Nam Theun dam: the World Bank's watershed decision.

• Author: Hales, David F.
• Position: People's Democratic Republic

For the last thousand years, as kingdoms and countries have fought for sovereignty over Laos' Nakai Plateau, the people there have learned the lessons of the grasses--to bend before the wind. Life has been relatively predictable, marked by continuity from one generation to the next. But the winds of change are blowing again, and this time the strategy of the grasses may not work. By April, the countries on the governing board of the World Bank will consider a proposed high dam on the Nam Theun River. Their decision will not only affect those who live here, but will also set a pattern for decisions regarding hydroelectric dams around the world for years to come.

The Nam Theun 2 dam (NT2) is a project of the Lao People's Democratic Republic (PDR), in partnership with Electricite de France, the Electricity Generating Company of Thailand, and Ital-Thai Development Public Company (jointly, the Nam Theun 2 Power Company Limited, or NTPC). The US$1.3 billion, 1,070-megawatt project would divert 93 percent of the Nam Theun's flow into the adjacent Xe Bang Fai River basin, generating power for Thailand's electrical grid. It would also submerge nearly 40 percent of the Nakai Plateau beneath a 450-square-kilometer reservoir, drastically alter the character of two rivers, displace thousands of desperately poor residents, and disrupt the livelihoods of tens of thousands more, among the other transformations typical of such hydropower projects.

The initial concept was promising. Laos is painfully poor, with few development options. Early estimates understated the number of displaced people and ignored the impacts on those who live downstream, especially on the Xe Bang Fai, so compensation and resettlement seemed manageable. Thailand seemed to need the power, the engineering is not difficult, and the plan included an attractive conservation component.

What has emerged, however, is much less promising. As documents have been made available and proponents have made their case in public, the inadequacy of the preparation and the lack of response to fundamental questions is surprising, especially after the heavy investments of staff at the World Bank to assist the Lao PDR and its partners to develop a coherent proposal. Proponents admit that no comprehensive analysis of alternatives to the project has been done. They have refused to disclose NT2's financial framework (the Concession and Power Purchase Agreements), despite the urging of Bank officials. They...