visit tC Sop Phene and Mah
Feuang
13.30 hrs Land in Lak Sao. lunch an refuel
15.00 hrs Take off and fly to Vientiane following:
Flv over Nam Theun II dam site. Narn Theun downstream of
Theun Hinboun to Pakkadmng. overflv Muong Kao. Phalavek.
to the North eastern catchment area of Narn Ngum Dam and
reservoir
17.00 hrs Arnval Vientiane
18.30 hrs First internal meetUng of LAGand outline of programme
Monday 2 June 08.30 hrs Attendence to public consultation workshop on the draft
Resettlement Action Plan. presentations by Mr Iverach
(NTEC) and Mr Bouathong Phounsalith. president of Nam
Theun 11Resettlement Committee
Participation in small group discussions
14.00 hrs Presentation of RegionaJ Context and the Basis for Planning
the RAP. Public Health Issues bv Mr Sparks and Mr Storey
14.30 hrs Meetmig with Mr Soulivong Dalavong. Minister of Industry
and Handicraft and Vice Minister. Mr Khamnrnone Phonekeo
16.00 hrs Meeting with Mr Souli Nanthavong, president of STENO
(Science, Technology and Environment Organization) and
other representatives
20.00 hrs Brieflng on Country Assistence Strategy by Mr Chamber-Uln
and Mrs Schneider of World Bank
Tuesday 3 June 08.00 hrs Public consultation and Partcipation workshop on Draft
Resettlement Action Plan, presentations by Mr MacKay on
Selection of Resettlement Sites and Livelihood Options for
Resettlers and by Mr Damrong Phomdouangsy on Imgated
Agriculture Development
09.00 hrs IUCN presentation on the NNT-NBCA Management Plan. Mr
Watling. Mr Chape and other representatives of IUCN
12.00 hrs Lunch with Mr Soulivong Dalavong. Minister of Industry and
Handicraft and Mr Khammone Phonekeo. vice-minister
14.30 hrs Meeting with Mr Yao Phonvantha. vice-minister of Finance
16.00 hrs Meeting with Mr. Bouthone Saisida. deputy director of
Forestry Department
17.15 hrs Meeting with NGOs to request views on Nan Theun II (see
seperate list uf representatives)
18.30 hrs Cocktail hosted by Mr Rich. Ambassador of Australia
21.00 hrs Meeting with Mr Iverach and Mr Philippe of NTEC on eco-
nornic and financial issues of the project
Wednesday 4 June 08.00 hrs Continuation of meetung with NGOs
10.00 hrs Meeting with Mr Mattsson. UN Resident Coordinator
11.30 hrs Meeting with MrChantaviphone Inthavong. Director of Center
for Protected Areas and Watershed Management. CPAWN
13.30 hrs Explanation by Mr Bapna on Economic Impact Analysis
14.30 hrs LAG-meeting and discussion on first draft
19.00 hrs Drafting LAG
AppendLi ". oaec
41. Thursday 5 June 08.00 hrs Drafting time
11.00 hrs Meeting with Mr Siene Saphantong. Minister of Agricuiture
and Forestry
14.30 hrs Meeting with Mr Bougnang Vorachit. vice prime-minister
15.45 hrs Meeting with Mr Bouathong Vonglorkham. President of the
State Planning Committee
21.00 hrs Meeting IAGon second draft
Friday 6 June ALlday drafting time
Saterday 7 June 09.00 hrs Meeting IAG on final draft
11.00 hrs Departure
NGO representatives:
CARE intemational Art Crisfield
Cooperation International pour le Khankeo Oupravanh
Developement et la Solidarite
Concern Worldwide Jan Rotte
Consortium Martin Dunn
CUSO Lisa ter Woort
International Red Cross Prudence Lambert
and Res Crescent
Oxfam Belgium Nico Bakker
Quaker Service Laos Hollyn Green. Michael Emst
Save the Children Fund Australia Cecily Dignan
Save the Children Fund Pauline McKeown
United Kingdom
Volunteer Service Abroad Shamali Guttal
World Education Intemational
SIDA Rolf Samuelson
Appendix 3. page iii
42.
