Documentation:Open Case Studies/FRST522/Lao PDR Hydro dam development plan Who benefits who loses

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Lao PDR Hydro dam development plan: Who benefits, who loses?

Lao PDR in South-East Asia is a poor country with rural population and underdeveloped post war society. The government is totalitarian. The country has plentiful natural resources, the Mekong river and the tropical forest. Hydropower development in Lao PDR and other countries in the Mekong Basin consists of 70 projects and trillions of US dollars. The government has total control over all land. The administrative institutions and legal framework is in place but the system is bureaucratic, complex and corrupted. The affected stakeholders are the rural people living along the Mekong river. They have little power. The interested stakeholders are however many and powerful. Private stakeholders are gaining power through build-own-operate-transfer agreements. While NGO’s, civil society and donors have little power. For Lao PDR the stakes are high. Environmental and social issues are neglected. The development is way too fast for weak institutions and corrupted system to regulate. The government of Lao PDR and for most the part the rural poor will be left with the negative effects. The winners are the powerful elite and private foreign investment as the rural poor lose out.


Lao PDR map

Lao People's Democratic Republic (Lao PDR) is a country in South-East Asia. Lao PDR has no access to sea as it is locked in by the borders of Myanmar and China in the north, Thailand in the west, Cambodia in the south and Vietnam along the east border. [1]


Lao PDR is a rich country in history and culture tracing back to the kingdom of Lan Xang Hom Khao in 14th century. After centuries of decline Lao PDR came under Thailand rule in the late 18th century. In 1893 Lao PDR became a part of French-Indochina (French Colonial Empire). Lao PDR gained independence in 1953. After a long civil war, the Communist Pathet Lao (CPL) movement rose to power in 1975. The CPL implemented a strict communist regime with close ties to Vietnam. [1]


Lao DPR is a socialist republic with People's Revolutionary Party (PRP) being the only party. The military controls the leadership positions in the PRP. Vietnam government and military has huge influence in Lao PDR. In the last 2-3 decades the Lao PDR government has made return to private enterprise and foreign investment. Lao PDR participates in numerous international organizations like the United Nations (UN), the Association of Southeast Asian Nations (ASEAN), the Food and Agriculture Organization of the United Nations (FAO), the World Trade Organization (WTO), the World Health Organization (WHO) and the United Nations Industrial Development Organization (UNIDO). [2]


Despite reforms and economic growth Lao PDR is a poor country with 23.2% living below the national poverty line. With Gross National Income (GNI) per capita of $2,150 and Gross Domestic Product (GDP) up to 15.903 billion in 2016 economic growth is one of the fastest in East Asia. The economy depends heavily on natural resource exports like hydro power, mining and logging while questions are being asked on how sustainable that growth actually is. [3]


Lao PDR population in 2016 was estimated 6.7 million rising from 5.3 million in the year 2000. Population growth is high and Lao PDR is the youngest nation in Asia with the average age at 21.6 years. The capital Vientiane is the largest city with 740.000 people but most of the population lives in valleys along the Mekong River and its tributaries. About 60% of the population lives in rural areas. [1]

Lao people are the largest ethnic group in Lao PDR and the country is named after the Lao People. The largest minority ethnic group is the Khmu people with 11% of the population. The Khmu were the first people to settle northern Lao PDR and are considered indigenous. With the migration of the Lao people Khmu were forced to withdraw from the lower lands to the mountains. Hmong people are the second largest ethnic minority and account for about 9% of the population. The Hmong people allied with the US during the Vietnam conflict and the Laotian Civil War. After the CPL movement rose to power in 1975 the Hmong people have been subjective to discrimination. [2]

Lao PDR rates number 147 of 171 countries on expenditures on education as a percent of GDP. Transportation infrastructure such as roads are underdeveloped in the Lao PDR. Roads are in total 39.500 km and of that 5,500 are paved which is much less than the neighbouring Vietnam with 195.000 km of roads and 150.000 paved. The Mekong River and its tributaries are important transportation routes with 4,600 km of waterways. [2]

The are many threats to human health and development in Lao PDR. Life expectancy is 56.29 years, morbidity rates from malaria is 48 of every 1000 people and many people lack basic healthcare. On the positive side the isolation and underdevelopment of the country has kept the HIV infection rate much less than the neighbouring countries. [4]


