Compensation Policy Issue

United Nations Environment Programme Dams and Development Project

Compendium on Relevant Practices - 2nd Stage

Monetary compensation for lost assets and loss of access to resources

Livelihood restoration and enhancement

Community development

Catchment development

Final Report

Prepared by:

Mr. Vincent ROQUET, Sociologist and Planner, Lead Consultant with Ms. Carine DUROCHER, Anthropologist

Vincent Roquet & Associates Inc. 560 Sainte-Croix Avenue, suite 101, Montreal (Quebec) Canada, H4L 3X5 Tel: +1 (514) 849-3030; Fax: +1 (514) 849-3322 Email: [email protected]

September 15th, 2006 Table of Contents Page

EXECUTIVE SUMMARY...... vi

1 – INTRODUCTION ...... 1 1.1 Context...... 1 1.2 Study Objective...... 1 1.3 Study Process...... 2 1.4 Contents of Final Report...... 2

2 – METHODOLOGY...... 3 2.1 Links with Benefit Sharing Priority Issue...... 3 2.2 Focus of Search for Relevant Policy/Legal Frameworks...... 5 2.3 Selection Process for Relevant Examples...... 6

3 – CHARACTERISATION OF COMPENSATION POLICY ISSUE...... 9 3.1 Need for Improved Compensation for Lost Assets...... 9 3.2 International Policies and Guidelines...... 11 3.3 State of the Art and of the Practice ...... 16

4 – DESCRIPTION OF RELEVANT EXAMPLES ...... 19 4.1 Costa Rican Expropriation Law and Inter-American Development Bank Requirements for Development Projects: The Arenal Dam...... 19 4.2 Brazilian Environmental Legislation and Second Master Plan for the Protection and Improvement of the Power Sector Works and Services: The Salto Calxias Dam...... 25 4.3 Resettlement Policy of the Electricity Sector in Columbia: The Urra 1 Dam...... 33 4.4 Opimiscow-La Grande (1992) Agreement between Hydro-Québec and Cree Indigenous Communities: The Laforge-1 Dam ...... 43 4.5 Hydro-Québec’s Integrated Enhancement Program and Participatory Approach on Partnerships with Indigenous Communities: The Sainte-Marguerite-3 Dam ...... 51 4.6 Indonesian Expropriation Law and World Bank Operational Manual on Social Issues Associated with Involuntary Resettlement: The Saguling and Cirata Dams ...... 60 4.7 Draft Chinese Regulation for Land Acquisition and Resettlement for the Construction of Large and Medium Size Water Conservancy Projects and World Bank Operational Directive OD 4.30 on Involuntary Resettlement: The Shuikou Dam ...... 67 4.8 Indian Land Acquisition Act, NHPC Resettlement and Rehabilitation Framework and CIDA and SIDA Requirements for Development Projects: The Chamera and Uri Dams...... 76 4.9 Treaty for the Joint Development and Utilisation of the Resources of the Komati Basin between Swaziland and South Africa and Maguga Resettlement and Compensation Policy Document: The Maguga Dam...... 84 4.10 Pakistani Land Acquisition Act and World Bank Operational Directive OD 4.30 on Involuntary Resettlement: The Ghazi Barotha Dam...... 91

5 – DISCUSSION OF STUDY RESULTS ...... 99

APPENDIX – Data Base of References on Compensation Policy...... 101 List of Acronyms

ADB Asian Developement Bank AFD ‘Agence Francaise de Dévelopment’ or French Development Agency AfDB African Development Bank ANEEL National Electrical Agency (Brazil) BAPE ‘Bureau d’Audiences Publiques pour l'Environnement’ or Environmental Hearings Board (Québec, Canada) CCDC Cree Construction and Development Company (Québec, Canada) CIDA Canadian International Development Agency Coface France’s export credit agency COPEL ‘Companhia Paranaese de Energia’ or Parana Energy Company (Brazil) COMASE Coordinating Committee for Environmental Operations of the Power Sector (Brazil) CONAMA National Council for the Environment (Brazil) CRA Cree Regional Authority (Québec, Canada) CRAB Regional Commission for People Affected by Dam Construction (Brazil) CRABI Commission of People Affected by Dams Construction on the Iguaçu River (Brazil) DBSA Development Bank of Southern Africa DDP Dams and Development Project DFID Department for International Development (United Kingdom), ECIDI East China Investigation and Design Institute EDC Export Development Corporation (Canada) EKN Swedish Export Credit Agency ERC Ekuvinjelweni Resettlement Committee (Swaziland) FAO Food and Agriculture Organisation FPEPB Fujian Provincial Electric Power Bureau (China) GBTI ‘Ghazi Barotha Taraqiati Idra’ or Gazhi Barotha Project NGO (Pakistan) GEM CX Salto Caxias Multidisciplinary Studies Group (Brazil) GCC-EI Grand Council of the Crees – Eeyou Istchee (Québec, Canada) GTZ German Corporation for International Cooperation HQI Hydro-Québec International IAP Environmental Institute of Paraná (Brazil) IBAMA Brazilian Institute of Environment and Renewable Natural Resources ICE ‘Institúto Costarricense de Electricidad’ or Costa Rica Electricity Institute

iii

ICLARM International Center for Living Aquatic Resource Management ICOLD International Commission on Large Dams IDB Inter-American Develpment Bank INDERENA Natural Resources Development Institute (Colombia) IEA International Energy Agency IFC International Finance Corporation ILEC International Lake Environment Committee IOE Institute of Ecology of the Padjadjaran University in Bandung (Indonesia) IUCN International Union for the Conservation of Nature JBIC Japan Bank for International Co-operation JBNQA James Bay and Northern Quebec Agreement (Québec, Canada) JICA Japan International Development Agency KCRC Komati Community Representative Committee (Swaziland) KfW German Bank for Development KOBWA Komati Basin Water Authority LVC Land Valuation Committee (Pakistan) MAB National Movement of People Affected by Dams (Brazil) MMA Brazil Ministry of the Environment, Water Resources and Legal Amazon MMA Ministry of the Environment (Colombia) MOI Ministry of the Interior (Colombia) MCR Regional County Municipality (Québec, Canada) MST Landless Workers Movement (Brazil) NAB National Accountability Bureau (Pakistan) NGO Non-Governmental Organisation NHPC National Hydroelectric Power Corporation (India) NORAD Norwegian International Development Agency NTPC National Thermal Power Corporation (India) NWFP North-West Frontier Province (Pakistan) ODA Overseas Development Assistance (United Kingdom) OECD Organisation for Economic Cooperation and Development OECD/DAC OECD - Development Assistance Committee OECF Overseas Economic Co-operation Fund (Japan) OED World Bank Operations Evaluation Department ONIC National Indigenous Organization of Colombia PLN ‘Perusahaan Umum Listrik Negara’ or Indonesian National State Electric Company

PMVI ‘Programme de Mise en Valeur Integrée’ or Integrated Enhancement Program (Hydro-Québec, Canada) SANDRP South Asia Network on Dams, River and People SADC Southern African Development Community SDBJ ‘Société de Développement de la Baie James’ or James Bay Development Corporation (Québec, Canada) SEB State Electricity Board (India) SEBJ ‘Société d’Énergie de la Baie James’ or James Bay Electricity Corporation (Québec, Canada) SIDA Swedish International Development Agency SKPE Swaziland Komati Project Enterprise SRRO Shuikou Reservoir Resettlement Office (China) UN United Nations UNCHR United Nations Commission on Human Rights UNCHS/Habitat United Nations Centre of Human Settlements UNDP United Nation Development Program UNEP United Nation Environment Program USAID United States Agency for International Development VRA Vincent Roquet & Associates Inc. WAPDA Water and Power Development Authority (Pakistan) WCD World Commission on Dams WWF World Wildlife Federation

Executive Summary

¾ Study Context and Objectives The Dams and Development (DDP) programme is tasked with improving decision-making and management of dams and their alternatives, building on the core values and strategic priorities of the World Commission on Dams (WCD) and other relevant reference materials through promoting dialogue and producing non prescriptive practical tools. The decision was taken to produce a Compendium of relevant examples. Stage 1 of the elaboration of the Compendium consisted in the elaboration of a checklist of key issues concerning planning of dams and their alternatives, a matrix analysis of their consideration by national and international frameworks and selection of a set of priority issues for analysis in further stages of elaboration of the Compendium, among which the Compensation Policy Priority Issue. The study on Compensation Policy is carried out for Stage 2 of development of the Compendium.

¾ Definition of Compensation Policy Mechanisms Compensation mechanisms applicable to dam projects can be defined as mechanisms that aim to both: a) compensate project-affected populations for lost assets and lost access to resources; and b) to restore and improve the livelihoods of project-affected populations living in the vicinity of a dam development (through livelihood restoration and enhancement schemes, community development schemes, catchment development schemes and/or monetary benefit sharing schemes). They include: 1) monetary compensation for lost assets and loss of access to resources; and 2) non-monetary or monetary benefit sharing mechanisms. The present study on Compensation Policy addresses all compensation mechanisms with the exception of monetary benefit sharing mechanisms which are discussed in a separate report produced for the Benefit Sharing Priority Issue.

¾ Characterisation of Compensation Policy Issue One of the key points put forward in recent debates on involuntary resettlement is that ‘dams have made an important and significant contribution to human development, and the benefits derived from them have been considerable’ (World Commission on Dams, 2000). These benefits are varied and include power generation, flood control, irrigation, industrial and domestic water supply, navigation as well as recreation.

However, dam projects frequently involve the unavoidable loss of housing, land, productive resources and/or community services by locally affected persons. This has been the case in the past and, for a variety of reasons, this can be expected to be the case in the future. An important body of social research has concluded that a large number of dam projects in developing countries have resulted in inadequate compensation and impoverishment of locally affected populations. This has occurred even though since the 1980s international resettlement standards have stressed the need for equitable compensation of all affected parties and the rebuilding of communities and of affected persons’ livelihoods.

The need to properly manage these issues is underscored by a globally accepted framework for setting universal goals, norms and standards. The foundation of this framework are the United Nations Charter (1945) and the Universal Declaration of Human Rights (1947). The United Nations General Assembly reinforced this framework with the UN Declaration on the Right to Development (1986) and the Rio Declaration on Environment and Development (1992). The WCD Report (2000) made the case that the traditional ‘balance sheet’ approach of assessing costs and benefits of a project is an inadequate tool for development planning and decision-making: “Given the significance of rights-related issues as well as the nature and magnitude of potential risks for all parties concerned, the Commission proposes that an approach based on ‘recognition of rights’ and ‘assessment of risks’ (particularly rights at risk) be developed as a tool for guiding future planning and decision making”. As

i emphasized in the IEA Report on Hydropower and Environment (2000), such an approach should also be balanced with needs, and above all the ‘need to reduce poverty’ which is particularly relevant in developing countries.

Dam project-induced resettlement takes place in a multi-layered framework composed of: a) International policy and law; b) National laws; c) State or provincial laws; d) Sector level laws and policies (energy, transportation, agriculture, etc.) and e) Policies and standards of dam building and operating agencies. Resettlement and compensation policies adopted by international development agencies are implemented in the context of this overall framework.

Until recently, few developing countries had put into place comprehensive compensation and resettlement normative/policy frameworks. Consequently, international development agency guidelines have played an important role in a number of development-induced resettlement programs. More recently, international financing institutions such as the World Bank have also played an active role in the development of national or sectoral normative/policy frameworks. More and more national governments are formulating resettlement guidelines and a few, such as China, appear to have these guidelines firmly in view when planning and undertaking dam project-induced resettlement programs. The World Bank’s involuntary resettlement guidelines (OP/OD 4.12) have been particularly influencial in shaping the policies of other donors and are often used as a reference by potential public and private sector investors in dam projects. However, certain aspects of the World Bank’s guidelines for involuntary resettlement have recently been called into question by the human rights-oriented approaches of many UN agencies, by the World Commission on Dams report (2000) and by a number of bilateral donor agencies and non-governmental organisations (NGOs).

¾ Brief Discussion of Study Results Ten examples were presented in the report to illustrate the four mechanisms considered within the general framework of Compensation Policy. They reveal a number of interesting points. For instance, the oldest case discussed in the report, the Arenal dam in Costa Rica which was commissioned in 1980, did not benefit from a sophisticated normative/policy framework but rather from the strong committment of government and power utility authorities and the support of Inter-American Development Bank partners. Resettlement planners were prepared to experiment and try out a variety of solutions with project-affected persons in order to ensure that displaced persons were better off after the project than before.

At the other end of the spectrum, the more recent Latin-American cases involving the Salto Caxias dam in Brazil (commissioned in 1998) and the Urra 1 dam in Colombia (commissioned in 2000) illustrate the benefits offered by clear and forward-looking national normative/policy frameworks for involuntary resettlement in the electricity sector in both countries. Both projects resulted in successful outcomes for affected people without requiring significant involvement by outside parties such as international development banks. In the case of the Salto Caxias hydroelectric project, compensation and resettlement programs were established on the basis of a multi-stakeholder consultation forum, an approach that was also later successfully adopted for the Ghazi Barotha hydroelectric project in Pakistan.

The two Canadian examples, based on the Laforge-1 and the Sainte-Marguerite-3 dams in Québec (commissioned respectively in 1994 and 2002), involved the use of lands traditionally used by indigenous communities for hunting, trapping and fishing activities. As a form of compensation for lost habitats and wildlife resources, both projects led to the negotiation of agreements that enabled indigenous communities to contribute actively to the planning and implementation of environmental remediation and enhancement activities for wildlife in the dam’s watersheds. The Sainte-Marguerite-3 project also adopted an Integrated Enhancement Program as well as innovative project implementation practices to optimise local economic spin-offs and training and employment benefits for local communities.

The two Indonesian cases, based on the Saguling and Cirata dams commissioned in 1988 in West Java, consitute extensively studied examples of implementation of an early version of the World Bank’s Involuntary Resettlement guidelines (1980) and are remarkable for their use of reservoir fisheries as an alternative means of restoring incomes in displaced communities.

The Chinese case based on the Shuikou dam commissioned in 1996 constitutes an example of successful implementation both of new Chinese resettlement regulations for large and medium sized dams (1991) and, to a lesser extent, of a later version of the World Bank’s Involuntary Resettlement guidelines (1990). The successful restoration of incomes in communities displaced by the Shuikou dam was largely due to the willingness of Chinese authorities to stimulate the development of sustainable agricultural and non-agricultural employment opportunities in the project area through a flexible and adaptive process.

The two Indian cases, based on the Chamera Stage-1 and Uri Stage-1 dams in northern India (commissioned respectively in 1994 with CIDA funding and in 1997 with SIDA funding), consitute examples of implementation of the National Hydroelectric Power Corporation’s (NHPC) Resettlement and Rehabilitation Framework which emphasises the development of community services (schools, health facilities and roads) and local employment to assist in restoring incomes in displaced communities.

The case of the Maguga dam in Swaziland (commissioned in 2002), whose development was linked to the signing of a Treaty for the Joint Development and Utilisation of the Resources of the Komati Basin between South Africa and Swaziland (1992) is of particular interest because it involves an irrigation dam built to support commercial agricultural ventures as a means to contribute to poverty alleviation in rural areas. The successful implementation of the Maguga dam Resettlement and Compensation Policy (1996) was largely based on the development of sustainable agricultural employment.

The case of the Ghazi Barotha hydroelectric project commissioned in 2003 in Pakistan constitutes another example of implementation of a relatively recent version of the World Bank’s Involuntary Resettlement guidelines (1990). This example is also of interest because it involved the requirement to address outstanding compensation claims from the Tarbela dam built seven kilometers further upstream on the Indus River.

A few of the examples presented in the Report did not demonstrably result in overall positive outcomes in regards to compensation for involuntary resettlement (Chamera Stage-1 and Uri Stage-1 dams in India, Saguling and Cirata dams in Indonesia, Ghazi Barotha dam in Pakistan). However, useful lessons can be drawn from all normative/policy frameworks described in the examples and from their implementation. In this respect, they can all be considered as examples of relevant practices.

Only a few of the selected examples have undergone systematic post-project assessments of the compensation programs implemented for communities affected by loss of assets or resources (the Laforge-1 and Sainte-Marguerite-3 dams in Canada and the Maguga dam in Swaziland). These assessments were carried out on the basis of surveys of local indigenous (i.e., the Cree in the case of Laforge-1 and the Innu in the case of SM-3) and non-indigenous stakeholder representatives. The other examples presented in the previous chapter would all benefit from post-project assessments of resettlement outcomes based on surveys of local stakeholder representatives, e.g., the Arenal dam in Costa Rica, the Salto Caxias dam in Brazil, the Urra-1 dam in Columbia, the Saguling and Cirata dams in Indonesia, the Chamera Stage-1 and Uri Stage-1 dams in India, the Shuikou dam in China and the Ghazi Barotha dam in Pakistan. In the case of the Urra-1 dam in Columbia, surveys of local indigenous stakeholder representatives (the Embera-Katios) and of downstream stakeholders such as the indigenous Zenu community living in the downstream reaches of the Sinú River would also be required.

iii

1. Introduction

1.1 Context

The Dams and Development (DDP) programme is tasked with improving decision-making and management of dams and their alternatives, building on the core values and strategic priorities of the World Commission on Dams (WCD) and other relevant reference materials through promoting dialogue at national, regional and local level and producing non prescriptive practical tools.

On this basis, the decision was taken to produce a Compendium of relevant examples. Stage 1 of the elaboration of the Compendium consisted in the elaboration of a checklist of key issues concerning planning of dams and their alternatives, a matrix analysis of their consideration by national and international frameworks and selection of a set of priority issues for further detailed analysis in further stages of elaboration of the Compendium. Stage 1 included a consultation held at the 4th DDP Forum Meeting that resulted in the following list of Priority Issues: • Benefit sharing • Stakeholders participation • Compliance: enforcement/mechanisms • Compensation policy • Environmental management plans • Identification of options • Outstanding social issues • Social impact assessment • International policy concerning shared river basins

1.2 Study Objective

The present study is carried out for Stage 2 of development of the Compendium. According to the TORs set out for the assignment: ‘Under the guidance of the Co-ordinator of the Dams and Development Project (DDP), the Consultant will identify, collect information and compile examples of relevant practices concerning the integration into policy/normative frameworks and implementation of Compensation Policy. The compilation of examples is a substantive element leading to the elaboration of a Compendium on relevant practices for improved decision-making, planning and management of dams and their alternatives’.

Accordingly, the present study focuses on examples of relevant practices relating to the integration of compensation policy mechanisms into policy/normative frameworks and to their actual implementation in the context of dam projects. It includes a characterisation of the compensation policy issue, a description of 10 examples of relevant practices relating to compensation policy for dams and a data base of references on international compensation policy frameworks for dams.

1.3 Study Process

The Consultant participated in a co-ordination meeting in mid-February 2006 in The Hague with the DDP Secretariat and Steering Committee members. The Consultant’s Draft Work Plan was subsequently revised and forwarded to the DDP Secretariat at the end of February 2006 with a preliminary list of relevant compensation policy examples. A revised list of 1 relevant compensation policy examples was forwarded by the Consultant to the DDP Secretariat in mid-March 2006. An Interim Report was forwarded by the Consultant to the DDP in early April 2006. The report contained a description of four examples of relevant practices relating to compensation policy for dams and a data base of references on international compensation normative/policy frameworks for dams.

The Draft Final Report produced in May 2006 took into account comments on the list of relevant compensation policy examples and on the Interim Report provided by the DDP Secretariat and by civil society representatives on the DDP Steering Committee at the end of April 2006. The present Final Report takes into account comments provided by the DDP Secretariat in June 2006 and by members of the DDP Steering Committee and Government Advisory Consultative Group during meetings held in The Hague at the end of August 2006.

1.4 Contents of Final Report

The Final Report is structured as follows: • Chapter 2 provides a summary description of the methodology used for the assignment. • Chapter 3 provides a characterisation of the Compensation Policy issue. • Chapter 4 presents 10 examples of relevant practices relating to compensation policy for dams. • Chapter 5 provides a brief commentary on the results of the study.

A data base of references on international compensation policy frameworks for dams is presented in the Appendix.

2. Methodology

This chapter provides a description of the methodology adopted for the assignment. Since there are many links between the priority issues relating to Compensation Policy and to Benefit Sharing, the methodology to carry out the assignment first had to define as precisely as possible the subjects to be covered in the assignments relating to both issues. These links are defined hereafter in Section 2.1. Subsequent sections present the focus of the search for potential sources of information and the selection process for relevant examples of international compensation normative/policy frameworks for dams.

2.1 Links with Priority Issue Relating to Benefit Sharing

There are many links between the Priority Issues relating to Compensation Policy and Benefit Sharing. Indeed, one of the key elements to be taken into account in compensation policies is the sharing of benefits generated by operation of a dam with affected communities. For the purpose of developing Stage 2 of the Compendium of relevant practices relating to Compensation Policy and Benefit Sharing, compensation and benefit sharing mechanisms were categorised as follows: Compensation

1) Monetary compensation for lost assets and loss of access to resources 2) Livelihood restoration and enhancement a. Sustainable agricultural employment i. Land-for-land options ii. Irrigation schemes including access to pumped irrigation from reservoir iii. Drainage iv. Cultivation in drawdown area and other benefits from managed flows and floods v. Agricultural extension services including planting materials and other inputs. b. Sustainable non-agricultural employment i. Local employment during construction and operation ii. Employment in services and industries iii. Reservoir fisheries iv. Skills training. 3) Community development a. Housing on titled lots b. Access to primary services: schooling, health care, social services (such as family support and income support), etc. c. Access to financial services (such as interest-free loans or micro-credit) d. Domestic water supply e. Roads and public transportation f. Rural electrification g. Markets and public and religious meeting places h. Access to common resources (forests, grazing areas, etc.). 4) Catchment development a. Custodianship or management of catchment resources b. Reforestation, afforestation and planting of fruit trees c. Environmental enhancement for wildlife resources.

Monetary Benefit Sharing 1) Revenue sharing (through royalties or taxes on revenues) 2) Development funds 3) Equity sharing 4) Property taxes 5) Preferential electricity rates.

Compensation mechanisms applicable to dam projects can thus be defined as mechanisms that aim to both: a) compensate project-affected populations for lost assets and lost access to resources; and b) to restore and improve the livelihoods of project-affected populations living in the vicinity of a dam development (through livelihood restoration and enhancement schemes, community development schemes, catchment development schemes and/or monetary benefit sharing schemes). They include: 1) monetary compensation for lost assets and loss of access to resources; and 2) non-monetary or monetary benefit sharing mechanisms. The present study on Compensation Policy addresses all compensation mechanisms with the exception of monetary benefit sharing mechanisms which are discussed in a separate report produced for the Benefit Sharing Priority Issue.

It is worth noting that catchment development schemes pursue both social and environmental objectives (for instance, the restoration of habitats such as wetlands can represent both an ecological benefit and a benefit for traditional hunters, trappers and fishermen). As a general rule – with the notable exception of monetary benefit sharing schemes, the funding for compensation mechanisms for dams is considered as part of the project’s costs. For large dams projects, recommended policy is to separate the funding and management of compensation mechanisms from other capital costs to avoid leakage from one category to the other during project implementation.

In a number of countries, the funding of compensation mechanisms may be shared between the developer and a state government. This may include for instance funding by the state of an access road to the dam or of health facilities in the vicinity of the dam (which is typically the case in India or Sri Lanka) or else funding by the proponent of community or transportation infrastructure that supports public infrastructure programs (which is typically the case in Brazil and Canada). While proponents or governments may welcome such cost sharing, it frequently raises jurisdictional conflicts related to the maintenance or long term operation of government-funded or developer-funded infrastructure and services.

The figure on the following page illustrates the main mechanisms to be considered within the general framework of compensation policy (shaded areas) as well as the links with monetary benefit sharing mechanisms (non shaded areas).

In order to minimise potential overlapping between the Priority Issues relating to Compensation Policy and to Benefit Sharing, the objectives of the assignments relating to both issues were spelled out as follows: • For Compensation Policy: Document relevant international and national compensation policy frameworks and corresponding examples of implementation (see overall shaded framework in above figure). Such examples will include non-monetary benefit mechanisms that are generally extensively covered under compensation policy frameworks in the context of community and livelihood restoration and enhancement measures (see shaded boxes in above figure). • For Benefit Sharing: Document relevant legal or policy frameworks for monetary benefit sharing mechanisms and corresponding examples of implementation.

Main Mechanisms to be Considered within the General Framework of Compensation Policy and Links with Benefit Sharing Mechanisms

Monetary compensation for lost assets and loss of access to resources

Livelihood restoration and enhancement a) Sustainable agricultural employment b) Sustainable non-agricultural employment

Community development c) Housing d) Access to primary services (schools, health…) e) Access to financial services f) Domestic water supply g) Roads and public transportation h) Rural electrification i) Market and meeting places j) Access to common resources (forests, etc.).

Catchment development k) Custodianship of catchment resources l) Reforestation, afforestation, planting of fruit trees m) Environmental enhancement for wildlife resources.

Monetary benefit sharing schemes n) Revenue sharing o) Development funds p) Equity sharing q) Property taxes r) Preferential electricity rates)

Such a division of work enabled the Consultants to avoid repetition of examples. It also allowed for explicitly discussing monetary benefit sharing mechanisms that constitute, for the most part, relatively innovative approaches. Indeed, most compensation policy frameworks do not provide for such types of mechanisms and there is little literature available on this subject.

Some Compensation Policy and Benefit Sharing examples could refer to the same policy or legal framework. In such cases, the example provided under the Compensation Policy issue would focus on the principles underlying the framework, while the example provided under the Benefit Sharing issue would focus on a specific type of monetary benefit sharing mechanism.

2.2 Focus of Search for Relevant Policy/Legal Frameworks

Within the limited timeframe available to undertake development of Stage 2 of the Compendium of relevant practices relating to Compensation Policy (e.g.: 30 person-days), we focused on the following major international or national agencies that have financed the building of dams in developing countries over the last 20 to 30 years, i.e.: • multilateral development banks: World Bank Group (including the International Finance Corporation), Inter-American Development Bank, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Nordic Investment Bank and Islamic Development Bank;

• United Nations Development Program; • bilateral aid agencies such as USAID (United States), DFID/CDC/ODA (United Kingdom), GTZ/KfW (Germany), JBIC/JICA/OECF (Japan), AFD (France), CIDA (Canada), SIDA/BITS (Sweden) and NORAD (Norway); • export credit agencies such as: Exim Bank (United States) and Jexim (Japan); • national or provincial government agencies and power utilities.

The assessment of potential sources of information aimed at: a) identifying and describing relevant compensation policy/legal frameworks and b) describing between 10 and 15 dam project examples to illustrate the implementation of the selected frameworks. The resulting data base of references is presented in the Appendix to this report.

Sources of information used to illustrate the implementation of selected normative/policy frameworks included a number of ‘Good Practice Reports’ produced on a preliminary basis in an ongoing study on ‘Hydropower Good Practices’ by the International Energy Agency1. They also included an environmental and social data base for eight dam projects derived from a study on ‘Quality Management of Safeguards in Dam Projects’ carried out by Hydro- Québec International and Vincent Roquet & Associates for the World Bank in 2004 on the basis of consultations with a selection of stakeholders2. In addition to these general sources of information, the consultant was able to access a number of socio-economic monitoring and follow-up reports based on previous field studies carried out by Mr. Dominique Égré on the Urra-1 dam in Colombia and by Mr. Vincent Roquet on the La Grande hydroelectric complex (including the Laforge-1 dam) and the Sainte-Marguerite-3 dam in Québec (Canada).

2.3 Selection Process for Relevant Examples

The sequence of activities to select relevant examples followed was the following: 1) Assess the potential sources of information provided in Annex B to the TORs. 2) Assess which cases considered in the 2005 IEA Draft report and accompanying database and in the 2004 HQI-VRA Final report and accompanying database could be used as relevant examples of compensation policy frameworks. 3) Select additional relevant normative/policy frameworks and dam project examples on the basis of a search and assessment of information contained in the following sources: web sites, proceedings from international conferences, reference centres of national and international organisations, information collected from contact persons. 4) Selected examples would have to meet the following criteria: a) the framework is fully documented; b) the examples can be used as a model for application in other contexts based on local conditions and the emerging lessons from the example. 5) Selected examples had to cover all types of compensation mechanisms (e.g., monetary compensation for lost assets and loss of access to resources; livelihood restoration and enhancement; community development; and catchment development).

1 International Energy Agency (IEA). 2005. Implementing Agreement for Hydropower Technologies and Programmes. Annex VIII: Hydropower Good Practices: Environmental Mitigation Measures and Benefits. Draft Report. New Energy Foundation. Japan. Review of selection of 21 ‘Good Practice Reports’ among 60 accompanying ‘Good Practice Reports’. Dam projects in the selection of reports reviewed included: Laforge-1 in Québec (Canada), Sainte-Marguerite-3 in Québec (Canada), Salto Caxias in Brazil, Chiew Larn in Thailand, Chamera and Uri in India, Cirata and Saguling in Indonesia and Song Hinh in Vietnam. 2 Klimpt, J.-E. et al. December 2004. Quality Management of Safeguards in Dam Projects. Final Report prepared for Donald T. O’Leary, World Bank. Volume 1: ‘Guiding Principles’. Volume 2: ‘Data Base’. Hydro-Québec International (HQI) in collaboration with Vincent Roquet & Associates (VRA). Dam projects reviewed on the basis of consultations with a selection of representative stakeholders were: Salto Caxias in Brazil, Akosombo in Ghana, Chilime in Nepal, Kukule in Sri Lanka, Palmiet in South Africa, Sainte-Marguerite-3 in Québec (Canada), Arrow Lakes in British Columbia (Canada) and King River in Tasmania (Australia). 6

The following table presents the list of examples identified on the basis of the above process.

Policy/Legal Frameworks Examples of Monetary Livelihood Community Catchment implementation Compensation restoration Development Development and Enhancement Costa Rican expropriation law and Arenal Dam, Sustainable Inter-American Development Bank Costa Rica (1980) agriculural requirements for development projects employment during the 1970s Brazilian environmental legislation Salto Caxias Sustainable (1981, revised in 1986 and 1988) and Dam, Brazil agriculural and Second Master Plan for the Protection (1998) non-agricultural and Improvement of the Power Sector employment Works and Services (1990) Resettlement Policy of the Electricity Urra 1 Dam, Sustainable Sector in Colombia (1992) Colombia (2000) agriculural employment Opimiscow-La Grande (1992) Laforge-1 Dam, Environmental Agreement between Hydro-Québec Canada (1994) enhancement and the Grand Council of the Crees- of catchment Eeyou Ischtee, the Cree Regional resources Authority and the Cree Nations of Chisasibi and Wemindji Hydro-Québec’s Integrated Sainte- Enhancement Program for local Marguerite-3 communities (1994) and participatory Dam, Canada approach on partnerships with (2002) indigenous communities Indonesian expropriation law (1961) Saguling and Reservoir and World Bank Operational Manual Cirata Dams in fisheries on Social Issues Associated with West Java, Involuntary Resettlement (1980) Indonesia (1988) Draft Chinese Regulation for Land Shuikou Dam, Sustainable Acquisition and Resettlement for the China (1996) agriculural and Construction of Large and Medium non-agricultural Size Water Conservancy Projects employment (1991) Indian Land Acquisition Act (1894), Chamera (1994) Roads, schools NHPC Resettlement and and Uri (1997) and health Rehabilitation Package (date Dams, India services unknown) and CIDA and SIDA requirements for bilaterally-funded development projects during the 1990s Treaty for Joint Development and Maguga dam, Commercial Roads, schools Utilisation of the Resources of the Swaziland (2002) irrigation and health Komati Basin between Swaziland and agriculture services South Africa (1992) and Maguga Resettlement and Compensation Policy Document (1996) Pakistani land Acquisition Act (1894) Ghazi Barotha Sustainable and World Bank Operational Directive Dam, Pakistan agriculural and OD 4.30 on Involuntary Resettlement (2003) non-agricultural (1990) employment

Compensation Policy Mechanism Applies Most Relevant Illustration of Compensation Policy Mechanism

As much as possible, the presentation of each example follows the template provided in Annex A of the Terms of Reference. However, the following constraints were encountered in the preparation of most examples: • Very few post-project evaluations based on systematic socio-economic monitoring studies are available for dam projects around the world. If and when they exist, they are frequently not accessible to the public. • Most publicly accessible documents that present a systematic evaluation of the outcomes of the implementation of a compensation policy framework have been prepared by the World Bank or by the project developer. Although they are based on studies using recognised methods that include stakeholder participation, they generally provide only the views of the World Bank or of the project developer. Little documentation is available on the points of view of other stakeholders. • A number of relevant examples selected were implemented in difficult socio-political contexts which hindered stakeholder participation and limited the scope of socio- economic monitoring of outcomes of compensation policy implementation (Urra-1 dam in Colombia, Chamera and Uri dams in India, Saguling and Cirata dams in Indonesia, Ghazi Barotha dam in Pakistan).

As a result, several elements of the template in the Terms of Reference proved to be difficult, if not impossible, to document in the context of the present assignment. Addressing these difficulties would require further studies on the outcomes and results of each example and would have to include interviews with concerned stakeholders.

