Hydropower Development and Food Security in Laos

Abstract

Vital water resources necessary for the production of food crops are coming under threat. Hydropower generation can have impacts on flood plains such that flooding even s are prolonged or more frequent and fish Theun-Hinboun Expansion Project (THXP), comprehensive measures have been introduced stocks decline. In this case of the ot only to restore lost production but also to secure food security and higher yields in areas downstream of the project. Relocation of villages, new or improved irrigation systems for dry-season rice production and other livelihood restoration measures are being monitored for their impact on social development and income.

Full text

2214-241X © 2013 The Authors. Published by Elsevier B.V.
Selection and peer-review under responsibility of the Stockholm International Water Institute
doi: 10.1016/j.aqpro.2013.07.012
Aquatic Procedia 1 ( 2013 ) 138 – 149
Available online at www.sciencedirect.com
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© 2013 The Authors. Published by Elsevier B.V.
Selection and peer-review under responsibility of the Stockholm International Water Institute

139
S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
poverty alleviation and sustainable development. These basic needs may become competitive in the context of
hydropower development, which aims to produce affordable, renewable energy by using these same water
resources. In the case of the Theun-Hinboun Expansion Project (THXP) in central Laos, releases of water in the
wet season impact food production by increasing the duration and extent of natural flood events and thus the
benefits of producing hydroelectric power mostly for export conflict with the needs of local populations for food
production. In order for THXP to be compliant with international standards (Asian Development Bank, 1998 and
2003; Equator Principles, 2006) and to fulfil its targets for sustainable development, a holistic, developmental
approach was used in planning to address both natural flooding events and project impacts that result in changes in
water quality and flows. The project therefore addressed not only specific impacts caused by basin transfer of water
and occasional flooding, but also designed a long-term solution to ensure food security.
2. Context of hydropower development
In the context of hydropower development, it should be stated that downstream issues in general are somewhat
neglected, since impacts often occur after construction and during the less intensive operation phase of generating
electricity (WCD 2000; Amornsakchai et al., 2000). This is surprising since rivers and their floodplains are
essential ecosystems that have formed the basis for human development, and today it is estimated that 472 million
people are impacted downstream by hydropower developments (Richter et al., 2010). Another aspect of
downstream areas is that they often consist of fertile plains that are highly cultivated and often highly dependent on
irrigation (UNEP, 2011). Hence these can be areas of essential food production, and recently, areas where
populations have expanded. People migrate into these areas due to the fertility of the soils, high yields and multiple
harvests despite frequent natural flooding and erosion (Scudder, 2005). There are surpluses in grain harvests, such
as rice in Laos, and fishing can be substantial, contributing to local diet and sale outside the area. From an
environmental point of view, downstream areas can often consist of complex wetlands with high biodiversity.
In terms of hydropower planning, these issues are not always captured in environmental and social studies due
to their complex nature, and the time required to study and fully understand ecosystems and how different
populations use and interact with them. The importance of floodplains and flood pulses, and how people use water,
can vary considerably with changes in water releases and water quality. In addition, the natural productivity of fish,
flood-recession agriculture, water use by livestock and how communities make use of the natural environment are
not easy to classify in terms of benefits. When impacts are assessed, the starting point is often the optimal
generation scenario for electricity production and the minimum or maximum water releases outlined in power
purchase agreements (PPAs). This implies that the economic analysis of a particular project may be completed at
the feasibility stage, before the complexity of downstream issues is fully understood. Hence, there is usually little
flexibility in negotiating releases after an impact assessment study, but instead the emphasis is on mitigating
impacts while retaining optimal generation possibilities. Mitigation can consist of recommendations to change
agricultural systems from water-intensive rice production to corn or vegetable cropping (Shesthra, 2007) or seeking
alternative agricultural systems, as is the case for THXP in Laos.
In addition, there is a history of emphasizing the potential gains in having regulated water instead of the flood
pulses that can be incorrectly deemed negative. Improvements in navigation and regular flows throughout the year
are often presented as benefits without any real economic basis. On the contrary, flood pulses and natural sediment
transport are often an integral part of agricultural cycles, and populations do very well ‘living with the flood’,
having adapted to occasional high floods that are more than offset by very productive soils and high yields – the
delta area of Bangladesh is an example of this kind of adaptation. Fisheries are also reliant on flood pulses and a
range of water quality characteristics (pH values, temperature, dissolved oxygen levels, sediment content, mineral
content, etc.) that trigger migrations and spawning. One cannot assume ‘more water, more fish’ since conditions
have to be suitable for various species’ requirements. The claims of flood control are also dubious if there are no
specific requirements and regulations that override electricity production regimes are written into PPAs and
concession agreements. Otherwise, electricity production will be prioritized over environmental requirements or

