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Damming to Disaster: The Dangers of Hydropower Proliferation in Laos

Damming to Disaster: The Dangers of Hydropower Proliferation in Laos

The proliferation of renewable energy is rarely a controversial issue, but painting the construction of new hydroelectric dams in the Lao People's Democratic Republic as exclusively positive ignores the negative impacts of such dam construction on rural communities. Laos hopes to transform itself into the ‘the battery of Southeast Asia,’ enacting a plan that aims to construct upwards of 140 dams at a furious pace. This plan includes building numerous dams on the Mekong itself, which is the lifeblood of 60 million people who fish the river and farm the lands along its banks. Stemming from China, where it is known as the Lancang River, the Mekong flows through Myanmar, Laos, Thailand, Cambodia, and Vietnam before emptying into the South China Sea. The fish caught from the Mekong alone account for more than 10 percent of the world’s trade in fish, with the river supplying food to more than 300 million residents of the Mekong’s riparian nations. Yet, while dam building presents an important opportunity for Laos to utilize the vast stretches of the Mekong that languidly meanders through the nation’s territory in the Indochinese Peninsula to generate power and revenue for the nation, improper project planning and a lack of adequate precautions threaten to destroy the river’s ecosystems and displace the communities that depend on it. The shortcomings in damming projects specifically impact the rural population in Laos, while benefiting the investors and government officials driving the dams’ construction. In order to assuage the harsh criticisms of Laos’ hydroelectric aspirations, the Laotian government must open channels for local input into projects before they are approved, ensure that the proceeds of dams’ construction benefit those who dams displace, and strictly adhere to regional processes addressing the transboundary impacts of the project.

The Mekong is the second most biodiverse river in the world, but inadequately planned dams could denude the fragile balance of life in the ecosystems it supports, robbing littoral communities of crucial food and revenue sources. The Mekong River Commission (MRC), an intergovernmental management institution with representatives from regional administrations, reported in a six-year, multimillion-dollar study that current dam development plans would result in a loss of 97 percent of the sediment in the Mekong by 2040 and reduce yearly fishing revenues by nearly 5 billion dollars. Sediment is a crucial fertilizer for much of the Mekong’s littoral farmland, and plays an important role in preventing sea-water creep in the Mekong delta downriver in Thailand. Existing dams already threaten fishing and farming communities, currently reducing sediment in the river by 40 percent. Another study by the MRC indicates that the losses that local fishing industry would incur as a result of the dams would reduce the economic benefit of the dams’ construction by roughly 25 percent by 2020. While more than 1,300 species of fish currently breed in the Lower Mekong Basin, dam construction plans that do not account for environmental concerns threaten to inhibit fish from migrating to their breeding grounds. The partially-constructed Don Sahong dam in Laos lies a few miles from the habitat of the only 80 Irrawaddy dolphins left alive, and the destruction in habitat caused by the dam may drive the species to extinction. Proper consideration of environmental concerns could mitigate such fears, yet unfortunately the government of Laos and the private investors building the dams fail to demonstrate such adequate consideration. Accusations emerged recently that the officially released impact assessment of the proposed Pak Lay dam contained major sections that are copied and pasted from the previous Pak Beng dam assessment, an assessment subsequently disproven by the MRC. The copied sections falsely claimed that the environmental impact of the dam would be “insignificant or positive.” The paucity of substantial pre-construction environmental consideration  illustrates the Laotian government’s callous attitude toward the toll levied on riparian communities by changes to ecosystems and presents significant obstacles to Laos’ goal of becoming a sustainable dynamo for Southeast Asia.