It is important to note that the list of relevant examples retained above do not necessarily represent the only dam projects that have resulted in relatively successful outcomes in terms of compensation policy implementation. Publicly available information for a number of the selected examples, such as Chamera and Uri dams in India, was quite limited. Several other potentially relevant examples were reviewed by the consultant but were not retained for lack of sufficient information, such as the Lesotho Highlands Water Supply Project, Song Hinh dam in Vietnam, Chiew Larn dam in Thailand, Kali Gandaki A dam in Nepal, Kainji dam in Nigeria and Victoria dam in the Mahaweli complex in Sri Lanka. A few potentially relevant examples to illustrate the catchment development compensation mechanism, such as Nam Theun-2 dam in Laos and Tocoma dam on the Caroni River in Venezuela, were not retained because they are still at initial implementation stages. Post-2000 developments related to potential socio-economic benefits of controlled downstream flows from the Manantali dam in Mali were not retained for lack of proper implementation by concerned authorities. Pak Mun dam in Thailand and Akosombo and Kpong dams in Ghana were rejected because of their shortcomings following a review of available documentation. Due to the lack of documentation, none of the examples addresses compensation policy for downstream users.

A few of the examples presented in the report did not demonstrably result in overall positive outcomes in regards to compensation for involuntary resettlement (Chamera and Uri dams in India, Saguling and Cirata dams in Indonesia, Ghazi Barotha dam in Pakistan). However, useful lessons can be drawn from all normative/policy frameworks described in the examples and from their implementation. In this respect, they can all be considered as examples of relevant practices. Finally, it should be emphasized that because of the nature of available documentation, all of the examples selected in this review involve large dams and all except one (Maguga dam) involve hydropower dams. ‘This is important because a relatively small number proportion of dams throughout the world (20%) are used for the production of electricity, while a much larger proportion of dams (48%) are built for irrigation purposes only.3

3 Lecornu, J. 1998. Dams and Water Management. Conférence Internationale Eau et Développement Durable, Paris (http://genepi.louis-jean.com/cibj/article-barrages-an.html) 8

3. Characterisation of Compensation Policy Issue

3.1 Need for Improved Compensation for Loss of Assets

One of the key points put forward in recent debates on forced resettlement is that ‘dams have made an important and significant contribution to human development, and the benefits derived from them have been considerable’ (World Commission on Dams, 2000)4. These benefits are varied and include power generation, flood control, irrigation, industrial and domestic water supply, navigation as well as recreation.

However, dams are the source of both significant and unavoidable environmental and social impacts. ‘The most important unavoidable impacts… are generally related to the flooding of land in the impoundment zone upstream of a dam and to changes to water flows and water levels downstream of a dam’(IEA, 2000)5. These frequently result in loss of housing, land, productive resources and/or community services by locally affected persons. This has been the case in the past and, for a variety of reasons, this can be expected to be the case in the future. Several dam projects have been abandoned or postponed for reasons including ‘poorly managed involuntary displacement and loss of livelihoods for populations living within or downstream of the impoundment zone, or the loss of means to support traditional ways of life, particularly in the case of culturally vulnerable indigenous or ethnic/religious minority groups that are largely dependant on locally available land and natural resources’ (IEA, 2000)6.

An important body of social research carried out over the last 20 to 30 years has concluded that a large number of dam projects in developing countries have resulted in inadequate compensation and impoverishment of locally affected populations.7 This has occurred even though since the early 1980s, international standards respecting resettlement and development of persons affected by dam projects have stressed the need both for: a) equitable

4 World Commission on Dams (WCD). 2000. Dams and Development, A New Framework for Descision-Making. The Report of the World Commission on Dams. Earthscan Publications LTD. London. p. XXVIII. 5 International Energy Agency (IEA). May 2000. Implementing Agreement for Hydropower Tecnologies and Programmes, Annex III. Hydropower and the Environment: Present Context and Guidelines for Future Action. Subtask 5 Report. Volume 1: Summary and Recommendations. IEA Technical Report, p. 9. 6 Ibid, p. 9. 7 Such research includes the following: - Cernea M. M. 2000. ‘Impoverishment Risks and Reconstruction: A Model for Population Displacement and Resettlement’. In Risks and Reconstruction: Experiences of Resettlers and Refugees. Cernea M. M. and McDowell C. (eds). The World Bank. Washington. - Cernea M. M (ed). 1999. The Economics of Involuntary Resettlement: Questions and Challenges. Collection Directions in Development. The World Bank. Washington. - Kanbur, R. 2002. ‘Development Economics and the Compensation Principle’. In An Exchange on the Compensation Principle in Resettlement. Cearnea, M. and Kanbur, R. (eds). WP 202-33. Cornell University, Department of Applied Economics. Ithaca. - Koenig, D. 2002. Toward local development and mitigating impoverishment in development-induced displacement and resettlement. Refugee Studies Centre Working Paper No 8. - Scudder, T. Unpublished. A Comparative Survey of Dam-induced Resettlement in 50 Cases. Available online at www.hss.caltech.edu/tzs. - World Bank. 2004. Involuntary Resettlement Sourcebook, Planning and Implementation in Development Projects. Washington: IBRD. Chap. 15 Dams and Resettlement: Building Good Practice, pp. 321-359. - World Bank, Operations Evaluation Department. 1998. Recent Experience with Involuntary Resettlement : Overview Report. Report No 17538. - World Bank, Africa Technical Department. 1994. Involuntary Resettlement in Africa: Selected Papers from a Conference on Environment and Settlement Issues in Africa. Technical Report No 227.

9 compensation of all affected parties and b) rebuilding affected communities and supporting the development of affected parties’ livelihoods.

What has gone wrong? It is important to recognize that funding and managing resettlement programs is difficult for governments in the developing world, particularly in low-income countries confronted with land scarcity, competing needs and limited resources, as well as severe institutional capacity constraints. Moreover, the absence in many developing countries of effectively functioning land and labor markets, the inadequacies of compensation systems for property appropriated by the State, and the absence of adequate social safety nets are three central reasons why the simple cash compensation of property losses under eminent domain laws cannot realistically be expected to provide satisfactory outcomes for displaced populations.

The literature on dam projects in the developing world also indicates that the means put into place to attain the required standards have not always been adequate. The amplitude and complexity of resettlement have frequently been underestimated. This has resulted in insufficient long term funding of resettlement and development activities. Frequently voiced concerns include: delays in project implementation and benefits foregone; high levels of destitution among project-affected persons which constitutes a significant drain on developing nations’ economies; and increasing concern about fundamental human rights and people’s welfare.

The need to properly manage these issues is underscored by “…a globally accepted framework for setting universal goals, norms and standards. The foundation of the framework are the United Nations Charter (1945) and the Universal Declaration of Human Rights (1947). In the last two decades of the 20th century, the United Nations General Assembly reinforced this framework with the UN Declaration on the Right to Development (1986) and the Rio Declaration on Environment and Development (1992) ”8. The WCD Report (2000) made the case that the traditional ‘balance sheet’ approach of assessing costs and benefits of a project is an inadequate tool for development planning and decision-making: “Given the significance of rights-related issues as well as the nature and magnitude of potential risks for all parties concerned, the Commission proposes that an approach based on ‘recognition of rights’ and ‘assessment of risks’ (particularly rights at risk) be developed as a tool for guiding future planning and decision making”.9 As emphasized by Gagnon, Klimpt and Seelos (2002) 10, such an approach should also be balanced with needs, and above all the ‘need to reduce poverty’ which is particularly relevant in developing countries.

Recent social research indicates that there is a requirement for compensation policies to clearly set out mechanisms that must be put into place in order to attain the policy objectives pursued under international standards. Policy provisions need to clearly establish the key elements that must be taken into account to ensure that improved livelihoods and living standards and opportunities are the outcome of resettlement and development processes. In addition to providing adequate compensation for lost assets, key elements should include specific provisions for the poorest affected persons (including those without legal title to assets, female-headed households and other vulnerable groups, such as indigenous peoples) as well as for benefit sharing.

8 World Commission on Dams (WCD). 2000. Op Cit. pp. 199-200. 9 Ibid, p. 206. 10 Gagnon, L., Klimpt, J.-E. and Seelos, K. 2002. Comparing recommendations from the World Commission on Dams and the IEA initiative on hydropower. In Energy Policy. November 2002 Issue. pp. 1299-1304.

These principles were recently supported in the Beijing Declaration on Hydropower and Sustainable Development11: “With respect to social aspects, we note that the key ingredients of successful resettlement include minimization of resettlement, commitment to the objectives of resettlement by the developer, rigorous resettlement planning with full participation of affected communities, with particular attention to vulnerable communities. We are encouraged by the trend of some governments to go beyond good practice resettlement by providing benefit sharing with host communities and call on governments to consider incorporating such approaches in their legal and regulatory frameworks. We further call on governments and regional and local authorities to accord special consideration to culturally sensitive areas.”

3.2 International Policies and Guidelines

The following analysis is based on a review of international normative/policy frameworks related to involuntary resettlement carried out by Rew, Fisher and Pandey (2000)12, by Hildyard and Gilfenbaum (2005)13 and by the XVth International Congress of Anthropological and Ethnological Sciences (2003)14.

Project induced resettlement takes place in a multi-layered framework composed of: a) international policy and law; b) national laws; c) State or provincial laws; d) sector level laws and policies (energy, transportation, agriculture, etc.) and e) dam building and operating agencies. Resettlement and compensation policies adopted by international development agencies are implemented in the context of this overall framework.

Until recently, few developing countries had put into place comprehensive compensation and resettlement normative/policy frameworks. As a result, over the years international development agency guidelines have played an important role in many development-induced resettlement programs. More recently, international financing institutions such as the World Bank have also played an important role in the development of national compensation and resettlement normative/policy frameworks. More and more national governments are formulating resettlement guidelines and a few, such as China, appear to have these guidelines firmly in view when planning and undertaking project-induced resettlement programs.

The World Bank’s involuntary resettlement normative/policy framework has been particularly influencial in shaping the policies of other donors and the World Bank Group’s guidelines on involuntary resettlement (including those of the International Finance Corporation) are often used as a reference by potential public and private sector investors in dam projects. However, certain aspects of the World Bank’s normative/policy framework for involuntary resettlement have recently been called into question by the human rights-oriented approaches of many UN agencies, by the World Commission on Dams report (2000) and by a number of bilateral donor agencies and international Non-governmental organisations (NGOs).

11 United Nations Symposium on Hydropower and Sustainable Development. Beijing. October 27-29, 2004. Available online at: www.un.org/esa/sustdev/sdissues/energy/op/. para. 11, p.2. 12 Rew, A., Fisher, E. and Pandey, B. 2000. Addressing Policy Constraints and Improving Outcomes in Development-Induced Displacement and Resettlement Projects. A review prepared for ESCOR and the Refugee Studies Centre, University of Oxford. Available online at www.reliefweb.int. 13 Hildyard, N. and Gilfenbaum, E. 2005. The OECD Arrangement and New Subsidies for Dams, The Case for Strengthened Standards. The Corner House. Available online at: www.thecornerhouse.org.uk/item.shtml?x=369004. 14 XVth International Congress of Anthropological and Ethnological Sciences. 2003. Symposium Statement : Sustainable Resettlement and Rehabilitation. Symposium on Involuntary Displacement and Sustainable Livelihood Restoration: Good Practices and Learning from Mistakes. Florence, Italy. July 7-8, 2003. Available online at: www.adb.org/media/articles/2003/2745_Regional_learning_from_good_practice_a_key_to_sucess_in_resettlemen t policy/symposium_statement.pdf. 11

¾ World Bank and Regional Development Bank Guidelines

It is a popular conception that the World Bank has played a central role in involuntary resettlement occuring worldwide over the last 30 years. This view is clearly associated with the destitution of displaced populations that has accompanied a number of past resettlement programs associated with Bank-funded projects, particularly in the hydropower sector. According to the World Bank, Bank-funded projects involving involuntary resettlement, mainly dam-building and urban infrastructures projects, represent a small percentage of the total number of involuntary resettlement projects carried out worldwide. A far greater percentage of projects involving involuntary resettlement are carried out by national governments and by the private sector (World Bank, 1996)15. However, World Bank representatives have played a proeminent role in involuntary resettlement policy formulation and research on resettlement issues as indicated by the quantity of litterature on this issue produced over the years by the World Bank.

The World Bank was the first major development agency to adopt a comprehensive policy on involuntary resettlement when it issued in 1980 its Operational Manual Statement 2.33 on Social Issues Associated with Involuntary Resettlement in Bank-financed projects. This policy was partly a response to criticism of the social impacts of population relocation programs associated with Bank-financed projects. This policy marked a change in the World Bank’s approach to infrastructure projects. In broad terms, before 1980, resettlement actions were peripheral to the technical and economic objectives of a project. After 1980, population displacement was rather seen as a development opportunity and development objectives had to be an integral feature of project planning and execution. From this point on, non-economic social sciences such as sociology and anthropology were given a place in understanding displacement issues and in the formulation of policies of Bank-funded projects.

The World Bank policy on involuntary resettlement has been periodically updated since 1980 (e.g., in 1990, 1994, 1998 and 2004) but its fundamental principles which are to prevent impoverishment and rebuild affected people’s livelihoods remain. Some aspects of the Bank’s policy have however been changed or strengthened over the years: • Institutional learning from operational experience. Post-1980 World Bank lessons learned have included, among others: the need for proper planning; the tightening of procedural guidelines on World Bank involvement and borrower government involvement; and the development of tools for improving resettlement preparation, analysis and monitoring and evaluation; • Change from project-based approaches to sectoral approaches established for country operations which helped to consolidate the planning of resettlement operations. This led to conditional interlinkage between investment in energy infrastructures and investment in the socio-economic rebuilding of affected population’s livelihoods. • Experience gained by the Bank in implementing its involuntary resettlement policy led it to put increased focus on influencing the development of national policy and legal guidelines on involuntary resettlement that were in line with its own guidelines. The Bank decided that it would no longer finance projects involving large-scale resettlement unless the concerned government’s adopted policies and legal frameworks for resettlement with income restoration components (World Bank, 1996)16. As such, the World Bank instigated national policy changes in the 1990s such as Brazil’s power sector resettlement guidelines introduced in the Second Environmental Master Plan, Columbia’s power sector

15 World Bank. 1996. Resettlement and Development: The Bankwide Review of Projects Involving Involuntary Resettlement 1986-1993. Environment Department Papers. Resettlement Series. Paper No 032. Available online at www.worldbank.org . 16 Ibid., pp 98-99. 12

resettlement guidelines, and India’s National Thermal Power Corporation’s (NTPC) Resettlement and Rehabilitation Policy. However, during the same period a number of nations and NGOs expressed the view that World Bank pressure for development of national policy and legal guidelines on involuntary resettlement that were in line with the Bank’s own guidelines constituted an infringement on national sovereignty.

The latest update of the World Bank Operational Policy on Involuntary Resettlement (OP/OD 4.12) was produced in 200417. Currently, the Bank’s approach is characterised by the consideration of the ‘least resettlement alternative’ of a project and by a broader collaboration with NGOs and affected people’s representatives in the design, implementation, monitoring and supervision of resettlement operations (Rew, Fisher and Pandey, 2000)18. The Bank requires that affected people are informed of their rights and consulted during resettlement planning. However, the terms of the Resettlement Action Plan are still ultimately agreed between the lending agency and the project sponsor or borrower.

Other regional development banks have issued involuntary resettlement guidelines that are largely aligned on the World Bank’s policy guidelines. The Inter-American Develpment Bank’s (IDB) first involuntary resettlement policy was adopted in 1993. The latest version of the IDB’s policy is the Involuntary Resettlement Operational Policy (OP-710) issued in 199819. This policy is consistent with World Bank policy with the exception that the IDB policy states that the resettlement component cannot always be prepared in the early stages of a project (Rew, Fisher and Pandey, 2000)20. The Asian Developement Bank’s (ADB) and the African Devlopment Bank’s (AfDB) Involuntary Resettlement policy were both adopted in 1995 and drew extensively on the World Bank’s Operational Directive on Involuntary Resettlement. The ADB published a ‘Handbook on Resettlement’ in 199821 and has recently contributed significantly to the development or revision of some Asian countries’ national policies on land acquisition and resettlement through its Regional Technical Assistance on Resettlement Policy Enhancement and Capacity Building (TA-5935).

In 2003, the AfDB issued a new version of its Involuntary Resettlement Policy whose objective is ‘to improve displaced people’s standards of living, income earning capacity and production levels’22. The International Finance Corporation (IFC), a member of the World Bank Group that deals with private sector developers, issued in April 2006 its new ‘Performance Standards on Social and Environmental Sustainability’ among which Performance Standard No 5 on ‘Land Acquisistion and Involuntary Resettlement’23, whose objective is also ‘to improve standards of living, income earning capacity and production levels of displaced people’. These more recent policies go a little further than the World Bank’s Operational Directive on Involuntary Resettlement which calls for ‘the improvement or at least the restoration of affected people’s livelihoods and standards of living to a pre- project level’24.

17 World Bank. 2004. OP/BP 4.12 - Involuntary Resettlement. Available online at www.worldbank.org 18 Rew, Fisher and Pandey. 2000. Op cit. pp. 88-89. 19 Inter-American Develpment Bank (IDB). 1998. Involuntary Resettlement, Operational Policy and background Paper. Available online at www.iadb.org. 20 Rew, Fisher and Pandey. 2000. Op cit. pp. 98-99. 21 Asian Development Bank (ADB). 1998. Handbook on Resettlement: A guide to good practice. Available online at www.adb.org. 22 African Development Bank (AfDB). 2003. Involuntary Resettlement Policy. Available online at www.afdb.org. pp. 7-8. 23 International Finance Corporation (IFC). 2006. Performance Standards on Social and Environmental Sustainability. Available online at www.ifc.org. p. 18. 24 World Bank. 2004. Op cit. p.1.

¾ United Nations Agency Guidelines

A number of United Nations (UN) agencies have a mandate to adress issues that are relevant to ‘forced eviction’ (involuntary resettlement) or ‘internal displacement’. The most important ones are the United Nations Centre of Human Settlements (UNCHS/Habitat), the United Nations Commission on Human Rights (UNCHR) and the Food and Agriculture Organisation (FAO). For most UN agency activities, conflict-induced resettlement had traditionally been given greater attention than development-induced resettlement. However during the 1990s development-induced resettlement issues became an area of increasing concern. This was linked to ongoing work and policy initiatives on human rights carried out under UN auspices.

It is now recognised that development-induced displaced people can be classified as a distinct group of persons requiring protection under international human rights law (UNHCR, 1997 in Rew, Fisher, Pandey, 2000)25. In 1994, forced eviction was recognised as a human-rights violation by the UN Secretary-General and in 1997 the UNHCR formulated guidelines on displacement in its document ‘The Practice of Forced Evictions: Comprehensive Human Rights Guidelines on Development-Based Displacement’. These guidelines emphasised that the ultimate responsibility for forced eviction is placed on the State and that ‘the State should adopt appropriate laws and policies for resettlement and ensure that international donors carrying out in-country resettlement actions do the same’26. They also argued that the consent of project-affected people ‘must be voluntarily gained and that the State must provide the necessary amenities, services and economic oportunities’27 in order to comply with the affected people rights to safe, secure, accessible and affordable and habitable land and housing. In addition, the guidelines specified that ‘resettlement must ensure equal rights to women, children, indigenous populations and other vulnerable groups … Resettlement policies should include programmes designed for women with respect to education, health, family welfare and employment oportunities’28.

‘Guiding principles on Internal Displacement’ have been formulated at the level of the UN Secretary-General. These principles identify rights and guarantees that apply to the protection of persons from forced-displacement. They also identify rights and guarantees that apply to the protection and assistance of displaced people during displacement and resettlement (Rew, Fisher and Pandey, 2000).29 In 1998, the FAO published its ‘Environmental Guidelines for Resettlement Projects in the Humid Tropics’. These guidelines put a strong emphasis on human/environment interactions and their implications for involuntary resettlement. They also set out conditions under which resettlement is less likely to be sustainable (Rew, Fisher and Pandey, 2000)30.

¾ Bilateral Development Agency and Export Credit Agency Guidelines

In principle, bilateral donors from countries who are members of the Organisation for Economic Cooperation and Development (OECD) follow ‘OECD - Development Assistance Committee (DAC) Guidelines’31. The DAC is the co-ordinating body for bilateral organisations from OECD countries. The OECD/DAC ‘Guidelines on Aid and the Environment’ were adopted developed in 1991 on the World Bank policy model. Guideline

25 Rew, Fisher and Pandey.2000. Op Cit. pp. 92-93. 26 Ibid., p. 93. 27 Ibid., p. 93. 28 UNHCR. 1997 in Rew, Fisher and Pandey. 2000. Op Cit. p. 93. 29 Rew, Fisher and Pandey. 2000. Op Cit. p. 93. 30 Ibid., pp. 94-96. 31 Organisation for Economic Cooperation and Development (OECD) - Development Assistance Committee (DAC) DAC. 1992. Guidelines on Aid and the Environment. Available online at www.ocde.org.

No. 3 ‘Aid Agencies on Involuntary Displacement and Resettlement in Development Projects’ specifically adresses compensation and resettlement issues. It provides for compensation of losses at replacement cost and assistance during transition period. Displaced people should be assisted in their efforts to improve their former living standards or at least to restore them. Both OECD and World Bank frameworks contained similar premises, which are: ‘the avoidance of resettlement whenever its possible, planning and execution of resettlement as a development project and due attention given to people’s needs and to environmental protection’. Emphasis was also put on ‘Women and Gender’ issues and on ‘the need for participation of affected people in the resettlement process’ (Rew, Fisher, Pandey, 2000)32.

The extent to which these guidelines have been recognised and adhered to by OECD members is a question for further research (Rew, Fisher, Pandley, 2000)33. Some bilateral development agencies, such as the United States Agency for International Development (USAID) and the Overseas Economic Co-operation Fund of Japan (OECF), adress resettlement in their guidelines on Environmental Impact Assessment. Other donors, such as the Canadian International Development Agency (CIDA) and the Swedish International Development Agency (SIDA) address resettlement issues in sectoral guidelines on energy. Agencies such as the Japanese International Development Agency (JICA) have adressed resettlement issues in their guidelines on environmental and social considerations. Other agencies, such as the German KfW and GTZ, have developed a general approach towards dam-induced resettlement.

Export-credit agencies of OECD member countries have been bound since 1978 by a voluntary agreement called the ‘OECD Arrangement on Officially Supported Export Credit’ (also known as the ‘Common Approaches’)34. The latest update of the agreement was issued in 2005 and participants in this agreement were: Australia, Canada, the European Community, Japan, Korea, New Zealand, Norway, Switzerland and the United States. Annex IV of the agreement provides for increased support for renewable energy and water projects and commits to addressing their impacts in accordance with the 2003 OECD ‘Recommendation on Export Credit and the Environment’, which provides for benchmarking against the World Bank’s Safeguard Policy on Involuntary Resettlement (OP/BP 4.1.2 and OD 4.30).

¾ World Commission on Dams Recommendations

The implementation record of World Bank safeguard policies, including the Bank’s involuntary resettlement policy, have been the subject of growing controversy. According to some NGOs and civil society organisations, the record clearly indicates that the Bank’s policies are currently inadequate for protecting the human rights, livelihoods and environment of affected communities. Criticisms of the effectiveness of World Bank standards led the Bank to contribute to the establishment of the World Commission on Dams (WCD). The WCD’s mandate was to produce, through a participatory process, a comprehensive review of dams and to propose a decision-making framework for future dam projects. The WCD Report published in 2000 advocated, among others, strengthened standards for compensation and resettlement in order to avoid the impoverishment of affected populations. The WCD proposed that affected peoples be provided with legal support in negotiating mutually agreed Mitigation, Resettlement and Development Action Plans35.

The WCD also recommended that no dam project be allowed to proceed on indigenous and tribal peoples lands without obtaining their free, prior and informed consent. In it’s response

32 Rew, Fisher and Pandey. 2000. Op Cit. p. 97. 33 Ibid., p. 97. 34 Organisation for Economic Cooperation and Development (OECD). 2005. Arrangements on Officially Supported Export Credits. Available at www.ocde.org 35 World Commission on Dams (WCD). 2000. Op Cit. pp. 26-27. 15 to the WCD Report, the World Bank indicated that it was ‘…dedicated to ensuring that the views of affected people are carefully documented and taken into account by project decision makers, without infringing on the right of the State to make decisions which it judges to be the best solution for the community as a whole’36.

The WCD’s recommendations introduced a new framework for resettlement and compensation issues. A number of international NGOs and civil society organisations have since advocated the adoption of these recomendations by international development agencies and export-credit agencies. Some European bilateral development agencies such as SIDA, KfW and GTZ have used the WCD’s recommendations for benchmarking. Other bilateral development agencies such as CIDA and JICA have adopted guidelines based on the World Bank’s involuntary resettlement guidelines. Switzerland’s Export-Credit Agency has used the WCD recommendations for benchmarking. France’s export credit agency (Coface) evaluates dam projects on the basis of an array of involuntary resettlement guidelines for dams such as the World Bank’s guidelines, the WCD’s recommendations, the International Commission on Large Dams’ (ICOLD) guidelines and the International Energy Agency’s (IEA) guidelines.

The WCD recommendation that no dam project be allowed to proceed on indigenous and tribal peoples lands without obtaining their free, prior and informed consent is gaining increasing support mainly in European countries. The European Union Parliament issued in 1998 a ‘Resolution on Indigenous People within the framework of the Development Co- operation of the Community and member States’ which emphasises indigenous peoples’ right to choose their own development paths and to object to development projects on their lands. 37

3.3 State of the Art and of the Practice

¾ Types of Mechanisms Considered under Compensation Policy

Compensation mechanisms that have been developed and applied successfully to dam projects include: 1) monetary compensation for lost assets and loss of access to resources; and 2) non-monetary or monetary benefit sharing mechanisms. Non-monetary benefit sharing mechanisms are generally provided for in international normative/policy frameworks related to compensation. Examples of such mechanisms are given in Guideline 20 of the WCD (2000) report38 and include: 1) those that are project benefit-related (access to irrigated land or to irrigation water, to power or to water supplies, etc.); 2) those that are project construction and operation-related (employment or financial and training support, etc.); 3) those that are resource-related (preferential access to, or custodianship of, catchment resources, etc.); 4) those that are community services-related (improved access to community infrastructure and services, income support, etc.); and 5) those that are household-related (housing improvements, micro-credit, etc.).

In addition, various monetary benefit sharing mechanisms have been developed and applied successfully to dam projects, both in developed and developing countries39. However, such

36 The World Bank Position on the Report of the World Commission on Dams, 2000, pp. 3-4. The World Bank’s position on this matter was supported, among others, by the International Hydropower Association. 37 Rew, Fisher and Pandey. 2000. Op Cit. p. 98. 38 World Commission on Dams (WCD). 2000. Op Cit. p. 300. 39 Monetary benefit sharing is based on the premise that dam projects may generate a significant economic rent that can be shared with project-affected populations. Economic rent is the surplus return which exceeds the normal return on capital. Such a rent arises because the company is exploiting a natural resource whose development depends on site-specific hydraulic, topographical and geological conditions. In a number of countries, monetary benefit sharing mechanisms provide funds to local and regional entities for infrastructure and development purposes. Such mechanisms provide a source of funding over the long term, enable local and regional entities to set their own priorities and to minimise their dependency towards the developer and the State, and facilitate adaptive management. 16 mechanisms are outside the scope of the present review. Consequently, four types of mechanisms are considered under compensation policy: • Monetary compensation for lost assets and loss of access to resources: This type of compensation is covered under national expropriation law and is specifically addressed in international development bank policies and guidelines, such as those of the World Bank. International guidelines normally require that compensation be paid out at market value for lost assets and/or loss of access to resources and that all land users are eligible to compensation irrespective of their land tenure status. For developing countries, they generally recommend that “land for land” compensation strategies be privileged over monetary compensation strategies. • Livelihood restoration and enhancement: This type of compensation is rarely provided for under national expropriation law but is specifically addressed in international development bank policies and guidelines, such as those of the World Bank. For developing countries, recommended livelihood restoration and enhancement strategies include: 1) the promotion of sustainable agricultural employment based on land-for-land options, irrigation schemes including access to pumped irrigation from the reservoir, land drainage schemes, cultivation in drawdown areas and other benefits from managed flows and floods and/or agricultural extension services including planting materials and other inputs; and 2) the promotion of sustainable non-agricultural employment based on local employment during construction and operation, employment in services and industries, reservoir fisheries and/or skills training. • Community development: This type of compensation is rarely provided for under national expropriation law but is generally applied to involuntary resettlement in developing countries. It is specifically addressed in international development bank policies and guidelines, such as those of the World Bank. For developing countries, recommended community development strategies include: the provision of new housing on titled lots; access to primary services (schooling, health care and social services such as family support and income support, etc.); access to financial services (such as interest-free loans or micro-credit); domestic water supply; roads and public transportation; rural electrification; markets and public and religious meeting places; and access to common resources (forests, grazing areas, etc.). • Catchment development: This type of compensation is rarely provided for under national expropriation law in developing countries but is specifically addressed in international development bank policies and guidelines, such as those of the World Bank. For developing countries, recommended catchment development strategies include: custodianship or management of catchment resources, reforestation, afforestation and planting of fruit trees and environmental enhancement for wildlife resources.

¾ Emerging Trends in Compensation Policy

A consensus is emerging to the effect that compensation policies for dam projects in developing countries should ensure a prompt and measurable improvement of the lives of affected people and communities by: • Fostering the adoption of appropriate regulatory frameworks: The regulatory and institutional aspects associated with resettlement are often difficult to address. Changes to legislative or institutional frameworks require the active involvement and commitment of the governments concerned. • Building required institutional capacities: This addresses the need for an institutionalized project planning process; the need to ensure the participation of all groups affected by the projects in the decision-making process; and the need for reinforced local land management capabilities.

• Planning and implementing long-term integrated community development programs: Losses incurred by individuals and communities as a result of project activities should be directly replaced and all compensation should, as far as possible, be in kind. Economic sustainability requires market proximity, sound natural resource management and including host communities as beneficiaries in the resettlement scheme. Development assistance, such as land preparation, credit facilities, training or job opportunities, must be provided.

New development strategies put forward for resettlement frequently emphasize both private and communal ownership of resources in rural communities in the developing world, as opposed to customary systems based on limited access to communal resources. A greater emphasis is also put on publicizing and disseminating project objectives and related information through community outreach programs, to ensure widespread acceptance and success of the resettlement and development process. Finally, the active participation of concerned communities in the decision-making process is of the utmost importance. Public participation programs must be planned over long periods of time (typically 15 to 20 years, particularly in the case of large dam projects), must be adapted to each stage of the project planning and implementation process, must include upstream and downstream communities and must be tailored to local capacities and customs. Ideally, they should lead to the establishment of long-term partnerships between developers and concerned communities.

4. Description of Relevant Examples

This chapter presents 10 examples of relevant practices relating to compensation policy for dams. These examples have been selected to illustrate the four types of compensation mechanisms described in the previous chapters (e.g., monetary compensation for lost assets and loss of access to resources; livelihood restoration and enhancement; community development; and catchment development).

4.1 Costa Rican Expropriation Law and Inter-American Development Bank Requirements for Development Projects: The Arenal Dam

Identification of the Example

Key Issues Addressed

Monetary compensation for lost assets, livelihood restoration and enhancement (sustainable agricultural employment) and community development.

Integration

Costa-Rican expropriation law and Inter-American Development Bank requirements for development projects.

Implementation

• Arenal Hydroelectric Project, Costa-Rica • Project owner: Institúto Costarricense de Electricidad (ICE) • Construction period: 1975-1980.

Stage Regarding the Project Life Cycle

Project planning, project construction and project operation.

Description of the Framework

General Description of the Country Institutional Set Up

The Republic of Costa Rica is a presidential democracy. The country is divided into seven provinces. Costa Rica’s political stability in the second half on the 20th century fostered its economic growth. The economy of the country is mainly based on agriculture. Since the 1980s, the economy has benefited from strong growth in the technology and tourism industries. Standards of living are actually relatively high and land ownership is widespread in Costa Rica.

The Arenal project was carried out during the 1970s by the State-owned Institúto Costarricense de Electricidad (ICE) and was financed in part by the Inter-American Development Bank (IDB). No information is available about the ministerial and institutional set-up during planning and construction of the Arenal project.

Description of the Framework

The policy framework for the Arenal project was based on the Costa Rican expropriation law and on IDB project requirements. No information is available regarding the provisions of the national expropriation law. At the time, the IDB not have an Involuntary Resettlement Policy. The first official IDB policy framework dealing with resettlement and compensation issues was a socio-cultural checklist issued in 1984. According to the IDB: “the two basic resettlement objectives were to: a) improve the standard of living of the affected population and b) create an integrated project to provide for the physical, social, and economic development of the new communities” (IDB, 1999).

Description of Organisational Set Up

ICE, the promoter and operator of the project, was created in 1949 after the 1948 civil war as an autonomous public entity in charge of developing the electric generation capacity of the country and responsible for national electrification. ICE also now offers telecommunications services (ICE, 2001). It is the main electric generating company in Costa Rica with 80% of the country’s interconnected generating capacity.

