World Bank, ADB Appeal for Blind Faith While Turning Back on Problems With Lao Dams

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Over the last month, the World Bank and Asian Development Bank (ADB) laid out their case for why the international community should support the Nam Theun 2 Dam in Laos. They argue the project is one of the country’s best hopes for development. They claim Nam Theun 2 will reduce poverty, impacts will be mitigated, and a critical nature reserve will be protected. Yet a new internal ADB report on a similar but much smaller dam in Laos raises serious doubts about such claims.

When the Nam Leuk Dam was completed 4 years ago, the Bank painted a similar picture and said the project would be environmentally sustainable, impacts would be mitigated and revenues used to protect a national park.

Sadly, these grand promises have been broken, and today rural Laotians suffer from impacts to their drinking water and fisheries; the natural resources in the park remain threatened.

Families in Pak Leuk village, for example, can no longer drink from the Nam Leuk river year-round because of declines in water quality during the dry season. They waited three years for utility Electricité du Laos to provide an alternative water supply. But only a few months later, one of the pumps broke, leaving villagers stranded once again.

Fish catches reportedly dropped 50 to 95 percent along the Nam Leuk and Nam Xan rivers after the dam was completed. As a result, the ADB report says it is “quite possible” that families “lack alternative income sources and adequate protein intake.” Without recourse mechanisms, affected communities have nowhere to turn when promises are broken. This bodes poorly for the 120,000 people living along the Xe Bang Fai river who will be impacted by Nam Theun 2.

When Nam Leuk was approved, the ADB boasted that 1% of export revenues would be used to protect Phou Khao Khouay National Park, one of the country’s most important protected areas and home to endangered tigers and elephants. A similar commitment has been made to devote $30 million from Nam Theun 2 for the conservation of Nakai-Nam Theun National Park.

But money is useless without a good plan for using it. According to the ADB report, inadequate management of the park and improper disbursement of funds threaten the long-term sustainability of Phou Khao Khouay. Does a similar fate await Nakai-Nam Theun?

The problems with Nam Leuk are bad enough in their own right. Even worse is that the Bank discovered some of these problems 2 years ago and did not take adequate steps to rectify them. In another internal report, the Bank warned it would be “contentious to hand over a large and essentially dynamic infrastructure project to an agency [Electricit√© du Laos], with limited funds and little operational experience or skills in environmental and social mitigation measures, and not expect problems.”

This warning has proved all too true. Problems with Nam Leuk have persisted for four years. Though highlighted in two Bank reports, these issues will remain unresolved until the Bank establishes clear mechanisms to ensure compliance with social and environmental conditions after projects have been completed.

Lack of follow up monitoring has allowed problems to fester with other ADB-funded dams in Laos. Mitigation for the Nam Song project has not been implemented, and villagers are still waiting for fisheries compensation for the highly regarded Nam Theun-Hinboun hydropower project.

The failure of the ADB to fulfill its responsibilities with existing dams in Laos is troubling alone. The fact that the ADB and World Bank are gearing up to fund the even bigger Nam Theun 2 Dam using similar promises, despite all that we know, is downright unconscionable.

These institutions have a history of making grand promises, but haven’t learned that actions speak louder than words. To ask Laotians and the international community to support Nam Theun 2 while thousands affected by dams suffer from broken promises is simply asking too much. Communities cannot afford to rely on blind faith.

*A version of this op-ed was published in the print edition of The Nation (Bangkok) on November 5, 2004.