The Lesotho Highlands Water Project (2003) and
Laos’ Nam Theun 2 Dam (2003 with 2005 updating)
(Unpublished T.Scudder Manuscript)
Introduction
Through 1989 most of my policy-relevant work relating to river basin development had
been as a consultant for either United Nations agencies or the US Agency for
International Development. That year, however, a new opportunity arose to provide
advice to the Lesotho Highlands Development Authority as a member of an independent
panel of experts dealing with environmental and social issues. In 1993 I was asked to join
a similar panel dealing with China’s Longtan dam followed in 1997 by one on Laos’
Nam Theun 2 (NT2) dam. All three panels were World Bank Group requirements for
financial assistance and/or financial guarantees.
Only the Lesotho Highlands Water Project will be assessed in detail. Though the Longtan
panel made its initial visit in 1993 during the planning phase, subsequently World Bank
participation, as well as the panel’s, stopped, with the Government of China relying
thereafter on its own resources. I considered that unfortunate since Longtan had the
potential to benefit project affected people provided good planning was implemented.
Though NT2 construction only began in 2005, the fact that planning is state-of-the-art,
and involves a number of important issues like interbasin transfers, warrants analysis.
Along with Kariba and Mahaweli, the Lesotho Highlands Water Project (LHWP) is one
that I have followed closely over an extended time period, with one or two annual visits
until I resigned from the panel in 2002. 1 Initiated by two pariah governments, South
Africa’s Nationalist Party and a military dictatorship in Lesotho, I considered LHWP to
be controversial and problem-prone. On the other hand, I considered its major goals to be
in the macro-economic interests of both countries. That conclusion was reinforced after
South Africa’s Independence in 1994 at which time the project received the support of
President Mandela and the African National Congress. Though Kader Asmal, the
government’s new Minister of Water Affairs and Forests, opposed the project before
Independence, he supported it throughout his tenure as Minister.
As with Longtan and NT2, my willingness to join expert panels in the Lesotho Highlands
Water Project case was based on two assumptions. The first was that each project had the
potential to help a majority of affected people. The second was that as a member of a
panel I would have more influence than as a consultant. That assumption has proved to be
the case to varying extents. Whether or not the single visit to Longtan has been influential
remains to be seen. Though the Lesotho Panel can point to some achievements in the
environment area, effects on human well being have been disappointing in regard to both
1
I resigned in April 2002 in large part because I suspected that the Panel’s clout, and that of the
World Bank, would be significantly reduced after the completion of the Mohale Dam.
1
the Katse Dam (completed in 1995) and the Mohale Dam (completed in 2002). While the
NT2 Panel can point to positive achievements, construction only began in 2005.
Panels of Independent Experts on Environmental and Social Issues
Unlike long standing dam safety panels composed primarily of engineers and geologists,
panels dealing with environmental and social issues were only pioneered by the World
Bank Group in the late 1980s and then primarily for their more contentious projects, most
of which have continued to involve dams. More recently regional banks such as the Asian
Development Bank have also begun to require them. Through technical assistance grants,
funds are provided to government agencies that select the necessary international
expertise. Though the World Bank must approve those selected, as well as their release,
each panel reports to the government agency that hires it. While those agencies also
provide terms of reference, the panels have the authority to examine whatever other
issues their members may consider relevant. All panel reports are expected to become
public documents once the project authority’s comments have been considered. Rejected
comments should be incorporated within an annex along with the panel’s reasoning.
While the strength of such panels is their independence and the expertise of their
members, they also have major weaknesses. One is the fact that visits to the project area
are limited to one or two a year and are of two, and occasionally three, weeks duration.
The short exposure makes it difficult to follow-up on actions taken on previous
recommendations and to examine results where such recommendations have been acted
upon. Visits invariably are hectic with members working through weekends. During their
in-country stay it is rare for panel members to spend more than three to four days in the
field. The first few days tend to be spent reading reports, making courtesy calls, and
being briefed on what has happened, or not happened, since the previous visit. Following
the field trip, reports must be written before members depart so that the results can be
discussed with the project authorities. That is important not just because members tend to
emphasize other priorities once they leave but also because project authorities themselves
are too busy to pay much attention to reports, even if they wanted to, once panel members
depart.
A panel’s clout is also influenced by its relationship to the funding agency and to how
that agency is involved with the project and the project authorities. While the influence of
the panel and the funding agency can be considerable when they work together, it is
affected by the nature of the funding agency’s financial involvement in the project. With
the Lesotho Highlands Water Project, the World Bank’s loans relate only to the
construction phase. That is worrisome since project impacts on the environment and on
affected people can be expected to continue well after the end of construction. Those
impacts require monitoring so that corrective action can be taken where necessary. But
where loans have been drawn down and project completion reports submitted, it is to be
expected that both the influence of the funder and the panel would be reduced. The
obvious solution would be to complement the funding of infrastructure with funding of a
project’s environmental and social components. To the Bank’s credit a social and
2
environmental component was initiated within the NT2 project area prior to the appraisal
of the main project.
The Lesotho Highlands Water Project
The main purpose of the binational Lesotho Highlands Water Project is to supply high
quality water to South Africa’s Gauteng Province and industrial heartland (focused on
Johannesburg and Pretoria) for industrial, commercial and residential use. Worsened by
a series of severe droughts since the 1981/82 rainy season, water is South Africa’s
scarcest natural resource. 65 percent of the country receives less than 500 mm annually
which is the minimum for rain-fed agriculture. Though South Africa suffers from floods
during periods of intense rainfall, annual evaporation, on the average, is well in excess of
rainfall. Water scarcity is exacerbated by poor aquifers that contribute only about 15
percent of available water supplies (LHDA POE 1995b).
I believed the project could play an important role as a supplier of water critically needed
to ensure South Africa’s stability and development, and that in turn could play an
important role in the stability and development of southern and central Africa. Revenue
from the sale of that water, along with remittances from workers laboring in South
Africa, could be expected to provide Lesotho with its major source of revenue. Deposited
in a trust fund, that revenue is to be used for poverty alleviation and national
development. En route to South Africa the water would also provide a second major
benefit by generating enough electricity to make Lesotho self-sufficient.
Distribution of water to South Africa and generation of electricity for Lesotho were
stipulated as the project’s major goals. During their implementation the project
authorities “shall effect all measures to ensure that members of local communities in the
Kingdom of Lesotho, who will be affected by flooding, construction works, or other
similar Project related causes, will be enabled to maintain a standard of living not inferior
to that obtaining at the time of first disturbance” (1986 LHWP Treaty: 27). As for the
environment, “The Parties agree to take all reasonable measures to ensure that the
implementation, operation and maintenance of the Project are compatible with the
protection of the existing quality of the environment” (ibid: 71). That wording was
compatible with existing World Bank Guidelines. Though I did not realize it at the time,
arguments (discussed in detail in the paragraphs that follow) over how to maintain living
standards and the existing quality of the environment have continued to threaten the
achievement of even those minimal goals.
The Project
As approved in 1986, the Lesotho Highlands Water Project was to be a thirty-year
scheme for exporting surplus Lesotho water 2 to water-scarce South Africa. Five large
dams were to be built during three project phases. During Phase 1A the 182 meter high
2
On completion Phase 1would divert to South Africa approximately 25 percent of the water in the
Lesotho portion of the Senqu-Orange river system that is the largest in Southern Africa south of the
Zambezi.
3
Katse Dam would be built from which 16.8 cubic meters per second (m³/s) of water
would be diverted through a 48 kilometer tunnel and hydropower plant that would
generate 72 megawatts for distribution within Lesotho. Water emerging from the plant
would be channeled into a reservoir backed up behind the second dam – the 55 meter
high ‘Muela dam from which water would be delivered through a 16 kilometer delivery
tunnel to South Africa’s Ash River and on to Gauteng Province. Total costs were
estimated at US $2.4 billion including a $110 million World Bank loan. Katse was
completed during 1995, with its reservoir filling during the 1995/96 rainy season. The
first water was transferred to South Africa in January 1998 with the first electricity
distributed later that year.
During Phase 1B the 145 meter high Mohale Dam was built with reservoir water
delivered to the Katse reservoir through a 32 kilometer tunnel designed to carry 9.6m³/s.
A further 2.2m³/s would be diverted into the Katse reservoir via a 5.6 kilometer tunnel
drawing water from a small reservoir backed up behind a 15 meter high weir at Matsoku.
Total costs were estimated at $1.124 billion including a $45 million World Bank loan.
Construction on Mohale began in March 1998 with dam closure in October 2002.
Due to reduced water demand in South Africa, the second and third phases have been
postponed indefinitely. If initiated, Phase 2 will focus on the construction of the Mashai
Dam on the Senqu River from whose reservoir water would be pumped up into the Katse
reservoir. Phase 3 would involve construction of the Tsoelike Dam below Mashai with
water pumped into the Mashai Reservoir. No estimates exist as to the number of people
who would require physical relocation if all three phases were completed, but the total
population affected by Phase 1 approaches 200,000. Of these about three-fourths are
residents of downstream communities affected by radically reduced Senqu River flows.
Another 30,000 villagers in reservoir catchment basins, though not requiring physical
removal, would be adversely affected by loss of winter grazing as well as loss of
thatching grass, fuelwood, medicinal plants and other common property resources.
Phase 1A affected 133 villages in the Katse and ‘Muela local catchments of which 121
were in the Katse area. Because ‘Muela project works required no physical removal with
less than 100 households losing arable land, and because of the scattered nature of the
hundreds of households that lost fields to, or had to move back from, project roads and
transmission lines, the emphasis in this chapter will be on the Katse and Mohale Dams.
3,357 households, averaging between five and six members, lived within the main Katse
impact areas. Approximately one-third lost some arable land to the project with
approximately 10 percent losing all their fields. Loss of at least 3,000 hectares of grazing
and other common property resources affected approximately 90 percent. Though the
large majority of households were poor according to any standard, some were more
vulnerable than others. 13 percent, for example, owned no fields, being dependent on
share cropping or loan of arable land, while 20 percent owned no livestock. The
proportion of female-headed households was approximately 30 percent, with those
headed by elderly widows being especially vulnerable.
4
In the main Mohale impact area an estimated 700 households in 84 villages will lose
about 725 hectares of arable land, with the Project reducing grazing land, including the
most valuable winter grazing, by approximately 1,635 hectares. Katse reservoir filling
involved the resettlement of 73 households, while physical removal due to Mohale
project works and reservoir filling can be expected to involve up to 400 households.
South Africa as the main beneficiary must pay for most project costs aside from the
‘Muela hydropower plant and associated transmission lines and any costs to improve, as
opposed to restore, the living standards of affected households. South African costs also
include the range of social and environmental impacts caused by water transfer.
Project planning and implementation required a complex organizational structure. In
Lesotho the responsible agency created under the treaty was the Lesotho Highlands
Development Authority (LHDA), while in South Africa the responsible agency was the
Trans-Caledon Tunnel Authority. Both reported to the binational Joint Permanent
Technical Commission (the Commission) that included three delegates from each nation
as well as alternates, a joint secretary, and separate secretariats based in Maseru, the
capital of Lesotho. As stipulated in the 1986 Treaty, both Authorities were required to
obtain the approval of the Commission for, among other items, budgets (including
allocation of costs between the two countries), design of project infrastructure and all
tendering procedures, implementation plans for each phase, annual and short term
operational and maintenance plans, and appointment of staff, auditors, consultants,
contractors and other senior personnel (including members of the World Bank-required
Dam Safety and Environmental Panels)
In 2000 the Commission was reorganized, though keeping essentially the same personnel,
as the Lesotho Highlands Water Commission. Reorganization followed from an
organizational study that was contracted to advise on the project’s gradual shift from a
constuction to a operations and maintenance mode of activity. Hence forward the
Commission was also supposed to be more policy-oriented as opposed to its previous
tendency to micro-manage certain LHDA planning and implementation activities, and
especially those of the Environment and Social Services Group (ESSG).
Lesotho National Setting
Lesotho, a small country about the size of Maryland in the United States, is surrounded
by South Africa. The terrain is mountainous with more than 80 percent above 1,800
meters. There are, however, three agro-ecological zones: the lowlands along the western
border with South Africa, the foothills and the mountains. During the winter months
several feet of snow may accumulate in the highlands that are Lesotho’s most
characteristic feature and which reach a high point of 3,482 meters. Pasture dominates
about two-thirds of the Lesotho landscape with arable land approximately ten percent and
restricted primarily to the lowlands.
Over 95 percent of a population of 2.2 million belong to a single ethnic group – the
predominantly rural Bantu-speaking Basotho who increasingly are moving to the urban
5
centers and peri-urban areas of the lowlands. Livelihoods in the rural areas affected by
the Lesotho Highlands Water Project are multi-stranded, with households combining
agricultural and herding strategies with wage labor. Though the role of agriculture is
declining, with few households growing enough to meet their annual needs, agriculture is
still important. So too is livestock management, but there also household reliance on their
animals has been reduced by “a rapid increase in stock theft…The result is that the
poorest of the rural households lose their insurance policy in animals” (Sechaba
Consultants 2000: 28). The third major component of the household economy, wage
labor, is also in decline because of South Africa’s gradual replacement of Lesotho’s
workers in the mines and elsewhere in the economy with South African labor.
Though Lesotho has been able so far to avoid the large peri-urban shanty towns that
surround other Southern and Central African countries, poverty has been increasing since
1990 with 68 percent of the population defined as poor in 2000 and two-thirds of the poor
living in destitution “with barely enough cash income to satisfy basic food needs” (ibid:
3). Basotho formerly lived primarily in what became the Orange Free State from which
they were pushed into Lesotho’s lower elevations by European settlers and military
forces. Initially they cultivated the lowlands and grazed their cattle during the summer
months in the highlands where the Katse and Mohale dams were to be built. But as the
population increased, some villagers began to live throughout the year in the mountains
until all the best alluvial deposits in the upper catchments of the Senqu/Orange River
system were being utilized. With the arrival of the Highlands Water Project in the 1980s,
the population living in the Katse and Mohale catchments, as elsewhere in the mountains,
was the poorest in the country (ibid), while such social services as schools and clinics
were the least developed. By national standards, out-migration was high with the
constituency including the Mohale Dam site having the highest out-migration rate in the
country in 1990.
Ongoing political turmoil since shortly after independence in 1966 has been partially
responsible for increasing national poverty along with major changes in the South
African economy that have reduced employment opportunities for migrant laborers.
Under such circumstances, a legitimate question is whether or not this small country,
which also is one of the 50 poorest in the world, has the institutional capacity to plan,
implement and maintain the social and environmental components of one of the five
largest infrastructure projects currently under construction in the world. Such doubts
concerning institutional capacity partially explain the micro-management approach of the
Commission.