In 1973, ICE initiated the formation of an Inter-Institutional Task Force to study and plan the resettlement component of the Arenal project. This Task Force was composed of the ICE Office of Architectural Design, the Institute of Municipal Development, the Departments of Anthropology and Architecture of the University of Costa Rica and the National Census and Statistics Bureau.

In 1974, when the Inter-Institutional Task Force proved to be unsuccessful, ICE set up the Office of Resettlement (IDB, 1999). It was headed by the former chief of the ICE Office of Architectural Design who had led the planning efforts to date. The Office of Resettlement was in charge of resettlement site selection. ICE produced monitoring evaluation reports of the resettlement implementation and an ex-post evaluation was carried out by the IDB in 1993 (Partridge, 1993).

Implementation History of the Framework

The Arenal hydroelectric project was the first and only power project in the history of Costa Rica to involve involuntary population resettlement (ICE).

Description of the Example

Project Description

The Arenal hydroelectric project is located in the Canton of Tilarán, in the humid tropical highlands of the province of Guanacaste in Costa Rica. The Arenal project raised the level of existing Lake Arenal by 43 m. The Arenal Lake is located on the continental divide and its waters flowed towards the Atlantic and into the Caribbean Basin. The Arenal hydroelectric project redirected the flow of its waters towards the Pacific and into the Santa Rosa River. The hydroelectric plant has an installed capacity of 157 MW and includes a 70m high dam located 545 m above the level of the sea, a reservoir of 1,750m3 and 6,700 m of conduction tunnels leading to its three generating units. Construction of the Arenal project began in 1975 and the powerhouse went on line in December 1978. The last of the transformers commissioned in April 1980. The construction period lasted two years more than originally planed because of unexpected difficulties in the excavation and construction of the conduction tunnel. The final cost of the project reached US$ 179 million.

Besides on-site electric power generation, the project’s purpose was also to increase and regulate the flow of the Santa Rosa River and to provide irrigation water to approximately 120,000 ha through the Arenal-Tempisque Irrigation Project and to serve other proposed hydroelectric projects further downstream. Two other hydroelectric plants have since been built on the Santa Rosa River, the Corobicí Hydroelectric Project (195 MW) commissioned in 1982 and the Sandillal Hydroelectric Project (32 MW) commissioned in 1992 to form what is now called the ARCOSA Complex (Rojas, Cedeño, Jimenéz, Treminio and Monroe, 2000).

The Arenal project caused the relocation of about 2,500 people (approximately 500 families) from the reservoir area. The region’s economy was characterised by large-scale cattle ranches. About half of the population to be relocated lived on dispersed ranches and the other half lived in Tronadora and Arenal, two small towns who historically served as “jumping-off points” for the colonisation of the region. The region’s original tropical forest had been colonised by migrants using slash and burn techniques to open up small farm holdings. At a later stage, large-scale cattle-ranches were formed through the acquisition of small holdings and by intensifying the clearing of the forest. In the 1960-70 period, the population of the region declined as forests were replaced by pasture and the demand for labour declined (Partridge, 1993). At the time of project planning, crop agriculture on a commercial scale was absent and subsistence agriculture was declining as the population was decreasing. Arenal was a major commercial centre serving the local livestock production system.

Implementation

The resettlement preparation activities began in 1973, two years before multilateral financing of the project was secured and construction of the dam begun. The National Census and Statistics Bureau provided data about the population to be relocated and in the summer of 1973 an ethnographic survey of a sample of 164 families living in the reservoir area was carried out. A pamphlet was distributed to the affected population with answers to the questions they were asking about the project during the ethnographic survey. Information meetings were also held by ICE and the Inter-institutional Task Force in Tronadora and Arenal. A socio-economic survey was undertaken in 1973 to count and characterise the affected population and to document their needs and expectations in regards to the resettlement plan. It turns out that the large-scale ranchers and other wealthy families of the area did not plan to move into government planned resettlements but rather into other holdings they had elsewhere. They did not plan to take with them their labourers because they already had employees on their other ranches. This means that the major sources of employment and capital in the communities would disappear. Resettlement planning was thus planned for small farm plots so that intensive crop agriculture and dairying could support the displaced population.

In February 1974, ICE published its resettlement objectives for the project which included improving the level of living conditions in the affected communities. From June to October 1974 the ICE Office of Resettlement identified resettlement sites who were submitted to the affected population for approval by vote. In Tronadora and Arenal, committees of residents were formed to represent the interest of the affected families, including those living in affected ranches. These “Defence committees” as they called themselves, were originally set up by ranchers to protest the resettlement but it soon became apparent to poorer families that the ranchers main interest was to increase the compensation price they would receive for their land while poorer families were most concerned with resettlement alternatives that could improve their living conditions. The ranchers quickly lost their credibility as leaders of the committees. ICE considered ‘Defence committees’ a good vehicle for public participation and they were involved in the inspection of alternative sites and in the presentation of those sites and organised popular votes for site selection. Seven alternative sites were presented for New Arenal and four sites were presented for New Tronadora.

The Resettlement Action Plan was subsequently prepared and included in the loan documents submitted to the IDB in October 1974. The agreed resettlement budget was US$ 4 million including US$ 1.25 million for land acquisition.

The land acquisition process began in 1975 when it was clear that the project would go ahead. A survey of properties was carried out for subsequent approval by land owners. Signed survey maps were provided to ICE lawyers who delivered them to the Fiscal Administration Tribunal authorities who inspected the lands and determined the prices to be paid. Checks for land acquisition were issued by ICE and delivered to the owners. In case of disagreement, according to the expropriation law, both ICE and the landowners could follow the normal appeal proceedings in courts.

Tensions ran high during the land acquisition process as ranchers tried to use the ‘Defence committees’ to pressure the ICE Resettlement Office to pay higher prices for their lands. At this point ICE ceased to work through the Defence committee setting and instead established “family files” for all families who wanted to be resettled and assigned a case worker to those families. The other families were only paid cash compensation. A total of 1,208 people chose to be resettled.

The planning of the resettlement sites was undertaken by the Resettlement Office between January and June 1975. Lists of characteristics of the new settlements were discussed, modified and approved in meetings with affected families. The new settlements consisted of an urban core surrounded by farm plots ranging from 2 to 10 ha. The central plaza-church- school complex present in the original settlement would be retained and the new settlements were to be provided with a tubed water system, septic tanks, electricity, paved streets and green space and parks among others. Some eighteen different models of houses were available to chose from and public buildings were designed simply in order to be inexpensive to maintain.

The relocated families assets were analysed and compared to their expectations in regards to occupations, size of houses and farm plots. These two aspects were reconciled and guidelines were formulated for financing the acquisition of new houses and plots. They included five categories of financing packages. The financing packages ranged from new house and farm plots free of charge for those whose property was less than a certain amount and cash payment only to those whose property was worth more than a certain amounts. Between those extremes, families were requested to pay half of their compensation and the rest of the cost of the new holdings was financed for 8 or 20 years according to their financial capacity. Families who owned neither house nor farm plots were eligible to acquire new houses and farm plots through a credit equal to the purchase price financed over a 20 year period. In all cases of credit, a one-year grace period on payment of interest and principal was given and another year grace period was given on payment of interest. Conditions were set up relating to the selling of newly acquired properties.

Meetings were held between resettlement officials and each family. Agreements were reached regarding the value of each family’s assets and the financing package to which they were entitled. Preliminary distribution of houses and plots was carried out with the help of community leaders and was later modified to accommodate the 20% of families who wished to relocate elsewhere.

Construction of the new settlements began in 1975 and was undertaken by ICE. Salvage materials from old houses could be incorporated into new houses. Each family acted as a building inspector for their new home. The construction of public buildings provided training and employment to some 70 young men of the communities. The ICE Office of Resettlement established itself in the new settlements and its social workers and community promoters encouraged and organised cooperative activities such as agricultural extension meetings or

22 courses on topics ranging from construction of fuel-efficient stoves to child psychology. The agricultural specialist of the office of resettlement set up experimental and demonstration gardens.

Families moved to New Tronadora in December 1976 and to New Arenal in December 1977. The administrative responsibilities for the new settlement were then passed on to the state authorities but ICE development assistance continued another three years.

Outcomes and Results

The first years were difficult for the resettled families as most of them were fully engaged in subsistence agriculture and it became evident that the farm plots were too small to sustain a family using traditional cropping practices. ICE provided assistance to increase agricultural and livestock production and demonstrated the suitability of the Caturra coffee variety. With assistance from ICE, farmers secured loans for coffee production and organised into a marketing co-operative. Income from coffee production was approximately two times higher than the farmers income prior to resettlement (Partridge, 1993). ICE experiments also provided for a more productive grass for cattle feeding and ICE provided technical instruction for transition from beef cattle production to dairy cattle production. Several diary farms were developed by the settlers and benefited from the all weather road linking the new settlement to the town of Tilarán.

The purchase of additional farm lands and of motorised vehicles, the construction of outbuildings on farm and residential plots, the construction of a rural school building and the creation of different community committees indicated the successful adaptation of the communities in the following years. The farming families success had a spin-off effect on the shopkeeping families. The fixed capital and inventory values of the new settlement’s shops revealed an increase of 50% to 200%. The adaptation to the new settlement is also indicated by a certain stability in the new settlement. A 1983 ICE monitoring report shows that 89% of residents in New Tronadora were original settlers while they represented 93% of the families in New Arenal. The remainder were composed of new marriages and of a few migrants (Partridge, 1993).

Assessment of Outcomes by Involved Stakeholders

No information is available on the resettlers’ assessment of the project outcomes. The resettlement component of the Arenal project has been considered successful by the IDB (Garcia, Rodriguez and Rossi, 2000) and by Partridge (1993).

Overall Conclusions

Review of Challenges and Opportunities

The Arenal hydroelectric project resettlement plan was not derived from a sophisticated framework addressing resettlement and compensation issues in depth. This type of framework was practically unavailable in those years. The commitment of the promoter toward improving the standard of living of the population and the participation of local people in the elaboration of the resettlement plan helped the setting up of a resettlement plan based on populations needs that proved to be successful in restoring affected people livelihood in a relatively short period of time. Partridge (1993) argues that the resettlement was successful because of the following elements: • contribution of suitable social science professionals in project planning and implementation;

• consultation and participation of affected people in resettlement planning; • introduction of new crops and technology only after trying the traditional ones.

It must however be said that the resettlement package offered by the Arenal project for compensation of people without property did not conform with current international best practices regarding the resettlement of vulnerable groups. Cernea (1996) demonstrated that landless workers and farmers are more vulnerable to impoverishment in involuntary resettlement processes for dams. Recent IDB and World Bank involuntary resettlement policies and procedures also emphasize that landless workers and vulnerable population groups must be be provided with specific assistance in order to secure their access to shelter and the restoration and enhancement of their livelihoods.

In the case of the Arenal project, people without land holdings and houses were provided credit for buying a property in the new settlement but were not given the same advantages as owners of low value properties who were provided with a house and plot free of charge. The provision of a house and plot to people with no access to property would have provided greater assurance that they were not impoverished by resettlement. It would have also ensured greater compliance with the stated objective of ‘improving the standard of living of the affected population’. Partridge (1993) also emphasized the fact that no empirical data was available to assess the viability of future farms and that no assessment was carried out of the affected people’s quality of life besides the economic outcomes of the project.

References

Cernea, M. M. (1996) Impovershiment Risk and Livelihood Reconstruction: A Model for Resettling Displaced Populations. Washington D.C.: The World Bank. Inter-American Development Bank (IDB) (1999) Involuntary resettlement in IDB Projects, Principles and Guidlines, Annex 1: Case Studies of Resettlement in Bank Financed Projects, Case 1 Arenal Hydroelectric Project. Available online at www.iadb.org Institúto Costarricense de Electricidad (ICE) (2001) ICE website. Available at www.grupoice.com Garcia, L. E., D. J. Rodriguez and L. Rossi (2000) Dams, Development and the Environment in Latin America and the Caribbean: Some Experiences of the Inter-American Development Bank. Available online at www.iadb.org Partridge, W.L. 1993. Successful Involuntary Resettlement: Lessons from the Costa Rican Arenal Hydroelectric Project. In Cernea M. M. and Guggenheim S. E. (ed.) : Anthropological Approaches to Resettlement Policy, Practice and Theory. Boulder: Westview Press. pp.351- 374. Rojas, F., H. Cedeño, R. Jimenéz, J. Treminio and M. Monroe (2000) Diseño Construcción y Puesta en Marcha del Sistema Integrado de Administración Hidroeléctrica del Complejo Arenal Corobicí Sandillal (SIAHC). Paper presented in Technologia-ICE, December 2000. Available online at www.grupoice.com/esp/cencon/docs/energ/doc_pdf_ener.htm

4.2 Brazilian Environmental Legislation and Second Master Plan for the Protection and Improvement of the Power Sector Works and Services: The Salto Caxias Dam

Identification of the Example

Key Issues Addressed

Monetary compensation for lost assets, livelihood restoration and enhancement (sustainable agricultural and non-agricultural employment) and community development. Compensation defined through multi-stakeholder consultation forum.

Integration

Brazilian Environmental Legislation (1981, revised in 1986 and in 1988 Constitution) and Second Master Plan for the Protection and Improvement of the Power Sector Works and Services (1990).

Implementation

• Salto Caxias Hydroelectric Power Plant, Brazil • Project proponent: COPEL • Construction period: January 1995-December 1998.

Stage in the Project Life Cycle

Project planning, implementation and operation.

Description of the Framework

General Description of the Country Institutional Set Up

The Federative Republic of Brazil is a presidential democratic government which is governed by a civil regime since 1985. The legislative branch of the State, the National Congress, is composed of the Federal Senate and of the Chambers of Deputies. Brazil is composed of 26 States and one federal district. The State’s territories are divided into municipalities. The Brazilian Constitution of 1988 grants broad power to the federal government but provinces have a certain amount of autonomy concerning economic and energy issues. Brazil is the most populous country in South America and the most important economy of the continent. The distribution of land in Brazil is a source of conflict since the end of 1970s and the country counts a large number of landless people. In 2000 the Brazilian Register of Large Dams had 823 entries including 293 whose main purpose was power generation (Cassio, 2000).

The Ministry of the Environment, Water Resources and Legal Amazon (MMA) is the federal department in charge of environmental policy. The Brazilian National Environmental Policy was first established by the Federal Law 6.938 of 1981 but subsequent legal provisions in 1986 and the 1988 Constitution enforced and regulated the Brazilian environmental legislation. The Brazilian Constitution is the only one in the world to devote an entire chapter to environment issues (Fonseca dos Santos, 2004). The 1981 environmental legislation established the the National Council for the Environment (CONAMA) and the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA). CONAMA is a consulting and deliberating body subordinated to the MMA. It is responsible for defining

25 general environmental regulations, basic criteria and guidelines to implement the country’s environmental policy.

Prior to the 1990s reforms towards greater private investment in the power sector, the Brazilian power sector was mainly controlled by the State-owned Eletrobrás and its regional concessionaires. A Coordinating Committee for Environmental Operations of the Power Sector (COMASE), comprising Eletrobrás and its regional concessionaires, was set up for establishing the environmental policies of the Brazilian power sector. In 1990 a privatisation programme was put in place, followed in 1995 by a law on public services, softening the conditions for entry to the electricity market and guaranteeing free access to the distribution and transport networks. Since the 1995 reform to enable the privatisation of the Brazilian power sector, the electricity sector has been regulated by the National Electrical Agency (ANEEL).

The Salto Caxias Hydroelectric Power Plant is located in the State of Paraná in southern Brazil. The State of Paraná enjoys one of the highest standards of living in Brazil.

Description of the Framework

The Salto Caxias project had to comply with national environmental policies and especially with the 1987 CONAMA Resolution 006 regulating the environmental licensing process for big engineering projects such as a hydroelectric power plants. According to this regulation, three licenses must be obtained. The first license, which is called the ‘Initial License’, is linked to the data collection program and feasibility study. It is issued after approval of the Environmental Impact Study, of the Environmental Impact Report and completion of the public hearings process. The second license, called the ‘Installation License’ authorises the start of construction and is issued after the required Environmental Basic Project, which sets out the required mitigation and compensation measures. Finally, the ‘Operation License’, which authorises operation of the project, is issued after satisfactory inspection of the implementation of the project’s environmental management plan and of programs required under the Environmental Basic Project. IBAMA is responsible for the environmental licensing of projects with potential regional impacts affecting two or more states. In certain circumstances, states and/or municipal environmental agencies are in charge of the enforcement of environmental regulations and can establish specific regulations for their jurisdiction related to environmental licensing and also stricter environmental standards.

Furthermore, the Salto Caxias Resettlement and Compensation program had to comply with the COMASE regulations and with federal laws concerning expropriation and financial compensation for hydroelectric generation. The COMASE’s ‘Second Master Plan for the Protection and Improvement of the Power Sector Works and Services’ was issued in 1990. It replaces the First Master Plan of 1986 and incorporates specific guidelines for population relocation. COMASE has established environmental and social policies for the electric power sector based on three main guidelines: 1) Socio-environmental feasibility of the project; 2) Environmental protection and socio-economic development of the project's area of influence; and 3) Consultation processes and public participation.

Federal Laws 7.990/89 and 8.001/90 and Federal Decrees 01/91 and 774/93 regulate the financial compensation (royalties) for the use of hydrological resources in the generation of electricity. According to Federal Law No 8001 of 1990, 45% of royalties from a hydroelectric project must go to affected municipalities. Royalties received by a municipality depend on the flooded area and on power production at the plant.

The expropriation process in Brazil is regulated by Federal Decree 3.365/41 and Federal Law 2.786/56. Furthermore, article 5 (ITEM XXIV) of the 1988 Brazilian Constitution states that

26 people affected by expropriation must receive fair and previous pecuniary compensation. In 1995, when construction of the Salto Caxias hydroelectric project was beginning, a new Federal Decree was introduced to regulate the expropriation of land for the implementation of a hydropower project and for the creation of a reservoir. The specific provisions of this decree are not available.

Description of Organisational Set Up

Companhia Paranaese de Energia (COPEL) was in charge of planning and building the Salto Caxias project. COPEL is a mixed capital company with the State of Paraná Government as its major shareholder. COPEL was created in 1954 and with its facilities representing an installed capacity of 4,500 MW, it is one of the biggest power generation companies in Brazil. COPEL was in charge of the construction of four of the biggest dams on the Iguaçu River and owns three of these dams, namely Foz do Areia, Segredo and Salto Caxias (COPEL, 2003). The COPEL Environmental Department under the Superintendance of Construction was responsible for the implementation of all environmental programs.

The Environmental Institute of Paraná (IAP) was the agency responsible for issuing the licences and thus responsible for examining the implementation of the mitigation measures proposed in the Environmental Basic Project for the issuance of the operational license.

Implementation History of the Framework

In the past in Brazil, the compensation and resettlement component of a dam project was addressed basically from a legalistic and financial point of view. The utility’s role was generally restricted to the acquisition of land and properties and to providing financial compensation for the loss of existing structures. Such an approach was generally appropriate for large landowners but not for small landowners and other underprivileged groups as it did not effectively protect affected families livelihoods. In the 1980s, resettlement policies in the power sector changed towards including a wider range of alternatives with a special focus on the resettlement of small landowners, sharecroppers, rural workers and squatters. This shift in power sector policies resulted from the combined effect of the following factors: a) increased requirements of the new federal legislation on environment; b) increased requirements of international funding agencies in regards to involuntary resettlement and c) heightened pressure from dam-affected people and environmental and civil rights activists (Fernandes Serra, 1993).

The history of the Itá hydropower project is relevant to the understanding of the previous compensation framework in the State of Paraná. The Itá project was developed by Electrosul (a regional subsidiary of the state-own Eletrobrás) in the Uruguay river basin in the State of Parana (Bermann, 2000). The Regional Commission for People Affected by Dam Construction or Comissão Regional de Atingidos por Barragens (CRAB) was created in the early 1980s during the planning of the Itá project. In 1987, Electrosul and CRAB signed a landmark agreement recognised by the federal government which met CRAB demands that fair compensation, in cash or land, be provided prior to dam construction. In 1988, Electrosul and CRAB defined together the Rural Resettlement Principles and Guidelines of the project. They established the conditions for indemnification, relocation, and resettlement of the affected population and the schedule for the implementation of socially oriented measures in the reservoir area. After the implementation of two conventional resettlement programs, CRAB took the responsibility for implementing collective resettlement. In the 1990s, CRAB gained recognition for its management of the Itá Dam resettlement which resulted in better facilities for relocated people and in a reduction of resettlement costs (Rothman and Oliver, 1999).

In 1991, CRAB took a lead role in the setting up of the First National Congress of People Affected by Dams in Brazil which regrouped various movements of people affected by dams in Brazil and led to the creation of the National Movement of People Affected by Dams (MAB). CRAB was renamed MAB-Sul. MAB had a lead role in organising in 1997 the first international meeting of people affected by dams in Curitiba, the capital of the State of Paraná. The Curitiba delegates emphasised the need for the establishment of an independent commission to evaluate dams constructed to date. One month later, MAB was invited by the International Union for the Conservation of Nature (IUCN) and the World Bank to participate in a meeting in Gland, Switzerland, where the proposal was formulated for what eventually turned out to be the World Commission on Dams (Rothman and Oliver, 1999).

Description of the Example

Project Description

The Salto Caxias Hydroelectric Plant is located on the Iguaçu River in the municipality of Capitao Leonidas Marques in the State of Paraná. Reservoir impoundment involved the flooding of 1,120 rural properties in nine municipalities and the relocation of 1,200 families or approximately 25% of the population of the area (Fonseca dos Santos, 2004). The Iguaçu River is the left tributary of the Paraná River. It flows through the biggest southern region basin with an area of nearly 6,900 km2. The Salto Caxias facility provides almost 40% of COPEL’s total installed capacity (Fonseca dos Santos, 2004). Thanks to the experience gained by COPEL in the earlier construction of several power plants, the planning and quality control of the Salto Caxias project constitute significant landmarks in the mastering of hydropower plant construction in Brazil (COPEL, 2003).

Specifications of the Salto Caxias Hydropower Project

Item Specifications Dam type Roller Compacted Concrete Dam Dam height 63 meters Crest length 1,000 meters Reservoir area 140 km2 Installed capacity 1,240 MW (Four 310 MW generators) Total Project Cost (including Environmental US$ 1,090 million Program cost) Environmental Program Cost (including US$ 250 million Resettlement Program cost) Resettlement Program Cost US$ 100 million Source : Hydro-Québec International and Vincent Roquet & Associates Inc. (2004)

The Salto Caxias Initial License was issued in December 1993 and its Installation License was issued in February 1994. Construction of the project started in January 1995 and the first turbine went on line in December 1998 after the Operation License was issued. The four generators were in service before the end of 1999 (IEA, 2005 Draft).

The project was expected to to affect approximately 1,200 families among which 900 were either owners of small properties or landless families (Fonseca dos Santos, 2004). Landless families and those who owned small properties derived most of their livelihood from agricultural work and were at risk of migrating to urban shanty towns if they were not provided with alternative land and livelihoods. Most of the project-affected families were of

German or Italian heritage. They had colonised the area in the 1950s and 1960s and were very attached to the land that they worked (Fonseca dos santos, 2004).

Implementation

¾ Resettlement Issues

Following announcement of the project in the 1980’s, rural workers in the project area expressed strong opposition to the construction of the dam. They recalled that the eviction process that occurred for another dam built on the Iguaçu River under previous legislation did not provide for any compensation for landless workers. The population of the area got organised with the help of MAB and the Landless Workers Movement (MST) and created the Commission of People Affected by Dams Construction on the Iguaçu River (CRABI) (Fonseca dos Santos, 2004). The Commission lobbied the local population to not participate in the population survey required for the Environmental Impact Assessment of the Salto Caxias project in order to prevent COPEL from obtaining its first license. CRABI requested that COPEL sign an agreement that guaranteed the rights of affected people. The fact that this project was the first one to be built following changes to the national environmental legislation led to the participation of representatives of the Environmental Authority and of the District Attorney who wished to ensure that the new environmental legislation was properly applied.

Multidisciplinary Studies Group COPEL, on its own initiative, set up in 1992 a Multidisciplinary Studies Group, called ‘GEM CX’, which provided a democratic forum to discuss relevant project-related issues, among which indemnity rights and resettlement. GEM CX was composed of different levels of government authorities and of non-governmental organisations such as CRABI and the MST. The boundaries of discussions within the scope of GEM CX were defined by the new environmental legislation and regulations and by the overall budgetary envelope available for the project. Meetings were held in the project region and functioning of GEM CX was funded by COPEL. It was the first time in Brazil that resettlement and compensation issues were discussed in an open and democratic way before the beginning of construction of a dam (Fonseca dos Santos, 2004).

Agreements with representatives of the affected people enforced in the licensing procedures GEM CX discussions led to the signing of agreements with representatives of the affected people. The main aspects covered in the agreements were related to expropriation and relocation issues. An important concern in Brazil is to maintain young people in rural areas to avoid rural exodus toward urban shanty towns. The October 1993 Agreement between COPEL and the representatives of affected people (including CRABI and the municipalities) defined the guiding principles and approaches of the Indemnification and Resettlement Program that was to be developed. These required that: - “ COPEL should conduct the resettlement program so as to promote social justice and to prevent rural exodus; - COPEL should ensure a fair solution in the resettlement process for small landholders and lessees, for landholders without title deeds and for other workers and farmhands who are directly impaired by the reservoir; - COPEL should only acquire resettlement lands with the consent of people to be evicted; - Family relative groups will be taken into consideration as well as neighbour’s relationships;

- Each lot of land to be acquired should not be less than 17 hectares per family; - The lands to be acquired should be more fertile than those condemned; - The size of each lot of land should be determined taking account of the family work force and quality of soil for cultivation; - A legal conservation area of 20% of acquired land should be maintained in each lot. In addition, a defined lot for an experimental agricultural project should be nominated, for which financial support would be provided; - A plan for agricultural exploitation and improvement of quality of soil for cultivation soil should be developed and implemented; - Complete services, i.e. roads, drinking water supply, electricity, telephone network, houses, community centres, schools, etc. should be provided” (IEA, 2005 Draft Report, Salto Caxias ‘Good Practice Report’).

The 1993 Agreement was included in the Environmental Impact Assessment Report and the Salto Caxias Initial License was issued in December 1993. According to Brazilian legislation, the Environmental Impact Assessment Report had to be implemented by the developer in order to receive the construction and operation license. As such, MST and CRABI were assured that if the agreement was not implemented, the Environmental Authority would not issue the needed Licenses.

The next step was to defined the specific mitigation programs (Environmental Basic Project) that had to be set up in order to implement the Environmental Impact Assessment Report. GEM CX provided a forum to discuss, negotiate and define each of the 26 environmental programs included in the Environmental Basic Project, such as the Indemnification and Resettlement Program. The Installation License was issued in February 1994 after the approval by the Environmental Authority of the Environmental Basic Project. The Operation License was issued in 1998 after the Environmental Authority was satisfied with the implementation of the 26 environmental programs.

Indemnification and Resettlement Program The Indemnification and Resettlement Program was negotiated with each “basic unit”, which was defined as a group of affected people represented by a leader. Criteria for compensation and resettlement were proposed by the leaders of the “basic units”. The program was composed of two aspects: • Indemnification of the land owners at market value. The market value was established after the result of a survey carried out by a commission formed by COPEL and by a representative of affected people with mediation from the Paraná State Environmental Institute. • A Resettlement Program was offered to small farmers (less than 30 acres) and to landless workers. The Resettlement Program provided the option of collective resettlement or of a letter of credit for individual resettlement.

Among the approximately 1,200 families affected by reservoir creation and eligible for the Indemnification and Resettlement Program, 858 were entitled to the Resettlement Program. The Collective Resettlement project elaborated in consultation with leaders of the basic units was presented in January 1995. In March 1995, families entitled to Resettlement had to choose between the Collective Resettlement Project and letter of credit for individual resettlement. A total of 626 families decided to be relocated in the collective project while 232 others settled for individual projects (Fonseca dos Santos, 2004).

Collective Resettlement Project The main goal of the Collective Resettlement Project was to obtain land suitable for agriculture and to try to guarantee that each family’s land included at least 80% of land that was suitable for farming and cattle raising on the basis of ecologically sound practices. Relocation areas were selected in close co-operation with affected people. In 1994 and 1995, the Resettlement Project was discussed in meetings and seminars with the affected families to ensure that the main decisions were made jointly and agreed to by those concerned. Those meetings included site visits to the resettlement area.

The approximately 600 families that chose Collective Resettlement were resettled between 1996 and 1998 into 10 collective farms organised into 19 Rural Producers’ Associations (or communities). A total of 40,000 acres of land was acquired for resettlement purposes. The program tried to combine the conservation of the existing forest with the development of new farmlands. The 11,690 hectares of lands chosen for cultivation purposes were improved on the basis of soil preparation activities carried out by employing project-affected people. COPEL, with the participation of CRABI, encouraged resettled farmers to switch to organic production modes. Each family received a 3 or 4 bedroom house plus a barn and a piece of land with a minimum size of 40 acres depending on the size of the family. Infrastructure and services including roads, electrical networks and rural telecommunications were provided. Two education centres were built and a special education programme was set up that was oriented toward participation in community life and environmental conservation. Two health centres were also provided with a family doctor program. COPEL funded agricultural and social assistance for three years after the relocation. Affected people were employed during the construction of the new infrastructures and services.

¾ Regional Development Issues

The relocation of 25% of the area’s population represented a big impact for the economy of the nine municipalities which was somehow stagnant since the 1980s. The impact of the project on the local economy was an important issue in GEM CX discussions. The Salto Caxias project involved the closure of a small hydroelectric power plant which was the main employer of the Foz do Chopim town. The inhabitants of the town, fearing a slow exodus generated by the lost of their main source of employment, asked COPEL to close the town and to be eligible for resettlement compensation.

Motivated by the prevention of rural exodus, COPEL decided to hire SEBRAE, a governmental organisation that provides assistance for the development of small businesses, to find other economic ventures for the small town. SEBRAE identified three economic alternatives for the town and COPEL helped in financing those new businesses. After six months, the 40 jobs provided by the small hydroelectric plant were replaced by close to 100 jobs. COPEL decided it would be good to extend this kind of action to the whole territory. SEBRAE produced a regional development plan but financing was missing to implement this plan. The solution was the creation of a Municipal Development Fund in each of the nine municipalities that was financed with 10% of the revenues provided by the royalties from the hydroelectric dam. Usually the spending of the royalties is a municipal prerogative but COPEL and SEBRAE convinced the municipal representatives to pass a law to transfer these funds to the Municipal Development Fund (Fonseca dos Santos, 2004).

Outcomes and Results

¾ Resettlement Issues

In 2001, the farming communities were producing substantial crops including a significant proportion of organic soy and corn. Co-operation between CRABI and COPEL continues as they jointly organise an annual cultural festival.

¾ Regional Development Issues

In 2000, the Municipal Development Funds helped created 50 new small businesses with more than 300 direct jobs. SEBRAE also provided training for municipal employees to help them adapt to the new reality and strengthen their public management skills. After one year of preparation, the nine affected municipalities decided to create a Municipal Consortium to have a stronger political situation inside the State but also to share services, such as construction equipment, and save money (Fonseca dos Santos, 2004).

Assessment of Outcomes by Involved Stakeholders

Representatives of CRABI and of farmers affected by the project interviewed in 2004 stated that displaced people experienced cultural change as some social networks and known places were lost. Adaptation to the new environment was not easy but the stakeholders outlined the benefits brought by the GEM CX and by the subsequent Agreement and Resettlement Program such as access to land ownership for landless workers and the opportunity to be part of the management of the Resettlement Project (Hydro-Québec International Ltd and Vincent Roquet & Associates inc, 2004).

Representatives of COPEL, of the Environmental Authorities, of the affected farmers and of CRABI interviewed in 2004 stated that implementation of the GEM CX was one of the main factors for the success of the environmental and social performance of the project and that this project was built with strong participation of affected people. Collaboration was not always easy as conflict mediation was a challenge and required flexibility from the stakeholders (Hydro-Québec International Ltd and Vincent Roquet & Associates inc, 2004).

Overall Conclusions

Review of Challenges and Opportunities

In the case of the Salto Calxias project, COPEL put considerable effort into complying with the COMASE Master Plan’s objectives to promote socio-economic development of the project's area, to consult with affected parties and to promote public participation. Achievement of the last objective is significant given an initial context characterized by strong mobilisation of groups opposed to the project.

The establishment of a Multidisciplinary Study Group has proven to be very successful and productive. In only three years it has mobilised parties with different interests in the development of a compensation and resettlement plan. It enabled the optimal participation of affected people in the definition and implementation of the compensation program. Participation of affected people in all stages of the compensation program enabled them and the developer to share responsibility for the Resettlement Project. The developer’s commitment to work with the affected municipalities in order to compensate for breakdowns of the economic structure in the reservoir area helped to create small businesses and new economic ventures but also strengthened the collaboration between the different municipalities which could have a lot of positive incidences on their future development.

