Building the Sustainable Dam: The challenges of meeting energy and livelihoods objectives at the same time
Shutterstock/Marcel Baumgartner

Building the Sustainable Dam: The challenges of meeting energy and livelihoods objectives at the same time

by the Ministry of Energy and Mines (Laos), TheunHinboun Power Company, Statkraft Oslo, Electrcité du Laos, and GMS Lao Company Ltd.

At the best of times, hydropower is controversial. The Nam TheunHinboun is one of the largest dams in Laos, the so-called "battery of Southeast Asia". This run-of-the-river dam was commissioned in 1998, has 210 MW installed capacity, generating some 1,500 GWh per year, 90% of which is destined for the Thai energy markets.

Description of the Actors

-The Ministry of Energy and Mines, Vientiane, Lao PDR — key Lao government partner in the project.

-The TheunHinboun Power Company, Vientiane, Lao PDR — dam owner and operator.

-Statkraft, Oslo, Norway — 20% shareholder in the project.

-Electricité du Laos, Vientiane, Lao PDR — 60% shareholder in the project.

-GMS Lao Company Ltd. — 20% shareholder in the project.

Affected communities of the Bolikahamxay and KhammouanneProvices, Lao PDR — project affected

Background to Case

The Nam TheunHinboun is one of the largest dams in Laos, the so-called "battery of Southeast Asia". This run-of-the-river dam was commissioned in 1998, has 210 MW installed capacity, generating some 1,500 GWh per year, 90% of which is destined for the Thai energy markets. The plant exploits the altitudinal variation between the Nam Theun (from which it derives its water supply) and the Nam Hinboun (in to which water is emptied having passed through the plant's turbines). The dam is currently expanding its operations — the so-called Theun-Hinboun Expansion Project (THXP), which will increase installed capacity by 60 MW.

The plant was built with funding from the Asian Development Bank, and therefore subject to its hydropower guidelines and protocols. At the time, these were based on EIAs, with little provision for longer-term social investment and development. Since the dam's commissioning, however, the Theun-Hinboun Power Company has seen that a commitment to a variety of social and environmental policies are beneficial to its corporate social responsibility profile, the dam's overall public image (something that matters to shareholders), and its own national profile in Laos. Since its inception, the project has become one of the foremost global leaders in resettlement. Its attention to extensive consultation and preparatory studies has meant that the project has become a national leader in resettlement plans, as well as environmental management. The resettlement plan under the THXP will affect 4,000 people.

Reasons for Action, Objectives and Targets

At the best of times, hydropower is controversial. One of the areas in which such developments are most critiqued is in the area of resettlement. 'Livelihood reconstruction' (as the World Bank calls it) is at the best of times a difficult process. Nam TheunHinboun has sought to meet the concerns of its critics (and, indeed, the expectations of its shareholders) by embarking on pre-emptive livelihoods reconstruction. Its resettlement and environmental plan has the following objectives:

-Identify all direct and indirect impacts of the project.

-Working closely with technical planners and engineers to avoid and reduce impacts wherever possible.

-Full mitigation of all unavoidable impacts through compensation, replacement, resettlement and relocation programs.

-The design of a thorough monitoring system with clear targets for full restoration of all households to be relocated or resettled.

-Implementation of social programs in close cooperation with project affected people and government organisations through consultations, disclosure or entitlements and reporting to all stakeholders.

-Implementation of environmental programs to protect the local environment and enhance conservation and reforestation programs to offset and construction and operation impacts.

Link to the Nexus

The approach taken was to open up opportunities for the resettled households across a spectrum of livelihoods options, comprising health, education, agriculture, housing and development infrastructure, such as energy. When resettlement is necessary, thought and managed through the nexus interlinked process is a key factor of success to achieve it in optimal conditions for people resettled.

Process, Summary of Action Taken

Implementation of the plan comprised a five-aspect approach:

-Regional health programs covering refurbishment of existing health posts, vaccination, mother-child care, sanitation, health awareness, and other government health programs not being implemented due to lack of resources.

-The Social Management Action Plan, which included anti-trafficking, your awareness programs, STD awareness, and community strengthening to prepare 'host villages' proximate to the construction areas to receive resettled villagers.

-Full asset registration and consultation so as to fully compensate resettled households for land and assets lost as a result of the project.

-Development of a full set of procedures and standards for environmental compliance in preparation for discussions with contractors and for joint site inspection of construction sites.

Uniquely, the project engaged with the World Wildlife Fund (WWF), the World Conservation Society (WCS) and Save the Children (Norway) to bring in fresh ideas and guidance as they implemented their resettlement, environmental and social plans.

Planning and Budget

The social and environmental plans represents about 10% of the total THXP project budget of US$650 million.

Problems, Difficulties Met

In resettling 4,000 people, the company has had to contend with 4,000 variables. Under any circumstances, this is a challenge, and the company has dealt with most of the innumerable problems thrown up by this variability by constantly monitoring and evaluating resettlement and the progress of individual household livelihoods.

Results to Date

Resettlement occurred at four sites around the anticipated inundation area.

Each resettled household received a new house, 1,000 m2 plots for agriculture and livestock, a hectare of land for rice cultivation and a half-hectare of upland fields for the cultivation of cash crops.

In addition, resettled communities have been given access to grazing areas, forests, rivers and fish ponds. Their health and education facilities have improved, and they have benefited from improved access from roads to and from key market towns. Individual households have also benefited from receipt of tools, technical assistance and other equipment.

The project invested heavily in the identification of suitable sites for villagers, and resettled villagers were paired with existing villages of the same ethnic group so as to improve the likelihood of integration, and hasten the process of integration. These preparatory studies also established baselines, which underpinned the company commitment to resettled communities.

Resettled household livelihoods need to achieve a target of US$1,800, while relocated households a target of US$1,450 for two consecutive years before the company withdraws its support. These targets are 25-40% above existing income levels.

Lessons Learnt

Successful resettlement that successfully addresses the matrix of livelihoods, energy, hydropower and food can be achieved provided it is focussed on clear targets, and investment in process and monitoring. There is no blueprint for successful resettlement, but there are frameworks that can be employed and replicated anywhere in the world.

A strong corporate commitment to social responsibilities is an essential ingredient in this mix.


Dr Kim Geheb, CPWF-Mekong Basin Leader


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