43. APPENDIX 4
Reference documents used (this list may not be complete)
PROJECT DOCUMENTATIONPROVIDED BY THE WB BEFORE VISIT TO LAOS
I. OVERVIEW (confidential)
General Overview
A. Background Note on Nam Theun 2 (September. 1996)
B. Minutes of NT2 Steering Commnttee Meeting (October. 1996)
C. Status Update on Nam Theun 2 (March. 1997)
D. Minutes of NT2 Steering Committee Meeting (April 1997)
Chronoloeical Review of Key Missions
E. Letter Responding to Government Request on Nam Theun 2 (August. 1995)
F. Technical Mission: Aide Memoir (November. 1995)
G. BTO Report - General (July. 1996)
H. BTO Report - Environmental / Social Issues (August. 1996)
1. BTO Report - Public Consultations / Government Studies (September. 1996)
J. BTO Report - Environmental Assessment (September. 1996)
K BTO Report - Social and Environmental Project (December. 1996)
Background Papers on Environment. Resettlement. Public Health. Construction
Management
L. BTO Report - Social and Environmental Project (March. 1997)
Background Papers on Resettlement. Livelihood, Downstream Environmental Impacts. and
Watershed Management Institution
M. BTO Report - Public Consultauons (March. 1997)
Other Imrortant Documents
N. Use of IBRD Guarantee (October. 1996)
O. Memorandum to Executive Di?rectors on Guarantees - Draft (April. 1997)
P. BTO Report - Hydropower Development Strategy (9ctober. 1996)
Q. Technical Panel of Experts - Environmental and Social Issues (February. 1997)
II. NGOs AND bMEDIA
Sample of NGO letters and press clippings on Nam Theun 2
NGO Corresrondence
A. Australian Council for Overseas Aid
B. Probe Intemational
C. Community Aid Abroad
D. Environmental Defense Fund
E. International Rivers Network
Press Chpnines
A. Selecuon of Press Clippings from Internatuonal Media
44. m. BANK OPERATIONAL DIRECTIVES
Relevant Bank Operational Directives
A. Operatuonal Directive 4.0 1: Environmental Assessment
B. Operational DLrective 4.20: Indigenous People
C. Operational Directive 4.30: Involuntarv Resettlement
D. Operational Policy 4.04: Natural Habitats
E. Operational Directive 4.00 Annex A - Environmental Assessment
rV. ENVIRONMENTAL STUDIES
List of environmental studies that have been prepared by PDG or GoL
V. SOCIAL STUDIES
List of social studies that have been prepared by PDG or GoL
VI. STUDY OF ALTERNATIVES
A. Terms of Reference
B. Incepuon Report (some secttons are confidential)
C. Review of Progress Report #2 (Progress Report #2 available upon request)
(confidential
VII. ENVIRONMENTAL AND SOCIAL ACTION PLAN FOR WATERSHED
A. Terms of Reference
B. Incepuon Report (some sections are confidential)
C. Progress Report # 1 (confidentiaD
VII. ECONOPIC IMPACT STUDY
A. Terms of Reference
B. Inception Report (some secnorns arc confidential)
C. Alternauve Review of Project Economics (commissioned by IRN)
DOCUMENTATION USED DURING VISIT TO LAOS
The key-studies'
1. (SOA) Study of alternatives (Lahmeyer)- only copies of sheets were handed out:
2. (CAMP) Nakal Nam Theun Conservation Area Management Plan (IUCN/WCS-study): on May 26
an incomplete draft was provided:
3. (EIS] Economic Impact Study (Louise Bcrger International)- a draft final report of April 1997 was
provided as well as an Executive Summary and Overall Economic Assessment (June 1997):
4. (EAMP) Environmental Assessment and Management Plan (SEATEC)- Draft final report Availabie
(May 1997) and Request for Submissions (Oct. 1996):
5. (RAP) Resettlement Action Plan - Draft final report available;
6. (NTSEP) Nam Theun Social and Environment Project- Pre-assessment Mission of Public Health
aspects (5-20 May). Preparation Mission on Resettlement (12-28 May). Environmental Training
Education and Communication (May 28). Second Preparatiop Mission. NTSEP Aid Memoire (June
3).