References

Bermann, C. (2000) Community-Managed Resettlement: Ita Dam, Brazil. Submission presented to the World Commission on Dams. World Commission on Dams CD-Rom. London: Earthscan Publications Ltd. Cassio, V. (2000) Large Dams and Power Production - The Brazilian Experience. Submission presented to the World Commission on Dams. World Commission on Dams CD- Rom. London: Earthscan Publications Ltd. COPEL (2003). Salto Caxias Resettlement Project, Blue Planet Prize application. Fonseca dos Santos, A. (2004). Salto Caxias Hydroelectric Power Plant Consultation Process and Public Participation. A Real Tool for Sustainable Development. Paper presented at the UN Symposium on Hydropower and Sustainable Development in Beijing, October 27-29 2004. Available online at: www.un.org/esa/sustdev/sdissues/energy/op/. Hydro-Québec International and Vincent Roquet & Associates Inc. (2004). Quality Management of Safeguards in Dam Projects, Final Report – Volume 2: Database. Case Study on Salto Calxias Dam. Report presented to The World Bank. International Energy Agency (2005, Draft). Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft) – Good Practice Report - The Salto Caxias Dam. Japan: New Energy Foundation. Rothman, F. D. and P. E. Oliver (1999) From local to global: the anti-dam movement in Southern Brazil, 1979 to 1992 . Published in Mobilization, Vol. 4, pp. 41-57, April 1999. Available online at www.ssc.wisc.edu/~oliver/ protest/ArticleCopies/Dams_moby.pdf World Bank Operations Evaluation Department (1998). Recent Experience With Involuntary Resettlement, Brazil – Itaparica. Report No. 17544.

4.3 Resettlement Policy of the Electricity Sector in Columbia: The Urra 1 Dam

Identification of the Example

Key Issues Addressed

Monetary compensation for lost assets, livelihood restoration and enhancement (sustainable agricultural employment) and community development.

Integration

Resettlement Policy of the Electricity Sector in Colombia (1992).

Implementation

• Urrá 1 hydroelectric project, Colombia • Project owner: URRÁ S.A. • Construction period: 1994-2000.

Stage in the Project Life Cycle

Project planning, project construction, project operation.

Description of the Framework

General Description of the Country Institutional Set Up

The Republic of Colombia is a presidential democracy. The country is divided into 32 departments and one capital district. The country has been faced with internal conflict between insurgent groups, government forces and illegal paramilitary groups over the last 40 years. However, an ongoing peace process has been in development since 2002.

When URRÁ S.A. started the planning of land acquisition and population resettlement for the project, Colombia could refer only to negative resettlement experiences, such as those of Tomine and Guatavita. However, in 1990, at the World Bank's suggestion, the electricity sector in Colombia undertook to develop a comprehensive Resettlement Policy for the Electricity Sector in consultation with the Ministry of Mines and Resources, the Natural Resources Development Institute (INDERENA) and the Administrative Department of National Planning. The policy was approved in 1992.

Description of the Framework

The Resettlement Policy for the Electricity Sector is a 13-page document that comprises: • a set of general policy guidelines; • operation guidelines for the implementation of the policy at each step of the resettlement process; and, • recommendations on strategies to be adapted to each project.

The policy guidelines are based on the following basic principles: 1) Communities that have to abandon against their will their homes and their livelihoods have a right to: a) the reestablishment of at least their former standard of living, as a compensation for displacement-induced impacts and traumas; b) participate in planning and implementing a community resettlement and rehabilitation program. 2) Cash compensation does not constitute in itself a solution to the effects of forced displacement. The resettlement strategy must be based on land-for-land, house-for-house compensation as well as on plans to restore the social, economic and cultural conditions of the project-affected communities.

The objectives of the operational guidelines at each step of the project are the following (the activities that must be carried out in relation to these objectives are detailed in the policy document): • Planning - Gather all the necessary information on demographic, economic, social and cultural characteristics of the population to be resettled; - Prepare the resettlement plan that must include strategies, projects, resources, timetables and budget. • Relocation - Relocate the population at minimum social cost.

• Economic and social incorporation - Rebuild the economic and social system of the displaced communities in their new environment. - Arrive at the self-management of the communities so that the resettled population and their organisations take control of their new environment.

Recommended strategies address the following aspects of the resettlement plan: • Social management • System of permanent communications with the project-affected communities • Inter-institutional co-ordination • Socio-economic information system • Control of the sub-contractors with regards to resettlement • Establishment of a resettlement co-ordination committee • Monitoring plan.

Description of Organisational Set Up

With the 1991 Constitution and National Law 99, the Ministry of Environment was established as the head of environmental management in Colombia with increased political power and influence. This new framework also created and consolidated the regional environmental agencies in charge of environmental management in their respective regions (Corporaciones Autónomas Regionales).

Implementation History of the Framework

As mentioned earlier, Prior to the promulgation of Law 99 in 1993, environmental management in Colombia was characterised by very y limited success in controlling environmental and resource degradation (Ramirez and Cubillos, 1995). In particular, together with the scattering of authority for environmental management, the definition of policies was too centralised and there was little involvement of local communities. In addition, there were budgetary constraints, which were reflected in personnel and technical limitations (low salaries and technical skills). The comprehensive Resettlement Policy of the Colombia Electricity Sector approved in 1992 had never been implemented before the Urrá 1 project.

Description of the Example

Project Description

The Urrá 1 hydroelectric project is located in the Department of Cordoba, in the Northwestern part of Colombia, on the 350 km long Sinú River which flows into the Caribbean Sea. Its installed capacity is 340 MW and its reservoir area is 7,400 hectares. Construction began in 1994 and its four units were commissioned in 2000.. The Sinú valley has been used by indigenous people since pre-Columbian times. The project affected the Embera-Katio indigenous population living in the upper reaches of the catchment of the Sinú river and the Zenu community living in the estuary zone.

The construction of the civil works as well as the impoundment and protection of the reservoir required the acquisition of 18,000 hectares of land inhabited by some 7,300 people. Land in the upstream Sinú valley has been used by indigenous people since the pre- Colombian era and has been occupied by settlers since the 1950s. This valley can be characterised as an economically backward area with almost no government presence,

35 subsistence-level agriculture, extreme poverty and high levels of ethnic, social and political conflicts. Most settlers have no land title. Access to the reservoir area is difficult. At the beginning of construction, in 1994, the project was delayed on several occasions. This created feelings of distrust towards the promoter, first CORELCA and later URRÁ S.A.

Implementation

Land acquisition and population resettlement were conducted in three phases to match the construction schedule. Land was thus acquired successively in three distinct areas: first the area required for the civil works and the construction site, then the area impounded by the cofferdam used to divert the river for construction purposes, finally the area corresponding to the rest of the reservoir. The spreading of the resettlement activities over three phases reduced the size of the resettlement tasks and experience gained from each phase could be used during the subsequent phases. These phases of are summarized in the following table.

Phases of Population Resettlement

Phase Date Total Displacement Number of Families Involved Population Completed Involved Direct Land for Land Total Compensation Compensation Civil Works May 1994 44 84 128 687 Diversion Dec. 1995 275 390 665 3,231 Reservoir Dec. 1998 337 106 443 3,350 Impoundment Total 656 580 1,236 7,268

URRÁ S.A. could count on several positive factors that were specific to the project region: • the reservoir area and the nearby area has a relatively low population density of 40 inhabitants per square km; • good quality land was available downstream of the dam; • the reservoir as well as the relocation area are within the limits of one department (Cordoba) and of one municipality (Tierralta) only, which simplifies administrative arrangements; • the population was willing to move because of political unrest in the reservoir area and the attractive resettlement package; • although URRÁ S.A. could not count on the active presence of government organizations in the area to help in the resettlement process, such situation offered the opportunity for the company to intervene in a coordinated fashion, with efficient means, in all aspects of land acquisition and population resettlement.

In conformity with the Electricity Sector Resettlement Policy, the resettlement plan was based on the following: Absentee landlords (approximately 10% of family heads and 35% of the total land area) and residents who had recently moved to the area were offered a mandatory direct money compensation at replacement cost. All other family heads, considered as "vulnerable" were offered in addition the possibility of land-for-land compensation. Almost all of them (99%) preferred the latter option which consisted in the delivery, in exchange for properties that the more vulnerable families possessed in the affected area, of a two-bedroom house and a 4 ha lot. Each lot was planted with 2 ha of permanent crops (banana plantation or fruit orchard) and 1.5 ha of other crops. It also comprised a small yard to plant fruit trees and raise domestic animals. Some models also included cattle breeding.

Land acquisition and resettlement activities included systematic information and consultation, particularly on the following: • compensation options; • selection of the relocation areas; • selection of housing design; • selection of agricultural production programs on the new 4 ha lots allocated to each family on nearby land downstream of the dam; • selection of houses and lots taking into account community and family ties; • the physical transfer to the relocation site.

The land-for-land resettlement package also included assistance and training to individuals and families in rebuilding new social organizations and production systems. Needed public services were also planned in consultation with government agencies, particularly the Municipality of Tierralta. The following infrastructures were built in the resettlement areas: aqueducts, sewerage, electricity networks, public roads, schools, health centers, cemeteries, churches, recreation areas and administrative buildings. During construction, URRÁ S.A. financed the operation of public services.

The first phase relocation area was organized along a "scattered" pattern, reproducing the spatial organization in the reservoir area. However, difficulties were met when constructing houses and infrastructure works, resulting in delays and higher costs. In the meantime, temporary houses using traditional techniques had to be built to offset problems. For the following phases, another pattern of organization was proposed with a grouping together of houses and public infrastructure close to the agricultural lots; 70% of the families chose the latter pattern.

Indigenous population issue

From the start of the studies, CORELCA and later URRÁ S.A. consulted with the Embera- Katios indigenous population. The Embera-Katio population affected by the project were then composed of two reserves: the Karagabi Reserve located along the Sinú and Esmeralda Rivers (193,500 ha, 310 families) and the Iwagado Reserve located along the Verde River (10,000 ha, 140 families). The Iwagado group received support from the National Indigenous Organization of Colombia (ONIC) and the other group from independent advisors. The objectives of URRÁ S.A.’s plan concerning indigenous populations were the following: • compensate for the land, houses and crops affected by the reservoir in the Embera-Katio territory; • negotiate a socio-economic development plan and compensation measures for the Embera- Katio community; • within the scope of the existing legislation, negotiate a monetary agreement with the Embera-Katio community for the operation of the project; • negotiate mitigation and compensation measures with the Zenu community.

In 1995, URRÁ S.A. and the Embera-Katios agreed on the following measures: • a direct money compensation for houses and crops affected; • adding 162 ha to the indigenous territory, an area which was considered equivalent to the area affected by the reservoir; • a plan de etnodesarrollo (indigenous community development plan) which covers all socioeconomic aspects: education, health, social organization, development of cattle breeding, aquaculture, etc.;

• the acquisition of land in indigenous territory occupied by some 165 settlers’ families.

However, a conflict emerged within the Embera-Katio community concerning, among other issues, the selection of a Cabildo Mayor (chief, acting as representative of the community). As a result, the implementation of the community development plan was suspended at the end of 1997.

In March 1998, the Ministry of the Environment (MMA) ordered URRÁ S.A. to complete all negotiations on mitigation and compensation measures with the indigenous people affected by the project (Consulta Previa) to the satisfaction of the Ministry of the Interior (MOI). In its November 1998 decision, the Corte Constitucional stated that the consultations made by URRÁ S.A. did not constitute an acceptable Consulta Previa and ordered the company to resume negotiations, firstly on impact mitigation and compensation, and secondly on participation by the community in project benefits during the life of the project.

The negotiations took place in Coveñas and San Entero (neutral places outside the armed conflict zone) between December 1, 1998 and September 2, 1999. The latter date was the deadline established by the Corte Constitucional to come to an agreement. The MMA and the MOI participated in the negotiations in order to guarantee that the fundamental rights of the Embera-Katio were respected and to ensure the transparency of the process. The negotiations were conducted in parallel with the Alianza de Cabildos Menores del Río Esmeralda y Fracción del Río Sinú and with the Cabildos Mayores del Río Sinú y Verde. An agreement was reached only with the first group. In accordance with the judgment of the Corte Constitucional, the MMA had to decide which measures would be applied for the second group. Accordingly, these measures are defined on the license (plan jenene) and correspond to the measures agreed upon with the Alianza de Cabildos Menores del Río Esmeralda y Fracción del Río Sinú.

The following summarizes the measures defined in the license and which are applicable to the Embera-Katio community40: • Compensation for the Loss of Territory due to Reservoir Impoundment: URRÁ S.A. will acquire an area of 128 km2, which will be added to the Embera-Katio reserve. This area is located between the northern limit of Paramillo Park and the indigenous reserve. It should further contribute to prevent non-indigenous persons to settle within the Park. • Impact Prevention, Correction, Mitigation, Restoration and Compensation: The measures agreed upon with the Alianza de Cabildos Menores del Río Esmeralda y Fracción del Río Sinú concern the following aspects: Economic development (aquaculture, agricultural production, cattle breeding, navigation, infrastructure); Social aspects (health prevention and promotion, etnoeducation); Cultural aspects (women’s participation to society, craft industry, strengthening of culture, recreation); Political aspects (institutional strengthening, community equipment); and Environment protection (tree planting, plant nursery, environmental education). It must be noted that these measures are in line with the plan de etnodesarrollo initiated in 1995. As regards the other Embera-Katio group (Río Verde), the MMA imposed similar measures that are part of the plan Jenene, as well as some other measures that are also part of this plan, such as the design and implementation of a database of the Embera-Katio community. • Participation in Benefits: URRÁ S.A. and the Alianza de Cabildos Menores del Río Esmeralda y Fracción del Río Sinú agreed on the payment of 60 million pesos per year during fifty (50) years as a substitute to the benefits proposed by the Corte Constitucional. Consequently, this sum must not be considered as a participation in the

40 The total cost of these measures was 72,752,841,000 pesos, e.g., 6,609,550,000 more than anticipated.

project benefits. This is considered as the main litigation point with the Embera-Katio Río Verde group, who insists on the right of the indigenous people to obtain part of the benefits arising from the exploitation of resources located in their territories. • Monetary compensation: The decision of the Corte Constitucional ordered URRÁ S.A. to negotiate and agree on amounts of monetary compensation to be paid to the Embera- Katio. It further stipulated that the amounts must be at least sufficient, firstly to guarantee the physical survival of the Embera-Katio people, and secondly to compensate the people for any cultural, economic and political modifications as well as changes to their customs and traditions that are attributable to implementation of Urrá 1 multipurpose project. An agreement was reached with five subgroups. The other subgroups, as specified in the decision of the Corte Constitucional have the right to ask the Tribunal Superior del Distrito Judicial de Córdoba to determine what amounts are to be paid. • Plan de Etnodesarrollo: As a result of the order of the Corte Constitucional, URRÁ S.A. resumed the implementation of all the projects included in the Plan de Etnodesarrollo in the Embera-Katio community. These projects were to end in 2000, at which time they would be replaced by the new projects agreed upon with the Alianza de Cabildos Menores del Río Esmeralda y Fracción del Río Sinú and to be agreed upon with the other Río Verde group. • Management of Part of Paramillo Park within the Embera-Katio Reserve: The Corte Constitucional ordered to negotiate management rules for the area of Paramillo Park which is part of the Embera-Katio reserve. The negotiation was based on a proposal made by the National Parks Unit of the MMA. The proposal includes measures on the following aspects: conservation, sustainable production, tourism, and participation of the community to land-use control and conflict resolution. In 2000, negotiations were still underway. URRÁ S.A. will finance part of the implementation of these measures.

Changes in the hydrological and sedimentation regimes of the Sinú river could also affect the indigenous Zenu community living in the downstream reaches. This community uses the river for transportation and for fishing. Negotiations on mitigation and compensation measures with this community were initiated in June 1998 and were successfully completed on July 30, 1999. The total cost of the measures amount to 1,750,000,000 pesos.

Outcomes and Results

The situation of the resettled communities can be judged on the basis of the results of two monitoring studies carried out in 1996 and in 1998. The results from these two studies apply only to the first two resettlement phases which concern more than three fourth of the displaced population. They can be summarized as follows. • Population: From 1994 to 1996, the population in the resettlement areas increased by 35% and, from 1996 to 1998, by another 13%. This large increase is due to migrants from other areas in the department of Cordoba and from adjacent departments currently subject to political unrest. These migrants are attracted by the relative security offered by the resettlement areas and by the quality of land and the services provided. They are often friends or relatives of the resettlers and have been generally well received, due to a tradition of solidarity among farmers in the region. The resettlement plan thus benefited a much higher number of families. However, this great influx of migrants puts more pressure on the available services and resources. • Housing and public services: More than 600 family heads who were settlers with no legal title on land or buildings are now owners of a house built with permanent material and of a 4 ha lot. These families also now benefit from basic public services. However, URRÁ S.A. had to overcome difficulties during the construction works as payments corresponding to the portion of the budget coming from the government were delayed. This resulted in

additional cost related to the execution of contingency plans for providing basic services and to build the houses in time for the arrival of the relocatees. URRÁ S.A. also experienced difficulties in completing the legalization of the relocatees' titles on their land. • Revenues: Although the average productivity per hectare increased from 2500 units of bananas to 3000 units and from 1.5 ton of corn to 2.8 tons (between 1986 and 1999), production levels still correspond to those of a subsistence economy. Some families have not reached a subsistence level and could not maintain the permanent crops put in place by URRÁ S.A. As a result, the company had to increase its level of technical assistance. The marketing of the excess production also proves to be difficult. Nonetheless, more and more farmers diversified their crops and adopted more modern forms of cultivation. Because most of the agricultural production still aims at ensuring subsistence, changes in revenues were difficult to measure. However, the overall capacity for saving money appears to have improved, as is shown in the number of new electrical appliances, furniture and decorations in houses. Moreover, one consequence of the training programs, of the pilot projects and of the proximity of the construction works has been more diversified income generating activities. • Education: Prior to the project, settlers in the reservoir area had no access to schools. All school-age children now benefit from primary education. Moreover, as a result of programs to eliminate illiteracy, the level of illiteracy in the adult population went down from 78.7% to 27.4% between 1986 and 1996. In 1997 and 1998, training programs conducted by a government agency with funds coming from URRÁ S.A. benefited 1961 persons living in the resettlement areas and in the neighboring villages. Programs concerned cattle, poultry and fish breeding as well as various agricultural techniques. • Health: Settlers had no access to health services. There are now six health centers in the resettlement areas where the following services are provided: outpatients' clinic, vaccination, family planning, malaria control and dental care. Public health conditions have drastically improved with the availability of potable water and sewerage systems. Hygiene habits have also improved due to the advice of the social workers. • Way of life and social organization: Settlers who were coming from a remote area without any public services had to adapt to a new environment. The main factors of change are the proximity of an urban center, Tierralta, the presence of roads, the influence of URRÁ S.A. personnel, especially its social workers and agronomists, who were often perceived as role models, school education and television. In resettlement areas where houses are grouped together, settlers had also to adapt to the proximity of neighbors. Adaptation is generally positive, leading to improvements in health, education and revenues. It is proving to be easier for younger people and women. Women in particular play a more active role as community leaders and in income generating activities. This is due mainly to the training programs as well as to the public facilities and conditions in the new houses which allow to reduce the time devoted to domestic chores. Adaptation to the new houses and modern household appliances is also good and is facilitated by the reproduction of familiar spaces which are characteristic of settlers' houses. The adaptation of some farmers to their new role of owners proved to be difficult. Several of them have allowed other families to cultivate part of their land and they experience difficulties in taking on the responsibility to maintain their 4 hectares lot. Some farmers have even sold their lots in resettlement areas close to Tierralta. Communal spirit and family ties remain strong. Community organizations have been strengthened, in part due to the level of expectations created by the resettlement programs but they are still in the early stages of consolidation. Because of the active involvement of URRÁ S.A. in many aspects of social organization and the weak presence of government organizations in the region, communities still experience a high level of dependency on the company.

These generally positive results could be carried out while maintaining feelings of trust towards URRÁ S.A. This was reflected, for instance, in statements during public hearings. 40

Besides, although the project is located in a region which is the scene of armed conflicts involving guerrillas, paramilitaries and drug traffickers, it never suffered attacks from these groups. Maintaining feelings of trust contributed to this relative peace.

Indigenous population issue

The Embera-Katio community now lives in the 2,000 km2 Resguardo Indígena del Alto Sinu. Following the November 1998 decision of the Corte Constitucional, this indigenous reserve was established by combining the former Karagabi reserve located along the Sinú and Esmeralda rivers (193,500 ha, 310 families) and the Iwagado reserve located along the Verde river (10,000 ha, 140 families).

Although the area of the reserve affected by the reservoir is only 417 ha, the community experiences a variety of impacts from the Urrá 1 project since Embera-Katios use the Sinú river for transportation and for fishing. Social and cultural impacts are also experienced because of the proximity of the workforce, of the reservoir and of the hydroelectric facilities.

Assessment of Outcomes by Involved Stakeholders

No information is available on affected population’s assessment of the Urrá 1 project’s outcomes and results.

Overall Conclusions

Review of Challenges and Opportunities

As described above, URRÁ S.A. could count on several factors specific to the project region which facilitated the resettlement task but the overall positive resettlement outcome is due, in large part, to the social and economic programs implemented by the URRÁ S.A. resettlement team. The main lessons which can be drawn are the following: • From the start, URRÁ S.A. developed a comprehensive resettlement strategy, on the basis of the resettlement policy developed by the Colombian electricity sector. This strategy was applied during all three phases of resettlement with improvements in the last two phases based on experience from the first phases, • This commitment was reflected in the adequate financing of all infrastructure items and of economic and social assistance programs. The overall cost per family amounted to some US$ 30,000. Approximately 55% of this amount was devoted to housing and infrastructure and the remainder to training, education, health and social adaptation programs. As mentioned above, delays were encountered in the payments corresponding to the budget coming from the government. Although this budget was officially accepted, other projects in Colombia were considered a priority at the time these payments should have been made. Considering the uncertainty generally associated with payments from public funds, it appears preferable to secure the financing of the resettlement task outside these funds. • URRÁ S.A. also mobilized a well-staffed resettlement team. In particular, beyond infrastructure works, URRÁ S.A. devoted many efforts to the adaptation and social integration of the resettled population in the following areas: hygiene, education, assistance to agricultural production and marketing, training for self-management and involvement in municipal affairs. This program was managed by a team of dedicated social workers and anthropologists which maintained day-to-day communication links and trust relations with the population. At the peak, there were 22 people in this team, which amounted to some 20 families per staff member. For each phase of population resettlement, this program was planned to last two years so as to allow for the resettled

population to adapt to their new environment. However, despite involvement, it was not possible to avoid the development of a degree of dependency on URRÁ S.A. • Ensuring increased long term revenue levels is another challenge, in particular with regards to the adaptation of farmers to their new role of owner and the marketing of their excess agricultural production. • Resettlement census followed state-of-the arts methods: The resettlement team could count on an accurate information to plan and carry out their activities. It also avoided later claims due to imprecise data or omission of properties or individuals entitled to compensation as well as the entry of individuals with the sole purpose of being indemnified. • A high level of information and consultation was part of all aspects of land acquisition and resettlement activities. The same team in charge of the information and consultation for all the steps which preceded the physical transfer of a group of resettlers was also assigned to their adaptation and social integration in the resettlement area, which allowed for more consistency and continuity and the building of trust in personal relationships. • One main challenge remains the consolidation of the resettled population into autonomous communities, away from a situation of dependency on URRÁ S.A. The company is still viewed as responsible for all services that in other communities are provided by government institutions.

References

Castro Illera, Margarita de and Égré, Dominique. 2000. Successful Involuntary Resettlement: Lessons from the Urra 1 Project in Colombia. In The International Journal of Hydropower & Dams. Volume 7, Issue 2, 2000. Castro, Margarita de. 2000. Lessons from Resettlements of Urra Hydropower Project. Submission to the World Commission on Dams. Empresa Multipropósito URRA S.A. Gestión social en los reasentamientos campesinos del proyecto URRA 1. Agosto de 1998. Empresa Multipropósito URRA S.A. Gomez, Cajiao y Asociados. Evaluación del programa de reasentamiento Pasacaballos. Mayo de 1996. Empresa Multipropósito URRA S.A. Gomez, Cajiao y Asociados. Seguimiento al programa de reasentamientos. Noviembre de 1996. Interconexión Eléctrica S.A. (ISA). Oficina Ambiental. 1992. Politica de reasentamiento de poblacion desplazada por proyectos. Castro Illera, Margarita de y Piedrahita de Leon, Rafael. El Alto Sinú: Paisajes de Ayer y de Hoy. Ponencia al Seminario Internacional sobre Reasentamientos, Antioquia Presente, Medellín, Noviembre de 1998. The Nordic Investment Bank. AGRA Monenco Inc. Monitoring of the URRA 1 Project. Inception Report and Progress Reports # 2B-96, 4-97, 5-97, 6A-98, 7-98, 8-99. Ramirez J. and R. Cubillos.1995. Economic Instruments for Environmental Management in Latin America and the Caribbean: Colombia Country Background Paper. World Bank.

4.4 Opimiscow-La Grande (1992) Agreement between Hydro-Québec and Cree Indigenous Communities: The Laforge-1 Dam

Identification of the Example

Key Issues Addressed

Livelihood restoration and enhancement (enhancement of hunting and fishing activities), community development and catchment development (environmental enhancement for wildlife resources).

Integration

Opimiscow-La Grande (1992) Agreement between Hydro-Québec and the Grand Council of the Crees – Eeyou Istchee (GCC-EI), the Cree Regional Authority and the Cree Nations of Chisasibi and Wemindji.

Implementation

• Laforge-1 Hydroelectric Project, Canada • Hydro-Québec • Construction period: 1989 – 1994.

Stage Regarding the Project Life Cycle

Project operation.

Description of the Framework

General Description of the Country Institutional Set Up

The province of Québec is located in the federative state of Canada which is governed by a democratic parliament headed by a Prime Minister. Each of its actual 10 provinces and three territories have a high level of autonomy. Hydroelectric projects built in each province are subject to provincial environmental regulations unless they involve an indigenous territory or a special status territory such as the James Bay and Northern Québec Agreement territory. Indigenous or Native populations represent a small percentage of the Canadian population but many communities occupy, use and have unsettled land claims over vast remote territories where hydroelectric projects are planned and developed.

Hydro-Québec is an electricity producer and a major North-American distributor owned by the Government of Québec. Its generating facilities have an installed capacity of some 34,000 MW, with hydropower producing 93% of its total energy output. A large portion of hydropower produced in the province (over 15,000 MW) is derived from the La Grande hydroelectric complex in the James Bay territory.

Description of the Framework

The Laforge-1 hydroelectric project is part of the La Grande complex developed from the 1970s to the 1990s by Hydro-Québec in the James Bay territory in Northern Québec. The James Bay territory covers approximately 400,000 km2 between the 49th and 55th parallels in Northern Québec. It is a vast land featuring hilly terrain and numerous rivers and lakes, with a cold continental climate. The vegetation is of the Northern taiga type. The population of the

43 territory is mainly constituted of 13,000 Crees who are dispersed among five coastal communities (from north to south Whapmagoostui, Chisasibi, Wemindji, Eastmain and Waskaganish) and four inland communities (Nemaska, Mistissini, Oujé-Bougoumou and Waswanipi). The Laforge-1 project was developed during Phase 2 (1987 to 1997) of construction of the La Grande complex.

Before the start-up of construction works on the La Grande complex, the James Bay area was a distant territory where the territorial rights of the indigenous peoples (Crees and Inuit) were left unresolved. The James Bay project which included the development of the La Grande River hydroelectric potential was announced in 1971 by the Government of Québec and was followed by a provincial law governing the development of the James Bay region which led to the establishment of the Société de Développement de la Baie James (SDBJ). One of the SDBJ’s subsidiaries, the Société d’Énergie de la Baie James (SEBJ) eventually became a separate entity responsible for development of the La Grande complex. SEBJ was later incorporated under Hydro-Québec while remaining a distinct entity.

Fearing that the announced development projects would have a major impact on their traditional way of life, the territory’s indigenous peoples undertook legal procedures for recognition of their territorial rights. An intensive round of negotiations finally took place between the indigenous peoples living on the territory, the Federal and Provincial governments as well as the public corporations involved in the hydro-electric project – the SDBJ, the SEBJ and Hydro-Québec. The negotiations ended by the signing of the James Bay and Northern Quebec Agreement (JBNQA) on November 11, 1975. The Agreement provide the general legal and institutional framework of the James Bay territory.

In the JBNQA, the Crees and Inuit of Quebec gave up their land claims and agreed to the construction of La Grande complex (1975), as described in the agreement, in return for rights and privileges granted or acknowledged by the Federal and Provincial governments. Crees and Inuit of Quebec also gained financial compensation, land and specifically defined rights in a number of areas such as local and regional self-government, harvesting of wildlife resources, economic development, administration of justice, health, social services, education and environmental protection.

In the years following the signing of the JBNQA, other agreements were ratified as the Crees agreed to modify the La Grande complex as it had been defined in the JBNQA. Among those, the La Grande Agreement signed in 1986 provided for compensation, remedial and mitigation measures for some of the hydro-electric developments undertaken in Phase 2 of the La Grande complex. This agreement was negotiated under the broader framework of the Hydro-Québec Environmental Enhancement Program called ‘Programme de Mise en valeur de l’Environnement’. The La Grande Agreement also offered community benefits (connection of five communities to the power grid), economic measures (training and hiring of Crees for the operation of generating stations through the Indigenous Hiring Program called ‘Programme d’embauche autochtone’ - Horizon 1986-1996’ and other measures benefiting the James Bay Crees.

The Opimiscow-La Grande (1992) Agreement was signed in early 1993 by the Grand Council of the Crees Eeyou Istchee (GCC-EI), the Cree Regional Authority (CRA), the Cree Nations of Chisasibi and of Wemindji, Hydro-Québec and the SEBJ in order to build additional hydroelectric power stations during Phase 2 of development of the La Grande complex, among which the Brisay, Laforge-1 and Laforge-2 generating stations and the Brisay-Nikamo 315 kV power transmission line. The Opimscow Agreement provided that the Crees be involved in the identification of environmental remediation and enhancement measures. The Agreement provided for three types of compensation measures.

The first compensation measure involved the setting up of three Community Funds to be used by the Crees communities and the CRA, whose payments over a period of 50 years were allocated as follows: • 73% to the Cree Nation of Chisasibi Community Fund • 17% to the Cree Nation of Wemindji Community Fund • 10% to the Cree Nation Community Fund.

The second compensation measures was a Remedial Works Program financed through the $25 million Remedial Measures Fund which was divided between the General Remedial Works Fund (Cdn $20 M) and the Vincelotte River or Opimiscow-Whopskagmow Funds (Cdn $5 M). These two funds were administered by Hydro-Québec but their uses were subject to the control of the Opimiscow-Sotrac Companee. Authorised uses under the General Remedial Works Fund included: • “Thinning of old growth areas • Intensive trapping • Enhancing habitat productivity • Clearing of aquatic habitats to enhance fish reproduction • Clearing of channels and landing areas • Tree planting • Clearing of wood debris • Building small weirs”.

Other remedial works to be carried out under the Vincelotte River or Opimiscow- Whopskagmow Funds included engineering works of direct benefit to Cree hunters in the area.

The third compensation measure was the setting up of the Indoho Fund, which involved annual payments of Cdn $500,000 indexed annually over a period of 50 years to support traditional Cree hunting, fishing and trapping activities in the areas concerned by the agreement. These funds are also administered by Hydro-Québec and subject to the control of the Opimiscow-Sotrac Companee. However, the uses of these funds are entirely decided by the Cree Trappers Associations of Chisasibi and Wemindji. The authorised uses of the Indoho Fund were set out as follows in the agreement: • “Building, renovation, maintenance, providing energy resources and relocation of trappers’ camps • Improvement of communication infrastructure • Assistance to trapline management including: the monitoring of fauna and of harvesting activities, the relocation of animals and outfitting activities • A collective insurance regime • Subsidies for transportation (by bush plane, road or snowmobile and for fuel and landing piers for float planes) • Programs for the enhancement of traditional activities. These include waterfowl habitat enhancement, boat ramps for canoes, parking areas, spawning areas, wildlife inventories, equipment repair shops, water management works, fish passes, training in traditional activities and other works”.

Description of Organisational Set Up

In the Laforge-1 area of the La Grande complex the responsibility for implementing mitigation measures was shared between SEBJ (Hydro-Québec) and the Opimiscow-Sotrac Companee.

The SEBJ was set up to develop the hydroelectric potential of the James Bay territory and it was responsible for carrying out the La Grande complex development and to implemented the related mitigation measures. In the 1980s, the SEBJ passed under the control of Hydro- Québec. Hydro-Québec is responsible for operating the La Grande complex and for monitoring its environmental impacts.

The Opimiscow-Sotrac Companee was a non-profit organisation whose board of directors is composed of six voting members, including three members appointed by the Crees and three members appointed by Hydro-Québec. It was set up to “…study, plan, evaluate, authorise and see to the execution and operation of remedial and environmental works and programs in respect to the Projects described in the Agreement”. Such works and programs were required to: • Facilitate the pursuit of indigenous traditional activities; • Alleviate the negative impacts of hydroelectric projects; • Facilitate the use by the Cree of the areas affected by the projects; • Preserve the productivity as well as the biological and visual quality of the environment; • Restore wildlife habitats.