Laos’ dam construction plans particularly impact rural communities where citizens wield insufficient resources to surmount the challenges posed by their forced displacement and changing sources of livelihood. The Lower Mekong Basin’s population is 85 percent rural, and not only relies on the Mekong for more than just their commercial livelihood, but also for their very subsistence, with locals eating 18 times more fish than citizens in the United States. Even if communities downstream of dams successfully weather the water-related shocks, state-sanctioned forced displacement will uproot numerous communities upstream of dams. The reservoir created by the aforementioned Pak Lay dam will displace 20 villages, necessitating the forced relocation of at least 1,000 families. The construction of the Xayaburi dam, Pak Beng dam, Nam Theun 2 dam, and Theun-Hinboun Expansion Project further displaced roughly 20,000 people. Beyond flooding and erosion, the nearly 5,000 people relocated for the Theun-Hinboun Expansion Project face serious concerns about their ability to sustain themselves in their new towns. Now living in consolidated villages without access to the Mekong, this population lost access to land that they historically fished and raised rice on, and land near their new village is predominantly allocated to rubber tree plantations. Dam projects also significantly impact the communities living downstream of the dams. The Xayaburi dam impaired the agricultural and fishing capacity of 200,000 people, placing the population at acute risk of food insecurity, according to estimates by the NGO International Rivers. The construction of the Pak Beng dam altered the water level in regional rapids and pools, damaging the ecosystems that many local villagers fished to eat from and earn a living. The Cambodian director of the World Wildlife Fund criticized the decision to construct the Don Sahong less than two miles from the Cambodian border, given that in Cambodia upwards of 70 percent of the protein eaten by the local population is from fish, noting that “the dam will have disastrous impacts on the entire river ecosystem all the way to the delta in Vietnam.” While the government of Laos is a clear proponent of dam construction, it must commit adequate resources to easing the relocation process for the affected rural population. A decreased number of fish in waterways and insufficient governmental allocation of land for farming specifically endanger the primary income sources of the rural population. The forced displacement of large subsets of the rural population coincides with an effort by the government of Laos to switch agricultural practices from crop rotation to large-scale cash crop cultivation. Such rice and other cash crop cultivation requires lowland areas for farming, which is expensive to acquire because it is already limited in Laos and made further scarcer by the construction of dams in lowland areas. Indeed, although the populations forcefully displaced are often in some of Laos’ poorest regions, switching to monoculture farming requires significant upfront investment, forcing many displaced farmers to go into debt in order to switch their agricultural practices. Furthermore, monoculture farming places farmers at risk of price shocks in the market and pestilence. The government of Laos must pay specific attention to the struggles that the rural population faces as a result of the state-enacted forced displacement in the name of hydropower projects.