140 S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
social development options. It is seldom that the potential benefits outweigh the negative impacts for downstream
areas.
Even if the negative impacts are identified, they are not fully manifested until operation (see ‘Theun-Hinboun
Power Company’ below) due to their complexity. An approach sometimes used in hydropower development is to
postpone mitigation and deal with impacts downstream as they occur rather than preventatively. This ‘wait-and-
see’ approach usually means that populations along rivers are negatively impacted for years before suitable
mitigation arrangements can be fully established, risking non-compliance with international good practice that
states populations should be mitigated prior to impacts, not after losses in production and disruptions to local
economies. An approach of optimizing benefits by looking at downstream areas in light of project impacts, being
proactive and seeing the project as an economic catalyst, has only recently been seen in project planning.
One final point in this section concerns multipurpose projects. Multipurpose is often considered an optimal
arrangement (‘win–win’), combining energy needs with potential increases in food production. However, projects
need to be multipurpose from the start of planning, since a private power producer (PPP) will consider economic
benefits only in terms of power production. If the original memorandum of understanding between the government
and a PPP is not a joint effort by several ministries and does not specifically state the multipurpose nature of the
investment, agricultural production is unlikely to be considered.
The economic analysis is quite clearly in favour of hydropower production and suggestions to adapt a design to
allow gravity-fed irrigation systems and regular water flows for agriculture are difficult to achieve. The
approximate value of 1 m3 of water in Laos for THXP is US¢3-3.2 average at full load with most efficient
generation, while for irrigated dry-season rice with good, consistent yields it is only US¢0.5-1. To include gravity-
based irrigation systems in the design would imply raising the level of the THXP powerhouse by about 3 m. This
translates to US$2-2.4 million in loss of income from generation per year or a total loss of about US$60 million for
the 27-year concession. This contrasts with the potential gain of perhaps 500 t rice or US$150,000 per year
(approximately US$4 million over the concession period). In the case of THXP, the concession was given to the
power company without any specific instructions or conditions relating to ensure food security. These issues
therefore had to be addressed in the mitigation programme.
3. Theun-Hinboun Power Company
The Theun-Hinboun Power Company is the first public–private partnership venture in hydropower development
in Laos, and is owned by Electricité du Laos (60%), GMS Power of Thailand (20%) and Statkraft of Norway
(20%). The first project was completed in 1998 as a transbasin, run-of-the-river scheme producing 210 MW,
mostly for export to Thailand. Although there were few direct impacts (no resettlement), water releases
downstream impacted fisheries and exacerbated natural flood events. After the start of operation, the company
carried out a mitigation programme to compensate for these losses, including alterative livelihoods, livestock
improvement and subsidies for diesel pumps for dry-season rice production. These measures addressed the impacts
directly and indirectly but provided no permanent solution in terms of sustainability.

141
S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
4.
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firs
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co
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P
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for THX
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142 S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
A
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rops). Howe
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o
to flood-safe
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or food secu
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ducation faci
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elihood dev
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rmanent, lon
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ddressing th
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e rivers have
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n projec
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(Zo
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s Internation
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s
ice seed) an
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n
n
stream villa
g
o
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areas close t
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lds
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ities and ser
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m
e targets th
a
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lopment pro
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g
-term solutio
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a
ge consolida
t
a
l impacts a
n
e impacts on
been regular
l
o
nes 3a, 3b, 3
c
o
a maximu
m
is a benefit
s
d
ing decrease
d
v
illages and r
i
%
, issues tha
t
a
l Rivers (Sh
h
e Hai and Hinbo
u
s
was to supp
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to promote
n
ot a sustain
a
g
ers in order
i
ronmental Di
o
existing site
s
od
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v
ices
a
t are sustain
g
rammes.
n to both nat
u
t
ion and dev
e
n
d mitigation
p
downstream
v
l
y subjected t
o
c
and 3d on t
h
m
release of 1
s
ince it allow
s
d
pumping co
s
i
ce fields in s
t
were freque
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o
emaker, 19
9
u
n Rivers. Sourc
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o
rt dr
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-seaso
n
alternative l
i
a
ble solution i
n
to develop
a
v
ision (SED)
,
s
fields are not
able and abo
v
u
ral flood eve
n
e
lopment for
i
p
lans were c
o
v
illages for T
o
natural floo
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h
e zone map
)
0
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m
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) from
s
for improv
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ts. However,
ome years. I
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tly raised by
9
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: Author (2011)
n
rice cultiva
t
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velihood sol
u
n
the long ter
m
a
strategy (T
H
,
and the mai
n
available
v
e existing i
n
n
ts and proje
c
i
nfrastructure
o
mpleted in
e
T
HXP is com
p
d
events that
w
)
. The duratio
the powerho
u
e
d navigation
in the wet se
a
n
creased sedi
m
a number of
n
g
the compa
n
t
ion (100% o
f
u
tions, enhan
c
m
due to the
h
H
PC, 2011)
w
n
elements ag
r
n
come levels
c
t impacts, as
w
and services
.
e
arly
p
lex,
w
ere
n of
u
ses
and
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son
m
ent
n
on-
n
y to
f
the
c
ing
h
igh
w
ere
r
eed
(20-
w
ell
.
By