The goals set out for the Opimiscow-Sotrac Companee were to ensure that the remedial and environmental works financed by the Remedial Measures Fund were carried out in such a manner as to alleviate negative impacts caused by the projects, notably on the hunting, fishing and trapping activities of the Crees, and to provide for environmental enhancement works. Furthermore, the Opimiscow-Sotrac Companee had to ensure that the works and programs financed by the Indoho Fund had as a primary purpose assisting the Cree in their traditional and related activities.

Implementation History of the Framework

A general trend that can be observed with respect to bilateral agreements between Hydro- Québec and the James Bay Cree is that they have gradually become more focussed and more concentrated on directly affected Cree community members. Agreements signed between both parties in the 1970s and 1980s involved payments made out to a legal regional entity and benefiting all Cree communities equally. Since the 1990s, payments have been made out mainly to the Cree Nations directly concerned by the projects governed by an agreement and have mainly benefited directly affected Cree community members.

While amounts provided to Cree communities in the 1970s and 1980s were largely established on a case-by-case basis in the context of negotiations with the concerned Cree Nations, since the 1990s such payments have been based on Hydro-Québec’s province-wide Integrated Enhancement Policy (‘Politique de mise en valeur intégrée’). This policy establishes levels of benefits on the basis of a percentage of the total capital costs involved.

Agreements signed between both parties in the 1970s and 1980s involved initial payments following the entry into force of the agreement, in addition to a series of installments paid out over a period ranging from 5 to 20 years. Since the 1990s, initial payments are still made following the entry into force of the agreement, but installments are now paid out over a period of 50 years so that future generations can also benefit from the agreement.

Agreements signed between both parties in the 1970s and 1980s tended to involve lump sums whose uses were difficult to monitor. Since the 1990s, amounts provided under agreements have been split up among specific types of uses defined as Community Funds, Economic Funds, etc.

Amounts provided to support remedial works and traditional pursuits in Cree communities in the 1970s were included as part of the overall benefits and did not distinguish between “remedial works” and “traditional pursuits”. Since the 1980s and 1990s, amounts provided for such purposes have also been split up among specific types of uses defined as Remedial Works Funds and Traditional Pursuits Funds. Funding for the support of traditional pursuits is now included as part of the benefits provided for a project, while funding for remedial works is part of a separate Hydro-Québec budget devoted to remedial works. Efforts are also made to clarify in detail the possible uses of such funds and to ensure that directly affected Cree community members are the prime beneficiaries of funding provided under the agreements.

These trends are largely reflected in the Opimiscow-La Grande (1992) Agreement which introduced a variety of funds with different purposes that extended beyond traditional remedial works focused on environmental impacts. The Remedial Measures Fund and the Indoho Fund were largely focused on affected trappers’ needs.

The future extension of similar subsidies to other groups of project-affected Cree hunters, such as in the case of the Nadoshtin and Boumhounan Agreements signed in 2002 by Hydro- Québec with the communities of Eastmain, Mistissini, Nemaska and Waskaganish for the recently built Eastmain-1 dam and for the Eastmain-1A dam and Rupert River diversion project, could result in increased differences between the economic conditions of various groups of Cree hunters and trappers. This might lead to unforeseen social implications in Cree communities (Roquet et al., 2004).

Description of the Example

Project Description

The Laforge-1 hydropower generating station is located in the Caniapiscau-Laforge Diversion in the north-eastern sector of the James Bay territory. When the 230 km-long diversion was commissioned in 1984, its purpose was essentially to channel water from the upper Caniapiscau basin to the La Grande River and its generating stations (from east to west La Grande-4, La Grande-3 and La Grande-2 close to the river’s outlet into James Bay). It transferred water from the Caniapiscau Reservoir into the La Grande River basin via the Laforge River. At the time, a group of 14 dikes were built in order to divert the waters of Vincelotte Lake into the Laforge River. This was called the Vincelotte ‘Reserve’ and resulted in the flooding of 125 km2 of land. Works were carried out to provide a residual flow into the Vincelotte River and to preserve the Lac des Œufs.

The Laforge-1 area is located in a sub-arctic environment devoid of human settlements beside camps used by Crees in their hunting, trapping and fishing activities. It is traditionally recognised as part of the Cree territories of the coastal communities of Chisasibi (3,500 inhabitants) and Wemindji (1,000 inhabitants) even if the JBNQA provided that most of James Bay territory, including the Laforge-1 area, occupies public lands. The Cree territory is divided into hunting grounds called traplines headed by a tallyman whose traditional role is the management of fur bearing animals. The maintenance of traditional pursuit activities is of great importance to the Cree communities as it is linked to their cultural identity and well- being in a context of rapid technological and social changes brought about by increased contact with the southern Euro-Canadian society. By extension, the preservation of the environment is of utmost concern for the tallymen and for Cree hunters and trappers in general.

Construction of the Laforge-1 hydroelectric project began in 1989 jointly with construction of the Laforge-2 and Brisay hydroelectric projects as part of a second phase of development of the remaining hydroelectric potential of the area (total added generation of 1,700 MW). The generating station was commissioned in 1993-1994. It involved a surface station of six generating units providing an installed capacity of 838 MW, a long dam and 80 dikes.

Development of Laforge-1 led to the impoundment of a 1,288 km2 reservoir and the flooding of 923 km2 of land. The reservoir has an average depth of 5.6 m and is dotted by over a thousand islands and islets. This impoundment did not affect any private properties or houses but it affected Cree traplines used for the hunting, fishing and trapping activities of some Cree families from Chisasibi. The impoundment brought about flooding of prime riverside habitat and waterfowl nesting sites. In addition to the loss of hunting and trapping grounds, it also created significant navigation and access problems for Cree users. Besides the creation of a vast and shallow reservoir, another significant environmental issue in the Laforge-1 development was the diversion of the Vincelotte River. This 75 km-long river stretch was to be partially dried up following the construction of the Vincelotte dam. The flow at the mouth of the Vincelotte River was to be reduced by about two thirds, from its original 67 m3/s to 21 m3/s. As a result, the average water level would be lowered by one to two meters in the various river sections.

According to an EIA of the project undertaken by SEBJ and Hydro-Québec in 1988, use by Cree hunters and trappers of the area concerned by the Laforge-1 project had increased since the end of Phase 1 of development of the La Grande complex (1975 to 1982) mainly because of the road network put into place during Phase 1 (SEBJ, 1996).

Implementation

The joint Cree/Hydro-Québec board of directors of the Opimiscow-Sotrac Companee developed an efficient project development framework based on the following consultation process: First, affected Cree land users were supplied with the appropriate information (maps, technical advice through consulting firms, etc.). Next the Cree general manager consulted land users about desirable remedial and environmental works. Finally, the users’ proposals were forwarded to the board, which approved and oversaw the execution of the initiatives.

Works carried out under the Remedial Measures Fund were intended primarily for the families of trappers whose traplines were affected by the Laforge-1 and Laforge-2 projects. As such, the selection, design and implementation of these works was carried out in close cooperation with the concerned trappers. Overall, the programs and remedial measures implemented were mainly based on the decisions made by the trappers. They were first supplied with appropriate information (such as maps or technical advice) and then consulted by the Opimiscow-Sotrac Companee’s general manager about desirable projects. Finally, trapper’s recommendations were forwarded to the board of directors who approved the execution of the program or remedial works. In certain cases, remedial works were undertaken under the guidance of concerned inland trappers which represented a significant departure from past practices and brought about interesting innovations in terms of enhanced habitat productivity for the use of local trappers.

The Remedial works program funded through the Remedial Measures Fund was undertaken largely between 1993 and 1998, shortly after the construction of the Laforge-1 dam and power station. Remedial works were carried out in the vicinity of the Laforge-1 Reservoir, the Vincelotte River and the Lac des Œufs. The works were co-ordinated by Chee Bee Cree Construction (Gestion CCDC), a joint venture consisting of Chee Bee Construction, a local construction company owned by the Cree Nation of Chisasibi, and the Cree Construction and Development Company (CCDC), the regional Cree construction company owned by the GCC-EI.

The remedial measures implemented in the vicinity of the Laforge-1 Reservoir, the Vincelotte River and the Lac des Oeufs were determined by considering the scope of impacts and enhancement possibilities of the local environment. They can be classified as follows into two main categories :

• Improvement of access to the territory: - construction of a 9 km stretch of road to the Vincelotte River which involved the installation of four boat ramps; - construction of short access roads and of 17 boat ramps on the Laforge-1 Reservoir, as well as clearing and cleaning of 9 boat landings around the reservoir; - construction of a 1.5 km stretch of road and of two boat ramps which facilitate access to a chain of lakes; - construction of a concrete weir and of five rock-filled weirs on the Vincelotte River; - opening up of five portages with hauling structures along the Vincelotte River and of a portage in the vicinity of the outlet of Lac des Oeufs in the direction of the Kanaapscow River; - slashing and cleaning of 435 ha on the top of six hills surrounding the Laforge-1 Reservoir, on islands and at the back end of bays along the Vincelotte River in order to improve goose hunting conditions; - opening up of 28 traditional style portages along the Laforge-1 Reservoir and on Lac des Oeufs; - clearing of five navigation channels on the Vincelotte River downstream from the dam which diverted it; - clearing of 60 navigation corridors (extending over an area of 900 ha) within the Laforge- 1 Reservoir; - installation of over 300 numbered markers along the natural navigation corridors of Lac des Œufs and on the Laforge-1 Reservoir; - preparation of navigation maps in order to help Cree users to find their way on the Laforge-1 Reservoir and the Lac des Œufs; - clearing and cleaning of ligneous debris on four intensive fishing sites extending over an area of 300 ha; - felling of dead trees and cleaning of ligneous debris over an area of more than 500 ha on sections of the Laforge-1 Reservoir shoreline.

• Improvement of wildlife and waterfowl habitat: - clearing and cleaning of 104 ha located on some 20 islands in the western part of the Laforge-1 Reservoir in order to improve waterfowl habitats; - clearing of 1,200 ha on 8 sites around the Laforge-1 Reservoir in order to create open habitats for waterfowl; on some sites, the seeding of grassy plants, the mowing of berry plants and the creation of wetlands involving the installation of low dykes were also part of the enhancement works; - seeding of 70 ha on 60 sites along the shores of the Vincelotte River, mechanical control of invading shrubs on about 50 ha along the river and creation of ten wetlands involving the installation of low dykes on the dried up shores of the river; - seeding of some 60 ha in some 50 borrow pits in the vicinity of the Laforge-1 Reservoir.

The remedial works involved the seasonal hiring of 533 Cree workers, including family members of project-affected trappers. On-the-job training was also provided to a large number of Cree workers. A total of 292 weeks of training were provided in different fields ranging from Assistant project manager to cook. A workers camp was specifically built and used for the remedial works near the Vincelotte River as it is remote from Chisasibi, the closest Cree community. This camp provided lodging and food to the Cree workers.

Outcomes and Results

For project-affected inland Chisasibi trappers in particular, the remedial works implemented by the Opimiscow-Sotrac Companee over a five-year summer period from 1993 to 1998 as well as annual benefits provided by the Indoho Fund over a period of 50 years represent a significant subsidy for the practice of traditional hunting, fishing and trapping activities.

Given their interest in the Remedial Works Program, a large number of Cree hunters and trappers from Chisasibi and Wemindji participated in the identification, planning and implementation of environmental remediation and enhancement works in the Laforge-1 area. Many Crees took advantage of the training opportunities to develop or to improve their skills and at the end of the five-year program were subsequently able to find jobs in their community in their fields. Several are now qualified to supervise major work sites, isolated camps and forest-clearing crews. The 100-person permanent camp that was specifically built in 1993 and used for the Remedial Works Program near the Vincelotte River became in 2001 a Cree outfitting base for the winter caribou hunt (Camp Kiskimaastakin which means ‘the Portage’ in Cree and is now operated by a Chisasibi outfitter).

Environmental monitoring of the Remedial Works Program was undertaken by Hydro- Québec in 1999 in collaboration with Environment Canada, one of the regulatory agencies involved. The results of monitoring studies showed that the improvement of access to the territory resulted in an increased number of Cree camps in the area and that the success of measures aimed at improving wildlife habitat was variable but that the number of waterfowl in the area had substantially increased. Many of the environmental initiatives put forward by participants in the program were innovative and led to positive outcomes. Most of the wildlife deforestation, weir construction, waterfowl management areas and seeding of grassy plants measures have proven to be successful, even if some experimental work such as the creation of wet zones with low dykes did not meet all expectations. The intensive use of the waterfowl management areas show the relevance of such initiatives. For example, the density of ducks and geese in the Laforge-1 Waterfowl Management Areas (250 hectares) was 76 birds/km2, compared with 3.2 birds/km2 on the unmanaged control plots around Laforge-1 Reservoir, a 20-fold increase. Bird inventories also showed that other birds such as threatened osprey and short-eared owl were taking advantage of the open areas created.

The Indoho funds channelled to Chisasibi and Wemindji Cree Trappers Associations through the Opimiscow-Sotrac Companee are still used by these local associations to directly subsidise their members’ activities according to priorities set out in their own programs. The Indoho Fund provides a wide range of measures that both enhance the pursuit of traditional activities and reduce the costs incurred by trappers from Chisasibi and Wemindji.

Assessment of Outcomes by Involved Stakeholders

The remote location of the Caniapiscau-Laforge Diversion, more than a thousand kilometres away from any major non-indigenous settlement, may explain why the Opimiscow-Sotrac venture has failed to raise mainstream media attention. However, the Opimiscow Remedial Works Program has been extensively covered on the local Cree television channel and has been cited as a success story by the concerned Cree communities. It has since served as a reference for subsequent projects in the James Bay territory.

According to former Cree managers and workers involved in development and operation of the La Grande complex, the Opimiscow Remedial Works Program stands out among other experiences in terms of being a good working experience and having obtained positive results in terms of community capacity building. Cree women employed at the Kiskimaastakin camp also indicated that they had good memories of working there (Roquet, et al., 2004).

Overall Conclusions

Review of Challenges and Opportunities

The compensation measures introduced by the Opimiscow-La Grande (1992) Agreement for loss of access to natural resources were largely focused on affected hunters’ and trappers’ needs. This represents a significant departure from past practices governing the funding of “remedial works” and “traditional pursuits” programs elsewhere in the La Grande complex which tended to compensate Cree communities at large. Lessons learned from the collaborative approach developed between Hydro-Québec and Cree communities for implementation of the agreement could be of considerable interest in other hydropower developments affecting indigenous territories used for resource gathering activities. Replication of this exemple is only possible in a context where remaining lands are sufficient to carry out such remedial works.

References

Chee-Bee Cree Construction. 1997. Remedial measures Laforge 1 reservoir, Vincelotte river, Lac des Œufs, 1993-1997. Opimiscow-SOTRAC Company. 39p Goyette, D., Grimard, M.-J. and Denis. R. March 2000. La Grande Rivière Hydroelectric Complex - Vincelotte River and Laforge-1 Reservoir Area – Follow-up of Remedial Measures. Report submitted to Hydro-Québec, Hydraulique et Environnement, Groupe Production. Montréal. 43p. International Energy Agency (2005, Draft). Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft) – Good Practice Report: Opimiscow-Sotrac Project. Japan: New Energy Foundation. Société d’énergie de la Baie James (SEBJ). 1996. Le complexe hydroélectrique de la Grande Rivière, Réalisation de la deuxième phase. SEBJ. Montréal. 427p. Roquet, V., Clément, D., Penn, A., Proulx, J.-R. and Tessier, A. November 2004. Environmental Follow-up Assessment of the La Grande Hydroelectric Complex - Human Impacts Generated in the Eastern Sector - Main Report. Final Report produced by Vincent Roquet & Associates Inc., Archéotec Inc. and Carto-Média Inc. for Hydro-Québec Production in co-operation with the Cree Regional Authority and the Cree Nations of Chisasibi, Mistissini and Whapmagoostui. 242p.

4.5 Hydro-Québec’s Integrated Enhancement Program and Participatory Approach on Partnerships with Indigenous Communities: The Sainte-Marguerite-3 Dam

Identification of the Example

Key Issues Addressed

Monetary compensation for lost assets, livelihood restoration and enhancement (local employment during construction and operation), community development and catchment development (custodianship or management of catchment resources).

Integration

Hydro-Québec’s Integrated Enhancement Program (1994) and Participatory Approach on Partnerships with Indigenous Communities.

Implementation

• Sainte-Marguerite-3 (SM3) hydroelectric project, Canada • Project proponent: Hydro-Québec • Construction period: 1994 to 2002

Stage in the Project Life Cycle

Project implementation and operation

Description of the Framework

General Description of the Country Institutional Set Up

The province of Québec is located in the federative state of Canada which is governed by a democratic parliament headed by a Prime Minister. Each of its actual 10 provinces and 3 territories have a high level of autonomy. Hydroelectric project built in each provinces are subject to provincial environmental regulations unless it concern an aboriginal territory or a special status territory such as the James Bay and Northern Québec Agreement (JBNQA). Indigenous or Native populations represent a small percentage of the Canadian population but many communities have unsettled land claims and they often occupy and use remote territory where hydroelectric project are planned.

Hydro-Québec is a electricity producer and a major North-American distributor owned by the government of the province of Québec. Its generating facilities have an installed capacity of some 34,000 MW, with hydropower producing 93% of its total energy output.

Description of the Framework

According to the provincial environmental legislation, large projects such as hydroelectric dams are subject to an Environmental Impact Assessment that must be reviewed and approved by the provincial Environment Department, the Ministère de l’Environnement du Québec, who then decides if the project needs to be submitted to a public hearings process. The Environmental Hearings Board (Bureau d’Audiences Publiques pour l'Environnement - BAPE.) is the provincial governmental entity that is responsible for carrying out public hearings and producing recommendations on the proposed project. The provincial government has no formal obligation to follow the BAPE’s recommendations.

Over the past 20 to 30 years, Hydro-Québec has developed a partnership approach with communities affected by its projects. The purpose of this approach is to foster public acceptance of projects. The objectives underlying this approach are: a) to mitigate environmental and social impacts; b) to award compensation for irreversible disturbances; and c) to provide support for regional development.

In 1990, Hydro-Québec established a corporate program called ‘Environmental Enhancement Program’ to support environmental enhancement projects in affected communities. This program was later enlarged in 1994 to include regional development projects and was called “Programme de Mise en Valeur Integrée (P.M.V.I.)” or ‘Integrated Enhancement Program’. The ‘Integrated Enhancement Program’ or PMVI dedicates 1% of a project’s total capital

52 costs to finance community undertakings. Communities concerned by the Sainte-Marguerite-3 (SM-3) project were the first to benefit from the PMVI. In order to promote regional development, Hydro-Québec’s corporate policy also gives the residents of the Administrative region concerned by a project certain advantages in terms of preferential hiring and contract awarding. Furthermore, in line with its flexible partnership approach, the state-owned utility signs agreements with affected land users in order to provide them with compensation related to their specific concerns.

Description of Organisational Set Up

During construction of the SM-3 project, the Hydro-Québec Planning and Construction Group, called Groupe Equipement, was responsible for the Environmental impact assessment and for monitoring the environmental and social impacts of the project while it was being built. At the beginning of 2000, Hydro-Québec was separated into four separate business units and there is now little communication between the business units. Since the commissioning of the SM-3 hydropower plant in 2002, the follow-up of the environmental and social impact has been transferred to the ‘Montmorency’ Regional Operating Unit which is part of the Production Vice-Presidency, the business unit in charge of operating Hydro-Québec’s power plants. There is a social follow-up study which is currently being conducted on the first years of operation of the plant but the results of the study are not yet available.

Implementation History of the Framework

The SM-3 project represented the first time that the Integrated Enhancement Programme (PMVI) was applied to a hydroelectric project in Québec.

Description of the Example

Project Description

Located in the Canadian province of Québec, the 280 km long Sainte-Marguerite River flows from North to South and empties into the Gulf of the Saint-Lawrence River near Sept- Îles/Port-Cartier in Québec’s North Shore Region. Sept-Îles (25,000 inhabitants) is an important regional city located 700 kilometres Northeast of Montréal. The SM-3 dam is located 90 kilometres upriver from the Saint-Lawrence River in a mountainous area largely covered by spruce forests. Two small privately owned power stations, SM-1 and SM-2, are also in operation near the mouth of the Sainte-Marguerite River.

The SM-3 power plant consists of a rockfill dam 171 metres high and an underground powerhouse with two turbines and an installed capacity of 882 MW. The total head is about 330 metres, which makes it the highest hydraulic head in Québec. The long and narrow reservoir covers 253 km2 and is about 100 kilometres in length. The SM-3 project also involved the construction of a new 90 kilometres long penetration road connected to the coastal highway.

The SM-3 dam and reservoir are located on public lands devoid of permanent settlements. While no population displacement was required, the project involved the use of lands traditionally used by indigenous Innu (Montagnais) hunters and trappers as well as the acquisition of cottages built on lands rented for recreational uses. The lands concerned by the project were used both by local indigenous and non-indigenous residents of the region for hunting, fishing and other recreational purposes. Part of the project’s reservoir and infrastructures were located in the ZEC Matimek, a Zone for Controlled Wildlife Harvesting which is used as a recreational facility by the non-indigenous population.

Map of the Sainte-Marguerite-3 Reservoir

Courtesy of G. Corfa, Hydro-Québec.

The lands required for the dam facilities and reservoir were and still are claimed as their own by the Innu community of Uashat mak Mani-Utenam (population of about 2,500) in their negotiations over ancestral rights with the provincial and federal governments. These negotiations started in 1979 and are still in progress.

After four years of engineering, from 1987 to 1991, Hydro-Québec submitted the final design report, including the Environmental Impact Assessment (EIA) for public review. After reviewing the report, the Quebec government requested that public hearings be held under the responsibility of the BAPE. After holding formal hearings in 1993, the BAPE produced a report that was critical of the proposed diversion of the Carheil and Aux Pékans Rivers41, which were planned in view of increasing the flow of the Sainte-Marguerite upstream of the proposed dam. In 1994, the Québec government authorised the SM-3 project without the Carheil and Aux Pékans diversions. Hydro-Québec was also required to reach an agreement with the Innu community (negotiations were already underway at the time). Following the signing by Hydro-Québec of an Agreement with the Innu community, construction began in 1994, the impoundment of the reservoir started in 1998 and project commissioning occurred in 2002. Project delays due to technical difficulties have extended planned completion of the SM-3 dam to 2006.

Implementation

The Hydro-Québec participatory approach used for the SM-3 Project led to : • the signing of an Agreement with the Innu community of Uashat mak Mani-Utenam including measures to promote indigenous employment and to facilitate the management and exploitation of catchment wildlife resources by Innu hunters and trappers; • the setting up of an ‘Integrated Enhancement Program’ (PMVI) for the non-indigenous communities in the region; • the design of specific measures to maximise local spin-offs; • the signing of an agreement with the Zek Matimek; • the compensation of displaced cottage owners.

The Uashat Mak Mani-Utenam Agreement The Uashat-Mak Mani-Utenam Agreement was signed in 1994 between Hydro-Québec and the Band Council of the Uashat mak Mani-Utenam community. Prior to signing, the Band Council submitted the Agreement for approval to the community by way of a community- wide referendum. The outcome was favourable, albeit by a small margin - 52% for and 48% against42. This reflected the polarisation of Innu public opinion that ranged between offering to become a partner in economic development on lands concerned by Innu land claims or preventing any future development activities on such lands.

The Agreement put aside historical land claim issues and allowed the Innu to pursue any and all pending territorial claims with the federal and provincial governments. The Agreement did not provide for individual compensations, but rather for collective compensations as requested by the community itself. It provided specifically for the establishment of three funds: • The ‘Innu Aitun’ Fund, which is a 50 year fund aimed at supporting hunting and trapping activities, a fundamental facet of Innu culture;

41 The Carheil and Aux Pékans rivers are affluents of a renowned salmon fishing river, the Moisie River. 42 The village of Uashat (located in the City of Sept-Îles) was largely in favour of the project while the village of Mani-Utenam (located 20 km away at the mouth of the Moisie River) was strongly opposed. This both reflected and exacerbated political divisions between the two indigenous settlements in the Sept-Îles region. 55

• An ‘Economic and Community Development Fund’, which is a 50 year fund designed to promote the development of the community; • The ‘Remedial Measures Fund’ which was designed to support environmental remedial and enhancement measures during the project’s construction.

The first two funds totalled about Cdn $20.9 million (in 1994 dollars), and the Remedial Measures Fund was capitalised up to Cdn $10 million. The Innu Aitun Fund and the Remedial Measures Fund were co-managed by Hydro-Québec and the Innu through a ‘Remedial Works Corporation’, while the Community and Economic Development Fund was managed solely by the Innu Band Council. Furthermore, the Agreement provided measures to promote the participation of Innu workers and companies in the project’s construction and operation.

The Integrated Enhancement Program for the non-Native communities Under the Integrated Enhancement Program (PMVI), Cdn $28 million was made available in 1995 to the municipalities of Sept-Îles and Gallix and to the Regional County Municipality (MCR) affected by the project. The PMVI was divided into two funds, one aimed at supporting environmental projects shared among the two municipalities and the MCR and the other aimed at supporting economic development projects managed by the MCR Council. Projects financed through the PMVI had to be accepted by Hydro-Québec. At first, the rules for accepting environmental projects were very restrictive but Hydro-Québec later made them more flexible in order to permit the financing of public infrastructure projects such as water supply and treatment facilities, landfills and selective waste collection facilities that met the most urgent needs of the municipalities concerned.

Measures to Maximise Regional Spin-offs To maximise regional spin-offs, Hydro-Québec gave preferential hiring to regional workers. Hydro-Québec split certain contracts in order to facilitate tenders from relatively small local companies. Hydro-Québec also restricted calls for tenders to local businesses for a number of work orders. At the request of local entrepreneurs, a regional committee was set-up to monitor the project’s regional spin-offs. This committee improved communications between the project developer and local indigenous and non-indigenous entrepreneurs and enabled local entrepreneurs to maximise their contracting and sub-contracting opportunities.

The Zec Matimek Agreement The ZEC Matimek Agreement was signed in 1995 and was later extended to 2002. This Agreement provided for a better access to the SM-2 Reservoir which is located inside the ZEC and, during the construction of the project, for support to the administrative structure for the Sept-Îles Hunting and Fishing Association that manages the ZEC. Hydro-Québec also provided incentives for its employees to use and to become members of the ZEC.

Compensation of Cottage Owners Compensation was offered to cottage owners that had to be removed and also for cottage owners that were affected by construction activities. At the request of Hydro-Québec, alternative sites for recreational leases were proposed by the concerned Provincial government authorities.

Outcomes and Results

The assessment of outcomes is possible due to statistics data collected during the environmental follow-up program done during the construction of the project. A follow-up of the project impacts since its commissioning in 2001 have been lately initiated but the results are not yet available, thus recent data on the project outcomes are unavailable.

The Uashat Mak Mani-Utenam Agreement The Economic and Community Development Fund resulted in the construction of many infrastructures in Uashat mak Mani-Utenam such as housing, an old age home, public swimming pools, a hockey arena and a cultural museum. It also helped to provide start-up funds to local businesses. The Innu Aitun Fund increased by a factor of ten the money available to support local traditional hunting and trapping activities. The Remedial Works Fund provided for the construction of hunting cabins and for the building of 170 km of snowmobile trails that facilitated access by the Innu to their hunting and trapping territories.

To improve the participation of Innu workers at the worksite, sole source contracts were given out to Innu companies, including to ‘Innu Construction’, a Band Council-owned construction company set up at the suggestion of Hydro-Québec. A Hydro-Québec/Innu committee helped Innu workers to obtain their mandatory certification for construction jobs. Furthermore, Hydro-Québec hired an Innu employment officer that assisted with the hiring of Innu workers and with their work site integration. Hydro-Québec also set up a youth training program and a work site training program on the SM-3 access road that provided training to some 30 young Innu.

Integrated Enhancement Program for the Non-indigenous Communities The Integrated Enhancement Program (PMVI) was used for building and improving many local infrastructures such as a water treatment plant, recreational and tourist infrastructures and community centres, among others. It was also used to revitalise a pulp and paper mill that was an important employer in the region. Measures to Maximise Regional Spin-offs From 1994 to 2001, 69% of the total workforce and 80% of the construction workforce originated from the region. During construction, Cdn $160 million in contracts were awarded locally, which represented 20% of the total amount of contracts awarded. A total of about Cdn $500 million were injected in the local economy through salaries, goods and services procurements and agreements with local communities. The measures put forward by the developer to maximise regional spin-offs evolved throughout the construction of the project (1994 to 2001). At the beginning of the project, when activities didn’t require a high level of specialisation, many contracts were split up to fit the capacity of local companies and calls for tenders where restricted to regional businesses. As the project approached completion and activities became too specialised for regional capabilities, Hydro-Québec included a clause in its contracts to encourage outside contractors to sub-contract work to local businesses.

The Zec Matimek Agreement The Zec Matimek received a total of Cdn $1 million throughout the construction of the project in financial compensation and mitigation measures. From 1998 to 2001, the membership of the ZEC doubled mainly because of the presence of dam construction workers.

Compensation of Cottage Owners The compensation of cottage owners ended in 1998. A total of Cdn $193,420 was paid out in compensation to cottage owners for various types of damages ranging from eviction to disturbances caused by construction activities. Some evicted cottage owners rebuilt a cottage in the area but some didn’t rebuild because of personal reasons or because the alternative sites offered by the government for rebuilding were not to their satisfaction.

Assessment of Outcomes by Involved Stakeholders

The Uashat Mak Mani-Utenam Agreement The uses made of the Innu Aitun Fund and of the Remedial Works Fund were appreciated by the Innu met during community surveys carried out in 1999 by VRA as part of the environmental follow-up of the project done by Hydro-Québec. Most of them expressed the view that the infrastructures built with the Economic and Community Development Fund were needed but some expressed concerns about maintenance costs related to the recreational infrastructures built by the Band Council (VRA, 2002). Members of the new Band Council administration interviewed in 2004 confirmed that infrastructure maintenance costs represented a heavy burden for the community which faced many urgent needs (HQI and VRA, 2004). During the referendum on the Agreement with Hydro-Québec, the Band Council had stated (mistakenly) that the project would provide some 150 new jobs to the community. Even if Innu employment during construction surpassed the developer’s expectations (an average of 30 full-time jobs per year), the Band Council had expected the project to employ three to four times more Innu than those that were eventually hired. Thus, Innu representatives met in 1999 and in 2004 were disappointed with the indigenous employment outcome of the project. They expressed the view that Hydro-Québec should have done more to promote Innu employment.

Integrated Enhancement Program for the Non-indigenous Communities Municipal administrators interviewed in 1999 were satisfied with the Integrated Enhancement Program or PMVI, mainly after Hydro-Québec modified the criteria of admissibility for the financing of environmental projects (VRA, 2002). The program’s most appreciated outcomes were the creation and preservation of local employment, the improvement of public infrastructures and the improvement of the recreational and tourism potential of the region. However, a number of concerns were expressed in the regional media over the perceived injustice of higher per capita compensation benefits obtained by the region’s indigenous community on the basis of their Agreement with Hydro-Québec.

Measures to Maximise Regional Spin-offs Local businesses and trade unions were satisfied with the project’s spin-offs and the measures set up to maximise regional spin-offs (VRA, 2002). Regional spin-offs upon completion of the project were significantly greater than those predicted at the onset of the project. Local businessmen gave much of the credit for this success to the collaborative work carried out through the Follow-up Committee on Regional Spin-offs. Local entrepreneurs preferred approaches based on the splitting of contracts and restricted calls for tenders than the later measures put forward by Hydro-Québec that promoted local sub-contracting. They preferred working directly for the developer as they considered it as more conducive to capacity building. While they recognised the efforts of Hydro-Québec to integrate Innu companies by encouraging the setting up of Consortia that included Innu partners, they did not consider such efforts as successful other than as vehicles to support on-site training of young Innu workers. Following the first year of construction, Hydro-Québec changed tack and contracted Innu companies directly for specific tasks such as bush clearing in the reservoir area.

Compensation of Cottage Owners

The majority of the 22 evicted cottage owners interviewed in 1999 as part of the promoter’s environmental monitoring of the project were satisfied with the amount received as compensation and by the procedures involved (VRA, 2002). Some would have preferred that the government provide them with better sites for the relocation of their lease.

Zec Matimek Agreement

Most of the members of the ZEC interviewed in 1999 were satisfied with the compensation measures offered to the ZEC and they hoped that the ZEC would continue its expansion so it would be able to maintain its financial independence and the administrative structure provided by the Agreement (VRA, 2002).

Overall Conclusions

Review of Challenges and Opportunities

Overall, the SM-3 project was successful in gaining public acceptance (Milewski and Corfa, 1998). This conclusion can also be extended to its compensation measures. A relationship built on trust was built through the negotiation of agreements and through the establishment of mixed developer/stakeholders committees. This relationship was maintained by ensuring that all commitments were properly followed through. The main local issue raised throughout the project’s construction period was the maximisation of employment and business opportunities and it was the main criteria for assessing the project’s performance by the population at large.

