Maintaining the Mekong: Using ecosystem payments to secure a global food-security asset

January 12th, 2015

David Fullbrook, DNV GL Clean Technology Centre, Singapore

In good times, rice fills plates and bowls from Bangkok to Brussels, Dhaka to Dakar. However, if supplies tighten trouble looms. When prices tripled in 2008, protests flared in many poor importing countries, riots struck West Africa, and the government fell in Haiti.

Surprisingly, the world was not short of rice.1 Nevertheless trouble with other staples sowed doubts, which telegraph quickly in a world of transnational farming, globalised food markets, and nervous policymakers. Worse could have happened. Soaring rice prices in 1979 helped tip Liberia into war.2

Even without the drama of surging prices, people face malnourishment when prices steadily outpace wages, with long-term consequences for health and well-being. Ensuring ample supplies of rice to avoid malnourishment, or hunger, while maintaining incomes to keep farmers in business is a delicate problem for public welfare and national security.

Unfortunately, the outlook is not promising. Increasing demand from an urbanising world collides with tougher conditions for cultivating rice and other foods, for two key reasons: dammed rivers and climate change.

Dams damage river ecosystems and harm communities on such a scale that the costs can easily equal narrowly conceived benefits, and often the impacts are simply too great to mitigate.3,4,5 Furthermore, energy technologies like solar, wind, and improved efficiency are cheaper and faster alternatives, which generate power without causing the heavy damage to ecosystems associated with large dams.6

A weaker ecosystem can leave communities poorer, with fewer options for adapting agriculture and fisheries to the higher temperatures, greater floods, worse droughts, and rising seas of climate change. Floods and drought might in some locations be tempered by dams, particularly by those with small reservoirs for local needs. Yet given the time and resources dams soak up, plus the long-term damage, it might be wiser to learn to live with flood patterns7 and plan for droughts as was the case until recent times.

How large dams affect rice production will become clear over this decade in the Mekong River basin, shared by China, Myanmar, Laos, Thailand, Cambodia, and Vietnam. What happens there matters globally for two main reasons.

One: food security. In 2012, the Mekong Delta supplied half of Vietnam’s rice and 18 percent of rice traded internationally.8,9 The Mekong, accounting for about a quarter of global inland fish catch,10 is an increasingly important source of protein for the basin’s growing population11 (see Dams on the Mekong). Farming and fishing are being stressed by rising seas and extreme weather events caused by a changing climate in addition to upstream dam building in China and especially in Laos.

Two: extensive damming foreshadows plans elsewhere. Dam building is booming across developing Asia and picking up in Africa. China has built six dams on the Mekong, altering seasonal water levels.12 Laos now has eleven dams on Mekong tributaries, most built within the last decade. Another ten are due by 2019.13 Among them is the Xayaburi, the first dam across the Mekong mainstream south of China (see The Xayaburi dam: Challenges of transboundary water governance on the Mekong River). The second mainstream dam will partially block the Don Sahong falls.

The dams are cutting off breeding grounds in the tributaries for hundreds of migratory fish species, trapping nutrient-rich sediments, and disturbing flood cycles. As a result, yields and incomes are expected to fall significantly for rice farmers and fishers downstream in Cambodia and Vietnam.14,15 Meanwhile, evidence suggests people living downstream suffer worse health.16

Over the last few years, Cambodia and Vietnam, plus local and international campaigners, have urged Laos to rethink dam plans. Laos has not been persuaded, preferring instead to bank on revenue from the export of hydroelectricity, primarily to Thailand, to help reduce dependence on mineral exports and eliminate poverty.

Ironically, poverty is partly caused by environmental damage from rapid expansion of plantations, mines, and dams. The failings of weak regulation are compounded by corruption, a severe problem acknowledged by the government.