Feasibility Studies
Feasibility studies were completed during the 1983-1985 period with funding from the
European Development Fund. They seriously underestimated the population that would
require resettlement. Over 3,000 people were to be eventually relocated in connection
with Phase 1 alone; the consultants’ estimate was only 495 while their estimate for all
three phases was only 1,365 individuals. A major underestimate was of the number of
households to be affected by such advanced infrastructure as project works, transmission
6
lines and roads. The Panel noted such discrepancies during its first visit to Lesotho in
1989.
The feasibility studies also seriously underestimated environmental impacts with the
project authority subsequently concluding that “there were no major environmental
obstacles to the implementation of the project” (LHDA May 1990: iii). That presumably
was a major reason why no Environmental Impact Assessment was completed – a fact
which NGOs criticized at a later date. Though my responsibility on the Panel related to
resettlement issues, my notes during the Panel’s initial 1989 visit also showed concern
about possible adverse impacts of reduced downstream flows on communities below the
Katse Dam. William Taylor, LHDA’s environmental adviser, who had formerly been the
Project Manager, International, for the UNDP/FAO/Ghanaian Lake Volta Research
Project, had similar concerns.
My concern was reduced by the feasibility study that minimized adverse impacts, noting,
for example, incoming tributaries below the Katse Dam and little downstream irrigation,
and other local use, within Lesotho. It was also influenced by the belief of knowledgeable
in-country experts, with no involvement in the project, that there was little dependence of
downstream communities on existing flows. I should have known better than to trust such
assurances having published during the 1980s two articles drawing attention to the
adverse impacts of large dams on downstream populations. When the necessary instream
flow requirement study was finally available in 2000, an estimated 152,000 villagers
were said to be adversely affected to varying degrees by Treaty stipulated releases
(METSI 2000). Increasing downstream flows significantly to decrease those costs, on the
other hand, would have reduced the financial viability of the project.
The Panel of Experts
In 1988 my colleague, Jonathan Jenness, and fellow graduate student in the 1950s at
Harvard University, recommended me as a candidate for the Highland Water Project’s
Panel of Experts on environmental and social issues (hereafter referred to as the Panel).
At the time he was the UNDP-supplied rural development adviser to what became the
Environment and Social Services Group (ESSG) of the Lesotho Highlands Development
Authority. In addition to myself, the other panel members selected were Guillermo Cano,
former Minister of Water Affairs in Argentina, and Charles Clay, an engineer, who had
recently retired as the Coordinator within FAO’s Department of Fisheries of the various
UNDP/FAO African man-made lakes research projects. Cano, a lawyer, had already
played a role as adviser on the institutional and legal structure of the Lesotho Highlands
Development Authority. We arrived in Maseru in January 1989. The next year the Panel
was reconstituted with Cano and Clay replaced by two specialists with more extensive
Southern African experience. One was John Ledger, chair of South Africa’s Endangered
Wildlife Fund. The other was Robert Hitchcock from the faculty of Anthropology at the
University of Nebraska. Along with Mike Mentis, a South African ecologist added to the
7
Panel in 1996, the four of us continued to constitute the Panel’s core, with other experts
periodically recruited to work with us as panel members, 3 until my resignation.
Because of South Africa’s UN-imposed sanctions and Lesotho’s military coup, both
countries were out of touch with the content of recent international covenants. As a result,
during the Panel’s first visit it was necessary to familiarize the project authorities with the
1987 report of the Brundtland Commission on Sustainable Development and the 1992
Rio Declaration on Environment and Development as well as recent World Bank
guidelines on environmental and resettlement issues. Assistance with planning and
budgeting was also emphasized during that year and the next. By 1991 and 1992, concern
had shifted to the delayed budgeting and implementation of development activities
necessary for restoring living standards. Thereafter the Panel dealt increasingly with
Phase 1A implementation.
Incorporating lessons learned from the Katse experience, Phase 1B planning was added
to the Panel’s responsibilities in 1992, followed by the implementation of those plans.
With inadequate time to familiarize itself with the Mohale project during 1992, the Panel
recommended two visits a year thereafter that has usually been the case. In addition to
evaluating planning and implementation activities dealing with the Katse, ‘Muela and
Mohale components, the Panel also advised on the planning of additional studies dealing
with such topics as reservoir zoning, catchment management, downstream environmental
flows, and natural reserves and tourism.
To me the Panel’s effectiveness has been disappointing to date especially in comparison
with that of the Panel on Laos’ NT2 Project. Part of the reason is due to the Panel’s
appointment after the completion of mid-1980s feasibility studies. Unlike their attitude
toward the Dam Safety Panel of engineering experts, the project authorities have been
ambivalent toward the Panel. For the first five years, for example, panel member
contracts were on an annual basis while those of the panel of engineers were multi-year.
Longer contracts were essential for a variety of reasons, including ability to set dates for
the next year’s visit. Through 1995 Panel members received notice of forthcoming visits
with only a three month lead time at best with the result that only two panel members
were able to participate on the two 1995 visits.
Another reason for the Panel being less effective than it might have been relates to
ESSG’s failure to forward relevant documents to members between visits in spite of
constant requests. That deficiency contrasts with the Panel’s relationship with the World
Bank, with the Bank forwarding to the Panel the reports of its various supervisory
missions.
Regardless of the reasons, the Panel’s recommendations dealing with broader
management issues and the need for a planning culture within the project authorities and
the Government of Lesotho have had little influence. What influence that the Panel has
had relates to helping the project authorities take more seriously the need for including
3
While the Panel is supposed to include a public health expert, there have been periodic vacancies
over the years with the position re-advertised in 2001 and finally filled in 2003.
8
and funding a range of development activities if treaty obligations to restore living
standards are to be met. As a result, perhaps the Panel’s greatest social accomplishment is
that affected households, if not able to restore their living standards, are at least less poor
than they otherwise would have been.
At the planning level the Panel has definitely had an impact on individual studies. One
example is the 1997-1999 Katse-Mohale-Matsuko instream flow requirement study
where the Panel was able to convince the project authorities and the consultants to
expand the study to include how use by communities and their livestock of downstream
resources could be altered by reduced flows. The resulting study was not only state of the
art but also pioneered a broadening of the methodology for dealing with environmental
flows.
The Katse Dam
Introduction
From the Panel’s origin, it was clear to me that even restoring the living standards of a
majority of people to be affected by the Katse Dam was going to be very difficult. Three
reasons that immediately suggested themselves were the scarcity of arable land and
grazing to replace gardens, fields and pastures taken by the project, the policy emphasis
on compensation as opposed to development, and the insistence of local chiefs that all
resettlement must be within the Katse local catchment. Subsequently the positions taken
by the members of the Commission, and their efforts to micro-manage planning and
implementation relating to environmental and social issues became a fourth major
constraint. Implementation capacity within LHDA and associated Lesotho government
and other agencies became a fifth.
Initial Constraints: Land Scarcity in the Katse Basin and Overemphasis on
Compensation
The best arable land was the riverine alluvium that would be inundated by the Katse
reservoir. The best winter grazing was also within the reservoir basin which provided in
addition important shelter to livestock during the coldest months of the year when
freezing weather, strong winds, and periodic deep snow created inhospitable conditions
in the upland pastures. Because it was assumed that no replacement land was available,
those losing fields and household gardens were to receive either cash compensation or a
grain ration (to which other foods were subsequently added) during a fifteen-year period
after which it was assumed that people would have found other livelihood options. Lost
communal grazing was to be replaced by a fodder ration for five years, with the overall
loss of common property to communities to be compensated in cash.
Though evolving as experience was gained, a limited compensation approach has
continued to the present. Its origin dates back to the enabling act establishing the Lesotho
Highlands Development Authority that included no mention of the type of development
activities that are necessary if living standards are to be restored. As for the
9
“memorandum on compensation policy” that I was shown in January 1989, the words
“poor, poor, poor” in my notebook summed up my reactions. The only good aspect that I
noted was that the Government of Lesotho “should make an explicit longterm policy
commitment to devote a major portion of its revenues from the sale of water … to the
welfare and economic development of the communities affected by the project” (LHDA
April 1988). At the insistence of the World Bank such a fund subsequently was
established though its focus was to be on poverty alleviation at the national level.
Reliable mechanisms to ensure that the revenue is, in fact, used for the stipulated
purposes remain to be achieved.
In regard to the third constraint, it was understandable that chiefs did not wish to lose
followers. At the same time, their insistence that people remain within current
jurisdictions may also have been influenced by the global preference of resettlers to
remain as close as possible to their former homes and to neighbors not required to move.
Honoring those preferences in the Lesotho case, however, meant keeping people in an
area in which reduced natural resources would not only make it difficult, and in some
cases impossible, for households to continue customary activities, but would also reduce
the availability of remaining common property resources, grazing in particular, for the
host population.
Not withstanding these three constraints, I remained hopeful that a majority of affected
people within the Katse catchment, as well as those affected by such other project works
as roads and ‘Muela, might benefit from the project. Not only did the Environment and
Social Services Group have some experienced officials and advisers, but its organization
included rural and regional development as well as compensation. At the time of the first
Panel visit in 1989 fifteen rural development activities had already been identified for
study by consultants. In addition to infrastructure development dealing with feeder roads,
rural electrification, village water supplies and sanitation, and construction communities,
the activities proposed included land use planning with the people, animal husbandry and
range management, mountain horticulture, community forestry, and reservoir fishery.
The intent of the range management approach was to divide the Katse local basin into a
number of range management associations run by clusters of villages. Mountain
horticulture was to include crop components dealing with mountain maize and seed
potatoes, fruit trees, and small scale irrigation based on gravity flow from mountain
springs. Plans also called for a rural training center that would prepare highland residents
for relevant non-farm jobs during the project’s construction and development phases.
The Lesotho Highlands Water Commission
The Commission as a Constraint
The Commission became a constraint on developing the project in the interests of
affected people for a number of reasons. One was organizational. As stipulated in the
treaty, the Lesotho Highlands Water Project was clearly identified as a water transfer
project. On the other hand, the model proposed for the Lesotho Highlands Development
10
Authority had been the Tennessee Valley Authority. In a 1984 paper M.E. Sole, 4 who
subsequently became the first LHDA Chief Executive, had proposed that the Authority
should be a regional development agency rather than one merely concerned with water
transfer and electricity generation. Though financing implementation would require
major assistance from international donors, he and other high officials in the Government
wanted affected people to become project beneficiaries. That was fine as far as the South
African members of the Commission were concerned so long as funding such
improvement remained strictly a Lesotho obligation.
The composition of the Commission created another problem. Dominated by engineers,
the Commission’s members were primarily concerned with achieving the project’s two
principal goals on time and without major cost overruns. Due to their engineering
mindset, time and again environment and social issues were either ignored or
misunderstood. The first draft of the terms of reference for the Organization and
Manpower Study dealt entirely with how to convert the Highlands Development
Authority from an initial emphasis on the construction of water transfer infrastructure to
its operation and maintenance. How to address ongoing environmental issues and
responsibilities to restore the living standards of affected people after the termination of
the construction phase was ignored, as were the organizational needs of the Environment
and Social Services Group. It was the Panel that insisted that those needs be addressed
and that the personnel on the study include environmental and social scientists.
Where environment and social issues arose, the Commission’s tendency was to view
them as engineering problems that could be solved by sticking to predetermined
blueprints and budgets. Not realizing, for example, that household formation was a
process whereby numbers changed through time and could be expected to increase
through marriage and fission, members found it difficult to understand why estimates of
numbers of resettling households increased from year to year, while preferences as to
where to resettle changed. With their views shared to a certain extent by expatriate
members of the Lesotho delegation, as well as expatriate engineers within the Lesotho
Highlands Development Authority, the South African delegation also appeared to be
primarily interested in the timely physical removal of local villagers from the reservoir
basins and associated project works rather than in their rehabilitation. I vividly recall one
occasion where one of the South African delegation’s senior advisers and I got into a
shouting match during a wrap up meeting because of my insistence that World Bank
guidelines, with which he and the Commission were unfamiliar and which included not
just physical removal but the rehabilitation of all project affected people, must be
followed.
Compensation versus Development for Meeting Treaty Goals
The biggest problem that the Panel had with the Commission concerned the extent to
which compensation alone would suffice to restore living standards as required by the
4
Sole was convicted later of taking bribes and sentenced to 15 years in prison. Subsequently two
major firms – Canada’s ACRES International and Germany’s Lahmeyer International – were convicted by
the Lesotho judiciary of giving bribes. Trials of other firms continue.
11
1986 Treaty. Jenness and his colleagues in rural development and regional planning
insisted that both compensation and rural development initiatives were essential if the
Treaty requirements were to be met. In that position they were strongly backed by the
Panel. Even though all environmental, resettlement and rehabilitation costs at that time
came to less than five percent of project costs, the South African delegation initially
rejected the position that South Africa had any responsibility for financing part of
LHDA’s Rural Development Plan.
The South African delegation claimed that compensation alone would be sufficient to
meet their obligations under the Treaty. ESSG’s rural development initiatives, their
members claimed, were designed to improve the living standards of affected people and
hence their financing should be the responsibility of the Government of Lesotho. They
also claimed that certain overall project benefits, such as an improved road system into
the Highlands, should be valued as a household restoration benefit, with their cost
subtracted from the compensation budget that South Africa was required to finance. They
also hired consultants whose terms of reference included careful scrutiny, and cost
reduction wherever possible, of all resettlement and rehabilitation activities. That
included trying to reduce the amount of grain offered to households losing productive
land, even though that compensation package initially was inadequate because it did not
include other important dietary components that households received from their fields
and gardens.
Since the Lesotho authorities did want affected people to become project beneficiaries,
confusion existed over the extent to which rural development activities were necessary
for restoring living standards. That confusion, in my opinion, made it easier for the South
African delegation to dominate policy in ways that seriously disadvantaged affected
people.
Disagreements that adversely affected the planning, budgeting and implementation of
essential development activities for meeting Treaty obligations began before the first
Panel visit, when the South African delegation rejected funding any of the 15 rural
development planning studies. In hopes of changing that attitude, Panel reports starting in
1989 have regularly explained why restoration of living standards requires both
compensation and development. The 1989 report, for example, emphasized that policies
which merely attempt to restore living standards at the time of first disturbance, in fact
“tend to leave the majority of the population worse off in the short run (three to five
years) and a significant proportion (which may continue to be a majority) worse off in the
long run.” The report then noted “the tendency to underestimate the complexity of the
compensation and rural development components” as well as “the ‘Grey Area’ between
compensation and development” that referred to the rehabilitation process “whereby
impacted people regain their previous living standard and income at the earliest possible
time…It is very difficult to define where compensation costs stop and development costs
should begin. Rarely do compensation costs cover rehabilitation. They certainly do not in
the LHWP” where the ‘Grey Area’ became a major source of contention between the two
delegations. That was because “The Republic of South Africa wishes to keep project
12
costs, including compensation costs, as small as possible, while the Government of
Lesotho would like to pass on additional costs wherever possible” (ibid).
