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Hydropower in the Context of Basin-wide Water Resources Planning

Jeremy Bird
CEO, Mekong River Commission Secretariat

Regional Multi-Stakeholder Consultation on the MRC Hydropower Programme

Vientiane, Lao PDR
25-27 September 2008


Excellencies, Distinguished Guests, Ladies and Gentlemen, Colleagues – Good morning,

Let me again add my warm welcome to everyone joining us over the next few days in what is a very important meeting for the MRC at this time of rapid development in the Basin. Your inputs will help us to define how we, as a regional organisation, can add value to the complexity of national, bilateral, regional and indeed international issues and relationships inherent in hydropower development in the Mekong Basin.

And also let me thank our distinguished opening and keynote speakers, who have so elegantly helped to frame the issues before us. They have captured the imperative of developing the significant resources of the basin, while at the same time pointed to many of the ways in which we can learn from the experiences of others around the world in ensuring this is achieved in an appropriate and sustainable manner.

Our aim at this Regional Consultation is primarily to draw on the experience of all of you to help us define how the MRC can play a constructive role in the field of hydropower development, and to design a programme that fulfils such a role. We have already started on some priority items and gathered further ideas through national meetings. During this Consultation we will hear the initial results of this work.

This event also provides a forum for discussing many issues and new ideas, some of which are already entering into effect in one or more of our member countries, and others that are at a formative stage. I hope our gathering here offers a chance for many of the key players to get to know each other better, and to raise our common understanding of others’ views.

This morning I would like to touch on the approach to integration as it applies to the planning and implementation of hydropower in the context of the Mekong Basin. Over the next few days we will be hearing a number of interesting presentations and discussions from a range of perspectives, including those of governments, industry, developers, NGOs, financing agencies and academics. Similarly we will be hearing about water from the point of view of river flows, sediment regimes, fisheries, peoples’ livelihoods, power generation and regional interconnection, tariffs and revenues, land use, freedom of navigation and much more. Seeking integration across these interests, sometimes competing interests, is our task.

Let me elaborate a little on this integration through the lens of this Consultation. This morning we have heard global perspectives provided by representatives of the World Bank Group, WWF International and the International Hydropower Association. Later we will listen to overviews of the current power expansion plans of the four member countries, details of hydropower developments in the Lancang-Mekong river in Yunnan Province, and the broader plans for integration of the regional power trade under the umbrella of the Greater Mekong Subregion programme, a six-country initiative coordinated by the Asian Development Bank.

From NGOs working on dam projects and representing community and biodiversity interests at both policy and field-levels, we will hear some of the critical social and environmental issues, and their ideas for a different way of doing business. Similarly we will be able to learn lessons from other river basins around the world, including the Columbia in the western United States and Canada, the Yangtze in China and the Rhone in France. From the scientific community we will hear some responses to searching questions about our ability to mitigate potential impacts on fish migration and the consequent effects on communities.

Developers and dam consultants will present their perspective on the future of sustainable hydropower, and two presentations from Viet Nam on recent experiences with Strategic Environment Assessment and Benefit-Sharing mechanisms will bring us up to date on how areas of good practice are being implemented in the region.

As well as feeding into the final working session on Saturday morning, when we will focus explicitly on the design of the MRC’s emerging Hydropower Programme, this Consultation is about raising awareness both of different perspectives and of common interests. It is, above all, an opportunity to meet and to build trust. This will be important in the future, when inter-governmental discussions on mainstream dams will need to ensure their contribution to the sustainable use of resources in the basin.

The MRC supports sustainable hydropower developed within the framework of the 1995 Mekong Agreement. This may appear to be an obvious statement, but I think it is one worth re-iterating as it introduces certain principles central to the way in which the MRC looks at any project involving a significant change in the way the resources of the basin are used or managed. These principles include a commitment to social and economic development, sustainability, mutual benefit among member countries, protection of the environment, and maintenance of the unique ecological balance of the river basin.

Dams and hydropower are, as we all know, sensitive subjects. Much debate has been held on this subject over past decades and our understanding of the issues has now significantly improved, both in relation to impacts, and also regarding necessary measures to lessen or mitigate those impacts and bring development benefits to a broader group of people. With high oil and gas prices and concerns over climate change there is now considerably more focus on hydropower. But also a focus on making our use of existing resources more efficient and on exploring the use of other renewable technologies. This is a dynamic and multi-faceted sector.

But let me to come back to the question of sensitivity. We will hear at this Consultation from those in support of hydropower as a suitable generating technology and those with doubts who question the use of large scale hydropower in the region. Particularly we will hear questions over the proposals for mainstream dams. This subject should not surprise anybody. In recent years media coverage of such projects in the Mekong Basin has been extensive. Local and global press have carried dozens of articles covering projects on the tributaries, proposals for mainstream dams, and the developments being constructed in China. For example The Economist has printed two articles on Mekong hydropower in the past 15 months, and we can expect that such coverage will intensify.

Sensitivity however is not a reason to avoid engagement on the subject – quite the opposite. Evidence has shown that greater openness and discussion can result in improved outcomes. Many of the good-practice examples being implemented on the Nam Theun 2 project, for example, are a direct result of a more open planning process which involved listening to a broad range of views.

Let us look at the benefits that this more open discussion on dam construction can bring. It encourages us to look at all options, to evaluate their relative merits and also the consequences that they bring - no technology is without some form of impact. Discussion encourages us to see whether more inclusive solutions can be found to improve the livelihoods of those affected and bring the benefits to a wider group. It also encourages us to make sure that the policy framework already in place is actually implemented, through clear commitments on the part of the developer, the government and the communities involved. These are not concerns of civil society alone, but are also echoed in the presentations we heard this morning from representatives of industry and international financial organisations.

