The Xayaburi dam: Challenges of transboundary water governance on the Mekong River

December 13th, 2011

Paul Wyrwoll, Australian National University, Australia

The title of the Lao P.D.R government’s hydropower website is explicit: ‘Powering Progress’. With the stated objectives of alleviating poverty and accelerating development, the government intends for Laos to become the ‘battery of Asia’: nine dams are planned for the Mekong River mainstream in Laos and a further 63 dams on tributary rivers (Powering Progress 2011). The demand for this expansion originates from the surging energy requirements of neighbouring countries, with Laos looking to benefit from large export earnings and foreign investment.

Progress on the first mainstream project at Xayaburi is not going smoothly. On December 8, construction was officially suspended following a meeting of the member countries of the Mekong River Commission (MRC): Cambodia, Laos, Thailand, and Vietnam. This is the second suspension this year due to concerns over potential environmental and social impacts.

The Xayaburi project is the first of 11 planned mainstream dams (including two in Cambodia), and many commentators view it as a yardstick for later projects. If construction proceeds without sufficient consideration for the risks, the dam will be a catalyst for others to proceed likewise.

Despite being a relatively cheap and low-carbon source of energy, large-scale hydropower bears significant environmental costs. Dams obstruct the fundamental processes of river ecosystems. Though China has built four large dams on the upper reaches in Yunnan Province, the mainstream in the Lower Mekong Basin (LMB) remains dam free. Hydropower development on the Lower Mekong mainstream will drastically alter the river’s most productive region. There is, however, great uncertainty concerning the size of these changes and how much the associated damages can be mitigated.

Of particular importance is the impact on fisheries. The LMB is the largest inland fishery in the world and, if all 11 projects proceed, mainstream dams would prevent the migration of over fifty fish species, leading to an estimated 26?42% loss in annual fish production (MRC 2010).

In addition to being an important source of income, fish are the major source of protein for over 23 million people living in the riparian areas of the Lower Mekong. Such production losses would have devastating consequences for food security in the region, particularly for subsistence communities. The Lao P.D.R government and dam developers have argued that fish passages can mitigate the problem; most scientists disagree, however, that there is sufficient evidence that current technology could accommodate the sheer volume and diversity of local fish migration.

Given the transboundary course of the Mekong River, dam construction is a regional issue: mainstream dams in Laos would alter the hydrology and ecology of the Tonle Sap lake and its banks, the life-source for much of Cambodia’s population. In Vietnam’s food bowl, the Mekong Delta, blockage of sediment hundreds of kilometres upstream would reduce the productivity of agriculture, as well as river and ocean fisheries.

Reflecting these transboundary issues, the MRC was established in 1995 as a dialogue forum. The MRC plays a facilitating role, with members having no right to veto the internal actions of other countries and only being obligated to consult. In 2010, the MRC commissioned a report that recommended a 10 year moratorium to allow further study of the large and uncertain risks associated with mainstream dam construction (MRC 2010). This recommendation has been widely supported by scientists, environmental groups, and aid donors.

Though the recently announced suspension is consistent with the MRC report, the announcement did not include a timeline and the final outcome is still very uncertain. On one hand, the suspension may be a temporary demonstration that due process has been followed, with construction eventually continuing regardless. Alternatively, this may be a face-saving method for Laos to accede to its neighbours’ vocal concerns (particularly those of its powerful ally Vietnam) and cancel the project.

Whatever the outcome, it will reflect the many, complex interests involved.

The Lao P.D.R. government has consistently demonstrated the intention to proceed with the Xayaburi dam. A Bangkok Post investigation revealed that preparatory construction activities had already begun in early 2011 during the official MRC consultation process. A few months later, the Ministry of Energy and Mines informed the dam developer that construction should proceed, although the official consultation process is still yet to be completed today. Officials have frequently invoked notions of sovereignty and highlighted the nation’s poverty in public statements. Recently, Laos has cited the favourable recommendations of a self-commissioned report to allay external concerns regarding environmental impacts.