Panel reports in 1990 and 1991 sounded a much stronger alarm. According to the 1990
report the “Commission …, the Government of Lesotho and the World Bank must all
share responsibility for the unsatisfactory start of the compensation and rural
development programs. Bearing in mind the proportionately low costs (relative to project
costs) of implementing satisfactory environment, compensation and rural development
programs, and the unfavorable international public relations impacts that can be expected
to follow implementation of unsatisfactory programs, the attempts by the South African
delegation and their consultants to reduce, and in some cases eliminate, what are
legitimate Republic of South Africa … water transfer costs relating to rehabilitation of
the catchment populations, are unacceptable in terms of the World Bank Guidelines but
also the LHWP treaty.”
Commission and Panel Relationships
Relationships Deteriorate: 1991
In 1991 the Panel stated that “…unnecessary delays have stalled implementation of
various RDP projects for more than a year…delays in implementing such components …
as Rural Sanitation, Village Water Supply, and Construction Communities have actually
caused worsening living conditions in certain villages.” Though such delays were
attributed to both LHDA and the Commission, the Panel concluded “that protracted
arguments within the JPTC [the Commission] 5 over what is compensation and what is
rural development have not only been non-productive but also counter-productive
because of resulting delays in approval, assignment of financial responsibility, and,
especially, initiation of implementation.” The Panel also referred to “unwarranted
interference, pressure and criticism from individuals and other divisions within LHDA,
and from within the Commission, upon the Environment Division” which were having an
adverse effect on morale.
Less than a month after receiving the Panel’s August 1991 report both delegations of the
Commission asked LHDA to withdraw and repudiate it. The argument given was that
“The report clearly demonstrates that the panel was inadequately and wrongly briefed,
resulting in unwarranted negative and untrue statements about the Commission” (JPTC
1991). Early in 1992 Panel members also received a letter from the Commission’s
Secretariat “to put on record that the Commission takes the strongest exception to
the…Panel’s unwarranted criticism of and derogatory comments aimed at the
Commission” and that “The Commission dissociates itself from the report, and has
requested the LHDA to follow suit” (JPTC 1992). By then, however, LHDA had
essentially refused to withdraw the report, requesting instead that the Commission work
closely with the Authority in implementing Panel recommendations.
5
The original name of the Commission will continue to be used where it occurs within quotations
from references.
13
As the Panel’s senior member and the member responsible for rehabilitation issues (for
Hitchcock’s terms of reference related to compensation and cultural heritage), I felt a
personal responsibility to clarify to the Commission what I referred to “as
misunderstandings.” The main misunderstanding concerned the Commission’s belief that
the Panel was merely a pawn of LHDA with no capacity to reach its own conclusions.
That I rejected, pointing out that the Panel’s assessment was based not on a single visit
but on an ongoing series of visits which provided ample opportunity for the Panel to form
its own independent views. I also noted that in addressing our obligation to monitor how
the project authorities were following Treaty obligations and World Bank Guidelines, the
panel had not singled out just the Commission for criticism but had also included
LHDA’s environment section, LHDA itself and the World Bank.
One benefit of this dispute was to bring the Panel’s concerns to the attention of senior
officials within the World Bank. Though fortuitous, the timing was good since the Bank
was still in the process of appraising the Phase 1B project for possible funding. While
LHDA was obligated to send Panel Reports to the Bank, the Panel had yet to meet the
Bank’s Task Manager responsible for the Highlands Water Project nor had the Panel ever
received any comments from the Bank. When I replied to the Commission, I sent, with a
covering letter, my letter and the various Commission memos to the Bank’s Senior
Sociologist (Michael Cernea), Environmental Adviser (Robert Goodland), and Chief,
Infrastructure Operations, Southern Africa Department (Isaac Sam). In his April 1992
reply to me, Isaac Sam wrote “I can assure you that the Bank fully shares the Panel’s
concerns regarding the slow implementation of the Environmental Action Plan for this
project. To underline our position, I am planning to make a personal visit to Lesotho in
the next month to discuss these matters with LHDA management. We are also keeping
this issue alive in our country dialogue with both parties to the JPTC.”
Relationships Improve: 1992 - 1994
The 1990-1991 period was the low point in the relationship between the Commission and
the Panel. During that period, the Commission appointed its own Environmental
Advisory Committee 6. Though more critical of Lesotho incapacity (with lack of Lesotho
Government funding singled out for special criticism in the Draft Minutes of their
October 1992 meeting), their reports tended to support the Panel’s broader concerns such
as affected people in Phase 1A becoming worse off as a result of the incapacity of the
project authorities to get on with implementation of the rural development program.
Panel relationships improved with the Commission during 1992. According to the
Lesotho delegation the Panel had played an important role in helping the Commission
understand the importance of the rural development component of the resettlement
process, the delayed implementation of which was now worrying both sides. A major
step forward was the 1992 appointment of Wynand Maartins as alternate delegate to the
South African delegation with special responsibility for environment, resettlement and
rehabilitation issues. Maartins, an engineer, was a quick learner with whom Panel
6
The Commission’s Environmental Advisory Panel met only a limited number of time before it
was phased out.
14
members developed a warm relationship. He attended appropriate ESSG meetings and
encouraged ESSG to work closely with the Commission.
In the meantime Panel reports continued to criticize slow implementation of the
necessary rural development components. The 1992 report noted that “Expected
implementation has now fallen two to three years behind schedule,” with the 1993 Report
referring to a three year delay in implementing most components. Such delays in the
ability of the project authorities to deliver on “promises” were responsible, according to
the Panel, for deteriorating relationships with affected people.
In April 1995 the Panel reported “Once again the Panel must reiterate its view that even
with implementation of the Rural Development Plan, it will not be easy to meet the
requirements of the LHWP Treaty and LHDA Order. Each potential development option
that is ignored, and especially options that deal with arable land, significantly increases
the chances of failure.” The same point was reiterated in June 1996:“Implementation of
the Rural Development Plan has been deficient to date in terms of LHDA and
Commission responsibilities under the 1986 LHDA Order. This is especially true in
regard to restoring the living standards of villages, households and individuals more
adversely affected by LHWP implementation.”
What influence, if any, the Panel had on the Commission during the 1989 – 1994 period
is difficult to pinpoint. Ironically, in the 1991 report to which the Commission objected
the Panel had praised the South African Delegation for finally agreeing to fund half of the
rural development program. Although still critical of delaying arguments within the
Commission as to which government would fund which component and for how much,
thereafter the Panel was more critical of the Government of Lesotho’s delays in funding
their portion of the program. A major shift in the Commission’s attitude toward the Panel
occurred during and following the April and December 1995 missions. At that time the
dam was scheduled to be closed in October. New housing for some of the 25 households
living in the reservoir basin, however, had yet to be completed.
Commission, Panel and NGO Relationships: 1995
Arguing that the likelihood of people being flooded out during the 1995/96 rainy season
was slight, the project authorities requested permission from the World Bank to seal the
dam on schedule so that a full year’s rainy season inflow would not be lost. The Bank,
strongly backed by the Panel, refused: the dam was not to be closed until the
replacement houses for all basin residents had been completed and occupied. With the
requested closure date only six months away, that was the situation at the time of the
Panel’s April 1995 visit during which the Panel played a major role in working out a
possible solution. That involved greater participation of Katse villagers in the
construction of at least some of their houses. The situation was still lamentable since
what was being belatedly achieved was merely the physical removal of affected villages
without the necessary social services and development to restore living standards. It was
a situation which the Panel later insisted should not be repeated during resettlement and
rehabilitation associated with Phase 1B.
15
In the meanwhile local and international NGOs in Lesotho, Europe, South Africa and the
United States had requested the World Bank not to proceed with Phase 1B 7 because of
the Project’s unsatisfactory record with the resettlement and rehabilitation of Phase 1A
households. Referring to local complaints, as well as quoting criticism from Panel
reports, the International Rivers Network (IRN) and Environmental Defense (ED), in a
September 28, 1995 letter to the World Bank’s Vice President for the Africa Region, also
requested that the legitimate concerns of affected villagers be “rectified before
impoundment commences.” They ended by stating that “there is an urgent need to halt
the LHWP until an independent and cumulative assessment of environmental, social and
economic, and technical aspects of the project is brought into compliance with World
Bank policies.”
I received my copy of the IRN-ED letter shortly after arrival in Lesotho in early October.
Though the project authorities had claimed that the necessary houses had been
completed, the World Bank insisted on inspecting them before allowing closure to occur.
The Bank also wanted an inspection team to include local NGO and Panel
representatives, with John Ledger and me representing the Panel. In the field all 25
houses were inspected (I personally visited 24) and proclaimed adequate. The dam was
closed on October 20th with the reservoir filling in one year owing to heavy rains.
I was very concerned by the content of the IRN-ED letter. While such an assessment was
unlikely to add to existing knowledge about the project’s strengths and weaknesses, it
would cause long delays in implementation at the expense of South Africa’s water needs.
On the other hand, I agreed with most of the letter’s critique that had been taken from
Panel reports as well as from legitimate complaints from Phase 1A villagers and the most
active local NGO which was the Highlands Church Action Group. During an earlier
Panel visit I had sought out local NGOs, including helping the Highland Church Action
Group get financial support, and had urged closer cooperation between the project
authorities and the NGO community that was belatedly institutionalized in 1999.
Especially helpful during those years had been John Gay who was helping Lesotho’s
Transformation Resource Centre become a coordinator of the work of local NGOs in the
Project area as well as throughout Lesotho. Because I valued their ability to influence
project outcomes, I had also established contact with the key people in ED and IRN,
sending them copies of Panel reports once they became public documents.
On getting the IRN-ED letter I immediately telephoned John Gay at his Maseru home to
obtain his opinion and to request that the two of us email EDF and IRN explaining why
their request to reassess the project was a mistake. Gay also knew the letter writers,
having been visited by them during their trips to Lesotho. The email that he sent warrants
detailed quotation because of the skill in which the issues were presented as they relate to
large projects like LHWP as well as to NGO involvement.
7
The Panel had recommended that the World Bank proceed with Phase 1B in its August 1994
report.
16
“I am writing you at the urgent behest of Ted Scudder, with whom I just completed a 40minute telephone conversation. He is, as I am, still unhappy about the slow pace of
response to the social and economic problems of the people. He is unhappy that it seems
to require continual pressure from outside the country to get LHDA to move. That,
however, is not Ted’s present concern. He feels that you have moved from a position like
his and mine to a position which says, in effect, ‘Kill the whole project.’ He feels,
furthermore, that you have gone against what he felt was a community of concern
between you, EDF, IRN, himself, and others of us, to support what is basically a sound
and helpful project by ensuring that it keeps its promises to people who are being
adversely affected.”
“Why is the project sound? In our view, the big issue is the economic stability and
viability and vitality of the South African economy. If the present experiment (and it is
still very much an experiment) of the new South Africa to create a living multi-cultural,
multi-racial political economy in the midst of an ailing African continent were to fail,
then Africa stands little chance of coming back to its pre-independence or even precolonial economic and political health. Success in South Africa is critical to success in
the neighboring economies.”
Asking how the preceding relates to the Project, Gay commented on the role that water
must play in a developing South African economy: “Ted and I see water as one of the
keys to success of the great South African experiment, and we see the LHDA as a critical
element in that success… (I)t does not help to take what I call the ‘little Lesotho’
position, in which all that matters is the situation in the mountains of Lesotho. There is an
old tradition in Lesotho which looks inward rather than outward, a tradition which tries to
ignore the economic and political realities of the larger southern African region. I fear
that some of the advice that you are getting relates to the ‘little Lesotho’ tradition. It
certainly does not represent a national consensus.”
John Gay’s words sum up, I believe, the essential weakness of the stand of NGOs against
all large projects. In the Panel’s report on its October visit, Ledger and I also included a
similar section on “LHWP in the Context of Southern African Development” in which
we quoted President Mandela as stating that “The modern economy of this country could
not have grown to what it is today without its large dams…We rely largely on surface
water, requiring storage for river flow regulation” (1994).
Capacity Issues
Capacity issues relate to the Panel as well as to the project authorities and the
governments of South Africa and Lesotho. In regard to my own participation, it is one
thing, as a scholar, to document the adverse impacts of development-induced resettlement
and to produce an analysis that shows that a majority of affected people can become
beneficiaries if appropriate opportunities are available. It is another thing to translate that
knowledge into appropriate plans and to have the influence to help ensure that those plans
are implemented, appropriately monitored, and modified where necessary. More
specifically, I failed to apply my knowledge that downstream impacts can be assumed to
17
be negative for affected people in late industrializing countries to the Lesotho case. In
1989 I should have emphasized the necessity for downstream studies. In that regard,
Guilliermo Cano was more alert than I when he wrote that “the environmental rights of
the Basotho living downstream and outside the LHWP Project area must also be
protected by law and by internal rules of LHDA.” In was not until 1996 that a Panel
report emphasized the urgent need for commissioning an instream flow requirement
study relating to both Phase 1A and 1B, and even then the Panel’s initial emphasis was
on ecosystems rather than on both ecosystems and downstream affected communities
along with their livestock.
Part of the problem in 1989 was that each of us wrote separate report sections under our
respective names so that the type of synergism that began with the writing of joint reports
in 1992 was weak. As for the Government of South Africa, inadequate capacity within
the lead LHWP ministry (the Ministry of Water Affairs and Forestry) to deal with
environment and social issues has been an ongoing problem. Another issue about which I
feel strongly has been the failure of that ministry and other government agencies to
address how LHWP water can be best used in South Africa for employment generation in
a country with one of the highest unemployment rates in the world.
The Lesotho Highlands Development Authority and the Government of Lesotho have so
little capacity that they may well be incapable of dealing with environmental issues and
the resettlement and rehabilitation process. Institutional issues may be partly responsible.
Back in the mid-1980s both Sole and Cano recommended that LHDA should have been
placed within the Office of the Prime Minister to whom its board would report directly.
That was a recommendation that Cano repeated during our 1989 visit when he
emphasized that LHDA should be placed directly under the Chairman of the Council of
Ministers and it is one that my own research supports. Where a single development
project dwarfs all others within a country and has major regional development potential,
it needs this kind of supervision.
Rather than accepting the Sole-Cano recommendation, LHDA was placed under the
Minister of Natural Resources. Regardless of the Minister’s competence, such an
organizational structure can be predicted to have major liabilities simply because one
ministry does not have the clout or the resources to ensure the cooperation of other
ministries. When a task force of permanent secretaries from relevant ministries was
established in 1992, it was unable to provide the necessary government support because it
met infrequently and had no secretariat to keep busy members well informed. Its
effectiveness was further diminished by inter-ministerial jealousies due partly to LHDA
using higher salaries and the project’s visibility to hire away staff from other government
agencies. In the Environment and Social Services Group, for example, three senior staff
had been hired away from the Ministry of Agriculture.