The level of satisfaction of the Innu community was lower in regards to compensation measures put into place for the project largely because community members recalled the Band Council’s statements in regards to Innu employment even if these statements did not correspond to actual commitments made by the developer. There were also concerns expressed about the impact of development of lands traditionally used by Innu hunters and trappers and about mismanagement of compensation funds by the Band Council.

The implementation of many compensation measures was handled to a large extent by local and regional authorities. This contributed to the relationship of trust between the developer and local and regional authorities but it also raised some communication issues. One consequence of this was the fact that most Innu community members and the non-indigenous population at large were not aware of the links between the SM-3 project and improvements to many public infrastructures that were financed in all or in part through the project’s compensation funds. Local Innu and non-indigenous politicians preferred to take the credit for popular local initiatives rather than remind people that these initiatives had been funded by the provincial power utility.

References

Consortium Roche-Dessau (1997). Aménagement hydroélectrique Sainte-Marguerite-3, Suivi Environnemental 1995 et 1996 – Impacts sociaux. Report presented to Hydro-Québec. Hydro-Québec International and Vincent Roquet & Associates Inc. (2004). Quality Management of Safeguards in Dam Projects, Final Report – Volume 2: Database. Case Study on Sainte-Marguerite-3 Dam. Report presented to The World Bank. International Energy Agency (2005, Draft). Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft) – Good Practice Report: Sainte-Marguerite-3 Hydroelectric Project. Japan: New Energy Foundation. Milewski, J. and Corfa, G. (1998). Sainte-Marguerite-3 Hydroelectric Development – Case Study No.2. Presented to E7 Seminar on Social Trust and Public Confidence. February 1998. Roquet, V. and Durocher, C. (2003). Monitoring of Social Impacts of a Hydroelectric Project in Quebec, Canada: A Few Comments on the Methodological Approach. in Strategic

Management of Environmental and Socio-Economic Issues, A Handbook. Guiyang, China: Guizhou Science and Technology Publishing House. pp 15-26. Roux, D. and Seelos, K. (2004). Building on Partnerships with Aboriginal Communities. in The International Journal on Hydropower & Dams. Issue 4, 2004. Aqua-Media International Ltd. Vincent Roquet & Associates Inc (2000). Aménagement hydroélectrique Sainte-Marguerite-3, Suivi Environnemental 1997-1998– Impacts sociaux. Report presented to Hydro-Québec. Vincent Roquet & Associates Inc. (2002). Aménagement hydroélectrique Sainte-Marguerite- 3, Suivi Environnemental 1999-2001 et Bilan 1994-2001 – Impacts sociaux. Report presented to Hydro-Québec.

4.6 Indonesian Expropriation Law and World Bank Operational Manual on Social Issues Associated with Involuntary Resettlement: The Saguling and Cirata Dams

Identification of the Example

Key Issue Addressed

Monetary compensation, livelihood restoration and enhancement (reservoir fisheries) and community development.

Integration

Indonesian and World Bank Resettlement Policies for Saguling and Cirata Dams.

Implementation

• Saguling and Cirata Dams, West Java, Indonesia. • Project proponent: Indonesian National State Electric Company (PLN) • Construction period: 1983-1988.

Stage in the Project Life Cycle

Project implementation and operation.

Description of the Framework

General Description of the Country Institutional Set Up

With its thousands of islands, the Republic of Indonesia is the world largest archipelagic state. Indonesia host the world’s largest Muslim population. In the 1980s and early 1990s at the time of Saguling and Cirata planning and construction, the country was under the authoritative regime of General Suharto who allowed technocrats to run the economy while letting the army be involved in all levels of government down to the village level. No detailed information is available regarding the institutional, legal and ministerial set-up of the country in the environment and power sectors during this period.

Description of the Framework

The Saguling and Cirata Dam Projects were developed between 1983 and 1988 by the Indonesian National State Electric Company or ‘Perusahaan Umum Listrik Negara’ (PLN). At

60 this time the Government of Indonesia resettlement and compensation framework was defined by the Law No 20 of 1961 on the Expropriation of Land and Objects Attached to the Land43. This law reflects the exercise of the power of eminent domain by the government. According to this law, resettlement can take the form of a new housing facility or lot and if they are not available the alternative is compensation money or certain facilities such as participating in a transmigration project. In the 1970s and 1980s, the Government of Indonesia was promoting migration from the heavily populated island of Java toward the less populated islands of Indonesia. Monetary compensation was to be calculated for the land and objects attached to the land at their real value. The value was determined by a Valuation Committee composed of members of various government agencies. The law also stated that compensation must be fair and allow the affected persons to continue at the same economic level as prior to expropriation (PT INTERSYS Kelola Maju, 2002).

The Saguling and Cirata dams were planned and implemented by PLN with loans provided by the World Bank and the Overseas Economic Cooperation Funds (OECF) of Japan. Owing to World Bank involvement, they were among the first projects in Indonesia for which serious attention was paid to environmental impacts (Nakayama, 2005). However, the initial stages of project planning were undertaken prior to adoption of the World Bank’s Operational Manual Statement 2.33 on Social Issues Associated with Involuntary Resettlement in Bank-Financed Projects (1980). The resettlement and compensation program was initially based on Indonesian regulations and was subsequently adjust to account for World Bank requirements. Central to this first World Bank policy on involuntary resettlement was the fact that development objectives had to be an integral feature of project planning and execution. In addition, the EIA presented recommendations regarding the resettlement and compensation component of the project and these were later adopted as a resettlement policy by the Provincial Government of West Java.

Description of Organisational Set Up

The Institute of Ecology of the Padjadjaran University in Bandung, Indonesia (IOE) carried out the Environmental Impact Assessment (EIA) for the Saguling and Cirata projects. The EIA for Saguling was published in 1984 and the one for Cirata in 1985. As mentioned above those studies provided the basis for the resettlement and compensation program set up for the project. A Resettlement Co-ordinating Board was established for execution of the resettlement and compensation program (ILEC and UNEP, 1989). IOE also carried out socio-economic monitoring of the Cirata Dam in 1992. No information is available on the organisational set- up of PLN.

Implementation History of the Framework

Little information is available on the history of implementation of the Indonesian expropriation law of 1961 but the formulation of the Presidential Decree No 55 on Land Acquisition for Development Activities in the Public Interest in 1993 was partially due to the negative impacts resulting from development projects carried out in accordance with the previous regulation (PT INTERSYS Kelola Maju, 2002).

Broadly speaking, before 1980, project-induced resettlement was considered by the World Bank as peripheral to the technical and economic objectives of a project. Following adoption

43 In 1993, the government of Indonesia set up a new regulation to deal with resettlement purposes. KEPPRES 55/93 is a presidential decree that makes provisions for compensation of land owners. It doesn’t provide compensation for tenants or squatters. It only states that assets other than land had to be compensated in accordance with a responsible government agency. As a rule, compensation levels for non-formally titled land is lower than for fully-registered titled land (ADB, 2000). Governmental agencies such as PLN have adopted their own regulations that conform with ADB and World Bank Guidelines (ADB, 2000).

61 of the 1980 ‘Operational Manual Statement 2.33 on Social Issues Associated with Involuntary Resettlement in Bank-Financed Projects’, development objectives for displaced populations were required as an integral feature of planning and execution for World Bank-funded projects. Since 1980, the World Bank policy on involuntary resettlement has been periodically updated (Rew, Fisher and Pandey, 2000).

Description of the Example

The Indonesian National State Electric Company or ‘Perusahaan Umum Listrik Negara’ (PLN) is the Indonesian State owned electricity company responsible for power generation, transmission and distribution. It was created in 1972. In the 1980s, PLN derived most of its power from thermal facilities.

Project Description

The Saguling and Cirata Dams are located in the Ciratum River system, the largest river in the western part of Java island in Indonesia. The Ciratum River flows north into the Java see and as catchment area of 6,590 km2. The Saguling reservoir (5,600 ha) is located 30km to the west of the city of Bandung. The construction of Saguling dam started in 1983 and was completed in 1985. The Cirata reservoir (62 km2) is located downstream of Saguling and the dam was built between 1983 and 1988. Prior to these projects, two other multi-function dams were built lower on the Ciratum River, namely Curug and Jatiluhur. Construction of Saguling started during planning of the Cirata dam. Saguling (700 MW) is a peak-load power generation facility while Cirata (500 MW) is mainly a base-load power generation facility that also provides flood control and irrigation benefits. Cirata’s installed capacity has been increased to 1,000MW by the Cirata phase II project completed in 1998 (World Bank, 1999).

During the project planning stage of the Saguling dam, the height of the dam was reduced by 5 meters in order to reduce the number of resettlers by 50%. As a result, the number of families to be resettled went down to approximately 3,000. The Cirata dam caused the relocation of 7,626 families.

Implementation

The Saguling and Cirata Dams are located in a densely populated area where paddy agriculture provides the main source of subsistence. The Saguling reservoir area had a density of 245 persons per km2 and its upper catchment area was even more heavily populated with an average density of 1,000 person per km2 (ADB, 2000). Around 28% of the people living in the area were below the poverty line and the perspective for the economy of the region was declining over the years. Because few alternative lands were available for the affected people, the government first offered transmigration packages and cash compensations for those that were not willing to transmigrate. The relocation of all affected people in the reservoir area would have resulted on increased pressure on the remaining resources in the area and an increase in poverty (ADB,2000). Therefore, PLN put an emphasis on transmigration packages and planned that almost 79% of the families would choose the transmigration package (Nakayama, 2005). Cash compensation was also proposed for families losing part of their land and assets.

Surveys carried out at the Environmental Impact Assessment stage showed that few people were willing to transmigrate. Contrary to government forecasts, the transmigration package only appealed to some 4 % of the people affected and nearly everyone wanted to be relocated on land belonging to their own village so that they would remain above the reservoir high water line. In order to comply with World Bank requirements and to promote the development of the area, the EIA envisioned that the following economic alternatives were possible for the families that had to be relocated by the Saguling Dam:

• Transmigration to other islands • Employment in project construction activities • Fisheries project on the reservoir (capture fisheries, aquaculture and running water fisheries) • A mixture of agriculture and aquaculture (agri-aquaculture) on the reservoir margin where dry-season cropping on the exposed reservoir bottom would be followed by wet-season aquaculture. • Resettlement in the Nucleus Estate Small Holder programs • Own choice (ILEC and UNEP, 1989).

Population displacement and reservoir impoundment for the two projects were carried out within an interval of only a few years and followed similar patterns. As foreseen in the EIA, only a small percentage of affected people chose the transmigration package. Displaced families who did not chose transmigration were compensated by cash according to the amount of land lost. During project design, IOE carried out a survey with affected people about the manner in which they preferred to receive compensation. Most preferred to receive compensation directly from PLN in order to avoid frauds by community leaders but this was not taken into account. Affected people did not receive compensation monies at the same time and this contributed to the propagation of rumours concerning fraud and corruption. At Cirata, some leaders left their village after receiving their compensation, thus leaving remaining villagers without the known communication link with PLN (Nakayama, 2005).

Most displaced people tried to resettle themselves in the project area. Affected people who tried to acquire agricultural land were confronted with high prices due to speculation. Because of reservoir creation, the local population density increased 2-3 times and these are now among the highest ‘rural’ population densities in the world (Costa-Pierce, 1998). The level of local people employed in project construction activity was limited by their skills and ability. For example, the EIA for Cirata anticipated that about 20% of affected people could find employment for the construction of the dam and secondary works. It turns out that only a limited number of affected people got employment at the dam because of their inadequate educational background or their lack of appropriate skills and experience (Nakayama, 2005).

Emphasis was put on the development of fisheries but this was an iterative process. The Saguling project was the first dam project to examine in detail the potential role of fisheries- related industries for reservoir resettlement and compensation purposes. Among the three fisheries options proposed (see above), capture fishing was the option that required the smallest investment and, at first, it rapidly developed in the Saguling reservoir but an important decrease in productivity was noted after the first years due to a rise in the number of predators in the reservoir and due to over fishing. Furthermore, the agri-aquaculture program planned for Saguling could not be developed because of the low level of the reservoir in its first years due to exceptionally dry seasons and to the fact that much water was needed for rice field irrigation purposes and for the filling of the Cirata Dam (Soemarwoto, 1989 in ADB, 2000). On other-hand, reservoir aquaculture became a success story as the level of risk of the productivity was lower. It was somehow immune to seasonal uncertainty and the fish stock was protected from predators.

The aquaculture component of the fishery program was derived from background research on aquaculture possibilities in the region and on the fact that the Saguling area already had a tradition of aquaculture in ponds and rice fields (Soemarwoto, 1989 in ADB, 2000). In 1982, three years before Saguling reservoir flooding occurred (1985-86), training in cage aquaculture was conducted among selected residents (mostly village leaders) that were to be displaced. A total of 24 persons received practical training and two of them subsequently received a loan from the Bank of Indonesia to develop a cage aquaculture business. In two years, they had paid back their loan and this positive success attracted a great deal of

63 community interest even before the reservoir was full. Expectations were high as the economic conditions of displaced people were deteriorating. In 1985, a IOE survey indicated that the income of displaced families in Saguling was 49% lower than their pre-project level and that their land ownership was 47% lower. In 1985, a Saguling fish farmers association was formed and in 1989 it had over 700 members.

Starting in 1986 as part of the World Bank loan for the Cirata project, an extension research and training project on aquaculture was carried out by IOE and the International Center for Living Aquatic Resource Management (ICLARM). This extension project led to the development of low-cost floating-cage aquaculture technologies, of small-scale and water- based hatcheries. Applied researches were conducted in a participatory manner with villagers and employed displaced people. This project was also giving training on aquaculture, fish feeds formula, and fish processing and marketing. Three local schools were established.

Floating-cage aquaculture experiences were at first carried out with 3,000 displaced families, e.g., 1,500 families from each project (Costa-Pierce, 1997 and 1998). The floating cage aquaculture system proved to be successful in Saguling and spread so rapidly that the control of the number of cages became an issue as early as 1989 (Costa-Pierce, 1998). It was determined for environmental and practical reasons that only 1 % of the surface of the reservoir could be occupied by floating cage aquaculture rafts (this corresponded to 5,800 cages in Saguling and 10,600 cages in Cirata). By mid-1988 the aquaculture extension project concentrated its efforts on the new Cirata reservoir where in a few years cage-aquaculture reached the level of Saguling. A government village co-operative unit took the lead in cage aquaculture in Cirata.

Outcomes and Results

The aquaculture system generally adopted consisted of floating nets on a 7 m2 bamboo raft44. The main fish cultivated is common carp and it can be harvested three times per year. Each raft unit employs 1.5 persons and creates 4.8 indirect jobs in supply, construction, maintenance and repair.

The families involved in Saguling reservoir aquaculture increased their income by 230% compared to their prior project situation (ADB, 2000). At Cirata the fisheries industry attracted workers from the agricultural sectors (Costa-Pierce, 1997). By 1992, cage culture in both reservoirs employed 7,527 persons (Costa-Pierce, 1997). By 1996, fishery revenue from both reservoirs exceeded USD $24 million a year which was five times more than the USD $5.1 million a year lost by the regional economy from submerged rice fields (Van Wlickin III, 2000). IOE reported that fish farmers were earning more than rice farmers. In the early 1990s the regional fisheries office reported that affected people who had left the area in the 1986-1988 period were coming back as they were attracted by reports of better economic conditions (Costa-Pierce, 1997).

The very profitability of the enterprise attracted interest from outside local communities. A new provincial legislation was passed to secure the use of Saguling and Cirata reservoirs for the displaced people but it was not adequately enforced and in 1992, 43 % percent of permits (one permit per cage) belonged to non-affected persons. By the end of 1996, 52% of the cages were owned by non-resettlers who had paid resettlers for their cage permits or who told officials they were living in the area. Outsiders had acquired nearly complete control over the marketing sectors (Costa-Pierce, 1997).

44 Cage culture was also tried but it turns out that for a same economic return it was harder to harvest and to repair (Soemarwoto, 1989 in ADB, 2000). 64

From 1986 to 1997, the aquaculture activities has continued to grow and reached 8,199 fish cages at Saguling which exceeded the maximum expected numbers of 4,870 cages. From 1998 to 2002, the numbers of fish cages decreased due in part to the late 1990s monetary crisis but also to the occurrence of fish mortality due to poor water quality (Gunawan, Takeuchi and Abdoellah, 2003). The sustainability of the aquaculture scheme is threatened by water pollution originating from the activity itself and by industrial development in the Bandung plain and agricultural activities in the upper Ciratum watershed as well as by residential waste in the reservoir area. Hypertrophic conditions linked to aquaculture productivity have been witnessed in the reservoir (Gunawan, Takeuchi and Abdoellah, 2003). Integrated watershed management has been seen as a solution to improve environmental conditions in the reservoir. Stakeholder participation is crucial in Integrated Watershed Management. PLN has recognised that public involvement is crucial but has also emphasised that the environmental awareness of the population in general is low and should be increased (Gunawan, Takeuchi and Abdoellah, 2003). In 2004, the Asian Development Bank provided technical assistance to Indonesia for the preparation of an Integrated Ciratum Water Resources Management Project (ADB, 2004).

Little data is available on the status of affected people who have not chosen aquaculture. The IOE survey of 1992 showed that at Cirata, 29% of displaced people were employed in fisheries-related activities and mostly the younger ones while the older people preferred to continue agricultural activities. The benefits of aquaculture have accrued mainly to the affected people with relatively more capital that were able to acquire rafts. This raised an equity issue. Even the low-cost aquaculture model proved to be too expensive for the poorest affected people. As a result, according to Nakayama (2005), the majority of the resettlers were worse off after relocation.

Assessment of Outcomes by Involved Stakeholders

Little information is available about affected people’s assessment of outcomes. According to a recent survey on the sustainability of the aquaculture activities, 50% of the 155 fish farmers interviewed considered this activity to be sustainable; only 11% had the perception that this activity was unsustainable and 28% did not know about its sustainability but stated that they had to continue because they had no other alternative (Gunawan, Takeuchi and Abdoellah, 2003). Data from Cirata show that resettlers would have liked to enhance their knowledge and skills in other trades (Nakayama, 2005). According to the World Bank, the success of fish farming in Saguling and Cirata attests to the potential for creating employment in reservoirs (Costa-Pierce, 1997)

Overall Conclusions

Review of Challenges and Opportunities

The World Bank requirements in regards to development objectives for affected areas played an important role in ongoing efforts to develop and optimise reservoir fisheries. Besides the fact that the fisheries’ sustainability needs to be reinforced by proper watershed management, the development of this activity improved the overall area’s economy and reduced the social cost of these two dam projects. According to the ADB (2000), the Saguling fisheries by improving affected peoples income “was a significant success story in the tortuous history of resettlement”. The way the fisheries program was planned and implemented is a relevant example of such a type of compensation.

However, this project was planned in the 1980s when public participation in planning and implementation of resettlement schemes was not as important as it is today. As such, it lacked some important components in order to secure affected people livelihoods and ensure that they benefit from the project. The lack of stakeholder participation in the definition of

65 resettlement options and implementation of the resettlement program resulted in the absence of measures to secure affected people’s livelihoods in the transition between their displacement and the setting up of economic alternatives (Nakayama, 2005).

References

Asian Development Bank (ADB) (2000) Resettlement Policy and Practice in Southeast Asia and the Pacific. Conference Papers and Proceedings. Available online at www.adb.org/documents/conference/resettlement/default.asp Asian Development Bank (ADB) (2004) Technical Assitance to the Republic of Indonesia for preparing the Integrated Ciratum Water Resources Management Project. TAR:INO 37049. Available online at www.adb.org Costa-Pierce, B. (1998) From Farmers to Fishers, Developping Reservoir Aquaculture for People Displaced by Dams. World Bank Technical Paper No 369, Fisheries Series. Costa-Pierce, B.A. (1998) Constraints to the Sustainability of Cage Aquaculture for Resettlement from Hydropower Dams in Asia: An Indonesian Case Study. Available online at: www.dbc.uci.edu/sustain/indo.html. Gunawan, B., Takeuchi, K. and Abdoellah, O. S. (2003). Challenges to community participation in watershed management : an analysis of fish farming activities at Saguling Reservoir, West Java – Indonesia. in Water Policy No 6 (2004). pp.319-334. International Lake Environment Committee (ILEC) and United Nation Environment Program (UNEP) (1989) Guidelines of Lake Management. Volume 1: Principles of Lake Management. Chapter 11: Environmental Management of Saguling Dam. Available online at www.ilec.or.jp/free_download/jpn/index.html. pp.171-189. International Energy Agency (2005, Draft). Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft). – Good Practice Report – Cirata Hydroelectric Project. Japan: New Energy Foundation. Nakayama, 2005 Public participation in the resettlement process of dam-construction projects: A post-project survey of the Saguling and Cirata dams in Indonesia. In Bruch et al. (2005). Public Participation in the Governance of International Freshwater Resources. United Nation University Press: Tokyo. PT. INTERSYS Kelola Maju (2002) Indonesia Country Report on National Resettlement Policy Enhancement and Capacity Building. Report presented at the Regional Workshop on National Resettlement Policy Enhancement and Capacity Building, Manilla Philippines, February 18-20, 2002. Available at: www.adb.org/documents/events/2002/RETA5935/Agenda.asp Van Wicklin III, W. A. (2000). Sharing Project Benefits for Improving Resettlers’ Livelihoods. Submission to the World Commission on Dams. World Commission on Dams CD-Rom. London: Earthscan Publications Ltd. World Bank Operations Evaluation Department (OED) (1998) Recent Experience With Involuntary Resettlement – Kedung Ombo. Report No 17540. World Bank (1999) Implementation Completion Report, Indonesia Cirata Hydroelectric Phase II Project (Loan 3602-IND). Report no 19978.

4.7 Draft Chinese Regulation for Land Acquisition and Resettlement for the Construction of Large and Medium Size Water Conservancy Projects and World Bank Operational Directive OD 4.30 on Involuntary Resettlement: The Shuikou Dam

Identification of the Example

Key Issues Addressed

Monetary compensation, livelihood restoration and enhancement (sustainable agricultural and non-agricultural employment) and community development.

Integration

Chinese Draft Regulation for Land Acquisition and Resettlement for the Construction of Large and Medium Sized Water Conservancy Projects (1991) and World Bank Operational Directive OD 4.30 on Involuntary Resettlement (1990).

Implementation

• Shuikou Hydroelectric Project, China • Project proponent: Fujian Provincial Electric Power Bureau (FPEPB) • Construction period: 1987-1996.

Stage Regarding the Project Life Cycle

Project planning, implementation and operation.

Description of the Framework

General Description of the Country Institutional Set Up

The People Republic of China is a socialist republic governed by a one party communist regime established in 1949. The country counts 22 provinces, five autonomous regions and four big municipalities considered as provinces (Beijing, Shanghai, Tianjin and Chungqing). The provinces are divided into municipalities that are in turn divided into districts in urban areas and into counties in rural areas. Each county is divided into villages, which were formerly known as collectives and can be made up of a number of small villages. Under the Chinese system, government authorities down to the county level are considered to be part of the Chinese government.

The Shuikou Hydroelectric Project was built in the 1980s and 1990s at a time of change in China. In the 1980s, China was in the process of developing a socialist market economy and in the beginning of the 1990s the country started opening up to the world economy with the development of Special Economic Zones along the coast. China is currently trying to operate a slow change in its political and economic structure in order to preserve political and social stability.

The Shuikou resettlement planning occurred in 1982 and 1983 in the context of an emerging legal and regulatory framework in China. In 1952, China had issued resettlement regulations that could have produced successful outcomes but they were abandoned during the tumultuous period characterised by the Great Leap Forward (1958-1960) and by the Cultural Revolution (1966-1976). During this period, central directives stressed the necessity of the country’s growth irrespective of what was perceived as temporary losses in a project area

(Jing, 2000). The civil works value of a project was higher than the interests of the people displaced (National Research Centre for Resettlement, 2002). The situation began to change in the early 1980s following mounting pressure from relocated people affected by the state- organised campaign for electricity generation, irrigation and flood control that led to the construction of some 70,000 dams, including 300 large scale dams, over a 40 year period.

Description of the Framework

In 1982, China adopted a new Constitution that confirmed the public ownership of the land. Urban lands belong to the State while rural lands are owned by collectives (with a few exceptions). A new land acquisition regulation, the ‘Land Requisition Regulation for State Construction’, was also issued in 1982. Because of collective land ownership, a village losing land through State requisition is able to redistribute its remaining lands among villagers. The new land acquisition regulation specify the range of compensation rates for the loss of cultivable land and for resettlement subsidies to finance the restoration of production levels. Detailed compensation rate standards are to be determined by provincial authorities. According to the new land acquisition regulation, the compensation rate for cultivated land should be within the range of three to six times the average annual output for the last three years. The resettlement subsidy is calculated by dividing the area of cultivated land requisitioned by the average area of cultivated land per person of the collective. It should be in the range of two to three time the average annual output value of the past three years, and should not exceed ten time the average annual output.

The 1982 Land Requisition Regulation for State Construction also provides that if land compensation and resettlement subsidies are not enough to restore farmers’ living standards, the resettlement subsidy may be increased but the addition of the value of land compensation and resettlement subsidies shall not exceed 20 times the average annual output. Provincial authorities have the responsibility to state standards for resettlement subsidies for other types of land (orchards, fishponds, pasture lands, and so on and so forth). The 1984 ‘Land Requisition Regulation for State Construction in Fujian’, set the compensation multiplier for cultivated land at five times the average annual output.

The 1982 Land Requisition Regulation for State Construction specifies that compensation and resettlement subsidies (with some exceptions) are to be paid to the collective for the specific purpose of developing a new production base, of finding employment for surplus labour and for providing subsidies for those who cannot be employed. The 1986 Land Administration Law further specifies that compensation funds received are to be shared equally among all villagers and may be used individually or collectively to develop or improve production capabilities.

In 1985, the Ministry of Water Resources and Electric Power issued detailed specifications for reservoir impoundment that stipulate guidelines to be adopted in resettlement planning, elaborating on the principles stated in the national regulations. It also provided requirements for the preparation of the reservoir area development plan.

Beside these regulations, the draft version of the 1991 national ‘Regulation for Land Acquisition and Resettlement for the Construction of Large and Medium Size Water Conservancy Projects’ was available and provided the main framework for the Shuikou resettlement program. This additional regulation for reservoir resettlement stated that displaced persons should be resettled as near as possible to their existing place of residence, that compensation should be given out in the early stages of resettlement and that rehabilitation assistance should be provided after displacement in order to improve or at least restore displaced persons’ former living standards. It also stated that resettlement shall be synchronised with resource development, soil and water conservation and economic development in the reservoir area.

The new resettlement policy of 1991 insisted only on gradual resumption (or surpassing) of existing living standards. While some argue that this is an inappropriate downgrading of the country’s resettlement policy, others argue that the new regulation recognised the unfeasibility of immediate restoration of income standards (World Bank, 1998). This regulation provided for the establishment of a reservoir construction fund to finance resettlement site maintenance and production development. It also provided for preferential uses in the reservoir area by displaced persons, for rural electrification (in the case of hydroelectric plants) and for preferential tariffs for irrigation and drainage for displaced communities. It gave priority to affected persons regarding government spending in agriculture, communication, culture, education, health care as well as for employment in government construction projects. The government’s efforts in economic rehabilitation were required to extend five to ten years after displacement.

It is also worth noting that the Shuikou hydroelectric project resettlement program was planned in conformity with the World Bank’s Operational Directive OD 4.30 on Involuntary Resettlement (1990).

Description of Organisational Set Up

The project’s preliminary design was undertaken in the 1970s by the East China Investigation and Design Institute (ECIDI) and approved by the Ministry of Water Resources and Electric Power. ECIDI also carried out data collection and undertook a monitoring role in the evaluation of the resettlement program. ECIDI is part of the Ministry of Water resources and Electric Power (Armstrong, 2000).

Project construction and operation was under the responsibility of the Fujian Provincial Government through the Fujian Provincial Electric Power Bureau (FPEPB). Early in the planing stage, it was decided that responsibility for the resettlement program would be delegated to the Fujian Provincial Government who was also tasked to plan and carry out the resettlement plan in compliance with national regulations and with requirements of the World Bank and of the State Planning Committee.

In 1982, FPEPB adjoined members from other provincial electrical agencies to compose a Fujian Shuikou Resettlement Planning Team to plan the resettlement program. The central government maintained a supervisory role as the Ministry of Water Resources and Electric Power had to approve the resettlement program developed by the planning team.

In 1986, the Fujian Provincial Government established the Shuikou Reservoir Resettlement Office (SRRO) to manage resettlement components of the project. In 1987, a Resettlement Leading Group was also established. This group, led by the provincial vice-governor, was composed of 21 persons and was responsible for making decisions regarding important resettlement issues and to co-ordinate and monitor resettlement works. One important role of the SRRO was the control of resettlement funds according to different categories of funds. Small investments were approved by county and city level resettlement offices while larger investments were be approved by the SRRO.

Implementation History of the Framework

As mentioned earlier, prior to 1980, the livelihoods of displaced populations by dam projects were generally sacrificed rather than restored on the basis of well thought out and funded resettlement programs. The Chinese government judged that only about one third of the people displaced by dams between 1958 and 1978 had recreated sufficient and secure livelihoods for themselves (Bizer and Ragsdale, 1997). The Shuikou project was undertaken in the 1980s when a new resettlement framework had been put into place. However, little

69 information is available about the implementation history of the normative/policy framework implemented during the 1980s. The Shuikou dam project was among the first to implement the 1991 draft national ‘Regulation for Land Acquisition and Resettlement for the Construction of Large and Medium Size Water Conservancy Projects’ and no information is available on previous implementation of this framework.

Description of the Example

Project Description

The Shuikou Dam is located on the Min Jiang (or Minjiang) River, 84 km upstream of Fuzhou, the capital of the province of Fujian. Project planning and construction was under the responsibility of the Fujian Provincial Government. The 300 km2 and 96 km-long reservoir extends its reaches around the city of Nanping. The catchment area represents 86% of the Min Jiang basin. The main purpose of this infrastructure is power generation. Its seven generating units have a capacity of 1,400 MW, making it the largest hydroelectric plant in the East China Region. The project also includes a shiplock and shiplift facilities to maintain navigation in the river system and capitalises on the improved navigational potential created by the reservoir and the regulated river downstream. The project was approved in 1985 and construction started in 1987. Impoundment of the reservoir was completed in March 1993 and the first generating units were commissioned in July 1993. All seven units were in operation by the end of 1996. The project benefited from two World Bank loans. The first one (USD 140 million) was approved in 1987 and the second one (USD 100 million) was approved in 1992.

The Shuikou Dam and Reservoir caused the relocation of about 15,600 rural families (67,239 persons) in three counties (Gutian, Youxi and Minqing) and in one city (Nanping)45. Overall, 89 villages were affected by the project, among which 73 had to be relocated. The project also led to the relocation of 20,000 urban-based people including 17,215 persons in Nanping to make way for embankments that improved the city’s flood protection works and for an urban renewal program on the city’s waterfront. Approximately 7000 mu of farmland were acquired around the reservoir in order to relocate displaced persons46.

Implementation

The original resettlement planning for the Shuikou project started in the 1970s when the East China Investigation and Design Institute (ECIDI) undertook preliminary investigations and design of the project. In 1982, the Ministry of Water Resources and Electric Power approved the preliminary design and requested that the Fujian Provincial Government develop a detailed resettlement plan that complied with national regulations and met the requirements of the World Bank and the State Planning Committee.

The Fujian Shuikou Resettlement Planning Team, created in 1982 by FPEPB, conducted extensive consultations with township and village leaders, particularly in regards to the selection of resettlement sites and identification of major economic rehabilitation options. The affected counties were requested to draft resettlement plans for their jurisdictions (World Bank, 1998). The resettlement plan elaborated by the planning team was approved by the Provincial authorities in 1983 and by the State in 1984.

45 In China, cities and counties represent different types of jurisdictions at the sub-provincial level. As such, villages can be part of a county or a city. 46 The mu is a Chinese surface unit corresponding to approximately 1/15th of an hectare. 70

The Shuikou Resettlement Plan was based on the previously described national and provincial regulations as well as the World Bank Operational Directive OD 4.30 on Involuntary Resettlement. The main principles and standards of the plan were: - to minimise moving distances so displaced people could be resettled in the same village or township. To the extent possible, the integrity of neighbourhoods and hamlets should be maintained; - to the extent possible, avoid changes in displaced persons occupations; - resettlement should be arranged so that physical and human resources continue to be at least as productive and living conditions at least as convenient as they were before the project; - plot sizes for farmers should meet minimum standards in order to enable farmers to make a living off the land; - the provincial government should supplement the agricultural production of farmers with grain during the transition period; - public facilities should be reconstructed to at least the pre-existing standards; - supply of construction materials for dwellings and reconstruction of facilities should be given priority; - compensation for dwellings, house plots, loss of wages and moving expenses should be paid to heads of households while compensation for productive assets and infrastructure should be paid to village authorities; - local governments should be involved in resettlement planning and affected populations should be informed after final project approval; - households should be given, to the extent possible, a range of choices in regards to the design of dwellings, the availability of construction materials at the official price and at market price (for additional materials), the quality of dwellings, building contractors and disposal of materials from the old house (Zhu, ter Woort and Trembath, 2000).

