There are a large number of infrastructure and resource development projects being implemented in Laos. But does the country have a robust framework for social and environmental impact assessment? Some key issues of concern are raised in this message from Keith Barney.

Greetings New Mandala readers.

I would like to draw your attention to some very interesting sections in the recently completed Lao PDR Nam Mang 3 Hydroelectric Environmental Completion Report. A quick internet search (especially the International Rivers Network webpage) will provide you with the basic features and controversies surrounding this project.

First, in the preface to the Environmental Completion Report, the writer has an interesting take on the functional utility of what he calls consultant “SQRs” (Status Quo Reports).

Secondly, in the final section of the report, there is an unusually frank and interesting discussion by a professional environmental impact assessment organisation with significant experience in Laos concerning: the structural limitations of the EIA process under current political realities in Laos; the problems with the addition of social concerns into the current model of environmental impact assessments in Laos ; some of the flaws inherent in the nature-protection model and in development “offset conservation”; and the idea of strengthening environmental and social standards in Laos via “Parallel and Participatory Development Programmes” organized by the MDB’s and key bilateral donors.

The full Nam Mang 3 Environmental Completion Report is available here. Some key extracts are provided below. I would be interested in any New Mandala reactions to this.


(p. 18) PREFACE The Nam Mang 3 Hydropower Project Environmental Completion Report was written in February 2007. The works referred to covered the period late 2001 to mid 2005, about 4 and a half years. The Advisers have made occasional visits to review the longer term impacts of the Project after April 2005. The last systematic examination of the entire site was made in February 2006.

There will have been changes in conditions since that last visit, and to that extent this Completion Report should be regarded as already out of date. The Advisers have given careful consideration to the matter of how this report can be most useful to EdL, and the nation. The possibility of writing a report which papers over the difficulties which the Project encountered, and indeed created, was attractive. It would take less time, and would make no enemies. Problems could be minimized or ignored. Their causes could be assigned to general issues associated with the country’s lack of resources and capacity. Solutions could be equally generalized and based on expectations of the trickling down of economic growth, improving capacity and reforming governance.

However there are large numbers of reports of this type issued by Consultants working for multilateral and bilateral agencies. They may be appropriate, or even necessary, to maintain the framework of relationships between the parties, and the flow of grants and loans which play an important role in meeting the State’s recurrent costs of administration, health and education services provisions, and government, and paying for the development and maintenance of infrastructure.

The Adviser’s term these sorts of report “Status Quo Reports”, (SQR). They serve the purpose of maintaining the present system, and moving it slowly without de-stabilising discontinuities, in the directions of a development model written by the developed world’s financial institutions, centered on economic issues.

The Advisers are aware that SQR cannot, nor are they supposed to, provide information which could change directions or modalities of development investment. There are however risks in having a reporting process which is constrained to avoid dissecting difficulties and limited to presenting only the convenient truths. Such a process lacks the capacity to change directions, detect mistakes and illuminate lessons. The more the events suggest a change is needed, the more important it becomes to hire consultants skilled in SQR drafting. So more unsatisfactory outcomes are met by more skillfully composed reports showing the general direction taken has been and remains sound.

(p. 172-174) 8. DISCUSSION A number of issues of general interest or concern arise from way the Nam Mang 3 Project managed, or failed to manage, its social and environmental impacts.

8.1 THE EIA PROCESS First, there is the role of the EIA Process. It is the Advisers’ view that too much is being expected of this. ADB in particular, but also World Bank, UNDP and bilateral agencies have invested resources in helping to create an Environmental Regulation Agency, STEA, in drafting regulations and in encouraging the adoption of policies, laws, guidelines, standards which enable them to be effective. The Regulator during the implementation of the construction and the mitigation and compensation measures of the EMP and SAP for the Nam Mang 3 Hydropower Project was conspicuous in his absence. This reflects the political realities. There has not yet developed internally among Lao decision makers a majority who believe that environmental and social impacts from infrastructure construction should be regulated. There is however recognition that a significant, but presently falling, proportion of foreign investments and grants require there to be a Regulatory Procedure in place. The creation of an Agency and issue of legal and administrative instruments, under strong external influence, does not suddenly persuade Lao decision makers that environmental regulation is a good idea for them. There is no framework in which the public or special interest groups can compel individuals or agencies to follow regulations. There is no Public Liability Law under which agencies or individuals can be held accountable and liable for neglect for breaches of environmental regulations leading to damage or loss. Poor performance by the Agency is unlikely to attract adverse comments in local media. The sanctions available to the Regulator under the regulations for poor implementation are arbitrary and toothless. The main sources of discomfort for the Regulator and for parties which fail to adhere to regulations come also from external sources.

8.2 ENLARGEMENT OF EIA INTO SOCIAL MATTERS Secondly, the EIA Process has been enlarged to take on too large a socio-political burden. The regulations require standards of equitability and distribution, and rights to property ownership and economic and livelihood opportunity, for families and groups by gender and ethnicity which are far in advance of the current situation. As targets for society they are admirable, but as a requirement for a developer they almost guarantee noncompliance. Any developer following the regulations would find himself trying to force political changes at rates far greater than is possible without severe social dislocation. He would be at odds with the officials and administrators, and would threaten their livelihoods more severely than his project threatens the livelihoods of rural stakeholders.