Another serious problem has been ongoing political instability arising from internal
political differences. The 1986 LHWP Treaty and LHDA Order were signed following a
military coup in January with no effort made by the government “to allow the public to
debate the merits of the massive project and thus gain its support and good will” (Gill
18
1993: 240-41). Though electoral politics were restored with the 1993 election, political
crises have continued “that virtually paralysed Government at critical times…Well-laid
plans for development were undermined as struggles for political survival took
precedence.” This culminated during 1998 in “rioting and looting that seriously damaged
the economy” (Sechaba 2000:7). Under such circumstances LHWP, and especially its
resettlement and rehabilitation activities, has suffered.
Though the Lesotho Highlands Development Authority had been in existence for two
years at the time of the Panel’s 1989 visit, the compensation policy had yet-to-be
approved by the Government, let alone explained to affected people, even though the first
land and houses had been acquired by 1987. Nor had the territorial boundaries of even
the Katse portion of the LHWP been agreed upon because of jurisdictional arguments
involving other ministries. 8 Those were capacity problems at the Government of Lesotho
level. Capacity problems within the project authorities related to interminable delays in
reaching decisions (or reversing decisions made), and then in implementing them. One
example at the highest level was the many years it took to implement the
recommendations of the Organization and Manpower Study.
In addition to delays in agreeing upon, funding and implementing the Rural Development
Plan, it took years to operationalize the crucial June 1995 proposal to establish field
teams in the various project areas. Monitoring project impacts on affected people
continues to be inadequate – an especially serious deficiency for the 365 Katse
households who lost all their fields to the project and the 441 households with no fields
who may have been dependent, as sharecroppers, on fields that were inundated. After
discussing and soliciting proposals over several years for handing over the key training
facility to a local organization, a decision was made to close it down with no
replacement. The Panel summed up such problems in its April 2000 report: “A key
constraint of LHWC-LHDA is its ponderous management machinery. Things take far too
long to decide, implement and complete. The litany of delays is long.”
Capacity problems within the Environmental and Social Services Group of the LHDA
were of three sorts. One was institutional; another concerned implementation capacity,
and the third related to overall planning. Due to its hierarchical structure, there was
insufficient coordination and consultation between the environment (which also included
health and cultural heritage), compensation, and rural development sections. The
necessary pre-project demographic and socio-economic studies carried out by the
compensation section did not include the type of data needed for rural development
purposes or for enabling monitors to determine when living standards had been restored.
Though assets requiring compensation were carefully documented, detailed information
on resources, such as arable land, remaining to each household was not collected. As a
result, necessary information that could be built into rehabilitation plans for each
household did not exist. Nor were sufficient data gathered for a benchmark study against
which restoration of living standards could be measured.
8
The compensation regulations were finally gazetted in April 1990, while the Phase 1A scheme
area was approved in February 1990
19
Plan implementation capacity was weakened by the fact that ESSG staff was
concentrated in Maseru. No one was stationed in the Katse Project area until the
agonizingly slow build-up of several field operations groups during the second half of the
1990s. While the Panel emphasized that constraint early on, we did not pay sufficient
attention to the coordination, staffing and administrative problems that could be
anticipated when compensation activities, housing construction, and implementation of
15 separate rural development projects began. 9
Compensation and housing construction have continued to be the most satisfactory ESSG
activities to date. I believe the Highlands Water Project has been the first major project
to accept responsibility for community compensation for loss of such common property
resources as grazing, building materials, fuel and medicinal plants as a major project cost.
The project authorities also realized early on that initial intentions to provide grain
compensation for a 15 year period to households losing fields, and fodder for a five year
period to those losing grazing, were insufficient. Subsequently those undertakings were
replaced by an agreement to provide cash compensation annually to households over a 50
year period with a minimum threshold established to deal with the most disadvantaged
households. Replacement housing, generally speaking, was an improvement over what
had previously existed with resettlers having the option to choose between customary
housing or ‘modern’ houses.
Nonetheless various weaknesses have continued to date which have drawn legitimate
complaints from resettlers and NGOs, and which threaten the restoration of living
standards. During the early years when the emphasis was on grain compensation, people
suffered hunger because delivery often came after the date that initial harvests from lost
fields would have brought the annual hunger period to an end. Also it took the project
authorities too long to admit that a grain ration alone was insufficient to compensate for
the multiple crops, including legumes, which most households had previously planted.
Community compensation for lost common property resources had not been received by
the end of 2001 because of delayed establishment of an institutional structure for
receiving the funds. In regard to replacement housing, correction of defects has been too
slow as has been the installation of stoves where resettlers have chosen modern housing.
Even if continued over a 50-year period or longer, cash compensation alone cannot be
expected to restore living standards without being integrated with effective
implementation of the rural development plan. As various consultants and experts had
noted, the quality of the individual plans was state of the art. But could they be
implemented? The record has been unsatisfactory with budgets unutilized, a few plans
dropped or seriously delayed, and the majority inadequately implemented.
Because of cost considerations the rural electrification component was soon dropped
although the Panel requested in its March 1998 report that the issue be revisited
especially as it related to schools and various development options. Though it should
have been the first component initiated, “Planning with the People” never was
9
This deficiency was noted at an earlier date by the Commission’s Environmental Advisory
Committee in their October 1992 Draft Minutes
20
satisfactorily implemented. The same was the case with the village water supply and
sanitation components. Though the intention was to complete provision of water and
sanitation facilities throughout the Katse local catchment during 1995, by the end of 2001
only 30 of 114 planned potable water projects had been completed.
Equally serious delays were associated with various agricultural components with the
unfortunate result that various consultants as well as the World Bank began to question
the relevance for rehabilitation and development purposes of agriculture in general.
Among Panel members, but with the support of my colleagues, I took strongest exception
to this position. Highland households practice a diversified economy that includes crop
agriculture, livestock management, wage labor, and a range of small-scale commercial
ventures. Since each component makes an important contribution to household living
standards, with their proportional importance varying from household to household and
within households from year to year, rehabilitation and development strategies must
address each. In November 2000 women affected by ‘Muela told the Panel how one dairy
cow or a small homelot vegetable garden could provide up to 30 percent of a household’s
necessary annual income or money to pay the school fees for two children.
The problems with the agricultural components of the rural development plan were
planning and implementation problems. Highland yields were not poor; indeed
“When rainfall is adequate, yields exceed 800kg of cereals per hectare –twice that
reported throughout much of Tropical Africa and enough grain to feed a small family
until the next rainy season harvest” (LHDA POE December 1995: 18). When rural
development plan budgets were finally approved and implementation finally began in
1991, no food production or income generation components were included. When they
were, a major problem related to the lack of attention paid to marketing – both the
identification of markets and the implementation of the necessary marketing structures.
Hence while dairy cows were distributed especially in the ‘Muela area, the need for an
institutional structure and marketing outlets for dealing with production once local
markets were saturated was ignored. The same was the case with those farmers producing
a significant surplus of vegetables such as peas, carrots and especially cabbage. The best
farmer in the Katse area, for example, was the principal of the Khohlontso Village
primary school. His inability to market his produce not only resulted in wastage of
produce but also discouraged other farmers from following his example.
Administrative bungling within ESSG has also discouraged South African entrepreneurs
from signing contracts to buy and market a range of high value specialty crops. This was
most unfortunate since only such crops could begin to replace the previous importance of
marihuana as the most important income generator for that majority of households
without employed family members. Though it can be assumed that marihuana will
continue to be grown, the closer incorporation of the highlands into the Basotho nation
will inevitably reduce production due to closer administrative, and especially police,
controls.
Through 2000, the artisannal fishery and forestry projects were being effectively
implemented by consultants. As their December 2001 termination dates approached,
21
however, the project authorities had yet to act on proposals for their extension. The
fishery project was also constrained by the continued inability of LHDA to operationalize
the necessary credit program to enable trained fishers to acquire nets and boats. Nor had
national laws outlawing the use of nets under all conditions been revised to except
reservoir fishing.
The Panel has been especially critical of LHDA’s lack of emphasis on education.
Educational facilities in the highlands, including the Katse and Mohale basins, are the
worst in Lesotho. While schools in the lowlands and foothills have piped water and
latrines, most in the highlands do not. According to Sechaba’s Poverty and Livelihoods in
Lesotho, 2000, poor school attendance is “intimately related to the deficit in school
facilities” (page 8) as well as the lack of trained teachers. Though the highlands also have
the highest out-migration rate in the country, those moving have not had the education
necessary for getting jobs; as a result “employment levels continue to decline in the
remote villages” (ibid).
In not emphasizing school improvement and skill upgrading, LHDA is losing a major
opportunity for providing individuals with the necessary education and skills to allow
them to either develop enterprises in the highlands or obtain jobs elsewhere in the
country. This inadequacy has been brought to the Panel’s attention during each
successive visit to the headmaster of the Khohlontso school during which he has showed
us how the project has yet to restore the school’s sole source of water that was disrupted
by road construction. Though eventually LHDA began to provide latrines to schools, and
helped establish one secondary school, little effort has been made to improve village
schools by, for example, encouraging the type of English language medium curriculum
that could have played a major role in the welfare of some households and perhaps the
area as a whole. When local initiative started such a school at Katse in an unused project
building, the Project and the Ministry of Education shut it down rather than help the
school authority to correct sanitation and other deficiencies.
Opportunities lost by failure to upgrade educational facilities were increased by the
failure of the project’s rural training program. In the early years, optimistic plans were
mooted to develop three training centers, as well as satellite centers, that would provide
the type of job training that was necessary to take the place of lost arable land and
grazing. Such training would provide skills needed by villagers to obtain jobs during the
construction phase, and by those who might start local business enterprises. In 1990 the
Panel agreed that there was indeed a need for a Skills Training and Entrepreneurial
Development Centre to be built at Katse but this never materialized. Instead a Rural
Development Centre was developed outside the project area at Thaba Tseka.
The RDC as it came to be called was contracted out to a South African consultancy firm
whose main accomplishment was to provide the most expensive program of job training
in Southern Africa. When the Centre was eventually shut down in 2000, it had
accomplished little while consuming more of the rural development plan’s budget than
any other component aside from construction of feeder roads that complemented the
major project road by completing a network circling the Katse reservoir.
22
In all fairness some of the RDC’s disappointing record was due to factors outside its
control. LHDA and the Commission paid insufficient attention to these when they
decided not to hand over training to one of a number of Lesotho organizations. 10 Delays
by the project authorities slowed the Centre’s opening while poor coordination and
administration from ESSG in Maseru was another contributing factor. Another problem
was that Centre graduates found it difficult to find jobs with the project since many of the
South African contractors brought in their own workers or rejected the training provided
by the RDC as being of too short duration to provide the necessary skills. Moreover, at
the time the Centre was closed down, LHDA had yet to implement a credit program that
could assist artisans with carpentry, masonry, weaving and other skills (and other local
entrepreneurs starting such businesses as bakeries and egg and poultry production) with
start-up costs. RDC’s own inadequacies, however, contributed to the failure of their
graduates to find jobs. It failed to relate its training curriculum to the local and wider
market for graduates and it had an inadequate program for following up graduates in
order to provide further assistance where necessary and feed back their experience into
the curriculum.
Another capacity problem of the project authorities has been their inability to deal with
planning and implementation suggestions for correcting agreed upon deficiencies. One
example relates to the need to bring the Ministry of Agriculture more effectively into the
rural development process. During several visits to the major Mohale resettlement area in
the foothills, the Panel visited the Ministry’s Matela Farmers Training Institute, the first
such institute opened in Lesotho. The capacity of Matela’s well trained and motivated
staff to provide training had suffered from major budgetary and infrastructure problems.
Housing and other trainee facilities were insufficient as was equipment needed for
training purposes. Nevertheless Matela was willing to provide relevant training to the
hundreds of Mohale resettlers that had opted for foothill resettlement and was a natural
candidate for the type of collaboration that the Lesotho Highlands Development
Authority was seeking with other government agencies.
The Mohale Dam
Preparatory works for the construction of the Mohale Dam began during 1996 with the
construction of access roads and township infrastructure. A five volume Environmental
Action Plan was issued in October 1997 prior to the commencement of dam construction
in 1998. It reflected many lessons learned from Phase 1A. Unlike Phase 1A, it was based
on a pre-project Environmental Impact Assessment that “identified a large number of
biophysical and socio-economic impacts which require mitigation and/or compensation
… The activities designed to carry out this mitigation and compensation, and in some
cases enhancement, have been grouped together under the collective category of an
Environmental Action Plan”(Executive Summary, EAP 1997:1). Though that wording
once again placed insufficient emphasis on the type of development necessary for
10
Several had been suggested. Of two visited by the Panel, one did appear to have the necessary
institutional capacity, personnel and curriculum.
23
avoiding further impoverishment, Volume 3 of the Plan was titled Resettlement and
Development Action Plan.
On the environment, planning for Mohale finally brought proper attention to the question
of downstream flows that should have been addressed prior to Katse construction.
Adding two members with relevant expertise, the Panel played the key role during 1997
in expanding the consultants’ contract to include “a full health and socio-economic
component” (LHDA POE July 1997: 9). In regard to affected people, two lessons learned
from Phase 1A included a decision to allow individual households and communities
requiring resettlement to either remain within the Mohale reservoir basin or move to any
preferred locale within Lesotho. Not only would that remove some pressure from a
project-reduced natural resource base, but it would also give resettling households the
opportunity to seek a wider range of development opportunities. As the Panel expected, a
majority of households opted to resettle at lower altitudes in the foothills and the
lowlands including in and round Maseru. 11
The second important lesson learned was to contract one consultant to map resources lost
and plan for their replacement through an integrated compensation and development
program. The firm picked was Hunting-Consult 4 Joint Venture which prepared under
Contract 1012 the Resettlement and Development Study that was incorporated within the
Environment Action Plan. 12 Implementation in three stages would be synchronized with
the construction schedule. Stage 1 would involve the relocation of 99 households affected
by project works prior to the commencement of construction on the dam itself. Stage 2,
labeled ‘Pre-Implementation,” would involve the resettlement of another 143 households.
Implementation of the third stage would be postponed until after the reservoir reached
full storage level. Though the Panel considered the figure too low,13 the Contract 1012
consultants estimated that 168 Stage 3 households would be involved. Some households
would be at risk due to proximity to the reservoir. Others might be cut-off by the
reservoir from other sections of their village while at least 67-70 households would lose
over 50 percent of their arable land to the reservoir.
11
According to data collected by Hunting-Consult 4 during their Resettlement and Development
Study, 61 percent of Stage 1-3 households wished to leave the Mohale local catchment if they had to move.
12
Generally speaking the Contract 1012 reports were state of the art. Though implementation
exposed weaknesses, they contained, for example, a well-thought out and initially well received “People’s
Involvement Programme.” On the other hand, while the development planning for the minority who wished
to remain within the Mohale local catchment was well thought-out, the planning for the majority who
wished to leave the basin was inadequate.
13
In its July 1997 report the Panel recommended that for planning and budgeting purposes it should
be assumed that 400 households might wish to resettle as opposed to the closer to 300 estimate of the
Contract 1012 consultants. Without including Stage 3, by 2001 resettlement was estimated to include about
320 households. That number, however, included in Stage 2’s second and third groups households at risk
from, or cutoff by, the reservoir; in other words households that were originally in Stage 3. Should
households losing over 50 per cent of their land be added under Stage 3, as they should be, the total
choosing to resettle could easily reach 400.