The initial resettlement plan proposed two approaches for the physical relocation of households. The first one was to create consolidated settlements with large villages and the second one was to create dispersed settlements for small villages. A total of 46 villages were to be consolidated among which 21 were to be consolidated into 9 large towns. Displaced persons were to be given serviced lots and were responsible for building their own houses using compensation monies. Houses of elderly or disabled people were to be built by the village or township. Compensation standards were defined for rice fields, vegetables, reclaimed land, timber forest, economic forest, orchards, buildings and enterprises. For example, compensation for buildings was based on replacement cost with a deduction for age and salvage value of old materials plus cost for moving the new material. Rice fields received compensation of 5 times the average annual production and resettlement subsidies of 4.09 times the annual production. Vegetable plots received 10 times the annual production for compensation and a fix price per mu for resettlement subsidies.

The resettlement plan also included an economic rehabilitation plan aimed at creating new production systems for affected people and a social rehabilitation component. The overall strategy of the economic rehabilitation plan was to use the remaining resources of affected villages. For example some hilly lands were suitable for growing of fruit trees, some sloped lands suitable for agriculture and some reservoir coves were suitable for fish ponds. Rehabilitation standards were defined for each type of land and resources. They refer to the amount of land required by type of activity to enable resettlers to restore their previous income and living standards. A survey of the remaining area enabled the planning team to prepare preliminarily plans in conformity with rehabilitation standards. According to these plans, 56% of the displaced persons would rely on farming, 23% would rely on orchards, on

71 animal husbandry and on fishing and 22% would receive support for non-agricultural activities.

Implementation of the resettlement plan began in 1987 at the same time as the construction of the project. The same year, the Provincial Government issued 17 preferential policies for Shuikou resettlement including the establishment of a Reservoir Fund to provide low interest loans to assist economic rehabilitation. The fund was planned to provide Y50 million over five years from the provincial budget and tax revenues. The 1987 provincial policies also assisted rural resettlers to convert to non-agricultural activities when the average land holdings available in affected villages was less than 0.3 mu per person. The Provincial Government waived tax collection for enterprises over a period ranging from 3 to 4 years according to the type of enterprises. The Provincial Labour Bureau gave employment priority to resettlers and the Shuikou project hired as many resettlers as possible during the construction and operation stages. One of the provincial policies also stated that local government would give priority to development project approvals for affected villages and local banks would give priority to relocated enterprises and development projects in their loans approval.

The implementation of the Shuikou Resettlement Plan coincided with a period of rapid economic development in the province of Fujian. Provincial growth was due to its coastal location, its links with Taiwan and its comparative advantages for foreign-based investors. From 1987 to 1997, provincial gross domestic product (GDP) grew at an average rate of 15.9% (in real terms) and net rural incomes grew at an average rate of 8.1% (after adjusting for a 10.2% inflation rate). This rapid economic growth led to a growth in employment and facilitated the economic rehabilitation of resettlers. However, this inflationary environment caused the 1984 resettlement budget of Y 410 million for the Shuikou project to become quickly inadequate. The resettlement budget was revised in 1989 to Y 888 million and in 1993 to Y 1,057 million. The budget was also revised to Y1,388 millions in 1996, in part due to flood damage in 1994. Of the total Y 1,388 millions budget for resettlement (1996), Y 379 million were applied to rural relocation, Y 217 were used for rural economic rehabilitation, Y 269 millions were spent on special infrastructure project such as roads and enterprises and Y161 million were allocated to the Nanping City Flood Control Program.

¾ Relocation of the rural population

Physical relocation took place from 1988 to 1993 with 60% of the population to be displaced moved between 1991-92. That was later than expected but it was due to delays in levelling and construction of infrastructures at the resettlement sites. Detailed planning and design of the nine new towns and 46 new villages was completed in 1988. The sites of the new settlements were mostly chosen during the planning stage but some changes were made during the implementation stage at the request of affected communities. For example, Xiadao Town located in Nanping City was supposed to be relocated but as most of its residents traditionally supplemented their income from fishing and river transportation, they asked that a dike be built to protect their existing village on the shore of the reservoir. The Municipal Government of Nanping formally requested a revision in the Resettlement Plan and after approval by the Provincial Government, a 890 meter dike was built to protect Xiadao Town. This had the double advantage of reducing the number of displaced persons and resettlement costs (Zhu, Ter Woort and Trembath, 2000).

¾ Relocation of the urban population

The 17,200 persons displaced by the Nanping City Flood Control component of the project were relocated into 10 large apartment buildings financed through the resettlement budget. Families paid one-third of the capital cost of the new apartments. The charges depended on

72 the distance from the city centre. Most of the urban resettlers maintained their old jobs so that livelihood restoration was not an issue in the Nanping component of the Resettlement Plan.

¾ Economic rehabilitation

In principle, the physical relocation was to be preceded by investment in order for the new production system to be operative before relocation. In practice, financial shortfalls broke down the scheduling strategy. Local governments concentrated on completing the infrastructure at the resettlement site at the expense of the economic rehabilitation budget. Thus, only half the fruit trees were planted before 1990, three years before the reservoirs was filled.

In the first few years, the economic rehabilitation efforts were concentrated on land-based rehabilitation. The remaining lands were redistributed among village members47 and sloped lands were allocated with assistance to develop fruit trees growing and other cash crops growing such as bamboo and tea. It was revealed during implementation that the evaluation of quantities of remaining lands suitable for agricultural purposes had been overly optimistic.

Given the limited land resources, land-based activities were not sufficient to restore resettlers incomes and livelihoods. Therefore, income restoration depended heavily on the second phase of income restoration processes, which focused on non land-based activities. These activities included rural-based secondary activities (such as duck and pig farming, cage fishing, growing of mushrooms, etc.), service-oriented activities (such as road and water transportation) and small enterprises (such as small restaurants or shops). The small enterprises generally derived from individual initiatives but were supported by the Resettlement Office and by the Provincial Government. Service-oriented activities were stimulated by the subsequent construction of Highway No. 316 linking Nanping and Fuzhou. Rural non land-based secondary activities became important income-earning activities in villages where land resources and traditions for those activities existed. For example, in 1996, in Meixong Village (Mingqing County), cage fishing contributed to over 15% of the village’s total income while in Yangwei Village (Nanping City), pig farming accounted for more than one third of the village’s income. These activities were cheaper to implement than industrial employment and they were developed in household backyards, according to household capacity and needs.

Local governments also concentrated their efforts on attracting outside investors to open up factories and businesses, which in turn provided jobs for the resettlers. Before reservoir impoundment, some level of industrial development was present in rural areas, in the form of Township and Villages Enterprises (TVE). These enterprises received compensation and relocation subsidies and also received some funding from the compensation earmarked for economic rehabilitation. The relocation of those enterprises led to a certain amount of restructuring. Their number passed from 96 prior to the project to 85 in 1993 but the proportion of the population employed by TVEs increased during the same years, passing from 11.2% to around 20%. A small part of the resettlers also found employment as migrant workers in Xiamen, the Special Economic Zone of Fujian province. In 1996, 80 high school graduates from resettled villages were sent to Xiamen in 1997 it was planned to increase this number to about 500.

In 1995, the Provincial Government of Fujian implemented requirements set out by national regulations and passed a temporary Provision (No 145) for the establishment of the 10-year Shuikou Reservoir Maintenance and Construction Fund. This fund is managed by SRRO and is funded through royalties from the power generated by the Shuikou generating station.

47 Land redistribution has occurred in Chinese villages over several decades in order to address population growth and changes in land use. 73

These are set at Y 0.004 per produced kWh. This rate was increased to Y0.005/kWh in 1996 due to the revision of the law (it is now called Later Stage Support Fund).

¾ Social rehabilitation

Social rehabilitation activities consisted of two components: first the reestablishment of social infrastructure such as school and clinics and secondly, social support provided to vulnerable households and individuals such as the elderly and disabled. Rebuilding of social infrastructures was under the responsibility of relevant departments and was carried out with compensation funds received from the project and with other resources provided by them. The infrastructures rebuilt were generally bigger and of better quality than before.

Outcomes and Results

Overall, resettlement expenditures for the Shuikou project represented an average of USD 14,000 per household. As far as physical relocation goes, it resulted in an improvement of living standards. New houses built within the scope of the rural relocation component of the Resettlement Plan were bigger and of better quality (concrete instead of wood and earth), mainly due to individual contributions to the cost of housing construction. Urban residents from Nanping displaced for the waterfront project enjoyed an improvement in their living conditions, including better provision of utilities (World Bank, 1990).

The economic rehabilitation component of the Resettlement Plan was a success. By the end of 1993, approximately 30,000 jobs had been created for the displaced persons and by the end of 1994, the average income of level of displaced persons, after allowing for inflation, had already exceeded the pre-project level by 3.8%. Less detailed village-level surveys indicated a further increase of 26.6 percent in 1996. By the end of 1997, 38,439 jobs had been created for the persons displaced by the Shuikou Reservoir (excluding urban displaced persons in Nanping). It is difficult to assess the extent to which the improvement of economic factors is due to the compensation programme or to general regional economic growth experienced during those years.

The land-based strategy succeeded with respect to tree planting but failed to provide the necessary cultivable lands for field crops. By project completion in the mid 1990s, only 700 ha of plowable land had been developed. Overall, among the approximately 38,000 jobs created in 1997 only 48% involved agricultural activities. Other types of employment accounted for 52% of new employment. They involved non-land base activities such as secondary activities (5,8%), small enterprises (15,1%), service-oriented activities (13.6%) and industrial enterprises and migrant workers services (17%) (Zhu, Ter Woort and Trembath, 2000). Since most villages were displaced as a whole, the traditional social fabric of those communities was not disrupted.

Assessment of Outcomes by Involved Stakeholders

A total of 11 World Bank supervision missions were carried out during implementation of the Resettlement Program. After the appraisal for the second loan in 1992, the World Bank initiated an Independent Evaluation of Resettlement. It was carried out by the ECIDI from 1992 to 1996 and involved samples of 524 households in 35 villages. This organisation provided annual reports on resettlement achievement and outstanding problems. This type of evaluation was useful for the FPEPB and the World Bank. It was the first of its kind in China and has been replicated since elsewhere.

Overall, the resettlers satisfaction as recorded during the Independent Evaluation of Resettlement was remarkably high. While some complaints were voiced it did not reached the level of dissatisfaction that one could anticipate with a major relocation (Zhu, Ter Woort and

Trembath, 2000). The accuracy of the data provided by the ECIDI and its objectivity have been questioned as it is attached to the central Ministry of Water Resources and Electric Power and was involved in the project design (Armstrong, 2000). However it is the only data available for assessing the outcome of the project and the World Bank Operations Evaluation Department, though admitting there is some scepticism concerning the reports from Chinese authorities, was confident that the reporting from Shuikou was accurate (World Bank, 1998). Both the Chinese government and the World Bank consider the Shuikou project as an overall success. The World Bank also considers the resettlement component of the project as a success, mainly due to China’s continuing commitment to improve incomes as a component of resettlement objectives but also due to favourable economic conditions. Another dam built subsequently at Yantan in the southern Guangxi province demonstrated the same degree of Chinese commitment and competent management of involuntary resettlement but, due to less favourable economic conditions, was less successful in reaching income targets (World, Bank, 1998).

Overall Conclusions

Review of Challenges and Opportunities

The Shuikou project stands out as an example of successful resettlement because in less than 10 years income levels and living standards of the affected populations were improved. This success is based on a number of reasons among which the variety of economic alternatives developed for affected communities. According to the World Bank, one major feature of the successful compensation and resettlement program at Shuikou is the continuing commitment of Chinese authorities to improve the incomes of affected people (World, Bank, 1998). Other important aspects of the success of the Shuikou resettlement as outlined by Zhu, Ter Woort and Trembath (2000) include the adequate policy of the Chinese State and of the Fujian Province, the methodological planning process, the provision for budget adjustments and the Independent Evaluation of Resettlement. Another major factor was the flexibility in the implementation provided by the creation of a single-purpose resettlement office, the SRRO. As mentioned in the Xiadao example, plans were revised to take into account common sense modifications requested by the population.

The Resettlement Plan was designed in the early 1980s when the Chinese economy relied heavily on agricultural production but the 1990s saw the coming into force of an industrial economy. Without any formal modifications to the plan, the management of resettlement funds allowed SRRO and the local authorities to use the growing industrial sector to restore and even increase the incomes of affected people. After most relocation activities had been carried out in the late 1990s, the future of SRRO was questioned. The Provincial Government stated that the SRRO would remain involved until 2004, the date set for the completion of all resettlement activities (World Bank, 1998). Recent data is missing on the latest aspects related to project implementation and to the final outcomes of this project and it would be relevant to undertake a post-project follow-up assessment of the Shuikou Resettlement Program.

References

Armstrong, P. (2000) Illusion of Progress? The World bank and Involuntary Resettlement in China. Paper published in the Spring 2000 edition of China Rights Forum, the journal of Human Rights in China. Available online at: www.irn.org/programs/threeg/00spring.hric.html Bizer, J. and T. Ragsdale (1997) The Development of Resettlement Policy in China; Two Case Studies in Sichuan and Hebei Provinces. Available online at: www.his.com/~mesas/Chinapol.htm National Research Center for Resettlement at Hohai University (2002) Peoples’ Republic of China Country Report on National Resettlement Policy Enhancement and Capacity Building.

Report presented at the Regional Workshop on National Resettlement Policy Enhancement and Capacity Building, Manilla Philippines, February 18-20, 2002. Available on: www.adb.org/documents/events/2002/RETA5935/Country_Report_PRC.pdf Jing, J. (2000) Displacement, Resettlement, Rehabilitation, Reparation and Development – China Report. Contributing Paper to the World Commission on Dams. The World Commission on Dams CD-Rom. London: Earthscan Publications Ltd. World Bank, Operation Evaluation Department (OED) (1998) Recent Experience With Involuntary Resettlement – China – Shuikou and Yantan. Report No 17539. Available online at www.worldbank.org Zhu, Y., M. ter Woort and B. Trembath (2000) Successful Reservoir Resettlement in China, Shuikou Hydroelectric Project. World Bank, EASES Discussion Paper Series.

4.8 Indian Land Acquisition Act, NHPC Resettlement and Rehabilitation Framework and CIDA and SIDA Requirements for Development Projects: The Chamera and Uri Dams

Identification of the Example

Key Issues Addressed

Monetary compensation, livelihood restoration and enhancement (sustainable agricultural and non-agricultural employment) and community development (roads, schools and health services).

Integration

Indian Land Acquisition Act (1894), National Hydroelectric Power Corporation’s Resettlement and Rehabilitation Framework (date unknown) and Canadian International Development Agency and Swedish International Development Agency requirements for bilaterally-funded development projects.

Implementation

• Chamera Stage-1 and Uri Stage-I and Hydroelectric Projects, India • National Hydroelectric Power Corporation Ltd. (NHPC) • Construction period: Chamera Stage-I : 1985 – 1994 Uri Stage-I : 1989 – 1997.

Stage Regarding the Project Life Cycle

Project construction and operation.

Description of the Framework

General Description of the Country Institutional Set Up

The Republic of India is a federal republic ruled by a parliamentary democracy. India is composed of 28 States and 7 territories. Since its independence from the British Empire and its partition with Pakistan in 1947, India and Pakistan have entered into a number of conflicts over the control of the Kashmir area. In 2000, the India power sector was the third largest in Asia.

The Himachal Pradesh State where the Chamera project is located has an economy mainly based on tourism and agriculture. The mountainous state is situated at the foot of the Himalayas and has abundant water resources. The State has undertaken several projects to develop its hydroelectric potential.

The Uri project is situated in the Jammu & Kashmir State, the northernmost state of India. This state is subject to fighting between Indian security forces and groups fighting either for the annexation of Kashmir to Pakistan or for an independent state of Kashmir. Religious differences between India where Hinduism is the religion of the majority of the population and the dominant Muslim Jammu & Kashmir State also play a role in this conflict.

Description of the Framework

Prior to 2003, the basic Indian law regarding resettlement was the Land Acquisition Act of 1894 which prescribes “adequate” cash compensation without specifying what this means. The Land Acquisition Act prescribes a procedure to determine the level of compensation (Hemadri and Nagraj, 2000). Some States had set up their own land acquisition policy. State- level resettlement policies exist in Bihar, Orissa, Maharashtra, Madhya Pradesh, Gujarat, Punjab, Karnataka, and Andhra Pradesh. Elsewhere, land acquisition and resettlement were governed by project-specific directives or by the Land Acquisition Act.

The Chamera Stage-1 project was built by NHPC and financed by the Canadian Export Development Corporation (EDC) and the Canadian International Development Agency (CIDA) (Bosshard, 2002). The Uri Stage-1 project was built by NHPC and financed by the Swedish International Development Agency (SIDA), EKN, the Swedish Export credit agency, the United Kingdom’s ODA and the Nordic Investment Bank (Bosshard, 2002).

NHPC’s Resettlement and Rehabilitation Framework at the time of project construction in the early 1990s is not known but it was most likely similar to the current policy. As part of the EIA process, NHPC designed Resettlement and rehabilitation ‘packages’ for the populations to be displaced. Resettlement packages were drawn up in consultation with the respective State Governments, District Administrations and representatives of the local people. Resettlement and rehabilitation packages were also assessed by the Ministry of the Environment and Forests for final approval. The underlying objective of NHPC’s resettlement and rehabilitation packages was the socio-economic development of affected people. The ‘packages’ implemented by NHPC for its various projects typically comprise the following elements: • Monetary compensation for loss of land, houses, shops and other properties; • Provision of homestead land; • Transportation charges for households items, cattle, etc.; • Construction of new houses; • ‘Solatium charges’; • Financial assistance for construction of cattle sheds or poultry farms; • Agricultural land depending on availability or ‘landless grants’; • Subsidies for seeds, fertiliser and land management; • Development of public health centres, schools, community centres, etc.; • Basic infrastructures such as roads, drinking water facilities, electricity, etc.; • Vocational training; • Preference in allotment of shops in NHPC’s shopping complex (NHPC, 2006).

Description of Organisational Set Up

The Ministry of Power under the Federal Government provides overall guidance to the sector mainly through the Central Electric Authority and owns the National Hydroelectric Power Corporation Ltd. (NHPC). The rest of the sector is controlled by State Electricity Boards (SEBs). NHPC was created in 1975 to generate bulk power through hydroelectric development and to sell it to SEBs. Subsequently, NHPC expanded its scope to include other sources of energy such as Geothermal, Tidal, Wind, etc. NHPC is among the top ten companies in India in terms of investment. According to the NHPC Resettlement and Rehabilitation Framework, implementation of resettlement and rehabilitation plans is undertaken in close co-operation with District Authorities and a Monitoring Committee is put into place at the project level. Each Committee includes representatives from affected families. A ‘Grievance Redressal System’ is also set up.

For the Uri Stage-1 project, SIDA funded a Panel of Experts to advise NHPC on environmental issues. This Panel followed the implementation of the Rehabilitation Plan. SIDA also set up a project monitoring team (SIDA, 2000).

Implementation History of the Framework

The Land Acquisition Act of 1894 has a long history of implementation and has been contested by dam-affected people mainly in regard to hydroelectric projects on the Narmada River. “Project planners and managers tend to complain about serious delays and protracted litigation leading to slippages in project time-schedules and cost escalation; the people whose lands are being acquired tend to complain about inequities and injustices, disparities between cases, delays in compensation payments and corruption” (Rangachari, Sengupta, Iyer, Banerji and Singh, 2000). However an in depth analysis of the implementation history of this framework is beyond the scope of this study. At the time of planning of the Chamera and Uri projects, there was no public hearings procedure in place but such a procedure was established in 1997. A National Policy on Resettlement and Rehabilitation for project affected families has since been issued in 2003. This policy includes among its objectives to provide better standards of living to project-affected families.

Description of the Example

Project Description

¾ Chamera Stage-I Hydroelectric Project, Himachal Pradesh State

The Chamera Stage-I hydroelectric project is a run-of-the- river scheme located on the Ravi River in Chamba District of Himachal Pradesh State in the lower part of the Himalayas in northern India. It has been developed as part of the country’s accelerated hydropower development program. Chamera Stage-I was built as an Indo-Canadian joint-venture and with its installed capacity of 540 MW it is one of the largest projects built in that region by NHPC. Chamera Stage-1 is composed of a 141 meter “concrete arch gravity type” dam located at Chaura and a 6.44 km-long head race tunnel connecting to an underground powerhouse located at Shauri and equipped with three units of 180 MW each. The 9.5 km2 Chamera Lake extends 18 km upstream of the Ravi River and 11 km along the Siul river. The project also involved the construction of a road linking the dam site to the powerhouse and the widening of an existing access road.

Field investigations for Chamera Stage-1 were completed in eight months and construction began in 1985. The project was commissioned in March 1994. The project encountered cost overrun due mainly to geological problems. Two other hydroelectric run-of-river project has

78 since then been built downstream. Chamera Stage-II (300MW) construction began in 1994 and was completed in 1999 and the Chamera Stage-III (230MW) construction began in 2001.

The construction of the Chamera Stage-1 project affected a total of 1554 families and necessitated the displacement of 1174 families (NHPC, 2006).

¾ Uri Stage-I Hydroelectric Project, State of Jammu & Kashmir

The Uri Stage-I hydroelectric project is the largest hydroelectric scheme located in Baramulla District, in the mountainous State of Jammu & Kashmir. The Uri Stage-I project is a run-of- river scheme located in the Kashmir valley on the Jhelum River, downstream of the Lower Jelhum Powerstation. The Jhelum river is a snow-fed and perennial river. The project comprises a 93.5 m long dam, a 10.65 km-long head race tunnel, an underground powerhouse equipped with four 120 MW turbines and a 2.06 km long tail race tunnel with an outfall at Bandi Village about 4 km from the town of Uri. Uri Stage-I has an installed capacity of 480 MW with a provision for an identical installed capacity under Stage-II which is planned to be built when the construction of Wular Dam and the Kishenganga hydropower project provides additional regulated water.

Uri Stage-I was executed by NHPC and was built by a consortium of Swedish and American enterprises named URICO. The consortium’s contract was signed in 1989 and the project was commissioned in 1997. The project underwent a 18 month time overrun due to security reasons, delays in land acquisition, delays in explosive licenses, etc. (SANDRP, 2005). The project was carried out in a difficult socio-political environment due to ongoing conflict in neighbouring Kashmir. Fighting in Kashmir during the construction period resulted in construction workers being ferried to the site by helicopter to avoid the risk of travelling by road (The Corner House, 2000). Construction of the project was hindered by kidnapping of expatriate engineers and public assassinations of NHPC officials (SIDA, 2000). The project cost almost doubled from the planned cost and this led to investigations for corruption by the Central Bureau of Investigation (SANDRP, 2005). The result of these investigations is not available.

Construction of the Uri Stage-1 project required the acquisition of 235 ha of land and affected a total of 471 families located in 19 villages. A total of 246 families were affected by the construction of the hydroelectric scheme and 225 families were affected by the construction of a road. Among those families, 121 had to be relocated (NHPC, 2006).

Implementation

¾ Chamera Stage-I Hydroelectric Project, Himachal Pradesh State

The rehabilitation and resettlement was carried out by the Himachal Pradesh State Government but its costs were borne by NHPC. Each affected family received cash compensation for the loss of land, of houses, of fruit trees and of other immovable properties. Families losing their home received Rs 45,000 and families losing all their land received Rs 20,000. Cash compensation enabled the displaced people to built new houses at the resettlement sites while NHPC provided infrastructure, medical facilities and schools. Two hospitals were built by NHPC in addition to a dispensary at Sundla and a first aid post near the dam site to be used by NHPC employees as well as by local residents. Two schools and a nursery K. G. School were also opened by NHPC who also provided grants and aid to other existing educational institutions in the area.

NHPC opened a bank, a post office and a police station in Khairi. Security services in the project area were provided by the Central Industrial Security Force whose accommodations and services were provided for by NHPC. NHPC invested Rs 3 million in the rehabilitation

79 of a lift irrigation scheme and Rs 0.5 million in the rehabilitation of water supply systems. A Spiritual Centre and a Gym/Health Centre were also built in the area

Around 700 project-affected people were provided with employment during project construction. A fish farm was developed at Sultanpur, Chamba District which provided additional employment and revenue in the area. The fish farm was constructed with the collaboration of the State Fisheries Department. NHPC also persuaded the State Government’s Tourism Department to establish tourist facilities including boating arrangements in Chamera Lake. The lake has tourism potential as it is situated 25 km from the famous hill resort of Dalhousie and it offers ample opportunities for boating and fishing. The Himachal Pradesh Department of Tourism has set up a water sports sub-centre in the Reservoir and has imparted training in water sports to local unemployed youths under the self-employment scheme of the State Government. Out of a total of 268 persons registered in water-sports training programs, 27 of them have completed intermediate courses and 23 have completed advanced water-sports courses (The Sport Tribune, 1999).

In 1999, the year the Chamera Stage-II project was commissioned, some people affected by the two projects held a 18 day hunger strike to protest the lack of compensation from both projects (Bosshard, 2002). Protesters were arguing that the numbers of people affected by those projects had been underestimated. A high-powered committee constituted by the Himachal Pradesh State Government formulated recommendations to NHPC about compensation to be provided to the affected families forgotten in the original compensation plan. This Committee recommended payments in two instalments of Rs 3 lakh for the additional 192 families affected by Stage-I and the payment in one instalment of Rs 2.5 lakh to the 120 families affected by Stage-II. In early 2003, NHPC had agreed to provide financial packages to those affected families but this did not fully satisfy the protesters and protests continued (The Tribune, 2003a). Payments were therefore postponed.

In July 2003, the Himachal Pradesh State Government requested a reassessment by the Chamera Welfare Oustees Committee of relief packages provided to ousted families of the Chamera Hydroelectric Project (Stages-I& II). The reassessment and the payment of the due compensation was to be resolved by the end of September 2003 (The Tribune, 2003b). The committee was to conduct a probe into the irregularities committed by a previous State Government in preparing the lists of ousted families. Revenues screening was also to be done to ensure that no families had politically manoeuvred to get benefits twice (The Tribune, 2003c). No other information is available on the outcome of the review by the Chamera Welfare Oustees Committee but as this subject has no longer appeared in the online edition of the Indian newspaper ‘The Tribune’ it is plausible that this compensation issue has since been resolved.

¾ Uri Stage-I Hydroelectric Project, State of Jammu & Kashmir

As mentioned earlier, some delays were encountered in the Uri land acquisition process due to the lack of cadastral surveys defining property boundaries and land ownership and also due to local resistance to land acquisition because of prevailing historical and political issues in the area (SIDA, 2000). The land acquisition issue resulted in a 18 month work stoppage/strike. No Environmental Impact Assessment was carried out for this project. The SIDA-funded Panel of Experts recommended in 1990 that a rapid environmental assessment be carried out, including an Environmental Management Plan and a Catchment Area Treatment Plan (SIDA, 2000). NHPC did not follow all of the recommendations of the panel but prepared a Catchment Area Treatment Plan and a Comprehensive Rehabilitation Plan. The contents of the Comprehensive Rehabilitation Plan were submitted for discussion by NHPC to the Indian Government and were finalised in 1992 when the land acquisition process was already in progress. The Comprehensive Rehabilitation Plan was designed on the basis of a previous socio-economic survey of the affected families (SANDRP, 2005).

The Uri Comprehensive Rehabilitation Plan was implemented by NHPC. Local populations were encouraged to participate and to provide their suggestions concerning the rehabilitation program but no formal public participation mechanism was set up. A monitoring mechanism was put into place for the implementation of the Plan. Cash compensation packages were discussed between NHPC, the Jammu & Kashmir State Government and elected officials of the Jammu & Kashmir Legislature who represented the families eligible for compensation. Compensation disputes could be taken to local courts for arbitration (SIDA, 2000).

Cash compensation was provided to affected families for their houses, land, rice mills, shops, etc. This compensation was used by the relocated people for building houses at the resettlement sites selected close to the affected villages. NHPC provided logistical support for the transportation of belongings and for physical resettlement.

A primary school was built in the relocation area and medical facilities available at the project dispensaries at Gantamulla were extended to the project-affected families as well as to local residents. NHPC funded a drinking water supply scheme to supply about 1000 persons in the village of Buniyar besides providing water to the mosque and the primary and secondary schools. A Children’s Park and a View Point were also developed by NHPC at Buniyar Village. The project construction implied the upgrading and the widening of a National highway to a two lane highway over a length of 34 km to improve access to the surrounding villages.

NHPC made efforts to employ a maximum number of displaced persons and provided employment to 237 persons during project construction. The Consortium undertook to employ at least one member from each of the project-affected families. This specific commitment was not actually fulfilled (SANDRP, 2005) but the Consortium building the project employed a total of 2,778 persons (International Energy Agency, 2005, Draft). In order to generate self- employment, training in the fields of backyard poultry farming was arranged by NHPC and provided to 165 families by the Animal Husbandry Department of the State Government. As part of the 1994 Catchment Area Treatment plan, 250 ha of pasture area was developed to meet the needs of the Gujjar tribesmen, the majority of the people in the area, who practice cattle husbandry. The Catchment Area Treatment Plan provided afforestation and soil and water conservation works in the catchment area and supported the creation of plant nurseries.

NHPC put considerable effort into not hurting the sentiments of the local people and in treating local heritage and religious sites with respect. The original Uri project design threatened the integrity of an Old Pandava Temple of archaeological importance but the dam design was changed in order to avoid the temple. One mosque affected by project construction in Buniyar Village was renovated with compensation funds provided by NHPC and another mosque was built at the resettlement site in the village of Kanchan.

Outcomes and Results

¾ Chamera Stage-I Hydroelectric Project, Himachal Pradesh State

Various surveys carried out by NHPC after the completion of the project have shown improvements to the affected-populations health, literacy and socio-economic conditions. Medical facilities built in the Chamera area as well as the distribution of free medicine helped to improve the health of local inhabitants and reduced the number of deaths due to epidemics from 884 in 1985 to 0 in 1993 (International Energy Agency, 2005, Draft). The number of villages with access to potable drinking water in Chamba District increased from 886 in 1985 to 1095 in 1992. There was only one higher secondary school before the project. The construction of schools in the area increased the literacy rate of the population in Chamba District by 64% from 1981 to 1991 (NHPC, 2006). A socio-economic survey of the families who were provided with employment at the Chamera project revealed that they had resettled

81 well and enjoyed better social status than before the project’s construction. The number of local people employed at Chamera is not known.

Before the construction of the project, many villages were cut off from the main town in the absence of a road network. The construction of roads and bridges in the area has made the lives of the inhabitants easier and infrastructure development carried out at the start of the project such as schools, hospitals, factories and other development activities ‘added a new pace to the life of local populations’ (International Energy Agency, 2005, Draft).

As stated by NHPC, “The Chamera H.E. Project Stage-I in Himachal Pradesh has boosted the development of the entire Chamba region” (NHPC,2006). The availability of reliable electric supply has helped to create new industries in the area and to facilitate tourism. The number of factories in Chamba District increased from 48 in 1984 to 130 in 1992. Fish production on fish farms increased by more than three times in Chamba District between 1985-86 and 1992-93 (NHPC, 2006). Overall, the population in Chamba District increased by 26% between 1981 and 1991 (NHPC, 2006).

¾ Uri Stage-I Hydroelectric Project, State of Jammu & Kashmir

The construction of the primary school contributed in reducing the illiteracy in the area. The new drinking water treatment plant provided safe drinking water to numbers of families in the area. Project construction created employment and new business opportunities for local populations and NHPC noted that there had been considerable improvement in the socio- economic conditions of local people.

Assessment of Outcomes by Involved Stakeholders

No information is available on affected people’s assessment of the Chamera Stage-I and Uri Stage-I project outcomes. An independent evaluation of the Uri Stage-I project carried out for SIDA in 2005 outlined some concerns about the sustainability of economic development in the area. The report indicated that some of the project-affected people had invested their compensation payments into commercial ventures but that several of these businesses had failed after project completion due to lack of demand. As a result, some people affected by the Uri project were now worse off than compared to before they were relocated (SANDRP, 2005). Compensation of people affected by the power transmission line linking the Uri project to the national grid was still unresolved as of 2005 (SANDRP, 2005). The independent evaluation of the Uri Stage-I project concluded that the project’s overall results were positive and met most of the Swedish requirements for bilaterally-funded development projects. However, the evaluation raised some concerns about the management of resettlement, about socio-economic effects and about sharing of benefits from the project (SIDA, 2006).

Both the Chamera Stage-1 and Uri Stage-1 projects were awarded the Indo-German GREENTECH Environment Excellence Award in 2001 by the Green Tech Foundation for the management of the water environment and of the biological environment, for mitigation measures, afforestation and the development of fish farms.