Scientists are raising similar concerns about mainstream dams, as we will hear later. This is one of many inputs into the process needed to build up a truly integrated picture of the consequences of various developments. And once the complete picture is built, that information will be available to the governments of our member states governments to take informed decisions.

Where broader development considerations suggest mainstream projects should go ahead, then the question becomes one of how can impacts be minimized and mitigated? How, for those people affected, can we guarantee that such projects also improve their livelihoods? This includes hundreds of thousands of people, many of whom live hundreds of kilometres away from the project sites.

Solutions, such as aquaculture and more intensive agriculture may exist, but how are such compensatory measures to be financed? As direct project impacts, are they financed exclusively by the developers as part of their concession agreements? Or will governments take on these costs, and will there be arrangements for cost sharing between countries that reflect the distribution of benefits? These questions will inevitably be asked as part of the decision making process.

For mainstream dam proposals, the 1995 Mekong Agreement enshrines the philosophy of consultation among member countries before firm decisions on project construction are made. It requires a process of ‘prior consultation with a view to reaching an agreement’ among member countries. We will hear more about this procedure during the course of the next two days.

But the Mekong Agreement and the current MRC Strategic Plan agreed by all Council members go further to establish an understanding of how such projects will fit together within a broader set of development principles. These guiding documents provide an integrated and multi-disciplinary framework within which to assess opportunities and concerns, and to minimize the risk of unforeseen impacts.

Preliminary information on most of the proposed mainstream hydropower projects has already been shared among the four MRC countries. Under our procedures it is expected that notification and consultation will begin in the coming months. As notification of projects will be made at different times, it is important to have an integrated basin-wide assessment framework.

Let me quote the five-year goal for our Strategic Plan to 2010, it is: More effective use of the Mekong’s water and related resources to alleviate poverty while protecting the environment.’ Poverty alleviation here can come from a mix of targeted poverty reduction initiatives and also continuation of the progress already made in Southeast Asia on reducing poverty through economic growth. The Member States of the MRC regard the development of their hydropower potential as an integral component of their policies to continue this economic growth and so gradually eliminate the poverty that is still all too prevalent within the Lower Mekong Basin. It also provides an opportunity for targeted poverty interventions through allocations from the revenue stream.

Our role at the MRC in relation to hydropower planning is threefold: we encourage dialogue, we assess outcomes and we help integrate basin planning across all sectors. To do this, our various programmes are working on various parts of an overall story that the Hydropower Programme will draw together in the form of a Strategic Environment Assessment for the mainstream dam projects. This will also take into account cumulative changes resulting from dams upstream in China, dams on the tributaries, land use changes, urban and irrigation developments, population and industrial growth, and the uncertainties surrounding climate change. In examining future scenarios, we also need to be clear that there are underlying trends in the basin that are already creating their own pressures on the basin’s natural resources. This is a region of rapid change, and hydropower is just one dimension of that change.

The models our Basin Development Plan or BDP process is using will inform the discussion on changes in water flows in the wet and dry season, on changes in water quality and sediment flows, on the hydraulic triggers for fish migration and on social and environmental consequences. The BDP has aligned itself with country planning processes and looks also at provincial and district interests through its sub-area planning process and consultations.

We are also assisting the Government of Lao PDR with an optimization study of the proposed dams in the upper part of the basin. From a power perspective there are clearly economic benefits to adopting an integrated approach rather than allowing developers to maximise production independently from individual projects. Similarly, there are advantages in looking at the whole system from an environmental and social perspective.

Our fisheries programme is identifying the importance of different reaches of the river for spawning, feeding and migration of fish. It is also looking into the technical options and likely survival rates for enabling fish to pass dam obstructions both upstream and downstream. A group of experts in aquatic ecology and engineering design came together this week in Vientiane to consider how fish pass technologies can be adapted to the Mekong region. The results will be presented later in this session.

One example of a technology fix is a new generation of ‘fish-friendly’ turbines – not only are they less damaging to fish passing through them, but they can stimulate efficiency gains that increase electricity generation. The fisheries issue, let us be clear, goes beyond biodiversity - it is at the heart of peoples’ subsistence livelihoods and is a resource with first-sale financial value of about $2 billion per year.

For river-borne trade and tourism, our Navigation Programme is helping member states develop standard specifications for ship locks to ensure freedom of navigation as required under the 1995 Mekong Agreement.

Our Environment Programme is working on integrated basin flow management, identifying the importance of wetlands and helping to build capacity for culturally appropriate approaches to conflict prevention and mediation. They have recently embarked on a climate change initiative which is linked into BDP’s modelling of development scenarios and also lead to development of adaptation strategies. In addition, they are working on a joint programme with ADB and WWF to develop a sustainability assessment tool based on the Sustainability Guidelines and Sustainability Assessment Protocol of the International Hydropower Association, that was outlined this morning.

The complexity of the issues facing hydropower development requires comprehensive and innovative solutions. As a regional body looking into the mutual benefits for its member countries, the MRC can play a part in bringing knowledge and ideas to the tables of decision-makers. Win-win solutions may be possible in some aspects of our work, but not everywhere. Where trade offs are necessary, the solutions need to avoid a win-lose result by applying appropriate design of mitigation measures and implementing the principle of a sharing of benefits. Our Hydropower Programme, which we are asking you to help design, needs to reflect on the unique abilities of a regional organisation like MRC to create more sustainable and mutually beneficial development outcomes.

I thank everyone with us this week for engaging in this process with the MRC, and look forward to the broad range of presentations and discussions.



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