Lao PDR river

Lao PDR has no access to sea as it is locked in by the borders of Myanmar and China in the north, Thailand in the west, Cambodia in the south and Vietnam along the east border. Approximately 70% of Lao PDR is mountain ranges and highlands. The Mekong River is the 12 longest river in the world stretching 4,350 km from the Tibetan Plateau. [1]

Deforestation and degraded forests are a major challenge. Since the 1950's the forests of Lao PDR have gone through major changes. Commercially harvested timber, both legal and illegal, and conversion for agriculture and plantations along with major investment in infrastructure like roads and hydro dams, have reduced forest cover to under 40% from 70% in the 1950's. [5]

Lao PDR climate is categorised as monsoon, tropical savanna and humid subtropical. The raining season is from May to the end of October, followed by a cool dry season to the end of February and a hot dry season for the rest of the year. [2]

Hydropower development

Lao PDR and the Mekong River

The Lao PDR has abundant resources for hydropower development. The need for energy is growing rapidly with population and economic growth. The hydropower capacity is estimated about 18,000 MW. The World Bank estimates that investment in hydropower costs between 1,000 and 4,000 USD per KW and the total investment in the Mekong Basin estimates between 1.33 and 5.32 trillion USD. The goal of the Government of Lao PDR’s (GoL) is to increase the domestic electrification ratio for the country to above 90% before 2020. Nine dams are under construction and other 19 are on the drawing board. The GoL has signed Memorandum of Understandings (MOU) or is researching more than 70 hydro projects. The GoL sees hydropower development as the future, a way out of poverty and a contribution to international efforts in the fight on Climate Change. There is not much room for failure as hydropower is already twice as much in Lao PDR as any other country in the world according to the World Bank. [6]

The Nam Theun 2 Hydropower Project (NT2) - From experience in the 1980s and 1990s the World Bank stopped funding large hydropower dams and set higher standards for hydro dams in accordance with the World Commission on Dams process. However, in 2005 the World Bank, under considerable pressure, decided to take part in the Nam Theun 2 Hydropower Project. (NT2). The NT2 dam began operation in 2010. [7]

The Xayaburi project – Lao PDR has started developing the Xayaburi dam the first on the Mekong River main steam in the Lower Mekong basin (LM). No reliable environmental assessment has been carried out for the project. China has already developed the upper Mekong (UM) and the effects of that development added to the purposed development in the LM can have negative effects on the livelihood of millions of people. It is estimated that the freshwater fishery capture in Mekong basin is 2.2 Mt per year. [8]

The Mekong River Basin (MRB) - Already a lot of development is taking place in the UM region but no dam is yet in operation in the LM region on the Mekong river. Lao PDR has begun developing the Xayaburi dam, the first dam in the LM region, witch is planned to be ready for operation in the year 2020. The development of the Xayaburi dam is causing transboundary conflict among the LM region countries. The other LM region countries are accusing Lao PDR of breaching the Mekong Treaty. It is important to bear in mind that Vietnam have huge political influence in Lao PDR and Thailand are the main drivers in hydro development in Lao PDR and will import most of the energy. Millions of people are effected by the development in the Mekong Basin it is estimated that 70 million people live in the region and 75% of them depend on fisheries for livelihood. [8] [9] [10]

Small hydropower development – The GoL has introduced small hydropower projects as possible option in rural development. Small hydropower projects involve projects under 15 MW. [11]

Tenure arrangements

The GoL has total control over all land. Only 0.1% of total land area is designed to indigenous people or local communities. [12] In 1975 after the Communist Pathet Lao (CPL) movement rose to power and established the Lao PDR all land was nationalized and put under government controlled management. In an effort to increase food security the GoL has ever since made efforts to implement land tenure rights programs with mixed results. [13]

Permanent land use rights

In the mid 1990’s the GoL implemented Land-titling programs (LTP) mainly in urban and pan-urban areas for communities and individual households. The LTP programs assign mainly “permanent land use rights” (PLUR) to individual urban households and the Use Planning and Land Allocation Program (LUP/PA) or Land and Forest Allocation (LFA) for rural areas. The LTP was supported by the World Bank and the Australian Agency of International Development (AusAid). PLUR secures the land holder highest level of land title with the rights to sell, lease and transfer. The PLUR holder can sell his house and the land with it. Without the PLUR household owner risks losing the land and his house. Because of complex procedure, bureaucracy and lack of transparency poor household find it difficult to pursue their rights. Assigning PLUR to rural household has been a slow process and it is estimated to take years to implement. According to the 7th National Social Economic Development Plan (7th NSEDP) the goal was to register one million land parcels by the year 2015 but that turned out to be an ambitious goal. [13]

