National Policy on Environmental and Social Sustainability of the Hydropower Sector in Lao PDR (Lao PDR, 2007); Regulation on Implementing Environmental Assessment for Electricity Projects in Lao PDR (Lao PDR, MIH, 2001a); Environmental Protection Law (Lao PDR, 2001b); and Regulation on Environment Assessment in the Lao PDR (Lao PDR, PMO, 2000).
The most recent of these documents, the National Policy on Environmental and Social Sustainability of the Hydropower Sector in Lao PDR, is a modern policy similar in content to recent policies in most other countries. However, there are a few issues that we will comment on below.
Many statements are made throughout the document pointing in a direction of integrated planning priorities, strategic considerations of impacts, risks etc. However, and this is clearly the most noteworthy omission in the document, the methodological concept of Strategic Environmental Assessment (SEA) is not mentioned anywhere. Nevertheless, the last paragraph in the Purpose statement reads: “An integrated approach to river basin management will be practiced for multiple projects planned to dam a single river. Such an approach will include addressing cumulative impacts and their mitigation, supported by an appropriate institutional and financing mechanism.” This is principally a description of work best undertaken by SEA.
Another important point is the note made on project-affected peoples. The first sentence under this heading talks about “involuntarily” affected peoples only. Best international practice would clearly include all people affected by the project, even if the emphasis has to be on those who have their livelihoods forcibly altered. In this sense a clear focus on village-level benefit-sharing is appropriate. A further point is made under this heading; “livelihoods restoration”. It has long been one of the key problems of socio-environmental sustainability in the hydropower sector that investors and/or sponsors look at pre-project livelihoods and “aim at restoring these”, or “bring them to at least the poverty line” at the end of the project. This is, however, not satisfactory. Livelihood levels (albeit not the actual nature of the livelihood) need to be maintained also during construction of the project, a period that in the hydropower sector can often run 3-5 years. Failure to maintain livelihood levels during this time can prove disastrous to the affected communities. Long-term, beyond the construction of the project, international best practice is for one of improved livelihoods through one or several benefit- sharing instruments to be applied to an individual project’s environmental and social action/management plans. Under the heading of revenues in the policy, there is a strong statement of the “user pays” principle, meaning the developer/owner is responsible for all costs related to the project (monetary and non-monetary). This is a very important statement.
This addresses WCD Strategic Priority number five, for benefit-sharing. Milattanapheng (2006) states that Strategic Priority 5 is covered in principle in Lao PDR legal instruments and policies, but that “this mechanism depends on agreements at the project level”.
Several key documents from this decade deal with this issue (e.g. Milewski and Egre, 2000, World Bank, 2002 and IHA, 2004, 2006), and there are two important conclusions that can be made for further development of Lao PDR policy: a) Benefit sharing with local and regional communities is not a novelty but is quickly becoming the norm in the industry, and; b) the level of such benefit sharing is significant. Examples abound, and the span is quite wide, ranging from around 1% to around 20%. Many western countries provide good examples (e.g.
Canada and Norway) but also other countries such as Thailand, the Philippines, Colombia and Brazil have prescribed schemes. In Vietnam an ADB-supported project is developing standards for new legislation on benefit-sharing in the hydropower sector.
Benefit-sharing can take place in a variety of ways, with the concomitant varying levels of community control and sense of ownership. Milewski and Egre, 2000, present a scale from preferential electricity rates, through property taxes and real revenue-sharing to full equity- sharing and ownership. The latter is still rare, but examples exist from e.g. Canada’s indigenous population groups. In these latter cases the indigenous groups were co-investors in the schemes, thus part owners and direct beneficiaries of revenue-streams developed during the project’s operation. The Lao PDR government has such stakes in equity in power projects in the country. The goal for further development of benefit-sharing in Lao PDR is recommended to focus on regional and local beneficiaries – in the project-near areas and build extensively on lessons learned from the on-going ADB project mentioned above.
The Environment Protection Fund is an existing solution to be used as an independent vehicle for both benefit-sharing and monitoring. Projects pay into the Fund which then distributes money to development/conservation and monitoring activities.
The Regulation on Implementing Environmental Assessment for Electricity Projects in Lao PDR is a standard regulation document which raises very few questions. The legal instrument is strong, and the demands on developers quite strict. There are, however, a few issues worth noting especially.
In Article 4, first paragraph, there is a very good instruction on projects approved before the regulations were implemented. It gives the environmental regulator (formerly STEA, now WREA) a strong tool when demanding best practice from old projects, such as e.g. Nam Ngum 1.
In Article 6, paragraph 2, there is an instruction regarding the Environmental Assessment (EA) process that is impressively modern and accommodating to hydropower projects with international funding. It concerns the sequencing whereby EIA approval is given at the stage of detailed design for the project. This is somewhat unusual (often approval is given at the feasibility stage, and later design changes force time-wasting resubmissions) but ideally suited to modern contract forms for hydropower project implementation, e.g. Engineering, Procurement, Construction contracts (EPC). More importantly, it allows the EIA study team to cover all relevant aspects in a comprehensive manner, rather than in ad-hoc updates as is often the case elsewhere.
In Article 13, paragraph 9, there is a requirement that is poorly enforced in the hydropower EIAs at our disposal. A good summary is an absolute prerequisite of any EIA, to allow for successful review and public input to the process, and some approved EIAs even completely lack summaries.
In Article 17, paragraph 4, there is a prerequisite for the project owner to prepare monthly environmental reports. There is, however, no time limit to this requirement, which absolutely cannot be intended to last forever.
The Environmental Protection Law and the Regulation on Environment Assessment in the Lao PDR are standard documents that basically live up to international standards.
As is commonly the case, in many countries around the world, there are few problems with laws, regulations and standards, even if the Environmental Protection Law is kept at a very general level. The problem, such as it is, lies in the implementation and review of environmental and social impact assessments. Two areas of concern in this respect are public participation in decision-making, and transparency in information management. It is very clearly stated in many legal documents that public disclosure of project-related information is mandatory for all projects, but in practice this has not functioned very well. The same could be said for participation, which is variable, but often lacking in quality and extent.
The quality of the EA documents we have reviewed as part of this study is highly variable, good examples are mixed with poor ones. Some lack summaries, and sometimes make bold unfounded statements. There are examples of when hydropower projects with large dams, significant stretches of dry river beds etc., have been stated as yielding “no significant impacts”. We agree with Norplan (2004), who recommended strengthening of the regulatory body and capacity building of experts in order to address this problem. On-going work is carried out at the time of writing into capacity-building on sustainable hydropower development.