Laos’ hydropower proliferation projects follow a prototypical narrative of unequal core-periphery relations, with the governmental elites ignore the impact of dam construction projects on local income and food sources in order to profit off of foreign investment in hydropower projects. While energy from Laos’ dams sold to other nations could yield 17 billion dollars in profits, the damage to the Mekong River could result in costs as high as 66 billion dollars. Scholars criticize international institutions such as the World Bank and the Asian Development bank, along with private investors, for ignoring the needs of local communities in favor of their own profits. Indeed, the Laotian government is similarly at fault, for its model of dam construction relies almost entirely on foreign investment, and the government consistently proves itself unable to ensure that such foreign investors adequately account for social and environmental concerns. Still, the government of Laos continues to pursue such projects because they view them as crucial to maintaining Laos’ growth rate, which is currently characterized as “a star in South East Asia,” at roughly 7 percent. One cannot begrudge Laotian growth aspirations, yet growth-oriented projects such as dam construction must benefit the Laotian people, rather than lining the pockets of governmental officials. The high growth rates enabled by new projects such as hydropower that capitalize on Laos’ factor endowments will evaporate unless the profits of such projects are used to fight poverty and develop human capital resources. Troublingly, Professor Martin Stuart-Fox of Queensland University characterizes the government of Laos as “massively corrupt,” elucidating that “if you are the top of the party you get a lot of money, and there’s a lot of Chinese money coming in, of course, and there are top people in the politburo who are extremely wealthy.” While Laos transitions to a market economy, it remains a single-party political system, allowing those in power to benefit from their privileged position. The Laotian government argues that the revenues of energy sales from dams will finance anti-poverty and social welfare programs. This is a sound policy in theory, but in practice the gross majority of power produced by the dams goes to the foreign companies that financed the dams, and is then reimported back into Laos at a higher price, resulting in electricity prices tripling for some citizens in Laos. After a catastrophic dam collapse in late July of this year, the government supposedly issued a moratorium and nationwide review on dam construction, yet the developers constructing the Pak Lay and Pak Beng dams reported that they received no instructions to halt construction. Just days after the moratorium’s release, Laos, Thailand, Cambodia, and Vietnam agreed to begin the regional consultation process for the Pak Lay dam, a clear indicator that the government of Laos does not plan to end its dam construction any time soon. Laos itself does not require greater hydropower to meet its domestic electricity demand, with energy sales already constituting 30 percent of its national exports. The lack of domestic need for hydropower signifies that the construction of new dams is aimed at foreign markets, thus involving foreign investors who will likely offer monetary incentives to the officials approving such projects, while the rural population continues to bear the burden of new dam construction. Obstacles to Laos’ goals of expanding energy exports may cause the hardship inflicted upon the rural population to be entirely unnecessary. While Laos and Thailand signed an understanding concerning expanding Laotian energy sales to Thailand through 2036, experts caution that Thailand already meets its energy needs, and thus may not be a sustainable market for future energy sales. In March, Thailand retracted its plans to purchase energy from the planned Pak Beng dam, the construction of which was predicated on an agreement to sell 90 percent of the energy it produced to Thailand. The Laotian National Policy on the Environmental and Social Sustainability of the Hydropower Sector outlines that all projects must include full public disclosure of the dams’ impact, yet without a free press and with Laos ranked near the bottom of global corruption indexes, there is little indication that the government of Laos will change its course and properly account for the struggles of the rural population.

Inequitable land titling regulations in Laos exemplify both the preferential treatment of foreign investors and the dearth of Laotian governmental capacity to protect both rural populations and the environment around them. Scholars in Energy Research & Social Science elucidate that without “stronger supervision and conditionality for project implementation,” elites will be able to capture the benefits of dam construction. Indeed, rather than protect rural populations, regulatory apparatuses can also further disenfranchise rural populations. When planning new dam construction, the government is able to designate land as ‘underutilized’ in order to justify the forced displacement of the local population. Given that since the governmental transformation in 1975, the Government of Laos controls all land in the nation, thus requiring that the government give titles for all land use. The Laotian Land Titling Program gives permanent land usage rights to those in urban areas, which cannot be easily withdrawn. In contrast, the Land and Forest Allocation policy in Laos grants rural residents temporary land use rights. As a result of this, not only are rural residents not secure in their homes due to the temporary nature of their land use permissions, but the process to acquire those permissions is also more lengthy. In 2015, the Government of Laos issued barely half of the number of titles that they intended to. Even when titles are issued to the rural population, “...due to corruption, titles may simply be ignored and land taken regardless of titling schemes that involve local land and resource users,” according to the NGO Global Witness. Global Witness estimates that private companies leased between 1.1 million and 3.5 million hectares of land, affecting 18 percent of the villages in Laos.  As previously discussed, the forced changes in rural agricultural practices make farmers more vulnerable to crops’ price fluctuations and harvest failure, which may lead to ‘distress sales,’ wherein the residents of an area are forced to sell of their land to survive. For foreign investors, on the other hand, Special Economic Zones grant land at a far more expedited rate to foreign investment projects. Additionally, new dam building plans such as the Build-Own-Operate-Transfer scheme result in foreign investors controlling the majority share in many newly constructed dams. This significantly erodes the Laotian government’s ability to regulate the effects of dams. The Laotian government only owned 25 percent of the Xe-Pian Xe-Namnoy dam, which collapsed in summer 2018. This precedent is increasingly worrying, given that the Laotian government will control as little as 10 percent of the shares in some new dam projects. Researchers write in the journal Global Environmental Change that “ownership and finance is increasingly private and less sovereign as use rights and decision making power over the exploitation of natural resources have been centralized and privatized into the hands of a consortium that has financial interests in maximizing power production.” The trend of decreasing Laotian government ownership in damming projects and the preferential treatment given to foreign investors in land titling demonstrates the need for stronger governmental oversight in the planning of new dam projects.