Temporary land use rights

The LUP/PA and LFA programs offer rural household and communities “temporary land use rights” (TLUR) with the issue of a “temporary land use certificate” (TLUC). The TLUC allocates rural households and communities land use rights for agriculture and forests for consumption. The LFA program does recognize “customary land use rights” (CLUR) of rural villages to land and its resources. Through the LFA program rural household with recognised CLUR could acquire TLUR, TLUC and is some cases PLUR. The Prime Minister Decree No. 88, Article 3 states that “the household who acquire land utilization rights will only have the rights to manage, protect, use, usufruct and inherit”, and “shall not have the right to transfer or use the land certificate as shared contribution, or to use it as security or to lease”. This limits the rural household’s ability to acquire finance for growth and development. LFA has been met with mixed receptions. In some cases it has increased inequality as household with more history in the community have advantage over more recently settled households. In other cases, LFA has threatened traditional land use as household have lost their fallow. The LFA program has had problems with data management and monitoring leading to illegal transfer of land. The latest development in LFA is the “participatory land use planning” (PLUP) under the UN REDD program. It is difficult to make a living form a small farmland and it is also very difficult to sell or lease it. The process of granting land titles in the rural areas is very slow. The GoL, the provincial and the district levels do not have the funding or the capabilities to manage the situation. [13]

Special Economic Zones

The Lao PDR government also allocates land for large and medium-scale investment and development to interested stakeholders. Through Special Economic Zones the GoL leases land through concessions agreements and resettlement programs. [13]

Tenure agreements and hydropower development

The GoL has signed Memorandum of Understanding (MoU) for over 70 hydropower projects. The next step is for the GoL to sign a concession agreement with a developing company. The fast paced investment and development projects have complicated the LTP implementation. The LTP and LFA offer different rights and security that might overlap and conflict with hydropower development goals and interests. The main drivers of the hydropower development projects have ample resources and abilities to push the projects through the system. There is little or no coordination between the implementation of tenure rights. When it comes to conflicts between “customary land use rights” holders and development projects it is extremely difficult for the rural people to exercise their rights. [13] As multilateral agencies like the World Bank and the Asian Development Bank (ADB) withdraw from supporting hydropower development projects private financing takes over. With more private investment the Build-Own-Operate-Transfer agreements (BOOT) are increasingly popular. Until lately hydro dams were 100% owned by the Lao national hydro company, Electricite du Lao (EdL), but dams build under the BOOT schemes are with mixed ownership and EdL owning 10-25%. [14]

The NT2 dam and The Nam Theun Power Company (NTPC) - The changing financial structure in the hydropower industry has shifted decision making power over natural resources and rights to water. The NTPC has almost complete power over water resources and its management during the ownership period of 25 years. NTPC will most likely focus water management on profit. [15]

Administrative arrangements

From the year 1975 Lao DPR has been a socialist republic with Lao People's Revolutionary Party (LPRP) being the only party. The LPRP controls all the country, all ministries and central government organisations. Furthermore, provincial, district and local authorities follow the LPRP policies making the LPRP and the party’s congress the highest form of authority. Therefore, all policies on land tenure are initiated and approved by the LPRP. [13]

Institutions – Government, provincial, district and local

Many institutions are in one way or the other responsible for the management of land, the Ministry of Natural Resources and Environment (MONRE), the Ministry of Agriculture and Forestry (MAF), Ministry of Energy and Mines (MEM), Ministry of Public Work and Transport (MPWT), Ministry of Industry and Commerce (MIC) and Ministry of National Defence (MND). The MAF makes plans for the LFA program about land zoning but the MONRE runs the LTP. The LTP was formally managed by the Ministry of Finance (MOF). Below the ministry level is the provincial level and then the district level. The provincial level has its own Provincial Office of Agriculture and Forestry (PAFO) and the district level has the District Office of Agriculture of Forestry (DAFO) and a District Land Allocation Committee (DLAC) making decisions on the LFA process. Policies involving natural resource management are controlled by the central government and local authorities must follow their direction. The GoL reserves land for investment, concessions and development. The Military has interests in natural resources and runs its own business operations. LTP1 and LTP2 programs were not implemented by the GoL as the donors, the World Bank and AusAID, required the programs to include social economic and environmental assessments. [13]