24
The consultants recommended that all 168 Stage 3 households should have the option of
resettlement. That was a recommendation that the Panel fully endorsed since those
households that opted for resettlement not only would have a greater range of
opportunities, but their departure from the Mohale local catchment would reduce the
pressure on the host population’s use of the remaining resources. That was an argument
that the Panel made in a series of reports between 1997 and 1999. Special emphasis was
paid to those losing over 50 percent of their land. The rich alluvial soils that will be lost
to the Mohale reservoir are literally some of the most fertile land in Lesotho. In other
words, loss of under 50 percent (say 30-49 percent) might well entail a lost of 50 percent
or more of the productivity of the arable land used by a household, so that the risk of
impoverishment from land loss is apt to extend to some households that lose less than 50
percent of their land.
Though the Panel believed that the Contract 1012 recommendations that households
losing over 50 percent of their arable land would have the option of resettlement had been
accepted, the project authorities denied that was the case in their commentary on the
Panel’s March 1998 report. On the contrary, loss of over 50 percent of arable land “was
not included in the approved compensation policy.” In replying the Panel reiterated that
“households who lose over 50 percent of their arable land should have the option of
resettling. That is necessary since it will be difficult, if not impossible, to restore the
living standards of a majority of such households if they remain in the catchment. In that
event, LHDA would not be in compliance with treaty requirements.” The Panel repeated
that comment in its March 1999 report as well as stating “The Panel stands by that
forecast.” Though the 1997 Compensation Policy did not stipulate land loss as a criterion
for resettlement, Volume 3 of the 1997 Environmental Action Plan did mention loss of
“over 50% of their arable land and/or productive assets” as “Eligibility for Voluntary
Resettlement.”
LHDA and the Commission finally agreed that Stage 3 households who lose over 50
percent of their land should have the option of resettlement after the Mohale reservoir
fills during a wrap-up meeting with the Panel in April 2002. The World Bank was present
and supported the Panel’s position. Following my resignation from the Panel that month,
I was informed by the Bank that funds had been budgeted for the possible resettlement of
over 100 such households. Since the reservoir was still filling at the time of writing, it
remains to be seen whether or not that commitment is honored. Here the experience at the
Katse reservoir is of concern. There too a post-inundation stage of further resettlement
was accepted policy. Yet no additional households requesting removal have been
resettled, including some so close to a cliff above the reservoir that the Panel
recommended their resettlement for safety purposes in 1998. The Katse policy was to
consider post inundation resettlement on a household-by- household basis. That is a
policy that must not be applied to the Mohale reservoir where the much larger number of
households at risk requires integrated planning. It also remains to be seen if the World
Bank has the clout after the disbursement of its loan to insist on implementation of the
Stage 3 resettlement option for those households that wish to move once they have had
the opportunity to assess how inundation of over 50 percent of their arable land affects
their livelihood.
25
The 1012 contractors only mapped fields lost and fields remaining in the 46 of the 83
Mohale local catchment villages that they considered to be most affected by the project.
Their reports contain two conflicting estimates of the number of Stage 3 households that
would lose over 50 percent of their land. One is the 67-70 households previously noted.
The other is contained in Vol. 4, Adjudication, of the consultants’ 1997 Resettlement and
Development Study where 65 households in 24 Stage 3 villages were listed as losing 90100% of their arable land, while another 70 were listed as losing 50-90%.
What might be the situation in the 37 villages where land resources were not mapped?
The unit for adjudication purposes that Contract 1012 used was the village not the
household; hence they were aware that an unknown number of households in the
remaining villages could be expected to lose arable land to the reservoir. That was noted
in their 1997 Synopsis of Studies that stated that 367 households in 33 of the less affected
villages “will lose a substantial portion of their land.” Though no estimates were given,
the Panel in its November 1996 report stated that it would not be unreasonable to expect
another 35 households to lose over 50 percent of their land.
Until Contract 1012 maps of fields lost and fields remaining are updated, it is difficult to
know how many additional households should have the option of resettlement. By
August 2001, the number of Stage 2 households had been increased from 143 to 226 by
including additional households thought to be either too close to, or cut off from, the
reservoir and which had previously been placed in Stage 3. Nonetheless I suspect that the
number of households remaining to be resettled in Stage 3 could still reach 100. How
many of those would wish to remain within the Mohale basin as opposed to resettling
elsewhere is another unknown.
If most such families remain in the Mohale local catchment, I predict that rather than
having their living standards restored, the majority will find themselves further
impoverished by the project. Increased impoverishment is already apparent in regard to
those Stage 1 households that opted to resettle within the local catchment in Ha Koporale
Village. During the Panel’s April 2001 visit there we interviewed seven Stage 1 resettling
households. On arrival, all were told that no fields were available for them and none had
in fact found any fields. Land for gardens was also scarce with only two of the seven
starting small vegetable gardens along the creek below the village. Though some host
households were willing to lease out fields and take on sharecroppers, the supply of fields
was limited and their use by resettlers would further reduce arable land available for
sharecropping by landless host households.
Other implementation problems that plagued Phase 1A have continued to adversely affect
Phase 1B. Mohale resettlement and rehabilitation, for example, has continued to
emphasize housing construction required for physical removal as opposed to other
compensation and development activities necessary to restore living standards. As stated
in the Panel’s March 1999 report, “While early POE reports (1990 and 1991) explained
in detail why restoration of living standards required more development activities as a
legitimate project cost, the imbalance between physical resettlement, compensation and
26
development activities has continued to this day…When Katse reservoir resettlement
began, emphasis on physical removal and compensation activities continued to take
precedence over development activities. The same pattern is now re-emerging with Phase
1B Stage 1 resettlement, where development activities have affected only a small
minority of households a full year after their removal…If Treaty obligations are to be
met, it is essential that a better balance between necessary compensation activities and
necessary development activities be achieved in future years” in regard to both the Katse
and Mohale dams.
The two reports submitted during 2000 made the same point as did the April 2002 report.
As stated in the April 2000 report “The principal problem remains the unsatisfactory
nature of the incomplete infrastructure…, and the slow implementation of income
generation activities.” At the end of that year, for example, the majority of the Stage 1
resettlers in Mokotoko, the principal resettlement community in the foothills, still had an
inadequate water supply nearly three years after removal, while necessary development
activities to restore living standards of the majority had still to get underway. In April
2002, the emphasis continued to be placed on the housing construction that was required
if dam closure was to occur on schedule at the end of the year.
On the other hand, activities required for restoration of living standards were increasing.
In the mountains, most impressive was the production of seed potatoes with annual
production rising to 220 tons and storage facilities with a 300 ton capacity nearing
completion. Plans for 2003 were for double cropping to produce two 300 ton crops. Stage
1 and Stage 2 households that had resettled in the lowlands and the foothills were
participating with host villagers in crop and poultry cooperatives. LHDA had finally
allocated funds to the Matela Farmers Training Centre that had begun offering courses to
both resettlers and hosts. ESSG field personnel had also arranged for a lowland poultry slaughtering cooperative to market resettler and host chickens. Community formation
was also underway. In Mokotoko, whose water supply problems had finally been solved,
37 Stage 1 and 2 households had begun to integrate with their hosts, with one host family
moving into the resettlement community and others expected to follow.
New issues, however, continued to arise, including one in 1999 that threatened the entire
Mohale resettlement program. It concerned the general topic of host-resettler
relationships that is a delicate one with all types of resettlement that requires sensitive
handling. It also involved two powerful politicians who brought to bare on the project
personal and political agendas irrelevant to, and disruptive of, the resettlement process –
hence illustrating the type of unexpected, yet expectable, events that can threaten
resettlement and development outcomes.
The largest Stage 1 resettlement from the Mohale basin to the lowlands involved 22
households relocated to form a planned community on the outskirts of Maseru. While the
project authority had legally acquired that land from the Lesotho Housing Corporation, it
did not discuss the intended resettlement with the adjacent host community of
Makhoakhoeng, nor with the community’s most important resident. This was the
Minister of Foreign Affairs who was one of Lesotho’s most powerful politicians as well
27
as the surrounding area’s representative to parliament. To make the situation still more
complicated his large house with ample grounds was not only next to the resettled
community but was burnt to the ground during the political disturbances that swept the
country in 1998.
Capitalizing on host community feelings that the resettlement site had been improperly
acquired at an earlier date by the Housing Corporation, the Minister encouraged hostility
toward the resettlers as soon as they arrived. Though Makhoakhoeng was not a rural
community, he also influenced the local chief to claim the same benefits that were given
to rural host communities in return for their willingness to share their land, grazing and
other natural resources with resettlers. While the project authority had already upgraded
the road serving both hosts and resettlers and provided a piped water supply, demands for
further benefits and harassment and intimidation increased after the resettlers’ arrival in
1999. Not only were their children harassed and chased, but use of the neighborhood
burial ground was refused when the first resettlers died that year. The situation worsened
in November 2000 when the Minister of Natural Resources, for unexplained reasons, told
the 22 households that they must resettle a second time to an undesignated site. As
harassment increased including house break-ins, the community became divided between
those who agreed to a second resettlement and those, apparently the majority, who did
not.
As the dispute intensified so too did its implications for the credibility of the Lesotho
Highlands Development Authority which felt that resolution of the dispute required a
solution at the level of the Prime Minister and his cabinet. The Panel and the World Bank
were both drawn into the dispute with the Panel labeling a second resettlement
“unnecessary, unacceptable, and undesirable” in its November 2000 report. Two months
later the World Bank went on record against a second resettlement that would be out of
compliance with its resettlement guidelines. The Bank also sent a special mission to
Lesotho during 2001 in an effort to meet with the Ministers of Foreign Affairs and
Natural Resources – both of whom were ‘unavailable.’
Repercussions also placed the rest of the Mohale resettlement program in jeopardy with
families still to move, and the participatory committees set up under Contract 1012’s
People’s Involvement Programme, refusing further cooperation with the project
authorities. Local NGOs were becoming increasingly concerned, with that concern
spreading quickly to international NGOs. In their 2001 critique of the Highlands Water
Project, the International Rivers Network referred to local sources that claimed those who
had already been resettled under Stage 1 had told those still to resettle under Stage 2 not
to move until the project authorities had implemented all their resettlement
responsibilities. The International Rivers Network also quoted the same local NGO as
stating that resettler community members were now unanimously opposed to a second
resettlement with a community representative stating that if the community cannot “stay
in peace, LHDA will never ever resettle anyone in this area” (Hoover 2001: 22).
Uncertainty continued until the end of 2002 when the Cabinet passed a resolution
disallowing further resettlement of the Makhoakhoeng community. The damage had been
28
done, however, with the World Bank reporting in late October 2002 concern about
rumors still circulating about the possibility of further removal.
Since the closure of the Mohale Dam in October 2002 the ability of the World Bank and
the Panel to influence events has weakened. For example, both the Bank and I expected
that my replacement would be appointed in time for the Panel’s September 2002 visit. 14
That did not occur. Nor was a replacement appointed for the Panel’s April and September
2003 visits. Only in December 2003, at Bank insistence, was an appointment made, or
rather a re-appointment when Hitchcock’s contract was renewed. That meant that there
was no social science expertise on the Panel for 20 months, including throughout 2003.
My experience in India and Sri Lanka in connection with the Sardar Sarovar and
Mahaweli Projects was that research, consultancy and advisory teams are strengthened
when they involve both host country and international expertise. And in the case of
panels like LHDA’s that expertise must be both environmental and social. Such was not
the case with the Lesotho Panel for a 20 month period during which the Panel was
dominated by two South African environmental scientists. It is unreasonable to expect
specialists in other fields to understand the stresses and problems associated with
involuntary community resettlement so that they are more at risk of making decisions that
favor the project authority over the interests of affected people. They also tend to be less
aware of a project’s international context.
In the LHWP case my colleagues have not insisted, for example, that Panel reports
should be distributed as public documents. As a result since my resignation, none of the
following three Panel reports have been released in contrast to Panel reports between
1989 and April 2002. That is bound to raise questions concerning the Panel’s
independence. Furthermore, they have also made statements that support LHDA and the
Commission at the expense of project affected people. Especially serious was their
support of the project’s Instream Flow Requirement policy that over 20,000 dispersed
households in the more distant downstream areas should only be allowed compensation
for reduced river flows if they could prove losses (LHDA POE March 2003). That
conclusion was contrary to the LHWP Treaty and World Bank Guidelines that require the
project authority to take responsibility for compensating all affected people.
Requiring over 20, 000 households to prove that they have been adversely affected is but
one of many examples of the inability and/or unwillingness of LHDA and the
Commission to deal equitably with affected people. Though development activities to
restore living standards were finally improving by 2002, throughout both Phases 1A and
1B the emphasis has continued to be on the physical removal of households as opposed to
their rehabilitation.
There have also been innumerable compensation inadequacies that are dealt with in detail
in the August 2003 report of the Ombudsman (S.S. Mafisa). The position of Ombudsman,
14
An excellent candidate was available. That was Stephen Turner. From England Turner had been
brought up in Southern Africa and especially in Lesotho where he learned to speak fluent Sesotho and had
completed innumerable assignments including substituting on one occasion for me on the Panel.
29
to be appointed by the King on the advice of the Prime Minister, is a requirement of the
Lesotho Constitution. During December 2002 and January 2003 the Ombudsman
received numerous written complaints from project affected people that he decided
warranted a formal enquiry. The largest number of complaints were about compensation
issues including delayed payment, general inadequacy of payment, non-payment for loss
of communal assets, compensation for household gardens and fields, and the minimum
threshold allowance. But complaints were also received concerning failure on the part of
the project authorities to provide access roads, water supplies, health facilities and
schools.
The Ombudsman’s main conclusion was that prompt payment of full compensation as
required by law had not been paid , with LHDA conceding that “it had failed to make
prompt payment in many, if not all, cases because of its own internal problems” (Gov’t of
Lesotho 2003: 54). Moreover, though the Ombudsman concluded that a small minority of
people had tried to defraud LHDA (eight were mentioned by name), “the inquiry
concludes that on the whole the complainants have proved their case against LHDA”
(page 56).
Summary
Bearing in mind that the Lesotho Highlands Water Project is not only a contemporary
one, but one of the largest under construction today as well as being World Bankfinanced, both environmental and social results to date have been disappointing. Among
other conclusions, the LHWP case study shows why it is essential for resettlement
policies to stress improvement as opposed to restoration of living standards and for
project authorities to have the political will and capacity adequately to fund and
implement those policies. Without such commitments, future dams should not be funded
by multilateral donors like the World Bank or by bilateral donors.
