Clean energy, messy consequences in Laos

In dense tropical jungle, the playground of wild elephants and endangered animals, the spirit lands of 28 distinct ethnic groups, one mountain of Laos' remote Nakai Plateau is groaning from within.

Deep inside it, teams of workers in threadbare shirts, hard hats and rubber boots clang hammers on steel as they gauge a three-kilometer hole through the earth that will serve as the drain pipe for the reservoir of Laos' biggest development project ever. Machinery shudders from the depths. Shrieks of steel on steel and distant thuds sound like an advancing army of orcs.

It's called the Nam Theun 2; a $1.45 billion, 1,070 megawatt dam that is projected to bring $2 billion into Laos over the next 25 years. Over 90 percent of the electricity it generates will be sold to Thailand. For the first 25 years, the revenue will be split between four investing companies from France, Thailand Laos and Italy. After that, all the profit belongs to Laos.

The Communist Lao government hopes the Nam Theun will help turn the country into the “battery” of Southeast Asia. Laos doesn't have oil or an ocean, but it does have the Mekong and its tributaries. Currently 10 dams are being built, and 70 are being considered. The Nam Theun 2 is the biggest.

“This is a commercial project and a development project,” says Vilaphone Vilavong, Director General of Energy in the Ministry of Energy and Mining. “It’s a good thing for Laos. One hundred percent of Laos supports it. Ask anyone you like.”

The World Bank, which has put $130 million into the project, says it will alleviate the poverty of Laos, where 80 percent of the population lives off the land and the average income is less than $2 per day. A doctor in a state hospital earns a monthly salary of about $40.

But the dam has its detractors. Activist groups say it will flood one of the most biologically and ethnically diverse regions in the world, and destroy the fisheries and fields of over 120,000 people living in two river basins.

Among them is the Berkeley-based International Rivers, a social and environmental group that documents the impacts of large hydroelectric projects around the world. Their program director for Laos, Shannon Lawrence, has been visiting the Nam Theun 2 project site for four years and remains skeptical.

“This is not going to be the panacea to Laos’ development woes, the one golden ticket that gets them off foreign aid and makes them a self-sustaining economy,” she said.

Lawrence said Laos’ history of corruption doesn’t lend credibility to the government’s claim that the dam’s revenue will be used to “eradicate poverty by 2020.”

“In a country that does not have a track record of using central government revenue to really deliver those benefits… it’s a very risky proposition,” Lawrence said.

The reservoir will also flood one of the most bio-diverse regions in Asia. The jungles of the Nakai Plateau are home to 400 species of birds – 50 of which are endangered, and 35 percent of which are found nowhere else in the world. Of the last five large mammals to be discovered or rediscovered by scientists have been found in the Nakai Plateau. Among them was the Laotian Rock Rat, rediscovered last year. Scientists thought it had been extinct for 11 million years.

The Lao government has said that $1 million of the dam’s annual revenue will be set aside for conservation efforts to protect the remaining jungle from illegal poaching. Many villagers have forraged in these jungles to supplement their meager diets for generations.

With the reservoir slated to be filled in 2008 and electricity to be produced by 2009, Lawrence admits there’s little chance of stopping the project now. But she said International Rivers is still working on easing the consequences of the dam.

“We want to see that the commitments made to [resettled] villagers are met,” she said. “It’s important to keep a close watch and make sure villagers get what they were promised.”

The Nam Theun 2 Dam will relocate 6,200 villagers when it floods two-thirds of the Nakai Plateau – an area three times the size of Sacramento. Anthropologists have identified 28 distinct ethnic groups in the area, some of them which have not yet been classified. The relocated villagers are now transitioning into different livelihoods on less land.

Som Vang, 41, is the headman of one village that was relocated four years ago.

“Life is different,” he said. “Before I was a farmer, now I am a gardener. I sell vegetables to buy rice.”

Vang said living conditions are better for his village, they now have running water and electricity, but their buffalo are not adjusting easily.

“Now there’s not enough food for them to eat,” he said. “They’re all thin now.”

Before, Vang’s village survived on the highland rice they grew the livestock they raised, and the food they foraged in the forest. In their new location things are different. Forest food is harder to come by with the increased competition. And with no place to grow rice, they have now been told they should grow vegetables to sell in the market, a kilometer away. Their first introduction to the market economy has not been easy.

“Some days are good for selling, some are not so good,” Vang said. Down the road three ethnic women are walking back from the market, where they made “10 or 20,000 kip” selling their vegetables – about one or two dollars.

Nanda Gasparini, the World Bank’s media representative for Nam Theun 2, is nonplussed.

“They probably would have come into the market economy on their own,” she said.

Gasparini said in impoverished Laos, which has no oil or access to an ocean, options for development are few. Moreover, in a country where the hammer and sickle still flies fringe to fringe with the national flag, the Communist government ultimately calls the shots.

“The fact is, in this country, [the dam] is going to happen. The government is going to do it,” Gasparini said. She said the World Bank is involved to ensure that the project is carried through consultatively, transparently, and with minimal negative impacts.

The project has generated “6,000 to 8,000 jobs” for Lao nationals as well, she said. At the worksite, there were employees from Thailand, Malaysia, Vietnam and the Philippines as well. Despite the dust-covered signs on the project site saying “Our Target is Zero Accidents,” International Rivers has been told of 11 workers dying, mostly in dynamiting accidents.

Gasparini said in a country with a small workforce of which very few are highly educated, “hydropower and mining are the most surefire options” for development.

But at least one Lao employee of the Nam Theun 2 Power Company, the consortium of companies building the dam, isn’t convinced.

“This is not development,” he said, asking that his name not be used to protect his job. “The government says it’s development, but it’s not. Development is bottom up. This is all top down.”

The employee made a funnel with a piece of paper.

“A lot of money goes in at the top, but not much comes out for the people at the bottom.”