Legal framework

Even if the GoL has made substantial efforts to improve policies, legal framework and guidelines assessing hydropower projects, it struggles with implementation problems. The major problems involve the institutional environment. Badly implemented and executed environmental and social assessments and weak regulation framework, underlying corruption and lack of transparency and inability to address and consult all stakeholders are major problems. [7]

The list of GoL legislation:

• Law on water and water resources (1996)

• Forestry law (1996) (2007)

• Land law (1997)

• Agriculture law (1998)

• Environmental law (1999) including Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) [7]

Affected Stakeholders

Affected stakeholders

Affected stakeholders are the rural people living along the Mekong river and its tributaries. The rural people are poor and trust their livelihood on the Mekong river ecosystems. They are the losers in Lao PDR hydropower development. The underlying factors are: poverty, low literacy, totalitarian government, little respect for ownership rights, lack of stakeholder empowerment, faulted compensations and benefit sharing systems. [4]

Rural people

The rural poor have little power when it comes to hydropower development. Regardless of the GoL efforts to grant poor rural households land tenure it is clear that it's very difficult for poor people to exercise their right. The institutional system is bureaucratic, corrupted and slow. Poor people with low level of education and literacy are in a very weak position. Even if a rural household holds a TLUC the procedural rights are week and the GoL holds substantive right. [13] [16]

Interested Outside Stakeholders

Stakeholder power

Interested outside stakeholders in Lao PDR hydropower development are the GoL, the political and business elite in the region, governmental institutions and officials, neighbouring countries governments, financial institutions, energy firms and power companies, construction, developing and engineering firms, NGO’s, civil society donors and other industries. The underlying factors are: GoL tight control over all institutions of the society, corruption, ample capital from neighboring countries, popularity of hydropower, high potential profits, potential short term economic gains in the region and the need for cheap renewable energy. [15] [17]

Lao PDR government

The main goal of the GoL is economic growth and hydropower development is seen as the central part in the country’s future and economic independence. The GoL has decision making power in development of hydropower but questions are being asked on how much of the power is transferred to foreign companies through BOOT and concessions agreements. The political and business elite of Lao PDR might put private interests before national, weakening the GoL control. [15]

Governmental institutions and officials

Many government institutions are involved in hydropower development like: MONRE, MAF, MEM, MPWT, MIC and MND. There are also the institutions at the provincial and district level. Government, provincial and district institutions will follow the central government policies to the letter. Officials have little power to influence these policies. [13]

Financial institutions

Stakeholder importance

International Financial Institutions (IFI) are institution like the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB). IFI have historically a had huge influence on development in Lao PDR as the main source of financial backing. However, that might be changing with more funding coming from regional commercial banks (RCB) and private equity. RCB from Thailand, Vietnam and China have the financial mechanism in place, ample cash and understanding of the hydropower development industry. The RCB’s can also make decisions faster and speed up the development. The RCB’s main goal is return on investment. [15]

Energy firms and power companies

Many Independent Power Producers (IPP) are interested in the fast paced hydropower development in Lao PDR. The Nam Theun Power Company (NTPC) is a limited liability company by Lao PDR law. It is owned by DEFI (France), EGCO (Thailand) and LHSE (Lao PDR). The main objective is profit. Through the BOOT agreement it has complete power over the company for 25 years. Energy firms in Thailand buy and distribute much of the energy. Companies like EGAT, EGCO, Ratchaburi, GWS Power and CH. Karuchang. It is estimated that CH. Karuchang will on average make 140 million USD a year form the Xayaburi project. There is also much interest from other energy firms in the region like EUN and Petro (Vietnam), MegaFirst and Gamuda (Malaysia). There are also interests form Global Power Developers (GPD) like EDF (France) and StarKarft (Norway). [15]

Construction companies and engineering firms

During planning and construction of hydropower development projects there is a lot of interests from construction companies and engineering firms. During planning the engineering firms do a lot of consultation work. It’s always in the benefit of the engineering firms that the projects become a reality as it will lead to more work for the firms. The business ethics of some of these firms is put into question. The objective of these firms is to make a profit and they can have huge influence through their consultation work. [18]