The range of problems involved also raise the legitimate question as to whether the
implementation issues associated with large dams are just too complex for realizing
outcomes that are equitable and sustainable environmentally, economically,
institutionally and culturally. And if the answer is “no”, should the dams in question be
replaced by other alternatives? In some cases, I am convinced that the answer is “yes,”
but I do not consider LHWP to be one of those cases simply because the potential overall
benefits to South Africa, Lesotho, and Southern Africa as a whole are so great. While my
conclusion here sets my position apart from many international NGOs, they are more
unified against the project than the most directly involved local NGOs who, like the
Panel, see the macro benefits to Lesotho and South Africa while hoping that the project
can at least restore the living standards of the most directly affected households and
communities.
Is such an outcome possible? For many, including the majority of the 150,000 affected by
reduced downstream flows, the most likely answer is ‘no’. Although significant, at least
their losses do not include arable land and grazing. For the majority affected by the
‘Muela Project the most likely answer is “yes.” With no households forced to move and
30
loss of land affecting about 25 percent of a population of about 400 households, the
majority can expect to benefit from improved roads and water and sanitation services.
More accessible to tourists and day visitors from Lesotho’s lowland cities and towns,
they can also expect to benefit from visitors to the ‘Muela dam, reservoir, and visitor
center as well as to two reserves in which surrounding communities have a degree of
ownership.
For the majority affected by the Katse and Mohale dams, the verdict remains in doubt.
That is especially the case for the over 700 Katse and Mohale households that will have
lost over 50 percent of their fields. On the other hand, outcomes can still be favorable for
a significant number of households (perhaps even a majority) if the political will is
present within the project authorities and the government for local people to achieve a
degree of ownership over existing resources and if the necessary plans and intentions are
integrated and implemented. By 2001 ESSG had begun a re-planning exercise because of
discrepancies between actual Phase 1A and 1B outcomes and those recommended in the
respective Environment Action Plans. Panel recommendations concerning the need for a
more integrated development paradigm were being seriously considered as shown by the
integration of compensation and development in the re-planning process.
A general strategy that could benefit reservoir inhabitants is outlined in the Panel’s
March 1999 Report in relationship to “Hotel and public recreation development,”
“Fishing opportunities,” “Feeder Roads,” and “Environmental Reserves.” The first three
categories fall under the purview of the zoning study for the two reservoirs in which local
communities are supposed to participate fully. Adjacent communities are custodians of
the land, including reservoir-inundated land. Zoning the reservoir and surrounding land
should allocate to them fishery rights and maintenance rights to the feeder roads that
encircle each reservoir. Fishery rights would include not just training to catch fish but
also rights to revenue received from outsiders who come to camp, boat on and sport fish
the reservoir.
Under intended environmental reserves, the Panel recommended that those communities
who provide land for such reserves “must be involved throughout in formulating the legal
framework for future reserve management and administration…Local communities must
perceive that they have ownership over all processes.” Because of capital requirements
and national elites (including some in the project authorities), the Lesotho Tourism
Board, and outside entrepreneurs interested in high class hotels and 18 hole golf course
possibilities, only incorporating members of local communities in low paid custodial,
housekeeping and gardening jobs is a definite risk. Should that happen “tourism will
emerge as ‘islands’ of luxury and wealth in a ‘sea’ of rural poverty. Profits will be
exported and there will be little trickle down to local communities” (LHDA POE March
1999).
In terms of capital, surrounding communities are not as impoverished as one might
expect. This is because of the significant sums that communities will receive for loss of
common property resources, the LHWP being one of the few existing projects where
major compensation is being provided for loss of access. Should a number of
31
communities close to each reservoir join forces, the capital involved could be a major
incentive to an outside entrepreneur to enter into a joint venture as has been the case in
Botswana’s Okavango Delta. In the Okavango region the local resource has been wildlife
and scenery. In the reservoir basins it could be taking over and developing construction
camps on, or near, the edges of the Katse and Mohale reservoirs as tourist facilities.
The potential is certainly there. But now that the construction phase is over, and the clout
of the World Bank and influence of the Panel reduced, the chances are less that it will be
realized. The most spectacular site in the Mohale reservoir basin is a spectacular island in
the middle of the reservoir. While the long-delayed LHDA zoning study was still
underway, a joint venture that involved several ministers began to develop the site, with
no local involvement and without the necessary environmental impact assessment, as a
high altitude training and tourism facility contrary to LHDA regulations. Moreover, both
LHDA and the Commission remain out of compliance with a number of World Bank
conditionalities.
Nam Theun 2
Introduction
Laos’ Nam Theun 2 (NT2) project warrants attention for a number of reasons. Largely
meeting World Commission on Dams criteria, environmental and social planning is stateof-the art. This was due to the desire of the Government of Laos and of the project
consortium for World Bank Group involvement, with the consortium’s private sector
participants insisting on a World Bank partial guarantee as a condition for initiating
construction. Applying lessons learned from the Bank Groups’ involvement in such
projects as India’s Sardar Sarovar, Nepal’s Arun III and Chile’s Panque, the World Bank
in turn required more studies and commitments from the Government of Laos than has
been the case with past projects. In addition, the Bank established its own International
Advisory Group (IAG) to provide guidance on how the Bank “can improve its handling
of environmental and social issues in the hydropower projects it supports world wide”
(IAG Terms of Reference 1997) with NT2 being the IAG’s first assignment.
National Context
With an estimated population of 5.7 million in 2005 and a 2.6 percent annual rate of
population growth, the Lao Peoples Democratic Republic is one of the poorest countries
in the world with annual per capita income estimates ranging from $300 to $400. The
economy is still predominantly rural with over 80 percent of the labor force employed in
agriculture. Social indicators are closer to those in tropical Africa than in much of Asia
with a life expectancy according to World Development Indicators of about 53 years, a
43 percent literacy rate and only 39 percent of the population with access to safe drinking
water.
Laos is also one of the most beautiful countries in the world in terms of landscape and
biological and cultural diversity. Approximately 60 percent of the population belong to a
32
wide range of ethnic minorities and linguistic communities. Closer to the Mekong River
the majority are lowland Lao Loum who are predominantly Buddhist. As with
neighboring Vietnam the government is run by a communist regime which has been
experimenting with a market economy since the 1986 implementation of its New
Economic Mechanism. While the economy grew rapidly in the mid 1990s, it was badly
hit by the Asian crisis with the local currency losing over 70 percent of its value by early
1999 and inflation increasing significantly. Since 1999, however, the economy has begun
to recover.
Like the Lesotho Highlands Water Project and Sri Lanka’s Mahaweli Project, Laos’ Nam
Theun 2 project is by far the largest development project in the country. Stretching from
the Vietnam border to the Mekong River and the border with Thailand, the project has
major regional development implications as well as national ones. With its over twenty
major tributaries, Laos contributes nearly 40 percent of the Mekong’s flow. Rising in
upland and mountainous areas along the border with Vietnam, the energy generating
potential of those tributaries makes them Laos’ number one natural resource for
generating foreign exchange. Already the government has negotiated an agreement to
provide Thailand with 3,000 MW of power. That makes sense, with hydropower
development hopefully replacing the export of timber, and hence the too rapid reduction
of Lao forest cover, as the country’s primary source of foreign exchange.
What does not make sense are the 20 odd memoranda of understanding that the
government has signed with various governments and companies to build dams on most
of those tributaries. A more sustainable strategy would be to build a cascade of dams on a
small number of tributaries, including the Nam Theun and the Nam Ngum which have
already been dammed, with the majority maintaining their natural regimes. Whether the
government has the foresight to implement such a policy, which our NT2 Panel has
recommended, remains to be seen.
The Project
The centerpiece of binational cooperation with Thailand, NT2 is primarily a hydroelectric project for the export of peaking power. But as planning has proceeded the
project has also come to emphasize other goals. As a major source of foreign exchange, it
is expected to provide revenue for poverty alleviation at the national level and for
environmental enhancement and living standard improvement within the project area.
NT2 is a very complex project in regard to its environmental and social impacts as its
scope extends from the Vietnam border to the Mekong River and involves interbasin
transfers from the upland Nam Theun River to the lowland Xe Bang Fai. On completion
scheduled for 2009, a 48 meter high dam will create a shallow 450 km² reservoir that will
inundate approximately 40 percent of the Nakai Plateau in Central Laos. Aside from a
mixed population of less than a thousand people who live in, and surrounding, Nakai
town and district headquarters, which will not be inundated, the large majority of the
village population on the plateau will require relocation. Classified as indigenous people,
they number approximately 6,000 people living in 17 communities.
33
Approximately 40 km up the reservoir, water will be diverted down the southern
escarpment, falling 335 meters to a power station with a capacity of 1070 megawatts.
Approximately 95 percent will be exported to Thailand, with the remainder delivered to
the Lao grid. Outflow from the turbines will enter a regulating reservoir from which
water will flow down a 27 km channel and waterway to the Xe Bang Fai approximately
80 km above its junction with the Mekong. From the regulating reservoir, water can also
be released down another tributary to provide water for irrigation and domestic purposes
to 20 villages. Roughly similar to that of the Nam Theun, the Xe Bang Fai’s average
annual flow will be nearly doubled on receiving project water. Especially during the dry
season, radically increased flows can be expected to adversely affect the flood recession
agriculture and fishing of a riverine population estimated at well over 50,000 people.
Including five tributaries that enter the Nam Theun reservoir basin, in addition to the
upper reaches of the Nam Theun itself, the project’s watershed is approximately 4,000
km². Its upper boundary is the crest of the Annamite Mountains that forms the
international border with Vietnam. Close to the future reservoir, and running parallel to it
and the Annamite Mountains, are the Dividing Hills through which the tributaries pass
via a series of rapids before reaching the Nam Theun floodplain. Both edges of the
watershed between the Annamite crest and the Dividing Hills drop off to lowlands with a
fringing population of at least 20,000 people.
Approximately 6,000 indigenous people, belonging to a large number of ethnic groups
and two different language families, live in villages along the five catchment tributaries
and the upper Nam Theun. Small numbers were foragers prior to their involuntary
sedentarization in consolidated communities during the past 30 years. Like the
inhabitants of the Nakai Plateau, villagers currently practice a diversified production
system that includes shifting cultivation, fishing, gathering and hunting with a small
amount of paddy rice cultivation in a minority of communities. Though rain-fed rice is
the preferred crop, yields seldom last more than three to six months, with maize and
cassava more reliable staples.
Vegetation and wildlife on the Nakai Plateau have been adversely effected by the
Vietnam war, post war land use by a traumatized and impoverished population, and
indiscriminate and project-related logging between 1993 and 1995 after which logging
outside the reservoir basin was prohibited. One of the most extensive pine forests in
South East Asia remains at the upper end of the plateau that is not settled, while mixed
deciduous and some riverine forest remain at the lower end. The lower reaches of the
Dividing Hills are also well forested. Otherwise “most of the terrestrial area of the
plateau is considered to be substantially modified by human activity and from a
biodiversity standpoint substantially degraded from its original status” (NT2 POE 1997).
Land in the upper reaches of the tributaries, and between them, supports perhaps the most
intact contiguous forest in South East Asia. It varies from different types of evergreen
broadleaf forest to upper montane forest in which a valuable cypress grows in scattered
pockets above 2,000 meters. Though threatened by commercial hunters from Vietnam,
34
wildlife is still prolific, with the watershed considered one of the most valuable
biodiversity areas remaining in South East Asia (IUCN 1997). In addition to at least 430
species of birds, mammals include elephant, tiger and several recently discovered species.
One is an endemic bovid, the Saola (Pseudoryx nghetinhensis) (Robichaud 1997).
Another is a member of the deer family. Recognizing the importance of the area, the
government incorporated it in 1993 within what was called the Nakai Nam Theun
National Biodiversity Conservation Area (NNT NBCA).
The project authority, Nam Theun 2 Power Company Limited (the Company), is a private
sector-government joint venture that will build, own, and operate the project during a 25
year period after which it will be handed over to the Government of Laos. The overseeing
partner is the parastatal Electricté de France (EDF) with a 35 percent share. A subsidiary
of the the Electricity Generating Authority of Thailand (EGAT) has a 25 percent share as
does Laos’ Electricité de Laos which has the option of increasing its share to 40 percent
after fifteen years. The fourth partner is Italian-Thai Development Company with 15
percent. Current cost is estimated at US $1.5 billion, with the Company’s commitment to
the project based on the assumption that the World Bank Group would provide financial
guarantees. As approved in March 2005 they include an IDA partial risk guarantee up to
US $50 million and a MIGA guarantee up to US $ 200 million. World Bank Group
involvement also includes a $20 million IDA grant for a Nam Theun 2 Social and
Environment Project.
Planning
Planning for the Nam Theun 2 project has involved the World Bank since the mid-1980s
with the Bank early on advising the government to built it on a ‘Build, Own, Operate and
Transfer’ basis so as to avoid acquiring a heavy debt load from the project’s construction.
Financed by the United Nations Development Programme through the World Bank a
feasibility study by Australia’s Snowy Mountains Engineering Corporation (SMEC)
identified NT2 as Laos’ most viable hydro project based on technical and economic
criteria but without dealing in detail with necessary environmental and social issues. In
1993 SMEC joined forces with another Australia firm – Transfield Holdings Ltd – to
propose that the two firms take on the project. Proceeding alone Transfield submitted a
full proposal in August, with the Government agreeing a few months later to sole source
the project to Transfield that then put together the Company. 15
The decision of the government to proceed with NT2 before a consideration of
environmental and social issues had occurred was a mistake since it gave project critics
an opportunity to challenge later studies, no matter how competent, as mere justifications
for a decision already taken. Because of its earlier funding through the Government of
Laos of the initial SMEC feasibility study, the World Bank also was put in an awkward
position which helps explain the extreme caution with which the Bank has proceeded
since 1993 and its delayed decision to proceed to project appraisal.
15
Subsequently Transfield pulled out of the Company, in part because of delayed appraisal on the
part of the World Bank
35
Environment and social issues came to the fore in 1995 when the private sector firms and
the Government of Laos asked the Bank to provide a partial-risk guarantee. A major
World Bank technical mission visited Laos during November, outlining in its report the
terms of reference for various studies dealing with consultation at district, provincial and
national levels and with economic, environmental, and social issues. During the 1995
visit, World Bank officials recognized from the start that the project would involve major
environmental and social impacts that had yet to be adequately addressed. One decision
made was to establish a panel of environmental and social experts to advise the
government. I received a query in December 1995 as to my availability as a nominee,
with a panel of three finalized during 1996. Lee Talbot, a wildlife ecologist and former
Director General of IUCN, and Tim Whitmore, an expert on tropical forests, became the
other members. 16 Our first two visits to Laos were in January and August 1997 with the
first scheduled to coincide with the first major national consultation.