If Laos aims to transform itself into the renewable hydro-power engine of Southeast Asia, then foreign investment is the gear that allows that engine to turn, but derisory regulatory oversight allows the interests of foreign investors to supercede those of the local populations. Laos’ insufficient capacity to construct dams independently results in 80 percent of the funding for dam projects originating from foreign investors. The demonstrated interest of foreign investors creates new pressure on the Laotian government to use hydropower projects as a catalyst for greater national growth, resulting in greater numbers of dams. The subversive power of foreign capital shifts the Government of Laos’ focus from specific goals such as poverty reduction through dam development to the act of dam construction itself, due to the monetary incentives for officials to support such foreign-funded construction projects. Foreign investment is a large enough component of the Laotian economy that different groups emerged with the Laotian one party government, with a faction of older party members and party members from the South of Laos favoring Vietnamese investment, and a faction of younger party members and members from the North favoring Chinese investment. Serious Laotian infrastructure projects even outside of dam-building exist with both Vietnam and China. A newly announced highway will link the Laotian capital, Vientiane, with the Vietnamese capital, Hanoi. Entirely landlocked, Laos also gained access to the Vung Ang seaport in Vietnam after the two governments signed a joint agreement, with a railway between Vientiane and the port projected to cost 5 billion dollars. In 2013, China surpassed Vietnam to become Laos’ largest foreign investor, with China footing the bill for the most expensive infrastructure project in Laos, a railway connecting China and Laos, which will cost, 6 billion dollars, half of Laos’ GDP. China also funds the construction of the Pak Beng dam, with a Chinese firm to control the sales of the gross majority of energy from the dam.  Singapore is also involved in Laotian investment, spending more than a quarter million dollars in the nation. As public debt reached 60 percent of the Laotian GDP in 2017, combined with plateauing demand for the energy produced by Laos’ dams, fears arise about if Laos will ever be able to repay this debt, and about the influence that Laos’ lenders may wield on Laotian policy decisions. The now collapsed Xe-Pian Xe-Namnoy dam was constructed by a South Korean company, with Thai and Laotian partners. Shalmali Guttal, executive director of Focus on the Global South, argues that the dangers of the Xe-Pian Xe-Namnoy dam were sidelined in favor of corporate ambitions, positing that “The risks are masked to make the investment worth it.” The Laotian Prime Minister, Thongloun Sisoulith, aims to combat corruption such as that which enabled the construction of dangerous dam projects during his tenure, yet his administration’s former finance minister was arrested along with four other senior officials for giving out bonds for infrastructure projects that never existed. Thongloun took important steps by advising an audit of public officials’ finances, and banning the opening of new banana plantations and the export of timber to China, both of which caused significant pollution and environmental destruction. While Thongloun’s stated belief that “we can have foreign investment, but we must share the benefits. There should be fairness,” is encouraging, Laos must strengthen its government oversight of foreign investment projects and enforcement of protective regulations in order to achieve such fairness.