NGO’s, Civil society and Donors

Lao PDR is under a tight government control which limits the influence and operations of international NGO’s and local civil society. [9] Donors like the AusAID supported the LTP but withdrew their support for LTP1 and LTP2 conflicting with the GoL over environmental and social assessments schemes. [13]

Neighbouring countries

The Lao PDR neighbouring countries are also interested. They are the main importers of energy from Lao PDR. They also have a stake in the Mekong River Basin were the Mekong runs along the countries border. The Mekong River Commission (MRC) is inter governmental body between Cambodia, Laos, Thailand and Vietnam. [10]

Other land uses

Other land use companies and industries are also interested. These are companies interested in coffee, oil palm and paper. [17]


The stakes are very high for Lao PDR to be successful in developing the country’s natural resources. One of these resources is hydropower development. The country has vast potential in hydropower that could help the country in development and offer a way out of poverty. However, Lao PDR faces a monumental task in making hydropower development successful for the benefit of all its citizen.


The MRB is very rich in biodiversity and it's the largest inland fishery in the world with over 1,200 species, some only found in the region. The negative impacts of hydropower development can be lost fishing stocks, water quality, biodiversity and habitat. [9]

With a BOOT agreement the power company receives full control of all water management for 25 years. This means that there is a conflict between making profit and environmental factors when it comes to water control. Private shareholders are very likely to set profit as a priority. For the private sector to invest in hydropower development will probably call for deregulation by the GoL. [15]

The environmental effects of the hydropower plan on the Mekong River and especially the Xayaburi dam that Lao DPR is developing in the lower Mekong basin have not been considered. No reliable environmental assessment has been carried out for that project. China has already developed the UM and the effects of that development added to the purposed development in the LM can have negative effects on the livelihood of millions of people. [8]

Hydropower development calls for a lot of investment in infrastructure like power lines and roads. All paving the way for illegal logging. Illegal logging is a side effect of hydropower development that adds to the misery of people depending on the forest for livelihood and habitat. [19]


Curse of the natural resources is a well known problem in developing countries. The curse of natural resources: “refers to the paradox that countries with an abundance of natural resources (like fossil fuels and certain minerals), tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources.” The curse applies especially to countries with weak institutions, governance and legislative structures. To turn the curse in to a blessing countries, need to develop strong governance, institutions and legal framework. The GoL has made efforts to address the problem but still struggle with implementation issues. [6]

The NT2 project - Despite the World bank considering the environmental and social compensation to be a success many of the people affected do not share that view. It is estimated that the freshwater fishery capture in Mekong basin is 2.2 Mt per year. [7]

Sustainability - Lao PDR plans are very ambitious and the stakes are high. The Nam Theun 2 Hydropower project was supposed to be a pilot project for good governance. Backed by the World Bank and the first hydropower project in Lao PDR partially funded by private equity it was groomed as the benchmark for the future. The focus was on sustainable development and good governance. The core value being equity, efficiency, participation in decision making, sustainability and accountability. The truth is that the GoL will have to deal with the cost of compensating people effected by the project not just during construction but also during operation. (S Jusi et al., 2010) According to information from GoL documents and series of workshops of the Future Resource and Economy Policies in Laos till 2020 Project (FREPELA2020). To achieve social and environmental sustainability Lao PDR must strengthen institutional structure, institutional coordination and cooperation across all the institutional level. [6]

Demand projections – Questions are being raised about the reliability of demand projections for the hydropower from Lao PDR. It is mainly the energy firms making the projections and it’s in the benefit of the companies if demand is high as they act as both supplier and distributor. [9]

Private equity - Increased private equity means basically that the project is financed 70% by debt and 30% by equity. That said the 30% is also financed by debt but that is not with a direct security in the power company. The shareholders control the power company for up to 25 years and in that period they will want to maximize profits. [15]

Diversification - Lao DPR is putting all its eggs in the same basket and if something goes wrong with hydropower, things can go really bad for the country. Lao DPR will export most of the energy and that will not help domestic development in other sectors. Hydropower development can hurt the tourist industry. During construction hydropower does need a lot of manpower but in the long run only a handful of people work on the dams. In the long run hydropower might not help the poorest people and they are more likely to end up with the negative consequences. [6]