An impasse has been reached. If dams are abandoned, Laos foregoes revenue, while Cambodia and Vietnam benefit from stronger food security and agricultural income. If dam building continues, Laos benefits from the revenue while the costs accumulate downstream in Cambodia, Vietnam, and beyond. The trade-off illustrates the asymmetric distribution of resource endowments, which is the basis for conflicting interests among riparian states.

Interests could align, however, if countries which benefit from the free-flowing river made payments, dependent upon stewardship performance, to Laos to support the ecosystem. The basic principle of payments for maintaining ecosystems is well established and has been applied in Europe, North America, and Latin America.17,18,19 New York City, for example, avoids higher water treatment costs by paying farmers upstream to reduce pollution.

Payments would introduce a new flow of tangible semiotic signals from downstream to upstream communities (see Figure 1), superseding intangible rhetoric and providing information to shape behavior and coordinate interests. Payments would complement the tangible biophysical signals people currently receive downstream in the form of nutrients and fish in the water, the flood cycle, and so on.

Benefits of payments would include preserving food and livelihoods in Cambodia and Vietnam, generating revenue for development in Laos, and promoting regional peace and cooperation.

For Laos to supply stewardship services, such as maintaining the free flow of water, silt, and nutrients, protecting fish spawning grounds, and tackling water pollution from agriculture and sewage, payments would at the least have to approximate expected revenues from hydroelectricity exports.

That revenues from dams have not transformed Laos suggests payments are affordable. The Mekong Delta alone, for example, already earns $10 billion annually in exports, mostly from rice, fruit, and fish.20 Cambodia and Vietnam may in the future earn even more if the river ecosystem is maintained, making payments to Laos relatively cheaper. The international community should also contribute because the Mekong, through exports of rice and fish, is a global food-security asset.

Granted, payments for ecosystem services, or more helpfully stewardship, can be problematic. What gets valued by whom under what conditions raises issues of equity and power. This valuation and any rights that follow can, if not handled carefully, lead to commodification which ends up taking precedence over the holistic management necessary to maintain ecosystems and their communities.21,22,23

Yet, those issues and risks pale in comparison to the notably imperfect processes for establishing the economic benefits and evaluating the environmental and social costs of dams.24 Moreover, dismantling a dam and restoring a river appears vastly more difficult than making corrections to flaws in a management method such as ecosystem payments.

Establishing payments on such a scale will nevertheless be challenging. International support and guarantees to help ensure performance and timely payments, perhaps channeled through the Mekong River Commission, could help build confidence and start the process of finding a formula for calculating payments and agreeing on methods for measuring performance and sharing costs. In return, international supporters would enhance food security, buttress regional stability, and establish a model that could be transferred elsewhere.

Introducing ecosystem payments into the Mekong to secure rice production, livelihoods, and regional stability is ambitious and will require a concerted effort by many actors. Nevertheless, the prospect of reducing risks to food security and regional stability is good cause for riparian states and other parties to act.

References:

Food and Agriculture Organization. 2011. The 2007-2008 Rice Price Crisis: How policies drove up prices and how they can help stabilize the market. Economic and Social Perspectives Policy Brief 13. Available at http://www.fao.org/docrep/013/am172e/am172e00.pdf Aker, J., Ramachandran, V., Timmer, P. 2011. West African experience with the World Rice Crisis, 2007-2008. Available at: http://www.cgdev.org/content/publications/detail/1424823. World Commission on Dams. 2000. Dams and development. Available at: http://www.unep.org/dams/WCD/report/WCD_DAMS%20report.pdf Ansar, A., Flyvbjerg, B., Budzier, A., Lunn, D. 2014. Should we build more large dams? The actual costs of hydropower megaproject development. Energy Policy 69: 43-56 Leslie, J. 2014. Large dams just aren’t worth the cost. New York Times. Available at: nytimes.com/2014/08/24/opinion/sunday/large-dams-just-arent-worth-the-cost.html. Kahn, J., Freitas, C., Petrere, M. 2014. False Shades of Green: The Case of Brazilian Amazonian Hydropower. Energies 7: 6063-6082. White, G.F. 1945. Human Adjustment to Floods: A Geographical Approach to the Flood Problem in the United States. Department of Geography Research Paper No.29. Chicago: University of Chicago Mekong rice exports in 2012 estimated at 6.9m tonnes. VietnamPlus. 2012. Mekong Delta rice exports up 7.8 percent in 2012. Available at: http://en.vietnamplus.vn/Home/Mekong-Delta-rice-exports-up-78-percent-in-2012/201212/30504.vnplus World rice trade 2012 37.4m tonnes. International Rice Research Institute. Rice Statistics. Available at: http://ricestat.irri.org:8080/wrs2/entrypoint.htm. Baran, E., Jantunen, T., Chong, C.K. 2007. Values of inland fisheries in the Mekong River Basin. World Fish Center. Available at: http://www.worldfishcenter.org/resource_centre/WF_895.pdf. Mekong River Commission. Fisheries. Available at: http://www.mrcmekong.org/topics/fisheries/. Räsänen, T., Koponen, J., Lauri, H., Kummu, M. 2012. Downstream hydrological impacts of hydropower development in the Upper Mekong Basin. Water Resource Management 26: 3495-3513. Ministry of Energy and Mines. 2013. Electric power plants in Laos March 2013. Available at: poweringprogress.org/new/power-projects. Ziv, G., Baran, E., Nam, S., Rodríguez-Iturbe, I., Levin, S. 2012. Trading-off fish biodiversity, food security, and hydropower in the Mekong River Basin. PNAS 109(15): 5609-5614 http://www.pnas.org/content/109/15/5609.long International Centre for Environmental Management. 2010. Mekong River Commission strategic environmental assessment of hydropower on the Mekong mainstream – final report. Available at: http://icem.com.au/portfolio-items/strategic-environmental-assessment-of-hydropower-on-the-mekong-mainstream/. Polimeni, J., Iorgulescu, R., Chandrasekara, R. 2014. Trans-border public health vulnerability and hydroelectric projects: The case of the Yali Falls Dam. Ecological Economics 98: 81-89 Darghouth, S., Ward, C., Gambarelli, G., Styger, E., Roux, J. 2008. Watershed Management Approaches, Policies, and Operations: Lessons for Scaling Up. World Bank. Available at: http://siteresources.worldbank.org/TURKEYEXTN/Resources/361711-1216301653427/5218036-1267432900822/WatershedExperience-en.pdf Engel, S., Pagiola, S., Wunder, S. 2008. Designing Payments for Environmental Services in Theory and Practice: An Overview of the Issues. Ecological Economics 65(4): 663-674 Wunder, S. 2005. Payments for Environmental Services: Some Nuts and Bolts. Centre for International Forestry Research. Occasional Paper Number 42. Available at: http://www.cifor.org/publications/pdf_files/occpapers/op-42.pdf. Luu Van Dat. 2014. Mekong Delta an untapped trade giant. Viet Nam News. http://vietnamnews.vn/economy/249650/mekong-delta-an-untapped-trade-giant.html. Fisher, B. et al. 2008. Ecosystem Services and Economic Theory: Integration for Policy-relevant Research. Ecological Applications 18(8): 2050-2067 Kroeger, T. 2012. The Quest for the ‘optimal’ Payment for Environmental Services Program: Ambition Meets Reality, with Useful Lessons. Forest Policy and Economics 37: 65-74 Barnaud, C., Antona, M. 2014. Deconstructing ecosystem services: Uncertainties and controversies around a socially constructed concept. Geoforum 56:113-123. See for example references 3-5, 16.

David Fullbrook, an ecological economist, is currently senior consultant strategy and policy with DNV GL’s renewable energy practise in Singapore. He has undertaken wide ranging research for development agencies on matters relating to agribusiness, energy, food security, and natural resources in the Greater Mekong and elsewhere in East Asia. He holds advanced degrees in Asian Politics, environmental management, and ecological economics. He writes in a personal capacity.

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.