Appendix 4. page ii
45. APPENDIX 5
Field visit May 30 - June 1. 1997
FINDINGS
VllUages to be Resettled (2 villages were visited, Nakai Neua and Theun Done About 20
women were interviewed in each village - most minding small children)
Ethnic Composition. Lao Lum. Tai Bo. Brou and Lao Teung
Reasons for moving/potential benefits: I want to see the dam before I die.'
-Weare not moving to another village." New resettlement sites are close by. Increased opportunities
for fishing. We are used to being f1boded every year.
Health:-Principal problems are maternal mortality (1-2 women die in childbirth each year). respiratory
disease, fever. Few protein sources but eat fish daily (Nakai Nua). Few or no doctors visit Half the
children in Theun Douane village were wearing no clothing although they ranged up to 5-6 years old.
Education: no school. 1 in Nakal Nua)
Instnutiorts: In Nakal Nua decisions were made by consensus with women having equal voice. In
Theun Douane village. village elders made decisions: women were also village elders.
Lao Women's Union was represented in both vlllages but meetings were not substantive.
Consultarion Process: Few seemed to understand the impact the dam would have on their village
(Life will be betterl. Others had forgotten the messages given by the consultation teams. None had
seen models of the dam or videos.
Inside the NakiL Nam Theun NBCA (3 villages visited. Notes are from Navang (2 women) and
MakPheuang (about 20 women interviewed), since the third village Ban Theung had few people
and none spoke Lao - this village had 4 generators at the river)
Ethnic Composition: Brou
Benefits: All villagers in Ban Ma Pheuang are planting vegrtables. chili and plan to raise chickens
to sell to construcUon workers.
AgricuLturalpractices: Irrigated padi (not Ban Ma Pheuang): upland rice interplanted with corn: taro.
Fishing. Forest products.
Trade: Vietnamese visit Ban Ma Pheuang 2-3 times per month in groups of 6-7 people to barter
kitchen utensils. clothes for sandalwood. cypress wood, turtles. tortoises and small deer. Traders
come up from Lax Sao and pay cash for sandalwood (7.000 kip for 1 kg although Market prices is
USS3.000 per kg)
Health: Dr visits Ban Ma Pheuang 2-3 times per month
Educatiorn: 1 school in village but did not look adequate for number of children. 2 grades.
InstLutuLorLs:LWUbut no substantial meetings.
Consultanori Villagers in Ban Ma Pheuang had heard about the dam.
46. Outside the NBCA Phon Sa-at (Hmong Village. about 5-7 women were interriewed)
Benefits: Not heard about t-he dam,. although they use the Nam Tneuin nver ever: day for fishing.
Agricultural practices: upland nce. cassava. ch:li, corn: squash. ginger. Substantial livestock.
HousehoLd incomes: In addition to agriculture as a source of income. th.s Hmong Village also receives
rermittances from the US. This has enabled one woman interviewed to set up a shop in the past year.
close to a road. Customers come from both the village and the road.
Health Dr visits once per year
Educatior:: I school in vlllage but children also travel 2 hours per day to attend school at the much
larger Hmong village of Thong Pae.
CONCLUSIONS AND RECOMMNDATIONS
Resettled Villages
The conditions on the Nakai plateau confirm the need for a resettlement and development approach
with investment in human resources development. particularlv schools and health facilities.
We recormnerndthat village institutions (eg LWL) will need strengthening in order to cope with the
resettlement process. Vlllage credit institutions should be cxplored to ensure that the beneflts
circulate at the community level.
Consultation. There is little understanding among the women we interviewed of the impact of the
dam on their village. We recornmend better communication methods:
use of models of the dam. videos:
field testing of visual matenals.
There is little recall about the messages from the consultation process. We recomrend that messages
are clear and simple. that thev are appropriatclv designed for the target populaton and that teams
check comprehension of the messages.
Appendix D. pagce ii