Also during 1996 the Government of Laos contracted three major studies with World
Bank funding. One was a study of alternatives for electricity generation to be undertaken
by Lahmeyer International - Worley International. The second was an analysis of the
economic impacts of the NT2 project contracted to Louis Berger International. The third
was a broad study for formulating an environmental and social management plan for the
Nam Theun watershed as well as for a corridor important for elephant migrations that
would connect the Nakai Plateau via the dam site with the Khammouane Limestone
conservation area to the southwest. That study was contracted to IUCN and the Wildlife
Conservation Society both of which had a long history of advising the government on
biodiversity management issues and had access to researchers familiar with the study
area. At the same time the Company funded two major studies. One dealt with reservoir
basin resettlement and involved Company staff and consultants working with government
officials. The other was for an environmental assessment and management plan that
became the responsibility of a consortium headed by SEATEC International.
Draft results of the first two government studies were presented at the January 1997
national consultation. According to the study of alternatives, NT2 still ranked higher than
other hydro and thermal projects, even with environmental and social impacts included.
Though the International Rivers Network and other NGOs have questioned the results,
the Louis Berger study showed a favorable economic impact. IUCN/WCS’ two volume
Environmental and Social Management Plan was published in June, followed by a final
report in July 1997 in time for the second major national consultation. Drafts of the
Company’s Resettlement Action Plan and Environmental Assessment and Management
Plan had been published the previous May. The IUCN/WCS study was first rate. The
same is true for the Company’s Resettlement Action Plan as it has evolved over the years
through collaboration with the government’s Resettlement Committee and Resettlement
Management Unit. The Environmental Assessment and Management Plan also continued
to be updated.
Also in 1996 the World Bank decided to complement any financial guarantee with a
stand-alone International Development Agency credit to finance a social and
16
Tim Whitmore’s death from cancer in 2002 left a major gap in the Panel that has yet to be filled.
36
environmental capacity building and management project. This I see as a major step
forward as an indicator that the Bank is willing to provide funding for implementing its
guidelines that relate to project components other than infrastructure construction. The
identification mission for what has become the Nam Theun Social and Environment
Project (NTSEP) was fielded in November 1996.
Due to satisfactory progress with overall NT2 planning, in October 1997 the World Bank
decided to proceed from its project identification stage to its project preparation stage.
That required new government initiatives such as the creation of a national poverty
alleviation fund into which NT2 project revenue – estimated at US $28 - 33 million a
year over the first ten years and averaging US $73 million a year thereafter – would be
placed. Preparation would also require further elaboration of the Company’s evolving
Resettlement Action Plan and the Environmental Assessment and Management Plan and
government planning for the management of the Nakai Nam Theun (NNT) conservation
area.
Utilizing a small World Bank grant that included funds for consultation, an operational
plan for a watershed authority covering the NNT conservation area was submitted
through the government’s Ministry of Agriculture and Forestry in May 2000 with a work
program and budget. Also with World Bank funding, IUCN carried out an innovative
program in the conservation area from May 1998 through July 1999 that concentrated on
economic development and conservation in three pilot villages located on three of the six
rivers. Preliminary results were encouraging, including “the development of cooperative
patrols to conserve biodiversity,” with special emphasis on transboundary poaching and
non-sustainable collection of non-timber forest products (NT2 POE 2001). Thereafter,
most unfortunately, funding gaps caused continuity to be lost, momentum slowed, and
initial village enthusiasm tempered.
A small bridging World Bank project was approved during 1999. Called the District
Upland Development and Conservation Project, it involved a $2 million credit for a
three-year period that covered several objectives. One was to increase the capacity of
government personnel at the Nakai District and Khammouane Province levels to facilitate
the necessary integrated process of poverty alleviation and conservation in the NT2
conservation area. At the community level, three pilot villages, including one of IUCN’s,
would be helped to place less emphasis on shifting cultivation by intensifing their system
of land use and to support biodiversity and sustainable use of natural resources. Within
those villages emphasis would also be placed on literacy and numeracy with special
emphasis on women.
At the end of 2002, the District Upland Development and Conservation Project was
handed over to the Government. Though little appears to have been accomplished
through 2001, the World Bank’s November Supervision Mission reported progress
during 2002 due primarily to staff that were now stationed in the pilot villages. From
each village, men and women were trained as teachers and health personnel, and two
Village Conservation and Monitoring Units were carrying out regular patrolling in the
surrounding zones. Initial mistrust and non-cooperation was reported to have been
37
overcome, “with project activities beginning to stabilize the swidden (shifting cultivation)
system and to reduce the number of very poor and poor households in each village” (NT2
POE: 2003).
At the Government level a Prime Ministerial decree in December 2000 formalized the
boundaries of the Nakai Nam Theun National Biodiversity Conservation Area that now
included the corridor to the Khammouane limestone conservation area. Government
approval was also given through a Prime Ministerial Decree signed in February 2001
to institutionalize the conservation area’s management plan within an autonomous
government Watershed Management and Protection Authority to be chaired by the
Minister of Agriculture with the Governor of the encompassing province as vice-chair. At
the Project level, the Government and NTEC initialed the Concession Agreement for the
project on December 19, 2001. The day before the Power Purchase Agreement between
Laos and Thailand was to be signed in July 2003, EDF unexpectedly announced its
withdrawal from the Company. Uncertainly continued until October when the
Government of France announced that the decision to withdraw EDF had been reversed.
On November 10 the Power Purchase Agreement was signed.
Affected Communities and Their Environmental Surroundings
Introduction
Both the Government of Laos and the project consortium have committed themselves to
policies that meet the criteria of the World Commission on Dams and that go beyond
World Bank Guidelines. Affected communities, for example, should be project
beneficiaries as shown by improved living standards. The sections that follow are
intended to shown how that goal could be achieved if approved planning is successfully
implemented. Dealt with in order are affected communities on the Nakai Plateau, in the
watershed conservation area, and within the Xe Bang Fai basin.
The Nakai Plateau
The Existing Situation
Aside from the odd household, all members of the 17 project affected villages are
indigenous people according to World Bank guidelines. Brou are the largest single ethnic
group, followed by Bo and various Vietic groups. Though the population can be split
“into twenty-eight ethnic sub-groups on the basis of linguistics” (NTEC 1997:4-2), all
have been affected by intermarriage, the dominant Lao lowland culture, including
language, and war. According to Sparkes, “One can speak of a Nakai culture, a kind of
‘melting-pot’ culture consisting of a shared material culture, common socio-religious
beliefs and agricultural practices” (1997: 11). That does not mean, however, that very
distinctive cultural variations do not exist within and between communities, as
Chamberlain has pointed out (communication to the author). Indeed, as Sparkes notes
each group defines itself as a distinct cultural group by name in spite of a tendency for
38
villagers to classify themselves as ‘highlanders’ (Lao Thung) in contrast to the dominant
lowland Lao Loum (ibid: 12).
Agriculture remains the dominant component of each household’s diversified economy.
Soils are poor, however, with an estimated cultivation area for the 17 villages of only 471
hectares – “less than 0.10 ha per inhabitant” (NTEC 1997: 4-6). Though rain fed rice is
the preferred crop, in 16 villages surveyed by CARE in 1996, only 17 percent of
households could produce enough to last a full year, with nearly half having a rice
deficiency for over six months. While a few villages have begun to experiment with dry
season paddy rice, the CARE survey reported only 78 hectares in 1996 and that was
confined to four of the sixteen villages. Livestock and non-timber forest products
provide the cash or bartering capacity that is needed to acquire rice and other basic needs
staples. 3,100 water buffalo are the most important livestock. Ownership is skewed with
half owned by households in two villages, while a “significant proportion of households”
own none (RAP op.cit.). Aside from a school and hospital in the district headquarters,
social infrastructure is poor to nonexistent in all villages. Where schools do exist, they are
restricted to the lower grades while morale among poorly and infrequently paid teachers
is low.
During my first visit to the Nakai Plateau in January 1997 I was struck not only by the
poverty of the people living in project affected communities but by the scarcity of
wildlife and the general degradation of much of the area. Initially trained as an
ornithologist, I was especially aware of the general absence of birds which reminded me
of the civil war-ravished areas that I had traveled through in Mozambique in 1993. The
per capita income was estimated to be only about 60 percent of the national average.
The Vietnam war caused much of the poverty. From 1964 to 1973 United States dropped
over two million tons of ordinance on Laos “during 580,344 bombing missions, or the
equivalent of one planeload of bombs every eight minutes around the clock for nine
years” (UXO Lao PDR Trust Fund 1995). Because the Ho Chi Minh Trail traversed the
length of the Nakai Plateau, all 17 villages would have been under attack from aerial
bombardment with the area around Nakai District Headquarters and the Nam Sot
confluence with the Nam Theun most heavily hit. Under such circumstances, reports by
villagers that the number of their water buffaloes was drastically reduced, with some
families losing all their animals, must be taken seriously. Since domestic stock constitute
the villager’s bank account to be drawn upon during times of misfortune such as crop
failure, sickness and death, the war’s impoverishing effect was serious. One result has
been increased reliance on gathering and hunting which would help explain the
degradation of biodiversity that the Panel observed.
Other factors have also contributed to the area’s current degradation and the
impoverishment of its population. Both are project related. Most significant was
commercial logging by the military parastatal responsible for the administration and
development of Laos’ central highlands. Following the Government’s decision to sole
source the project to the Company in 1993, commercial logging is reported to have
increased from 30,000 cubic meters annually to 300,000 until it was restricted to the
39
future reservoir basin in 1996 as a World Bank requirement. Though the central
government received royalties, few benefits reached local people. Logging was largely
carried out by Vietnamese companies with Vietnamese crews who also exploited the
plateau’s natural resources. In addition to loss of wildlife, especially serious for the
village population was the further reduction of such non-timber forest products as resin,
rattan, and cardamom which, along with livestock, had been an important source of
income for purchasing food and other essential goods and services.
Another impoverishing factor has been the delayed implementation of the project.
Partially responsible was the 1996-1999 Asian economic downturn which reduced
Thailand’s demand for energy, caused a serious devaluation of Lao currency, and slowed
project activities. Convinced that the project’s potential can best be realized with the
active involvement of the World Bank Group, the Panel has also been critical of the
length of time that it had taken the World Bank to move from project identification to
project approval. As stated in its January 2001 report, “The POE is aware of no other
World Bank-assisted hydropower project where a member country has been asked to
meet such a large, indeed escalating, number of requirements over such an extended
period of time.”
Resettlement and Development Plans for Making the 17 Communities Project
Beneficiaries.
The best such plan that I have seen, the Resettlement Action Plan – if implemented – has
the potential of helping the large majority of the population to significantly raise their
living standards. The word “significantly” is important. The people’s current poverty is
so great that implementation of even a mediocre plan could reduce their impoverishment.
But they would still be poor. The intent of the Resettlement Action Plan is to help those
involved end their impoverishment.
During extensive in-village consultations, members of all 17 villages made it clear that,
aside from individual families who would use resettlement to join kin elsewhere or for
other purposes, the large majority wished to remain not only on the Nakai Plateau but
within their current spirit territories. That desire has been largely honored, hence reducing
the host-resettler problem that characterizes the Lesotho Highlands Water Project as well
as many other dam-induced resettlements. Furthermore, in two cases only part of a
village is required to shift to higher ground.
Villagers were actively involved in planning the resettlement process, with anthropologist
Stephen Sparkes asking separate groups of men and women to map their “dream
villages” (Sparkes 1997) in regard to layout and infrastructure. A range of gendersensitive household livelihood options have been developed, which take into
consideration both income generation and household labor resources. Each option is
based on a “high degree of diversification and flexibility …to allow for changes over
time” (RAP 1997: E-8). Seven major components are involved, none of which is required
to generate more than 20 percent of a household’s income.
40
In addition to cultivation of rice and fruits and vegetables, they include livestock
management, wage labor, fishing, collection of non-timber forest products and
participation in the management of community pine and deciduous forests. In addition to
the remaining forests, the reservoir will also be utilized as a resource. Because the
reservoir depth averages less than 10 meters at full storage level, an extensive drawdown
area will be available for recession cultivation and grazing. Fishing, the Panel has
recommended, should be restricted to members of affected communities, while fish
processing and marketing should be open to all comers rather than restricted to a single
concessionaire as has been the case on the Nan Ngum reservoir. The Panel feels strongly
on this issue because of the importance of reservoir fishing and fish marketing as a source
of employment and income generation for other dam reservoirs in the tropics. Should the
various livelihood components be implemented as planned, total family income could be
expected to exceed the country’s poverty datum line almost by a factor of two.
An all-weather road will be constructed through the resettlement area which currently is
served by tracks - significant portions of which are impassable during the rainy season or
when churned up by logging trucks. Electricity will be extended to the edge of each
village, with a piped water supply, along with wells, provided within the village. Each
family will be provided with 0.5 hectares of cleared land before moving, along with
housing, tools and seedlings. Though land for irrigated paddy is scarce, where available
families will receive 0.15 ha. To test such livelihood components as stall fed livestock,
and fruit and vegetable cultivation, an experimental farm has been in operation since
1996 with three pilot families settled in 1997 to experiment with the different livelihood
options. For training purposes and propagation a nursery was established in 1998.
By 2000 a village near the district headquarters had been selected to pilot the resettlement
action plan along with an adjacent irrigation project large enough to incorporate
households from a number of villages on small plots that could produce the paddy
component of their livelihood plan. At the time of the Panel’s January 2003 visit several
households had moved into new houses, while others were clearing new fields and
cultivating vegetable gardens along a small stream. Their main complaint concerned ongoing delays in the project’s implementation.
The Nam Theun Watershed between the Dividing Hills and the Annamite Mountains
The Current Situation
Human settlement in the watershed area is located along the different tributaries
immediately upriver from the hills that offset the NT2 reservoir from the Proposed
Protected Area. What evidence is available suggests that living standards among a
population of at least 6,000 people are somewhat higher than on the Plateau due to less
Vietnam War and project impact. Though included within Nakai District, much of the
area, however, is more isolated with the three southeastern most tributary villages
reachable only by foot. To reduce the watershed’s isolation and to open the area for
logging, the responsible military parastatal had begun building a road into the area from
the highway system in the neighboring province to the northeast. By the time
41
construction was stopped as a 1996 World Bank project-related requirement it had
reached the village of Ban Navang on the Mon River. From there a logging road had been
built at right angles to gain better access to the cypress pockets in the Annamite
Mountains from where cut timber was lifted by helicopter to the logging road terminus.
That too was stopped as a World Bank requirement in 1996.
At least ten distinct ethnic minorities live within the Nam Theun watershed conservation
area. The earliest arrivals were Vietic speakers whose “ethnic diversity represents a
critical dimension of biodiversity” (Chamberlain 1997: 1-6). Separated by ridges between
tributary valleys, they developed different cultures with economies varying from foraging
to sedentary cultivation of a variety of crops including paddy rice. Aside from the most
recent foraging groups, most interesting from an anthropological perspective were the Kri
who lived close to the border with Vietnam. Located on a trade route, their economy was
based on trade as well as a system of shifting cultivation based on rotation between a
series of fixed village sites.
