Laos: Pak Beng Dam Project Approved, but at What Cost?

8 March 2017 Madeleine Lovelle, Research Analyst, Global Food and Water Crises Research Programme

Background

The Laos Government has approved a project on the Mekong River’s mainstream, known as the Pak Beng Dam Project. Approval for the project was announced in February 2017, and is expected to cost US$2.3 billion (AUD$3.04 billion). Construction of the dam is set to join two other Laos dams along the Mekong, the Xayaburi Dam and the Don Sahong Dam. The project is set to be financed by the Chinese firm, Datang Overseas Investment, however, there is little transparency surrounding the development of the project.

Comment

The Director-General of the Lao Ministry of Energy and Mines, Daovong Phonekeo, asserts that while all development projects have unwanted side effects, the side effects of the Pak Beng Dam project are manageable. The director-general has claimed that, although some villages will have to be relocated, only 1,000 people will be affected. Mr Phonekeo has assured citizens that the Laos Government will assist by building new infrastructure, schools and hospitals for the relocated communities.

Critics of the Pak Beng Dam Project, however, argue that the creation of the dam would harm the environment and lead to widespread dislocation. According to the non-government organisation International Rivers, the likely impact of the Pak Beng dam has been understated by the Laos Government. It has been predicted that 6,700 people will be displaced, including those in 25 villages from Laos and two from Thailand. Despite the direct adverse effect that the dam will have on local Lao people, 90% of the 912 megawatts of energy produced by the dam is set to be exported to Thailand (with the remainder distributed to a state-owned utility in Laos) . While there is merit in the idea that the project will assist the Laos economy, the effects to the surrounding environment are considered damaging.

The Pak Beng dam is one of a total of 11 dams along the Mekong that have been proposed by Laos and other riparians along the river. The Environmental Assessment on Mekong Mainstream Dams, commissioned by the Mekong River Commission (MRC), has shown that the effect of the development of multiple dams would have an adverse effect on fisheries, hydrological flows and sediment for the countries along the river. FDI has also previously examined the effects of damming the Mekong River, particularly the threat to livelihoods and food and water security within the region. Downstream countries, including Cambodia and Vietnam, have expressed their opposition to the Pak Beng Dam Project. Given that tens of millions of people rely on the flow of the Mekong to survive, any damming along the river is likely to create future tensions between countries, villages and neighbours as the side effects worsen.

In 1995, riparians along the Mekong signed the Mekong agreement that established the MRC. While this forum provides a space for riparians to discuss transboundary river concerns, the challenges of multilateralism mean that the Commission has been somewhat ineffective at maintaining co-operation between neighbouring countries. Cambodia and Laos have recently formed a joint committee that aims to increase the current levels of freshwater fish in the Mekong. It is likely that this committee will have more success at maintaining co-operation and replenishing fish supplies, given that bilateral agreements tend to be much easier for countries to negotiate. The countries have committed to developing a joint management plan that, once completed in 2018, will see Cambodia and Laos adopt the plan into their national policies. Given that Laos is one of the largest hydro developers in the region, the costs of any dam construction must be carefully considered in light of riparian co-operation to ensure that the future security of the region is not jeopardised.

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