143
S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
providing support for dry-season rice production, food security could be achieved since wet-season floods would
no longer threaten harvests, thus solving the residual impacts of the first project as well as addressing the
anticipated impacts of the THXP.
It should be stated here that dry-season rice production yields are significantly higher than wet-season yields due
to more favourable conditions – more sunlight and pumping systems regulating of water levels in paddies that keep
a check on weeds. Water in paddy fields also provides an ideal breeding situation for some fish species, adding to
protein intake for villagers.
5. Implementation of downstream programmes for THXP
The development of an entitlement matrix that outlined all the benefits and obligations that THPC would
provide to downstream communities took more than a year. This was due to the open-ended approach that
attempted to include all aspects of long-term restoration, working out agreements between villagers, the
government and the developer. A typical challenge was arriving at agreements on rates for evaluating existing
structures and assets, replacement costs, labour costs for dismantling structures and preferences for new locations.
There was also the need to verify sites on the ground to make sure that locations actually were flood safe and that
the construction of roads and other infrastructure would be within a reasonable budget. A thorough assessment of
existing rice fields was also undertaken in order to identify ways of improving production in the dry season and
areas for possible expansion of fields, not only for rice but also for cash crops such as tobacco, cassava, chillies,
sweet corn and feed corn.
Relocation activities started in early 2010 for the first village of Phoumakneng, where four villages and a
number of households from a fifth village had decided to relocate. The majority of the houses (167) were
dismantled and rebuilt between March and June 2010. In addition to providing assistance and additional materials
for the improvement of housing, SED infrastructure teams also established a new school, a health centre, a village
meeting hall, a water supply to all households, electricity connections, rural roads and a temple. Physical relocation
work was completed by the end of 2011, with villagers reconstructing their own dwellings under the supervision of
qualified project carpenters and technical experts. Regarding livelihood development and food security, all
households were provided with household gardens, new fruit trees, animal pens for small livestock and fishponds.
Compensation was paid for all non-moveable assets.

144 S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
T
p
ro
v
and
irri
g
cro
p
wet
-
b
ro
k
T
he greatest
c
v
ide food sec
u
this area can
g
ation manag
e
p
s. These vill
a
-
season rice.
D
k
en.
Figure 3
Figure 4: D
r
c
hallenge so
f
u
rity and inco
m
be expanded
e
ment and w
a
a
gers were rel
y
D
ry-season p
r
: Relocation Site
r
y-season irrigat
e
f
ar has been
m
e for villag
e
to 400 ha in
a
ter user grou
p
y
ing solely o
n
r
oduction in
t
of Phousaat abo
v
e
d rice fields at P
h
the construc
t
e
rs. More tha
n
the future.
W
p
s, additiona
l
n
we
t
-season
p
t
his area was
v
e natural flood l
h
oumakneng Vil
l
t
ion of a lar
g
n
230 ha of r
i
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ork continu
e
l
productive l
p
roduction an
limited and
t
evels. Source: A
u
l
age. Source: Au
t
g
e dr
y
-season
i
ce paddy is
n
e
s on establis
h
ands for cas
h
d many farm
e
t
he diesel pu
m
u
thor (2013)
t
hor (2013)
irrigation sc
h
ow irrigated
b
h
ing viable vi
h
crops and
m
e
rs had given
u
m
ps were ine
f
heme that w
o
b
y electric p
u
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llage institut
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arketing of t
h
up trying to
g
f
ficient and
o
o
uld
m
ps
ons,
h
ese
g
row
o
ften