As recently as the early 1970s several groups of Vietic speakers, each containing less
than 50 families, were still nomadic foragers with invaluable indigenous knowledge of
the upper reaches of the tributaries and associated forests where they lived. In
Chamberlain’s words “their intimate relationship between nature and culture” represents
“a resource of inestimable value for Laos, a cultural type that is practically extinct in
South East Asia, and that is found nowhere else on the planet” (ibid: 7). Tragically,
starting in the mid 1970s, the government rounded them up for involuntary settlement in
existing communities within and without the conservation area. Mortality rates were
excessive so that all such groups are threatened with extinction unless they develop ties
of intermarriage with each other. The largest group, and culturally the one with the best
chance at survival, are the Themarou. Settled primarily in the furthermost village up the
Nam Theun in the conservation area they numbered 200 individuals living in 39
households in the mid-1990s. When visited by the Panel, a few families had begun to
experiment with dry season paddy cultivation. Yet their foraging past was sufficiently
recent that they still had their no longer worn bark clothing.
The next arrivals were the Sek. Claiming to have emigrated into the conservation area
early in the 18th century, they numbered about 600 in the mid-1990s and lived in three
villages along the upper reaches of the two conservation area tributaries southeast of the
upper Nam Theun. They brought with them a sophisticated system of dry season paddy
rice cultivation with water diverted by small weirs through canals and bamboo piping to
their paddies.
As with the various communities of Vietic speakers, the Sek economy appeared to be in
balance with the natural resource base. That is not the case with the Brou who are the
latest and largest group of immigrants. Numbering over 3,000 individuals they have
established villages along all six rivers where the basis of their economy is an expansive
system of bush fallow agriculture. Due to the highest rate of population increase within
the conservation area, estimated time for a doubling of their numbers is less than twenty
years.
42
The more densely settled areas along the watershed rivers were also bombed during the
Vietnam war, though to a lesser degree than on the plateau. The same applies to adverse
impacts caused by the long period of NT2 project planning. Adverse impacts were of two
sorts. Though beneficial in the long run if current plans are implemented, stopping the
road construction efforts of the military parastatal has kept the area in isolation. Though
the roads were primarily to open the area to logging, they were also intended to reduce
the isolation and improve the social services of all five tributary areas by connecting them
with a road that would run the width of the conservation area.
The lack of continuity in the pilot development and conservation activities that raised
village expectations during the 1998-99 period of IUCN activities has caused confusion
and adversely affected morale. The Nakai-Nam Theun conservation area has also
suffered in recent years from intense rainfall that has caused flooding, as well as some
land slippage and tributary siltation. Riverside fields have been eroded with crops
destroyed. Severe pest infestation has also been a major problem with a “plague” of rats
also adversely affecting crop yields. Though explanations vary as to causality, the extent
and form of shifting cultivation is not considered to be a significant factor. Whether or
not global warming is involved as opposed to natural variation in rainfall remains a
question. As for the ‘plague’ of rats two explanations exist. One is a natural increase in
the rodent population associated with the “hundred year” flowering of the dominant
species of bamboo. The other is reduction in the population of small predators due to
hunting pressure from local villagers as well as transboundary poachers who at any one
time may dominate residents within a 20 kilometer distance from the joint border with
Vietnam.
Development Plans for Making the Conservation Area People Project Beneficiaries.
The most important immediate development need is to implement the autonomous
Watershed Management and Protection Authority. A major strength of the Authority as
planned is the way the development of the 6,000 residents is integrated with landform
and biodiversity conservation. Unlike the situation in other parts of the country where
government policy has been to move upland minorities to the lowlands, a project
requirement for the conservation area is that no involuntary resettlement is acceptable.
That includes both resettlement from the area and village consolidation within the area;
indeed, one recommendation of the Panel has been that the former foraging groups
should be allowed to return to their former habitats should they so wish.
Landform and biodiversity conservation must be intricately integrated with stabilization
of village production systems. That will not be easy especially in the case of the Brou
who constitute the majority of the population. The outlines of an approach have been
piloted by IUCN, EcoLao and more recently the District Upland Development and
Conservation Project with special emphasis on the Brou village of Mak Pheuang on the
Nam Theun a short distance upriver from the Dividing Hills. The key component is the
intensification of crop agriculture through water diversion for dry season paddy rice
cultivation so as to reduce emphasis on shifting cultivation. During successive visits, the
43
Panel has not only been told of requests from villages in different tributary valleys for
assistance with irrigated dry season cultivation, but has also seen its gradual expansion
within a number of Brou villages.
Without pressuring people, one still-to-be resolved issue is how to accommodate
households who may wish to leave the conservation area. Though exceeding inmigration, to date out-migration has been on a small scale. Should development plans for
the Plateau and for the lowlands along the Xe Bang Fai be implemented as intended, one
can anticipate more households wanting to join kin or villages in both areas because of
their higher level of social services and income generation. Releases of water for
irrigation from the regulating reservoir below the power station, for example, will be for a
area from which Chamberlain believes Brou immigrants came. Thought the project
consortium sees its resettlement responsibilities restricted to Nakai Plateau households
and villages directly affected by project works, development with conservation can be
expected to depend on the extent to which the area affected by the project is incorporated
within an overall development plan that stretches from the Vietnam border to the
Mekong. That will require closer integration of the Resettlement Action Plan and the
Watershed Management and Projection Authority, as well as with on-going planning
along the Xe Bang Fai by the Department of Irrigation than has occurred so far.
Just as development activities are urgently needed now, so too are conservation activities
throughout the area under the Watershed Conservation and Protection Authority.
Especially important is the integration of the type of village biodiversity awareness
program and village-based biodiversity patrols piloted by IUCN with the activities of the
Lao security forces that must play an increasingly important role, especially along the
international border, if the illegal wildlife trade is to be controlled.
In addition to implementing the Watershed Management and Conservation Authority and
the necessary development and conservation activities, another important project benefit
will be the extension of Nakai District responsibilities into the conservation area.
Currently there are only five primary schools for a population of over 6,000, three of
which are single room structures covering the first two grades with teachers who are
irregularly in residence. A two-room building, the fourth school was built by the military
parastatal at Ban Thameuang close to where the military’s road crossed the first tributary.
The fifth and largest school has recently been completed as a result of World Bankassisted project influence at Mak Pheuang. While Nakai District has facilities on the
plateau including a hospital, two health centers and a Malaria Station, there are no health
facilities in the conservation area (IUCN 1997.Part II: 19).
As a substitute for the previously planned road crossing the width of the conservation
area that would tie communities closer to the neighboring province rather than to Nakai
District headquarters, current plans are to link the plateau headquarters to the three
subdistricts by tracks paralleling the tributaries that would be wide enough for the
passage of ox carts and two wheeled tractors but not for four wheeled vehicles.
44
The Xe Bang Fai River Basin
The Existing Situation
Aside from Brou living along the Nam Khatang tributary in Gnommalath District
immediately below the escarpment, villagers close to the Xe Bang Fei are largely lowland
Lao. Five of the project’s 12 zones lie within the Xe Bang Fai Basin. Zones 7-9 cover
different parts of the Gnommalath Plain, while Zone 10, called Upper Xe Bang Fai,
includes the next district downstream. Zones 11 and 12 include the Middle and Lower Xe
Bang Fai.
Though the riverine population probably exceeds 70,000 people in all five zones, their
current life styles, including degree of dependence on the river, have been less
extensively surveyed than is the case with the population on the Nakai Plateau and in the
Nakai Nam Theun conservation area. As elsewhere in the lowlands their economy is
dominated by the rain-fed rice cultivation complemented by a slowly increasing amount
of dry season irrigation. Gravity fed into a community irrigation project on the
Gnommalath Plain, water elsewhere is lifted by diesel operated pumps that slowly are
being electrified. Where river banks are not too steep, flood recession dry season gardens
are an important source of maize and vegetables. Next in importance to rice as a food,
fish is the major source of protein.
Development Plans for the Xe Bang Fai Villages to Become Project Beneficiaries.
The current annual flow of the Xe Bang Fai will be almost doubled once the power
station commences operation. Impacts on the river’s natural regime will be greatest
during the dry season when water levels in the upper zone channel will be increased 3.4
to 4 meters. Though the draft Environmental Assessment and Management Plan states
that impacts on riverine communities will only be “slight to moderate” (SEATEC 2000),
they will be heaviest on communities most dependent on flood recession cultivation. The
Panel is also of the opinion that such radical changes in river flows will also have an
adverse effect on fisheries – an opinion held by the most knowledgeable fishery experts
as opposed to the belief of the project authorities and their consultants that ‘more water
means more fish.’ As a result of a panel recommendation, a program of annual pre- and
post-project completion fishery surveys was started in 2001 which will document what
impacts actually occur. During 2001 independent and project consortium livelihood
surveys were also completed.
The best approach for mitigating project impacts, on the one hand, and improving
livelihoods, on the other hand, is hydrological and socioeconomic. As a mitigation effect,
the turbines will be shut down when water levels reach a predetermined height in the
upper zone so as to avoid increased flooding of irrigated floodplains. In the irrigated
areas of the delta the backwater effect of the Mekong will be somewhat lessened due to
reduced Mekong flows from the Nam Theun. At an increase in project cost, another
mitigation measure was to select a less densely settled route for channeling the turbined
water from the regulating reservoir 27 km to the Xe Bang Fai.
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If affected communities are to benefit it will be necessary to use turbined water to
increase significantly the area under dry season irrigation. If implemented, existing plans
for the use of project water and electricity have that potential in all project zones. While
passing through the Gnommalath Plain, one fourth of the 27 km channel will be
sufficiently raised above ground level to allow double cropping in the local irrigation
project. Though designed to irrigate 2,400 hectares, during the 2000-2001 dryseason only
335 hectares were cultivated (Vientiane Times, January 12-15, 2001). Outflows from the
regulating reservoir are also designed to release 15 m³/s into another Xe Bang Fai
tributary which can be used for irrigation and domestic purposes by 20 riverine villages.
Further downstream, natural regime water levels falling as low as 3 m³/s in the upper
zone are a major constraint to an estimated dry season irrigation potential of over 20,000
ha. Even the 3,000 ha. that have been developed to date are adversely affected by low
water levels which increase pumping costs and may stop pump operations entirely.
Greatly increased project flows during the dry season will not only reduce those pumping
costs but will provide the opportunity to increase greatly the area under dry season
irrigation. Already the Department of Irrigation has drawn up plans to use turbined waters
for that purpose (2002 communication from Robert Goodland). Increased electrification
of pumps can be expected to follow the ongoing electrification of the area by the World
Bank-funded Southern Provinces Electrification project. Using electricity the Bank is
also considering irrigation development in the uppermost zones (SEATEC 2000).
It is very much in the interests of the Company and the government to integrate those
plans into an overall regional development plan for the entire project area. Such a plan
should also combine aquaculture with irrigation along lines proposed by the Department
of Fisheries and address the fishery implications of the new Xe Bang Fai regime. With
the potential to raise living standards such an approach also has the major benefit of
addressing what I believe could otherwise be the most serious costs of the NT2 Project.
Risks
Introduction
Unless the plans previously described are adequately implemented, the Nam Theun 2
project has the potential to be a disaster for the environment of the Nakai Plateau and the
Nam Theun watershed, as well as for affected communities from the Vietnam border to
the Mekong River. Of various risks, two are potentially serious. One is lack of political
will on the part of the government; the other is lack of implementation capacity.
Political Will
With large dams one never knows whether governments and project authorities have the
necessary political will until environmental and social plans are actually implemented.
Though some critics believe that the communist government of Laos has no intention of
implementing the NT2 Project as planned, the history of how affected communities are
dealt with does not appear to be influenced by form of government. The record, for
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example, of Canada and the United States is poor in regard to large dams requiring the
resettlement of ethnic minorities. On the other hand, two of the best planned and
implemented projects are associated with a socialist government (Egypt in regard to
Aswan High Dam resettlement) and a communist one (China in regard to Shuikou Dam
resettlement).
In the NT2 case, of more concern are a number of past and present government policies
which if applied in the Nam Theun project area would run counter to current plans. One
such policy relates to past attempts to resettle ethnic minorities from the uplands to the
lowlands, in some cases incorporating them within larger Lao host communities. Few
such relocations, if any, can be considered successful from the point of view of the
resettling communities (UNESCO/UNDP 1997). Top down government control of rural
land, water and other natural resources is another worrisome policy since it has interfered
with the ability of the government to implement World Bank-financed community
forestry projects. That inability raises the question as to the government’s political will
not just to implement such projects within the context of the Resettlement Action Plan for
the Nakai Plateau but also to allow the population of the Nam Theun conservation area to
play a major role in the Watershed Conservation and Protection Authority.
Capacity
Since I believe both the government and the project consortium are committed to
implement existing plans, the most serious risk I believe to be inadequate implementation
capacity. The most serious capacity problem relates to the Watershed Management and
Protection Authority which must be able quickly to control the currently unsustainable
transboundary poaching of wildlife and collection of non-timber forest products. As
recommended by IUCN, staff of the Authority would number 197 members “at full
operational capacity” (July 1997. Part IV: 8). The largest number would be concerned
with protection functions (30 percent) and with village development and ethnic minority
preservation (also 30 percent). Piloted by IUCN between 1998 and 1999, after a two year
gap the District Upland Development and Conservation Project has recommenced the
type of training that is necessary to staff the Nakai District office as well as the Authority.
Because of the active involvement of the Company and the nature of the resettlement
program, staffing capacity, while less serious than with the Watershed Conservation and
Protection Authority, will still stretch government resources. A high level Resettlement
Committee will report to the Vice Prime Minister on the work of its Resettlement
Management Unit. The Unit staff dealing with technical, administrative and financial
issues will work closely with Nakai District staff and where necessary with provincial
and central government technical and administrative officials. Development along the Xe
Bang Fei will be largely the responsibility of district staff working with provincial and
central government Department of Fisheries and Department of Irrigation personnel. The
government’s ongoing prohibition against independent environmental and community
development NGOs is unfortunate since they could have played an important role, as in
other countries, in capacity building activities.
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In addition to staffing another capacity problem is coordination. As with the Lesotho
Highlands Water Project, the NT2 project falls under a single ministry (the Ministry of
Industry and Handicraft) and within that Ministry under the Laos National Committee on
Energy. In the Panel’s experience responsibility for such a complex project with major
regional and national development implications is “too much for a single ministry” (NT2
POE 1997: 7). The active involvement of the Deputy Prime Minister in NT2 planning
and his ongoing interest in the project as well as the interest of the Prime Minister may
enable the Minister of Industry and Handicraft to obtain the necessary cooperation from
other ministries and agencies through a central working committee that he chairs.
Because that remains to be seen the Panel recommended that the effectiveness of such an
institutional setup should be “re-evaluated at regular intervals” (ibid). Project
components such as the Resettlement Action Plan, the Environmental Assessment and
Management Plan, and the Watershed Management and Conservation Authority all have
their own coordination problems with other government agencies. The Authority’s
effectiveness, for example, will depend in good part on its ability to work with the
military parastatal for the central region and other security forces in patrolling the
international border and upper portion of the watershed.
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