Water grabbing - International and public funding is slowing down and instead private banks and companies are the drivers of funding Lao PDR hydropower projects. This can mean a shift of power in control and ownership of the hydro industry. Large construction and engineering groups are now major investors in the Lao PDR hydro industry. The reputation of these companies is questionable. The pace of development is very high and Lao does not have the necessary capabilities to manage the situation. [15]

Inflation of development – A well know side effects of development is the “Inflation of development”. During construction of a large hydropower project the cost of all necessities rises considerably leaving the poor people much worse off than before. [4]


Human development - The foundations of Lao PDR society seems to be low on the Maslow's hierarchy of needs. Lao PDR ranks as the 133rd out of 182 countries on the UNDP Human Development Index (2009). Most of the rural people are identified as very poor. The situation in Lao PDR is described as a classic post-conflict-society (PCS). Troubled with insecurity and underdevelopment. Life expectancy is just 56.29 years and insecurity threatens development. The classic PCS is troubled with; refugee’s camps, poor nutrition, lack of medical supplies, criminal activities, damaged infrastructure, displaced people and refugees, legacy of explosive remnants of war, unemployment, homelessness and etc. New development comes also with a price as new roads could increase criminal operations like human trafficking, drug trafficking and illegal logging, “the roads are like a straw in the glass sipping natural resources and people”. [4]

Benefit sharing - It is suggested that benefit sharing is not a priority of the development companies and government in the region. It is more of a public relations action to meet the demands of the local public and international institutions or to bring hydropower development and economic growth into the limelight. It is mostly linked with Corporate Social Responsibility (CSR), Community Development Funds (CDF) and Payments for Economic Services (PES) and has done little to alleviating poverty and promote social justice. [20] Benefit is often looked at as a payoff and is decided forehand by the government or the power company with no participation or empowerment by the people receiving the benefits. Forced resettlement from hydropower development have resulted in poor outcomes. The problems end up with international agencies, NGO’s and local government but the power companies are stick free. [21]


Corruption - Even though Lao PDR is making progress to reform many problems still exists. Corruption is a big problem and Transparency International ranks the country consistently among the most corrupted countries in the World. Corruption is a big obstacle in installing active rule of law and regulation and the gap between legislation and implementation is big. [7]

Regulatory capture - All government contracts and dealings with the private stakeholders are kept secret and confidential making it very difficult for the public or NGO’s to monitor the situation. [15]

Transboundary - The Xayaburi Dam project shows that Lao PDR has trouble making decisions according to multinational agreements. This strengthens the belief that the government and the institutional structure is severely lacking the ability to do its job. Possible conflict between Lao PDR and its neighbors is a direct consequences of the hydro plan and the breaching of the 1995 Mekong Agreement. [10]


Resettlement – One of the consequences of the NT2 hydropower dam in the Khammouane Nakai District was resettlement of people. The people have not been compensated adequately for their losses. The land they got is too small and can’t sustain the same living standard as before the resettlement. [4]


Looking at the big picture in Lao PDR hydropower development you can’t help but to think that the country is not just exporting electricity but also with it a lot of its own future opportunities. The hydropower development has huge effects in Lao PDR, environmental, economic, social and cultural. Millions of people will be effected and the environmental effects are enormous. All this development will however not necessarily create a lot of jobs and opportunities for the general public or the rural poor. It is more likely that the main beneficiaries will be the elite few and foreign companies. The rural poor and the general public will share most of negative effects. Hydropower development is too fast for the GoL to being able to keep up. [7]

The NT2 project was not a success in being a benchmark for good governance and the reason is simple. There is no good governance in Lao PDR with the lack of transparency, weak institutions and corruption it's just not possible. The rural people have little procedural rights to pursue there interests. [7]

You have to wander about all the development in infrastructure that comes with hydropower development like roads and power lines. Assuming that the hydropower companies pay for the power lines. Power lines are massive constructions which needs roads and it needs to clear the forest from under the line. They are usually in a very remote places very contractor can work without much monitoring. There is little mention on the impacts of the power lines. Assuming that the GoL has to pay for other roads and infrastructure. Thinking back to the book, “Confessions of an Economic Hitman” by John Perkins. “According to Perkins, his role at Main (engineering consulting) was to convince leaders of underdeveloped countries to accept substantial development loans for large construction and engineering projects that would primarily help the richest families and local elites, rather than the poor, while making sure that these projects were contracted to U.S. companies. Later these loans would give the U.S. political influence and access to natural resources for U.S. companies” [22]