The EIA Process is much too frail an instrument to carry these additional purposes. It is in any case doubtful how much social change can be generated from external pressure. More progress could be made with regulating environmental damage, a much more important and long term topic, with higher potential for success, if the social elements were to be removed, and placed back into the general context of the entire relationship between lenders, investors, donors and the developing country.

8.3 INCLUSION OF HABITAT AND BIODIVERSITY MATTERS Thirdly the conservation of special habitats and biodiversity as a target for the Regulator in countries such as Laos presents particular problems. It needs to be recognized that there is at present no internal political support for this activity. Rare animals and plants and areas of unusual landscape and vegetation are seen by Lao decision makers to be chiefly of interest to foreigners. Local concerns are concentrated on livelihoods, incomes, health, education and more basic human needs. As a result there are no indigenous institutions or agencies which can act as “conservation stewards” and play the role of stakeholders on behalf of habitats or wild populations.

The use of common land and water is customarily managed by communities living within easy access along territorial lines. This use involves harvesting at the highest possible rate all edible and marketable products. Very valuable marketable products (e.g timber, minerals) tend to be excluded from exploitation by rural people, or at least harvesting is limited. Some rules governing harvesting methods (e.g. guns cannot be used to hunt animals) have been applied to some common land areas, but compliance and enforcement is highly variable.

As infrastructure developments inevitably damage or destroy at least some areas of habitat and impair the survival possibilities of some wild populations, it is common for developers to use some type of “offset” approach to remedy the damage. An offset recognizes that the damage cannot be prevented and that the lost habitat or populations cannot be restored. To compensate for the loss the developer proposes to improve protection of other habitats or wild populations, as similar as possible to those which are lost. The drawback of the offset approach lies in the flaws of the protection model.

As protected land and waterways continue to be used by rural people, (who derive 40% to 60% of their income and livelihood from common land and water resources), protection of habitats and wildlife involves adding to the number of users of the area, (as conservation personnel have to live from the land, or at least augment the low salaries which civil service posts attract). The degree of reduction of use of wild resources by rural stakeholders which conservation guards can impose is limited, and in general does not balance out the increase in use which is made directly by guards, or by agencies provided improved access to the area through connections with the guards, and higher security against facing village territory disputes. In effect then, conservation protection introduces new parties with modern harvesting methods and access to wider markets, into the protected area, and loosens current territorial constraints on use by changing the status of the area.

Offset conservation-oriented mitigation measures need to be designed taking into account the current difficulties which attend “area protection” approaches.

8.4 RECOGNITION OF THE DYNAMICS OF THE PROJECT DEVELOPMENT CYCLE Finally the point at which the EIA is able to intervene in the Project is too late in the development cycle. By the time an EIA is commissioned the preliminary design has been made. The economic costs have been estimated. The targets of enrichment by and large have been set, and the beneficiaries know who they are. At this stage the developers and their associates and sponsors are prepared to accept changes in costs resulting from feasibility studies. However the possibility that social and environmental assessments could change the preliminary design, or introduce social and environmental costs of such magnitude that the Project is no longer attractive, or is less profitable, is not accepted by any of the parties. The notion that an environmental or social cost could “prevent” the development of a project, is seen by decision makers as unfair interference by rich countries in the process whereby a poor country tries to become less poor. There is some justification in this view, which makes it difficult to present strong counter-arguments.

The stage at which Environmental and Social issues should be considered is at the immediate start of a Project, before a developer becomes involved. It is clearly too late for this to take place in Laos for Hydropower Projects. The EIA process is limited to trying to remedy social and environmental damage, much of which could be avoided had the preliminary design been appropriately modified107. The EIA process is impeded in its effectiveness as the budgets applied are generally much too small for the works required, as a result of the project’s preliminary economic costs being made prior to any social and economic evaluation, with risks that substantial costs, properly attributed to the engineering budget, become transferred (externalized) as social and environmental damages, for which there is inadequate budgeting and insufficient sanction-pressure to ensure remedy. ADB and World Bank, as the parties which promoted and introduced the Independent Power Producer (IPP) model into Laos have some responsibility for the current problems of significant impoverishment and degradation associated with IPP Hydropower Developments. Clearly the EIA process cannot solve the problems. It is recommended that these lenders, in association with other donors, promote and support Parallel and Participatory Development Programmes, (PAPDEP), to be carried out in areas impacted by hydropower construction and operations, with a view to ensuring all damage and losses are remedied. The PAPDEP, although co-ordinated with the developer’s mitigation works, should not be managed by the developer, nor should budgets be determined by the developer. As some of the measures of the PAPDEP will probably be engineering works essentially avoided by the developer through “externalization”, consideration should be given to having the developer undertake and pay for these works, making appropriate adjustments in the Project’s economics and financial arrangements.
107 For example middle catchment diversions on the Nam Theun river have been made by the Nam Theun 2 Hydropower Project and the Theun Hinboun Hydropower Project. Neither Project was designed with adequate engineering to convey the power station discharges to channels of sufficient capacity to absorb the consequent hydraulic and ecological changes without social and environmental damage. In the case the NT2 there is a partial engineering-partial EIA solution, with the externalized costs not yet precisely estimated and still to be discovered during operations. In the case of THPC no engineering has been carried out and all the damage has been externalized.