Why World Bank Gave Its Nod to a Giant Dam

Build a large dam, and prosperity will come.

That's the belief of many who think the future of this poor landlocked nation lies in tapping its huge potential for hydropower.

Still ruled by Communists who are slowly letting the outside world in, Laos doesn't have much to export. But it does have plenty of rivers that feed into the mighty Mekong and can produce hydroelectricity for development or export to Thailand and Vietnam.

But environmentalists and other opponents of proposed dams in Laos say the risks are too great. Build them, they counter, and ecological areas will be destroyed, thousands of people displaced, and, given the economic downturn in Thailand, Laos may not even profit.

Nonetheless, the quiet Lao People's Democratic Republic persuaded the World Bank this summer to begin backing the $1.5 billion construction of Nam Theun Two Dam, the largest hydroelectric project in Southeast Asia. The bank agreed to begin an appraisal process and make a final decision in mid-1998.

Global debate on dams

By putting money into a dam in one of the world's poorest countries, the World Bank has revived an international debate on the impact, benefits, and cost of large dams worldwide. The World Bank has been burned by large dam projects in the past. It abandoned a similar project on India's Narmada River in 1993 and, two years later, bowed out of the Arun Dam project in Nepal.

A more cautious World Bank is now "viewing with microscopic precision everything surrounding Nam Theun Two," said Stuart Chape, resident representative of the World Conservation Union, which is advising the government on the project.

What dam is and would do

The proposed dam would be 1,066 feet long and 148 feet high. It would be built on the Nam Theun River and is expected to produce 680 megawatts of power, much of which Thailand has agreed, in principle, to buy. Laos is expected to make about $40 million annually. For this cash-poor nation of 4.6 million whose annual per-capita income is $380, the revenues would mean a way out of its "underdeveloped" status. Laos's rivers and mountains are capable of producing at least 18,000 megawatts of electricity, of which only 2 percent has been developed.

"I am convinced that this dam is the only way we have to build up Laos," said Somsanouk Mixay, editor in chief of Vientiane Times.

But before Nam Theun Two can even begin to explore its potential, Laos and developers must meet the World Bank's nonnegotiable requirements that they tackle resettlement plans, land conservation, environmental impacts, and economic effects.

Such studies are ongoing and discussions regarding them are required by the World Bank to be conducted publicly. However, in Communist-run Laos, domestic criticism is often muted.

Communists invite debate

Still, according to a report by the International Advisory Group, which counsels the bank on the project, the government's concession to the public-participation demand is "groundbreaking."

The advisory group also praised steps taken so far by Laos and developers.

What's been done already

Since 1993, the developers, called the Nam Theun 2 Electricity Consortium (NTEC) comprising five foreign companies and Laos as partners, have spent $30 million in plans addressing social and environmental concerns. The group pledges $30 million more in the next 30 years to protect the 2,485-square-mile water catchment area, a large part of which is a conservation area recognized as rich in biodiversity.

Further, the money would be used to resettle and train the 4,500 people currently living in the area to be flooded.

"Everything that could be done to minimize the negative impacts has been done," says Khithong Vongsay, chairman of the Mekong River Commission, a group overseeing activities in the river area.

"It is not possible to preserve, intact, everything when you develop, but the benefits are so much bigger than the damage."