A mother and child from Sop-hia village. They are two of thousands in the area of the Nakai Plateau who will be forced to move to make way for the $1.1 billion Nam Theun 2 dam, which is being built to sell power to Thailand. Photo: Reuters

The Mekong River flows from Tibet through Southeast Asia to Vietnam. It is the twelfth-longest river in the world and its fishery is second in diversity only to the Amazon. The Nam Theun 2 Dam in Laos is one of a number of dams scheduled to be built on the Mekong or one of its main tributaries. Located on the Nakai plateau in central Laos, the hydroelectric project would be the largest in Indochina, transporting water from the Theun River through a system of tunnels to the Xe Ban Fai River at the base of the plateau. Most of the dam’s energy will be sold to Thailand; planners say the revenue generated from the project will be used to address social concerns in Laos.

The Economics

Finding investors for the $1.1 billion dam has been difficult. Dam critics have said the project is too large for Laos to handle, given that the cost is more than half as large as the country’s $1.8 billion gross domestic product (2002). In 1997, the Asian financial crisis threw the first wrench in the project’s plans. In July 2003, the dam endured a second major setback when major shareholder Electricité de France backed out of the project, stating its withdrawal was part of a strategy to limit its investments to European ventures. According to a Dow Jones report, Thai Energy Minister Prommin Lertsuridej stated that his country still intended to buy energy from the Nam Theun 2 Dam, but would only wait one year for the project to secure a replacement investor. Investors from Norway and Japan are reportedly interested in financing the project.

Human Displacement

Around 4,500 people would be displaced by the reservoir that will be created by the Nam Theun 2 Dam, and there are measures in place to assist the affected with their relocation. But according to dam critics, tens if not hundreds of thousands of people will be indirectly affected by the changes the dam will cause to the Theun and the Xe Ban Fai Rivers. In particular, below the dam the decreased flow of the Theun and increased flow of the Xe Ban Fai could have a detrimental effect on the fish populations that many depend on for their livelihoods. Additionally, there may be an increased risk of flooding in certain areas. Dam builders claim they will implement a 30-year watershed management program to protect the reservoir area.

A woman transplants rice seedlings. Many of the dams in Laos have been built to prevent the flooding that often devastates rice crops, yet environmentalists argue that the dams often increase flooding problems. Photo: Reuters

Environmental Concerns

The Nam Theun 2 Dam would flood around a third of the Nakai plateau, an area of deciduous forest, semi-evergreen forest, secondary forest, seasonal wetlands, and permanent streams rich in biodiversity. A number of endangered animals inhabit the area, including the Asiatic black bear, the clouded leopard, the white-winged duck, a rare kind of deer known as the large-antlered Muntjac, and more than 50 species of birds on the verge of extinction. The World Bank claims the area has already been so deforested by logging that it is not worth saving. Yet dam activists argue that the area was logged by a military-run company called BPKP in preparation for the dam’s reservoir and that before the World Bank decided to back the dam, the plateau had been part of a comprehensive conservation plan funded by the Dutch government and the Global Environment Facility (GEF), the “green fund” managed by the World Bank itself.