The Mekong crosses the borders of six nations, and any change to it will inherently affect the other riparian nations, yet the Laotian government worryingly circumvents the processes of regional regulatory mechanisms. The Mekong Agreement established the Mekong River Commission in 1995, aimed at analyzing the transnational impacts of projects on the river. Laos, Cambodia, Thailand, and Vietnam all signed the agreement, with China and Myanmar not joining the agreement in an effort to escape its jurisdiction. This effort succeeded, with 8 Chinese dams already on the Mekong and 20 more soon to come, none of which were subject to approval by the MRC. This exhibits a clear weakness in the MRC, for it lacks the enforcement power necessary to ensure that nations adhere to its directives. Laos’ unilateral decision to proceed with the Xayaburi dam’s construction illustrates this institutional weakness, for while Article 5.4.3 of the MRC’s procedures states that the committee of nations must jointly approve a proposed project, Laos decided to begin the dam’s construction without the approval of its fellow riparian nations. Laos instead cited a report by a Swiss company that used more than 40 still-unfinished studies to falsely argue that concerns about the dam were adequately addressed. This is a further example of corporate interests subverting regulatory mechanisms and endangering both the local ecosystems and population. The copied and pasted report that Laos submitted to the MRC was at best a tacit attempt to conform the regional body’s rules. The lack of concern for the regional impact of national dam projects sets a worrying precedent for the future of the Mekong and the communities that rely on it.

On July 23rd, 2018, an auxiliary dam at the Xe-Pian Xe-Namnoy hydropower complex burst, releasing a thunderous wave of 5 billion cubic meters of water that claimed 36 lives, with 98 people still missing, and destroyed the homes of more than 7,000 people. Less than a year before the Xe-Pian Xe-Namnoy collapse, the Nam Ao dam broke after the company constructing it did not follow standard practices, yet regulatory enforcement did not expand following that previous collapse. The collapse affected 13 villages, and reportedly destroyed 95 percent of the homes in some of the villages affected. The man made crisis has lasting repercussions, with families losing vast food stores that would have fed them for months, and with waist-deep mud preventing those whose homes survived from returning. The CEO of the MRC expressed hope that following this most recent collapse, sustainable and less contentious paths for development along the Mekong could be explored. Yet, just weeks after the collapse, the MRC began the consultation process for the proposed Pak Lay dam. This raises concerns about the Laotian government’s ability to protect its citizens from predatory business practices, for the dam’s builders knew that something was wrong before it collapsed. The Xe-Pian Xe-Namnoy project was previously criticized in 2013 for its inadequate public consultation, environmental planning, and impact assessments. The support provided to those displaced by the dam’s original construction also proved insufficient, with those displaced without adequate access to food, water, and new land. Following the dam’s collapse, citizens criticized the government’s efforts to conceal the disaster through social media posts, given that all other forms of media are tightly censored. Authorities also failed to notify Cambodian officials about the incoming water, with 1200 Cambodians displaced by the dam collapse. The effects of the collapse stretched as far as the Mekong Delta in Vietnam, where farmers’ fields were damaged. The question remains if this disastrous loss of life and the monumental crossborder impacts will prove sufficient impetus for the Laotian government to reconsider its hydroelectric ambitions. Former analyst for the U.S. Department of Energy, François Le Scornet, expounds that “..hydropower development is too important for the political power in place to significantly challenge the overall development plan,” demonstrating the conflict between the political motivation for dams’ construction and their sometimes-lethal impact on rural communities. The widespread impacts of the Xe-Pian Xe-Namnoy auxiliary dam’s collapse should serve as a call for Laos to reexamine its policy of forcefully displacing its citizens to serve foreign corporate interests.

The former vice minister of energy and mines who was behind Laos’ unilateral decision to proceed with the controversial Xayaburi dam responded to news of the Xe-Pian Xe-Namnoy collapse by saying that “For me, it is for the better. We have done so many projects; it is time we reassess.” Such reassessment is critical to ensuring Laos’ prolonged success. Renewable energy is an admirable aspiration, but it must be constructed in a way that does not unfairly inflict harm on the rural population through forced displacement, insufficient available land, and environmental destruction. The government of Laos must develop regulatory mechanisms capable of standing up to the powerful capital of foreign investors. Furthermore, the Laotian government must follow the procedures of the MRC, to assuage the transboundary impacts of its rapid dam proliferation. Laos as a whole can benefit from dam building, but only if the concerns of local communities are addressed, environmental impacts are analyzed, regional partners are engaged in discussion, and above all else, if the proceeds of dam building benefit the communities where dams are built rather than corrupt officials.

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