Todays neoliberal economics and focus on growth offer a great opportunity for financial institutions, energy firms, construction companies, engineering firms to tap into Lao PDR natural resources. The GoL tight control, weak institutions and lack of transparency make the perfect conditions for them to be successful in their endeavor. The tightly controlled society of Lao PDR limits the possibilities for the rural poor people, NGO’s and civil society to influence the country’s decision making. [15]



Lao PDR has committed to the United Nations Framework Convention on Climate Change (UNCCC) and hydropower development can help reduce carbon emissions in the region. However, the side effects of hydropower development can not be overlooked. Lao PDR needs to commit to the environmental assessments process according to law. Efforts designed to minimizes the effects of hydropower development on the environment could be to develop Run-of-River hydropower dams (ROR) and to promote Small Hydropower Development (SHD) in the rural areas. Both would minimize the need for big reservoirs. [23]

Lao PDR has signed the United Nations Convention on Biological Diversity (CBD) and committed to the conservation of biodiversity. Is more important than ever for the GoL make that commitment and inforce the environmental assessment process according to law. [24]

Illegal logging is a side effect of hydropower development and the GoL could take extra efforts to make sure all exported timber is legal. Making sure that all timber is certified by the Forest Stewardship Council (FSC) should be a long term goal. [25]


Lao PDR has signed the United Nations Constitution of Industrial Development Organization and therefore committed to equal opportunities for citizens for economic growth. Compensation and benefit sharing schemes in hydropower development need an overhaul. System that truly share the benefits, not just the burden, is an absolute necessity. A commitment to fair and just distribution of benefits is essential to secure long term success of hydropower development. [26]

The GoL could explore the options of generating revenues through taxation and tariffs on exported energy form hydropower to stimulate national investment in industry. Another possibility would be to offer incentives for local development using hydropower energy.


Lao PDR is a member of the United Nations International Labour Organization (ILO) and voted on the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Lao PDR also recently signed the International Covenant on Civil and Political Rights (ICCPR) and International Covenant on Economic, Social and Cultural Rights (ICESCR). Lao PDR needs to commit to making reforms in government in accordance. [27] [28]

The GoL could commit to Free prior informed consent (FPIC) for decentralization and empowerment of the rural poor. Though for that to be a realistic goal reforms in government are necessary. The GoL has to implement with better results the many laws and regulations already in place. It is difficult to see FIPC help the rural poor if there is not the firm intent of the GoL to decentralize power to the local level. For FPIC to work effectively the affected stakeholders must understand the consequences of the project. The stakeholders must also have the right to say no. The process must take place before any decision or commitment is made. The environmental social assessments must be carried out by an independent third party. The consent, substantive power, of the stakeholder must be respected. [29] Looking at LTP1 and LTP2 were GoL decided not to go a head with the projects as the donors demanded for social and environmental assessments as conditions for supporting the projects. [13]

Lao PDR could initiate PES programs for forest management for displaced households to replace lost income because of resettlement.

Lao PDR could invest in the education system. The education system needs to produce the knowledge and capabilities to make the necessary changes.


In general Lao PDR needs to address the separation of powers: legislature, executive and judiciary. Lao PDR could implement the office of an Ombudsman or public advocate for representing the rights of the public against maladministration and government violations against citizen rights. [30]

Lao PDR has confirmed the United Nations Convention against Corruption (UNCAC) and the United Nations Convention against Transnational Organized Crime (UNCTOC). However, Lao PDR consistently rates as one most corrupted country in the world. Lao PDR could divert finance from hydropower development to invest in institutional structure and abilities, stakeholder and civil society empowerment, law enforcement and free media. [31]


Lao PDR is rich in culture and history. The GoL has signed UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects (CSIECO) and UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (CMPPIIETOCP). A lot of the cultural heritage lives with the customs, traditions and lifestyles of the rural people. It is very important to carry out social and cultural assessments making decision on development projects. [32]


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Seekiefer (Pinus halepensis) 9months-fromtop.jpg
This conservation resource was created by Gunnlaugur Gudjonsson. It is shared under a CC-BY 4.0 International License.