145
S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
Seven other villages were relocated in the same way to three sites in the same area by the end of 2012, before
releases of water from the new powerhouse. A total of 530 households were relocated, the largest site consisting of
371 households. For these three sites, the project has worked to find rain-fed rice fields that are in flood-safe areas
rather than setting up the more expensive irrigation systems for dry-season production. This is feasible since the
land surrounding these village sites is higher and further away from the river where natural flooding is more severe.
Requests for replacing the old diesel pumps with new electric ones are being considered as an additional means of
security food security in these areas.
In 2012-2016, work on relocation and enhancing existing dry-season rice production systems will continue for
villages further downstream on the Nam Hinboun. Project impacts in this region, where approximately 5,500
people live, are minor but there is still increased flooding in some years. In all, about 8,500 people will benefit
from improved food security.
6. Assessment of results for THXP
It may be too early to fully assess the results of the THXP downstream approach and implementation. The
programme is preventative but has only managed to relocate those villages that have experienced the most impacts,
i.e. the villages immediately downstream of the powerhouses and above the confluence of the Nam Hai and Nam
Hinboun before the natural constriction of a gorge. Efforts to achieve food security and improve livelihoods and
incomes for all downstream areas will continue until income and development targets are met. This will take at
least another five years of technical assistance, enhanced systems and careful monitoring.
THPC has issued annual public reports with monitoring results compared to the 2008 baseline, establishing clear
criteria for achieving project restoration and development targets. A five-year monitoring report, due at the
beginning of 2013, aims to show the status and trends after of the mitigation and on-going restoration work
(www.thpclaos.com). The THXP License Agreement stipulates income targets as a legal obligation. However, 15
human development indicators were also identified by SED management. By having both income targets and
human development targets, it will allow the project to reach closure as a ‘social success’. At the time of writing,
2011 results are available (Table 1) and the 2012 survey results are being compiled.

146 S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
Table 1. Human Development Indicators from the 4th Annual Monitoring Report. Source: THPC (2011)
THXP CORE HUMAN DEVELOPMENT INDICATORS
Description 2008 2009 2010 2011 Targets
Percentage of schoolchildren in appropriate
grade level
24% 17% 31% 49% More than
40%
Wasting in children (aged 6-60 months) 5% 7% 7% 10% Less than 4%
(new level)
Anemia amongst women of reproductive
age
53% 45% 35% 38% Less than 30%
Diarrheal disease prevalence in children
under 5
9.20% 12% 8% 8% Less than 5%
Primary health care accessibility rate 31% 53% 43% 60% More than
80%
% of HHs with food security 59% 65% 68% 85% More than
80%
Average number of months HHs
experienced rice shortage
2-3 months 2-3 months 3-4 months 2-3 months Less than 1
month
Percentage of HHs using high-risk coping
mechanisms
1% <1% 1% 1%* Less than 10%
Percentage of HHs that planted at least 1 ha
rice in 2010
45% 52% 41% 56% 80%
Percentage of HHs that own agricultural
land
88% 88% 91% 85% More than
90%
Villages with year-round road access 26% 42% 60% 60% More than
50%
Percentages of HHs with electrical meter
installed
45% 52.50% 67% 65% More than
75%
Percentages of HHs with year-round access
to improved water source
16% 17% 28% 47% More than
50%
Percentages of HHs reporting regular latrine
use
55% 57% 63% 82% More than
80%
Percentages of HHs reporting women or
girls responsible for fetching domestic
water
83% 85% 71% 46% Less than 50%
* New target to be set
Note: ‘HHs’ stands for ‘households’
Table 1 shows that six targets have been achieved so far, with positive trends clearly recognizable for many
other indicators. However, a number of indicators related to long-term development will take more time and effort,
since these involve changes in behavior and attitudes by people affected by the project and depend on a number of
interdependent factors before clear positive trends can emerge. For example, in order for occurrence of diarrhea
incidents to decrease, improvements in sanitation and awareness need to occur, and these will influence behavior in
a boarder sense. For social development to be sustainable, these long-term goals need to be maintained for at least
two consecutive years. There are specific indicators for food security, included in Table 2.