The position of the Cambodian government is more complex. Although it has lobbied for delay and is concerned about the effects of all nine mainstream dams planned in Laos, it is not opposed to mainstream dams more generally because of the two planned Cambodian projects. Given Cambodia’s poverty, these dams would generate a significant amount of national revenue.

On the other hand, the Vietnamese government has been very vocal in its public opposition, particularly by the diplomatic standards associated with ASEAN’s non-interference principle. Vietnam stands to lose the most and gain the least from mainstream dam construction. Accordingly, it supports the 10 year delay for all projects. However, Vietnamese companies are developing three of the planned mainstream dams, among many other tributary projects in Laos, to export electricity to a Vietnamese economy which is gradually becoming exposed to energy insecurity.

Thailand is the principal destination for hydropower generated in Laos. Therefore it is largely the demands of Thailand’s economy (and the state-owned electricity company) driving construction and the government could use this leverage to ensure a sustainable outcome. However, Thailand stated before the recent MRC meeting that a decision on construction is an internal matter for Laos and refused to use its influence, at least not publicly. There is significant domestic opposition to the government’s tacit support, largely because the stretch of the Mekong that functions as the Thai-Laos border will be heavily affected by the six dams planned in northern Laos (including Xayaburi).

China is less directly involved in the Xayaburi dam but its overall role in the LMB is highly significant. In addition to the four large dams already operational on the upper-Mekong in Yunnan, there are a further 18 mainstream dams planned. The Chinese dams provide a precedent for Laos: if China is building dams on the Mekong why shouldn’t Laos? More importantly, Chinese developers and financiers have interests in at least four of the planned mainstream dams and around half of the tributary dams. China exerts significant economic and political power in the region, particularly in Laos and Cambodia where its investments are rapidly increasing. If China perceives mainstream hydropower development as aligned with its self-interest then it may seek to influence progress. China’s increasing willingness to protect its regional interests is reflected in the deployment of armed Chinese police vessels on the piracy-affected waters of the Mekong in northern Laos and Myanmar.

Other prominent actors, such as environmental NGOs and development agencies, have consistently voiced their support for the decade long moratorium. It should be noted, however, that the Asian Development Bank is funding and developing infrastructure projects, such as long-distance power transmission lines, that facilitate mainstream dam construction. European countries, Australia, and Japan are active as aid donors in the region, with the latter facilitating the recent suspension announcement and leading the upcoming study of potential impacts.

There is also a global geo-political element to this issue. The United States has launched a Lower Mekong Initiative that emphasises sustainable hydropower development and the US Congress recently adopted a resolution expressing opposition to advancement of the Xayaburi project. It may be that the US seeks to counter rising Chinese influence in the region by supporting opposition to mainstream dams.

Delineating these interests into a coherent picture of how the Xayaburi project will progress is out of the question and it is unclear what the ultimate outcome of the recent suspension will be. What is certain is that the outcome will have critical economic, social, and political consequences throughout the region. The Xayaburi dam will certainly be a catalyst for other projects and while such developments may generate significant economic benefits, they could potentially be outweighed by costs to the environment, food security, and poverty alleviation.

For a region experiencing its longest period of relative calm for decades, transboundary water governance is likely to be a, if not the, defining issue in the Lower Mekong Basin for many years to come.

References:

1. MRC (Mekong River Commission) 2010. Strategic Environmental Assessment for Hydropower on the Mekong Mainstream, http://www.mrcmekong.org/news-and-events/consultations/strategic-environmental-assessment-of-mainstream-dams/.

2. MRC (Mekong River Commission) 2011. Web site of the Mekong River Commission, http://www.mekongmrc.org.

3. Powering Progress 2010. Website of the Department of Energy Promotion and Development, Ministry of Energy and Mines, Lao P.D.R Government, http://www.poweringprogress.org/.

Paul Wyrwoll is a member of the GWF Editorial Team and a research economist at the Crawford School of Economics and Government, The Australian National University. His current research focuses on climate change mitigation and adaptation in the Asia-Pacific, including water management and economic development. The Global Water Forum self-publishes occasional articles on important developments in global water governance.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.