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S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
Table 2. Food-secure households from the 4th Annual Monitoring Report . Source: THPC (2011)
Zone Food-secure HHs
2008 (%)
Food-secure HHs
2009 (%)
Food-secure HHs
2010 (%)
Food-secure
HHs 2011 (%)
Secure HHs selling
rice surplus 2011
(%)
Overall 60 65 68 85 16
2 55 76 71 81 12
3A 45 63 58 86 13
3B 48 70 48 89 43
3C 49 60 58 83 26
3D 70 61 69 81 9
6A 79 76 95
91 6
6B 90 31
Note: ‘HHs’ stands for ‘households’
Regarding food security by zones, with Zones 3A-3D representing the downstream areas discussed above, there
has been a marked increase in food security from 45% to over 80% for all areas since monitoring for THXP began.
Food security is defined by a number of factors: the ability to produce enough rice for the household, land
ownership, high-risk coping mechanisms such as selling land, selling large livestock for food and indebtedness to
people outside the village. The project targets have been met but not yet sustained and further interventions to
enhance systems are necessary, given climate variation and the full extent of impacts that have yet to be manifested
as production from the second powerhouse has just begun. The aim is to ensure that targets are met for at least two
consecutive years after full production and water releases. The number of households planting rice is expected to
increase as new areas for production are identified and job opportunities as labourers on the project decrease.
Regarding income targets for the downstream areas, Table 3 indicates significant improvements in average
income levels for all zones – a doubling or tripling of baselines. However, the direct benefits of short-term
employment as day labourers and the indirect benefits of selling services and products is part of the reason for this
increase. Only continued monitoring after the construction period, i.e. after 2012, will reveal how project
interventions have had positive impacts on communities in a sustainable manner. It should be noted that the most
significant increases are in Zones 3A and 3B where relocation programmes have been or are being completed.
Further positive developments are expected in Zone 3C as the relocation programme and infrastructure
improvements are carried out from 2012 to 2016.
Table 3. Income targets from the 4th Annual Monitoring Report . Source: THPC (2011)
7. Conclusions
The issue of sustainability is key to the mitigation strategy adapted by THXP, which was developed in strict
compliance with Lao law, Asian Development Bank safeguard policies and the Equator Principles. These project
conditions implied sustainability and a consultation process with stakeholders. Thus meetings were held to identify
needs and concerns, and to work out solutions before construction started, well ahead of any impacts. The approach
adapted by the company was one that aimed for long-term sustainability, not just mitigating specific impacts and
SED outcome indicators 2008 2009 2010 2011 Project targets
Average income by zone (Lao kip in millions; LAK800 = approx. US$1)
Income for Zone 3A: Nam Hai and
confluence with Nam Hinboun 10.1 8.7 22.2
28.9 17.1
Income for Zone 3B: Upper Nam Hinboun 8.0 9.9 29.7 26.7 17.1
Income for Zone 3C: Middle Nam Hinboun 8.1 6.0 12.5 16.4 17.1

148 S. Sparkes / Aquatic Procedia 1 ( 2013 ) 138 – 149
working out compensation. The participatory process yielded clear ideas about what the villagers were struggling
with and the challenges they faced. A holistic approach included developing dry-season rice production systems
using improved seeds and electrical pumps. These mitigation measures were included in the entitlement matrix for
those affected by the project and formed part of the License Agreement. Not only were these measures legally
binding, but income targets were established for all impacted villages. These targets were based on a needs
assessment, are 20-50% higher than existing income levels, and are increased annually in relation to the consumer
price index. ‘Sustainability’ was defined as 80% of households meeting income targets for two consecutive years
and achieving 15 Human Development Indicators (HDI), several of which relate to food security.
The construction of new irrigation system, replacing diesel pumps with electric ones and enlarging systems is
only the first step in food security. Efforts continue in terms of supervision by technical staff until water user
groups are fully established and functioning well. The company will only hand over systems to villagers and
district authorities when a thorough assessment is made of performance and all institutions are working well.
Monitoring will continue throughout the concession period (27 years) and it is likely that some funds will be
available to ensure that food security needs are always met, such as maintenance of electrical pumps.
The cost of these programmes represents an increase in mitigation costs that would have only compensated for
direct losses. However, the solutions proposed mean that there is not only sustainability and positive development,
but also closure in terms of the need for further mitigation. The downstream programme costs will probably be in
the range of US$40 million. This represents nearly half of the overall costs for the Social and Environmental
Division programmes and activities which in turn represent about 9% of the investment costs.
In terms of policy development and implementation, Laos is at an important crossroads, where new standards
and procedures have been developed but are just starting to be applied to actual project situations. A number of
large-scale projects, such as THXP, may serve as good examples of how comprehensive and holistic planning can
result in sustainable solutions, and that hydropower development can become a catalyst for development if the
focus is on development opportunities in terms of food security and other long-term needs, rather than on
compensation for negative impacts.
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