Overall Conclusions

Review of Challenges and Opportunities

The Resettlement and Rehabilitation Plans designed and implemented by NHPC for both projects emphasized the construction of public infrastructures in affected communities. Schools, health services and roads significantly upgraded the level of services available to the populations living in the remote areas where the Uri Stage-1 and Chamera Stage-1 projects were built. These infrastructures proved to be beneficial for the development of the affected

82 areas as indicated by statistics for literacy and access to potable water in the affected districts. An ex-post assessment of these projects would be needed to evaluate the sustainability of the economic improvement noted in the project areas during and following construction by NHPC. Sustainable improvement of the economic conditions of project-affected people is more likely in the vicinity of the Chamera Stage-1 project because of its high tourism potential than in the area of the Uri Stage-I project which is located in an area which is frequently affected by ongoing conflicts in neighbouring Kashmir. Despite its difficult environment, the Uri Stage-1 Resettlement and Rehabilitation Plan is noteworthy because of the attention paid to the preservation of heritage sites and the restoration of religious sites.

NHPC resettlement and compensation programs implemented for these projects did not provide for public consultations and the objective they pursued was not to secure the livelihoods of affected people. The latter gap should be filled in the future with the coming into force of the new 2003 National Policy on Involuntary Resettlement whose stated objective is to improve affected people livelihoods.

References

Hemadri R. and V. Nagraj. 2000. Dams, Displacement, Policy and Law in India. Submission to the World Commission on Dams. Available online at: www.dams.org. Bosshard, P. 2002. Power Finance : Financial Institutions in India’s Hydropower Sector. Published by South Asia Network on Dams, River and People (SANDRP), Urgewald and International Rivers Network (IRN). International Energy Agency (2005, Draft). Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft). – Good Practice Reports – Chamera Hydroelectric Project Stage 1 and Uri Hydroelectric Project. Japan: New Energy Foundation. National Hydroelectric Power Corporation Ltd. (NHPC). 2006. NHPC website. Available at: www.nhpcindia.com. Rangachari, R., N. Sengupta, R. R. Iyer, P. Banerji and S. Singh. 2000. Large Dams : India’s Experience. Case Study prepared for the World Commission on Dams. Available online at: www.dams.org. Swedish International Development Agency (SIDA). 2000. Review of Environmental Mitigation and Compensation Measures in Sida Financed Hydropower Projects. Compiled by the Department of Landscape Planning Ultuna of the Swedish University of Agricultural Sciences (SLU) in co-operation with Andrew Roberts. Submission to the World Commission on Dams. Available online at: www.dams.org. Swedish International Development Agency (SIDA). 2006. India, Sida Country Report 2006. Published by the Embassy of Sweden in New Dehli. Available online at: www.sida.org/shared/jsp/download.jsp?f-sida28420en_india+2005+web.pdf&a=23420 South Asia Network on Dams, River and People (SANDRP). 2005. Questions to SIDA/Evaluators, SANDRP critique of SIDA’s evaluation of URI HEP in Jammu & Kashmir, India. Available online at: www.sandrp.in/hydropower/crtq_sidadrtf_uri.pdf The Corner House. 2000. Dams Incorporated, The Record of Twelve European Dam Building Companies. Published by The Swedish Society for Nature Conservation. Available online at: www.snf.se/pdf/rap-vattenkraft-dams-inc.pdf. The Sport Tribune. 1999. Water-sport at Chamera Lake. The Tribune online edition of Saturday May 17, 2003, Chandigarh, India. Available online at: www.tribuneindia.com The Tribune. 2003a. Chamera oustees hold protest, seek package. The Tribune online edition of Saturday May 17, 2003, Chandigarh, India. Available online at: www.tribuneindia.com.

The Tribune. 2003b. Reassessment of aid to Chamera oustees starts. The Tribune online edition of Sunday, July 20, 2003, Chandigarh, India. Available online at: www.tribuneindia.com. The Tribune. 2003c. Chamera project oustees seek compensation. The Tribune online edition of Saturday, July 26, 2003, Chandigarh, India. Available online at www.tribuneindia.com. Visvanathan, V. 2000. Impacts of Construction of Large Dams: A Case Study. Submission to the World Commission on Dams. Available online at www.dams.org.

4.9 Treaty for the Joint Development and Utilisation of the Resources of the Komati Basin between Swaziland and South Africa and Maguga Resettlement and Compensation Policy Document: The Maguga Dam

Identification of the Example

Key Issues Addressed

Monetary compensation, livelihood restoration and enhancement (commercial irrigation agriculture) and community development (roads, schools and health services).

Integration

Treaty for the Joint Development and Utilisation of the Resources of the Komati Basin between South Africa and Swaziland (1992). Komati River Basin Development Project, Phase 1B: Maguga irrigation dam and associated infrastructure, Resettlement and Compensation Policy (1996).

Implementation

• Maguga dam project (Phase 1b of the Komati River Basin Development Project) • Project proponent: Komati Basin Water Authority (KOBWA) • Construction period: 1998- 2002.

Stage in the Project Life Cycle

Project implementation and operation.

Description of the Framework

General Description of the Country Institutional Set Up

The Komati River Basin is a trans-boundary watercourse shared by the Republic of South Africa, the Kingdom of Swaziland and the Republic of Mozambique. It is part of the larger Incomati Basin that ends up in the Indian ocean in Mozambique. Since 1948 there have been bilateral cooperation forums between those three countries.

The Republic of South Africa is a mixed presidential-parliamentary democracy that is the economic power of the Southern Africa region. In the early 1990s, South Africa was ending almost a century of apartheid policy and was eager to get out of political isolation caused by its apartheid policy and the financing of resistance movements in Angola and Mozambique in the 1980s.

The Kingdom of Swaziland is a small country landlocked between South Africa and Mozambique. It is one of the oldest monarchies in Africa. The population has elected representatives to Parliament since 1973 but there is only one party allowed and the Prime Minister is appointed by the King who also confirms cabinet members. In the 1990s, students and labour movements pressured the monarchy to grudgingly allow political reform and greater democracy. In 2003, Swaziland was the country with the highest known rate of HIV- Sida infections (close to 40% of the population).

The Republic of Mozambique obtained its independence from Portugal in 1975 but in 1977 it was faced with civil war between a socialist governing regime and resistance movements. During the 1980s it was practically at war with South Africa that was helping the RENAMO, a resistance movement. In 1992, a peace agreement put an end to the civil war but the country is still emerging from the ruinous effects of the lengthy conflict (Carmo Vas and van der Zaag, 2003).

The Republic of South Africa and the Kingdom of Swaziland, the two major owners of the Komati basin area wanted to develop the potential of the Komati Basin for agriculture development. Under international law (Helsinki Guidelines), the two countries had to consult Mozambique prior to any development. Consultations were carried out with Mozambique and resulted in the Pigg’s Peak Agreement in 1991 where the go ahead was given for the project, conditional to the delivery of 2m3s-1 flow to Mozambique (Dlamini, 2006). The ongoing civil war prevented Mozambique at the time from taking a more active role in the development of the Komati Basin.

Following the Pigg’s Peak Agreement, South Africa and Swaziland signed two treaties in 1992. The first one, the Joint Water Commission Treaty established the Joint Water Commission that was in charge of advising them on water matters of common interest. The second one was the Treaty for the Joint Development and Utilisation of the Resources of the Komati River Basin. In order to dispel Swaziland’s fear of being pushed into an agreement, South Africa agreed to pay half the cost of an independent consultant to act on Swaziland’s behalf during the negotiations leading up to the treaty (Klaphake, 2005). The planned development of the basin involved the construction of seven dams on the Komati River and its tributary, primarily for agricultural development.

The Treaty for the Joint Development and Utilisation of the Resources of the Komati River Basin provided for the implementation the first phase of development which involved the construction of the Driekoppies dam – also called Lake Matsamo (phase 1a) in South Africa and of the Maguga dam (phase 1b) in Swaziland. The development of the Komati basin by the two countries is a reflection of the Southern African Development Community’s (SADC) spirit of cooperation as established in the 1995 SADC Protocol on Shared Watercourse Systems (KOBWA web site).

It was hoped that the development of the Maguga dam would reduce water management problems in the Incomati catchment area which is characterised by the erratic nature of rainfall and the high level of water use for agriculture (Nkomo and van der Zaag, 2003). During the apartheid regime, many white farmers developed large scale agriculture in the South African part of the Incomati basin and some had even built private dams for providing waters to their fields. The Nkomazi Irrigation Expansion Program was designed in the 1990s to promote small scale sugar farming by black farmers as a way to develop communities and reduce unemployment but this increased the level of water use and the stress related to water management.

Description of the Framework

Resettlement and compensation for the Maguga dam was guided by the Resettlement and Compensation Policy Document signed in 1996 by both countries and implemented through the Environmental Impact Assessment/Compensation Management Plan. In the Treaty for the Joint Development and Utilisation of the Resources of the Komati River Basin signed in 1992, each government was given the responsibility to plan for resettlement done on its territory. Swaziland had to plan for the Maguga dam resettlement but at this time, Swaziland did not have national procedures dealing with resettlement issues or with environmental and social impact assessment. Swaziland adopted in 2002 an Environmental Management Act which required, for all large projects, the preparation of an Environmental Impact Assessment (EIA) and of a Comprehensive Mitigation Plan to be carried out under the supervision of the Swaziland Environment Authority. The EIA carried out for the Maguga dam had previously recommended the formulation of a compensation procedure to deal with the impacts of the project and had proposed a ‘Compensation Management Plan’ for the project (Keatimilwe and Mlangani, 2003).

The Resettlement and Compensation Policy Document produced for the Maguga dam in 1996 drew upon experience from similar projects in other parts of the world and from consultations between the Swaziland Government, KOBWA and the Development Bank of Southern Africa (DBSA). The policy was also presented in consultation meetings with representatives of affected communities. The main objective of the Resettlement and Compensation Policy Document was that affected people should be better off after the project than they were prior to project implementation. This objective was to be met through the involvement of affected people in the planning and implementation of the resettlement measures. The policy guidelines, which are aligned on international standards, also stated that : - Design of the project should aim to avoid resettlement, displacement costs should be born by the project and mitigation measures should be implemented as an integral part of the project. Where possible, in kind compensation should be given instead of cash compensation; - Resettlement of displaced people should be carried out as close as possible to the original settlements and that the wishes of those desirous of making their own arrangements regarding their place of residence should be respected; - Affected families have the right to be informed about implementation and monitoring of compensation and resettlement measures; - Affected people and communities should be enable to participate in the project as much as possible; - Special attention should be given to the needs of vulnerable groups and individuals; - The host community should be considered as an affected party.

Specifically, the policy prescribed three types of resettlement compensation: - Free Choice resettlement: The affected person chooses his/her own destination for relocation and is compensated for the loss of structures at replacement value plus 20% as an inconvenience allowance but does not receive anything for the loss of his/her field. - Resettlement in the Host Area: The affected person is compensated for the loss of structures at replacement value plus 10% as an inconvenience allowance and gets land for land replacement for his/her field in a host area. - Relocation within the same Chiefdom: The affected person receives compensation for the loss of structures at replacement value plus a 10% inconvenience allowance and gets land for land replacement. If the person’s land is not affected, he/she receives only compensation for the loss of structures.

The Resettlement and Compensation Policy Document also provided compensation for the loss of arable and grazing lands, of orchard trees and for disturbance to community facilities and common property resources and to ancestral graves.

The Resettlement and Compensation Policy Document stated that affected people must be the first to benefit from employment in the project. The employment of local workers was also a way to limit the risk of transmission of Sexually Transmitted Infections (STI). The fight against STI such as HIV/Aids was a priority for the Government of Swaziland. By bringing in workers from other areas, concerns were expressed that projects such as the Maguga dam project had the potential of increasing the prevalence of STI in the project area. Managers of the Maguga dam project implemented a number of measures to prevent STI and HIV/Aids transmission among which the employment of local resources and their transport to the worksite.

The pillar of the economy of the Maguga dam area is subsistence agriculture. The project aims to develop commercial agriculture (mainly sugarcane growing) as a way to mitigate its negative impact on local agricultural production and as a way to restore the income earning capacity of affected people. This aim goes far beyond mitigation and compensation purposes and is linked to the purpose of the dam itself (see below).

Description of Organisational Set Up

The Komati Basin Water Authority (KOBWA) was established in 1992 by the Treaty for the Joint Development and Utilisation of the Resources of the Komati River Basin. The main task of KOBWA is to implement Phase 1 of the project and to manage the Driekoppies and Maguga dams to satisfy the needs of the catchment area water users, mainly farmers, while respecting international agreements. The Board of Directors of KOBWA is composed of six members, half of whom are appointed by the Kingdom of Swaziland and the other half by the Republic of South Africa. Decisions are taken by consensus and in case of equal vote the decision is referred to the Joint Water Commission. In 1998, KOBWA was tasked by the Government of Swaziland to implement the Maguga dam resettlement program.

KOBWA established an Environmental Unit within its structure to carry out the resettlement program. KOBWA established the following Environmental and Resettlement Strategic Objectives: • Achieve compliance with the implementation of the Resettlement and Compensation Policy Document; • Facilitate the development of the affected people by providing support services to the affected community focussing on : sustainability, institutional & capacity building and building opportunity (revolving development zoning); • Monitor project impacts; • Ensure proper liaison with project stakeholders; • Ensure sound financial and human resources management.

The Government of Swaziland retained a monitoring role over the resettlement program through the Swaziland Komati Project Enterprise (SKPE). SPKE is wholly owned by the Kingdom of Swaziland and is tasked to ensure that the project benefits Swaziland economically and services the people of the area through environmentally sound practices (Mohamed-Katerere, 2001).

Implementation History of the Framework

The Maguga dam project was the first for which Swaziland developed a Resettlement and Compensation Policy. The construction of the Driekoppies dam on the Komati River shortly

87 preceded construction of the Maguga dam and required involuntary resettlement in both countries but it followed a different framework. The Driekoppies dam project is located in South Africa and was wholly financed by South Africa. Around 20% of its 2,200 hectare reservoir area was located in Swaziland. The construction of the project started shortly after the signing of the Treaty for the Joint Development and Utilisation of the Resources of the Komati River Basin in 1992 and it followed a very tight schedule. This project caused the relocation of around 239 homesteads (2,000 people). The Relocation Action Plan had been prepared and approved by both governments following the Social Impact Assessment carried out in 1992 by the Human Sciences Research Council. Relocation occurred in 1993 at the same time as the dam construction began. Reservoir impoundment for the Driekoppies dam started in 1997.

Description of the Example

Project Description

The Maguga Dam is located 12 km south of Pigg’s Peak in Swaziland. The multi-function dam is mainly operated for irrigation purposes in view of developing commercial agriculture and reducing poverty and unemployment in rural areas (KOBWA web site). It also plays a role in flow regulation and in electric power generation. The project included the construction of a hydroelectric power station equipped with two 9.5 MW turbines to provide peak power generation in the evening, depending on irrigation requirements.

The dam has a total height of 115 meters but has a capacity for retaining only 40% of the mean annual runoff of the river at this site. Engineering of the clay core embankment had to take into account the extremely high floods occurring in this area. Construction of the project began in August 1998 and the official opening occurred in April 2002 with the completion of all outstanding works (SWADE website). The project included the construction of two access roads for a total length of 28 km, the relocation of a bridge and the construction of facilities to house the project’s workers at Pigg’s Peak (including the construction of a water supply system). The Maguga dam affected 125 homesteads by inundating part or the totality of their arable lands and/or infrastructures (KOBWA, undated). Approximately 35% of these homesteads had to be relocated (ECS, undated). The project also caused the relocation of graves and affected one heritage site (painted site).

Implementation

¾ Relocation Action Plan

A host area for relocation purposes was identified and agreed upon by the affected families and allocated by the Government of Swaziland. As stated in the Compensation Management Plan, KOBWA put into place a participation structure, the Ekuvinjelweni Resettlement Committee (ERC) that represents the affected people and is composed of representatives of the affected people. The ERC established a fund with the proceeds from relocating the graves. ERC requested that affected people build their own houses under ERC supervision. KOBWA was very sceptical at first but gave in after ERC successfully completed the construction of housing for the Free Choice compensation package. The affected people chose their own contractor and design and they supervised the construction and received supervision fees. This model enabled KOBWA to save on architectural and supervision fees. KOBWA was impressed by the quality of local builders and extended the model to the Host Area. KOBWA was also committed to provide infrastructures and services such as education and health services in the Host Area. Fruit trees lost (estimated at 5,907) were replaced by the planting of saplings and an irrigated sugar cane field was planted.

¾ Employment

To comply with the Resettlement and Compensation Policy Document requirement on employment benefits, hiring of labour was restricted to residents of the project area. The Komati Community Representative Committee (KCRC) was set up to facilitate employment of local people from the communities of Ekuvinjelweni, Ngamadolo, Nsangwini, Mnyokane and Pigg’s Peak.

¾ Agricultural Enhancement

Many types of infrastructures were planned to enhance livestock production in the dam area such as the construction of dipping tanks, fencing of grazing lands, and planting of pasture on lands left by the resettlers. Furthermore water supplies were provided at the reservoir area in order to mitigate access road impacts on some sources of water supply.

In order to enhance agricultural production in the Host Area, a 23 km-long canal was built to provide irrigation to the cane field planted as part of the compensation package. A storage reservoir, an infield irrigation system and fencing were also set up. Other measures were also provided to improve livestock production in the Host Area. Many infrastructures built in the Host Area such as public roads and cane roads to help local producers. Funds allocated for relocation services were used to buy a truck to be also used by the Ekuvinjelweny Farmers Association for transportation purposes.

Outcomes and Results

¾ Relocation Action Plan

A total of 6,356m2 of floor area was built for affected persons using the Free Choice compensation package and 65 homesteads were built in the Host Area. By handling the housing component of the relocation, affected people gained confidence in their skills and ability and they demanded more work. As a result, they were awarded a fencing contract and a sugarcane planting contract. Furthermore, they built the community church and completed the Agricultural Shed (to store farm inputs such as fertilizers). KOBWA will provide the affected people with training and technical support for three years following project completion in order to help them maintain the infrastructures handed to them. Many infrastructures such as roads and electricity were provided in the Host Area and a school and a clinic with staff housing were built. A community center, with hall and offices, has also been built. It can be used for community social events and as a business area.

¾ Employment

At the peak of the construction activities, approximately 1,500 persons were employed by the project, 80% of whom were from the surrounding area (KOBWA web site). No data is available regarding employment of affected people during operation of the dam.

¾ Agricultural Enhancement

The Host Area has been provided with 97 hectares of well-established sugarcane fields. In conformity with the overall objective of the Maguga dam project concerning regional agricultural development, Swaziland implemented the Komati Downstream Development Project to alleviate poverty in North-eastern Swaziland by providing irrigated agriculture and by developing small businesses (SWADE, undated).

Assessment of Outcomes by Involved Stakeholders

Little information is available on affected people’s assessment of the outcome of the Maguga dam project. Even if the relocation had an impact on the social relations and traditional lifestyles of the affected families, families relocated in the Host Area can now be considered as better off since most of them did not have access to good educational and health services before and they now enjoy the benefits of improved infrastructure (Keatimilwe and Mlangani, 2003). KOBWA considers the Maguga dam resettlement program as a success mainly because of the involvement of the Ekuvinjelwini people (KOBWA, undated).

Overall Conclusions

Review of Challenges and Opportunities

The Maguga dam Compensation Management Plan defined at the Environmental Impact Assessment stage has been successfully implemented and has subsequently been adopted by other development projects in Swaziland (Keatimilwe and Mlangani, 2003). In 2002 the Kingdom of Swaziland set up its own Rural Resettlement Policy which included some elements of the Maguga dam Resettlement and Compensation Policy Document. The goal of this new policy is to enhance sustainable livelihoods through participatory planning by all stakeholders, in order to prevent future land use problems and to ensure that affected people are at least as well-off after resettlement as they were before (Kingdom of Swaziland, 2002).

However it has been argued that, on the basis of available information, the implementation of the Maguga dam Relocation Action Plan failed to address gender issues while the Driekoppies dam has been criticised for its marginalization of women (Mankone, 2000). The promotion of irrigated sugarcane fields in the place of traditional drylands agriculture has provided employment to men while drylands small-scale agriculture is mainly carried out by women and provides them with livelihoods in a context where many households are headed by women. According to IUCN, the Maguga dam Relocation Action Plan did not adequately cover the concerns of local people in regards to the loss of a painted site, the loss of grazing lands and the loss of Kiaat, an important carving wood (Mohamed-Katerere, 2001).

The drought experienced in the region in the early 2000s underlined the importance of water management as an issue among the different water users in the greater Incomati Basin. The development of generating power capacity at the Maguga dam increased the complexity of this issue (Brown and Woodhouse, 2004). A Catchment Management Agency representing the interests of different water users according to the principles of the 1998 South Africa National Water Act was set up for the Incomati Basin in March 2004 (Brown & Woodhouse, 2004). Some people question the emphasis put on the growing of sugarcane in the area and suggest a transition to less water demanding crops (Nkomo and van der Zaag, 2003).

The present example discusses the types of compensation provided to the people displaced by the Maguga dam but does not discuss the issue of compensation of downstream users. It is still unclear to what extent Mozambique will benefit or not from the development of the Komati Basin. Although Mozambique benefits from regulated flows, floods in June, July and August to meet the needs of sugarcane production undermine local livelihoods (Mohamed- Katerere, 2001).

References

Brown, J. and P. Woodhouse (2004) Pioneering Redistribute Regulatory Reform, A Study of Implementation of a Catchment Management Agency for the Incomati Water Management Area, South Africa. Center on Regulation and Competition Working Paper No 89.

Manchester: University of Manchester. Available online at: competition-regulation.org.uk/publications/working_papers/wp89.pdf. Carmo Vas, A. and P. van Der Zaag (2003) Sharing the Incomati Waters, Cooperation and Competition in the Balance. UNESCO/IHP/WWAP, IHP-VI Technical Documents in Hydrology, PCCP Series No 14. Available online at: unesdoc.unosco.org/images/0013/001332/133297e.pdf. Dlamini E. M. (2006) Decision support system for managing the water resources of the Komati River Basin. Presentation at the Enhancing equitable livelihood benefits of dams using decision support systems Working Conference held by CGIAR Challenge Program on Water and Food on January 23-26, 2006 in Adama/Nazareth, Ethiopia. Environmental Consulting Services (ECS) (undated) The Maguga Dam Project, ECS webpage available at www.ecs.co.sz/magugadam/index.htm Keatimilwe, K. and J. Mlangani (2003) Swaziland Country Report in P. Tarr ed. Environmental impact assessment in southern Africa, Part II: Country Report. Southern African Institute for Environmental Assessment (SAIEA), Windhoek. Kingdom of Swaziland (2002) The Rural Resettlement Policy 2002. Available online at www.ecs.co.sz/rrp/index.htm#3. Klaphake, A. (2005) Kooperation an internationalen Flüssen aus ökonomischer Perspective: Das Konzept des Benefit Sharing. Deutsch Institut für Entwicklungspolitik Discussion Paper 6/2005. Available online at www.die-gdi.de. Komati Basin Water Authority (KOBWA) (undated) KOWBA website available at: www.kobwa.co.za. Nkomo, S. and P. van der Zaag (2003) Equitable water allocation in a heavily committed international catchment area: the case of the Komati Catchment. paper presented at the 4th Waternet / WARFSA Annual Symposium: Water, Science, Technology and Policy: Convergence and Action by All, Gaborone, 15-17 October, 2003. Available online at www.waternetonline.ihe.nl. Mankone, N. (2000) The Driekoppies Dam: Benefits and Impact to Local Communities. Submission presented to the World Commission on Dams. World Commission on Dams CD- Rom. London: Earthscan Publications Ltd. Mohamed-Katerere, J. (2001) Review of the Legal and Policy Framework for Transboundary Natural Resource Management in Southern Africa. Paper No 3 of IUCN-ROSA Series on Transboundary Natural Resource Management. Available online at www.iucnrosa.org.zw/tbnrm/publicatioons/book3.pdf. Swaziland Water and Agricultural Development and Environment (SWADE) (undated). SWADE website available at: www.swade.co.sz. Swaziland Rural Resettlement Policy 2003 available at: www.ecs.co.sz.

4.10 Pakistani Land Acquisition Act and World Bank Operational Directive OD 4.30 on Involuntary Resettlement: The Ghazi Barotha Dam

Identification of the Example

Key Issues Addressed

Monetary compensation, livelihood restoration and enhancement (sustainable agricultural and non-agricultural employment) and community development (roads, schools and health

91 services). Compensation defined through multi-stakeholder consultation forum. Settlement of outstanding compensation claims from the Tarbela dam.

Integration

Pakistan’s Land Acquisition Act (1894) and World Bank Operational Directive 4.30 on Involuntary Resettlement (1990).

Implementation

• Ghazi Barotha Hydroelectric Project, Pakistan • Project proponent: Pakistan Water and Power Development Authority (WAPDA) • Project financing: WAPDA with support from Islamic Development Bank, the World Bank, the Asian Development Bank, the Japanese Bank for International Cooperation, KfW and the European Investment Bank. • Construction period: 1995- 2003.

Stage in the Project Life Cycle

Project planning and implementation.

Description of the Framework

General Description of the Country Institutional Set Up

The Islamic Republic of Pakistan is a federal republic with four provinces, one territory and one capital-territory. The legislative branch is composed of a National Assembly and a Senate. In the mid-1990s, at the onset of construction of the Ghazi Barotha dam, the country was governed by a civil democratic regime. In 1999, a military coup replaced the previous regime and brought General Pervez Musharraf to power. The military regime was conferred a certain legitimacy by the country’s Supreme Court in 2000 and by a referendum in 2002 when Mr. Musharraf’s presidency was extended for five more years. The country’s constitution was suspended in 1999 and it was restored in stages from 2002 onwards. It was amended in 2003. The Ghazi Barotha project is located in two provinces: the North-West Frontier Province (NWFP) and Punjab Province. Each of the provinces includes a number of administrative districts.

WAPDA is the governmental authority in charge of developing and operating the country’s electricity generation facilities. It is the second largest employer in Pakistan outside the federal government. Since the 1960s, WAPDA had executed a number of large hydroelectric projects among which the Tarbela Dam upstream of the proposed Ghazi Barotha dam. During the period leading up to the project, resettlement impacts of hydropower projects had generated a lot of debate and controversy in Pakistan and abroad (World Bank, 2004).

Description of the Framework

The Pakistan Land Acquisition Act (1894 with subsequent amendments) provides displaced populations with compensation for their property at market value. Market value is determined by the provincial Land Acquisition Department and by the Land Acquisition Collector and generally draws upon past market prices (Asian Development Bank, 1998).

The Ghazi Barotha Hydroelectric Project introduced new compensation and resettlement management practices to Pakistan by integrating the World Bank’s Operational Directive 4.30

92 on Involuntary Resettlement into the project’s resettlement guidelines. World Bank OD 4.30 included the following general objectives: - “Involuntary resettlement must be part of the project design and dealt with from the earliest stages of project preparation; - Involuntary resettlement should be avoided or minimised; - Resettlement plans should be concieved and executed as development programmes so resettlers can share in project benefits; - Displaced persons should have their former living standards and income earning capcity improved or at least resored; - Community participation should be encouraged in the planning and implementation of resettlement; - Land, housing, infrastructures and other compensation should be provided to affected people; - The compensation process should be fully transparent; - Concerned government agencies and departments dealing with resettlement should upgrade their institutional capacity”.

Description of Organisational Set Up

According to the World Bank, project preparation was handled following best practice approaches (World Bank, undated). The feasibility study and detailed design was carried out through a UNDP-funded assignment executed by the World Bank. An independent Environment and Resettlement Review Panel of Experts was formed to assist the developer. It was the first World Bank-financed hydropower project where such a Panel was associated from the feasibility study stage on through to project completion. This panel was composed of internationally recognised experts, NGOs and World Bank representatives. Three NGOs, namely the World Conservation Union (IUCN), the World Wildlife Federation (WWF) and Sungi, a Pakistani NGO, were involved in the preliminary consultations and in the project design and preparation phase. Panel activities led to changes in the channel design in order to avoid sacred sites. These changes, although increasing the complexity and cost of the project, reduced the number of people to be displaced (World Bank, undated).

WAPDA was responsible for the implementation of the resettlement plan. One of the development objectives of the World Bank loan was to strengthen WAPDA’s capacity to address environmental and resettlement issues. As such, the World Bank loan included a comprehensive set of monitoring arrangements such as the Environment and Resettlement Review Panel of Experts. An Environmental Cell was set up within the WAPDA structure and was responsible for the implementation and oversight of the Resettlement Action Plan (RAP). WAPDA’s Social Sciences Unit supervised the resettlement activities through the Project Resettlement Organisation (World Bank, 2004).

Considering past experiences in Pakistan with involuntary resettlement for hydropower projects, WAPDA recognised that it would require assistance to handle resettlement and compensation issues for the Ghazi Barotha Hydroelectric Project. The RAP prepared for the project by WAPDA in 1994 called for the creation of a ‘Project Non-Governmental Organisation’ (PNGO) to carry out various resettlement activities, including an ‘Integrated Regional Development Plan’ (IRDP) and to find locally acceptable solutions to grievances. The ‘Project Non-Governmental Organisation’ called “Ghazi Barotha Taraqiati Idra” (GBTI) was created in 1995. It is composed of 13 members including six representatives of the affected communities and one representative of WAPDA.

Compensation of affected persons required the establishment of market value of property. Instead of being assessed by the Land Valuation Department, market value was to be 93 established through a Land Valuation Committee (LVC). This committee was composed of five members: two from the community, one government official, one representative from WAPDA and one representative from the GBTI.

Implementation History of the Framework

The World Bank Operational Directive 4.30 on Involuntary Resettlement had not been implemented before for a hydropower project in Pakistan. Previously, WAPDA usually referred to Pakistani policy on land acquisition (as set out in the Land Acquisition Act).

Twenty years earlier, implementation of the Land Acquisition Act for the Tarbela dam upstream of the proposed Ghazi Barotha dam had resulted in outstanding compensation claims. The Tarbela dam is located on the Indus River seven kilometres upriver of the Ghazi Barotha dam. Project construction started in 1968 and the Tarbela dam was commissioned in 1976. It affected close to 96,000 people among which only two thirds were eligible for land compensation on the basis of the Land Acquisition Act. According to the Tarbela Resettlement Plan established in 1967, the criteria for land compensation eligibility was the ownership of at least 0.2 hectares of irrigated land or 0.8 hectares of rain-fed land. Other land owners received cash compensation based on market price (Asianics Agro-Dev International (Pvt) Ltd, 2000). Land replacement for people losing part of their lands and replacement of residential plots for people losing their house was to be provided by Punjab and Sindh Provinces but the provincial governments failed to provide all of the promised land. The people affected by the Tarbela Dam protested to the World Bank about unjust treatment by WAPDA regarding the settlement of their claims. This led the World Bank to make the financing of the Ghazi Barotha Project conditional to the settlement of these outstanding issues (Asianics Agro-Dev. International (Pvt) Ltd, 2000).

Description of the Example

Project Description

The Ghazi Barotha Hydropower Project was designed to be a local source of renewable energy to contribute to the alleviation of Pakistan’s power shortages with its 1,450 MW generation capacity. By benefiting from Tarbela dam’s regulated flow, this project was the least-cost alternative for the expansion of the country’s power generation capacity. The dam is located on the Indus River, in the North-West Frontier Province (NWFP). A 52 km-long channel brings the water to the power station located in the village of Barotha located at the confluence of the Indus and Haro Rivers, in Punjab Province. Dam construction started in December 1995 and impoundment started in February 2003. Commissioning was carried out in May 2003 and all units were operational in July 2003 (Government of Pakistan, 2003). The project provides a significant benefit in generating maximum power during the critical period of May-June when water levels in the Tarbela and Mangla Reservoirs are at their lowest.

Specifications of the Ghazi Barotha Hydropower Project

Item Specifications Dam pond and embankment area 1,180 ha Hydraulic head 74 meters Channel length 52 meters Installed capacity 1,450 MW (Five generators of 290 MW) Total Project Cost US$ 2,068 million (April 2003) Sources : Government of Pakistan (2003) and GBTI (2002)

Construction of the dam led to the flooding of uninhabited public lands but the construction of the power channel and powerhouse required the acquisition of 4,770 hectares of agricultural lands. As a result, the project required the relocation and rehabilitation of 179 families and affected the land of approximately 20,000 households in 54 villages located in three districts, i.e. Swabi and Haripur districts in NWFP province and Attock district in Punjab province (GBTI, 2002). It was planned that the land on the channel spoil banks would be provided with tube-wells for irrigation and returned to those losing cultivable land to the project (land-for- land compensation).

Implementation

The objectives of the Resettlement Action Plan (RAP) prepared by WAPDA for this project were mostly derived from the World Bank’s O.D. 4.30. One of the objectives of the resettlement plan was that “persons to be displaced should have their former living standards and income earning capacity improved or, at least restored, and should be provided adequate support during the transition period” (WAPDA, 1994). It was also stated that community participation should be encouraged in the planning and implementation of the resettlement plan and that the compensation process should be fully transparent.

Most of the affected people were affected by the loss of part of their cultivable land. The RAP provided for cash compensation for loss of production and acquisition of land at market value. For people losing their house (179 families or 899 persons), the RAP provided cash compensation for their lands plus relocation into three resettlement villages in addition to scattered house relocation. For people losing all their landholding (less than 100 families), the RAP provided them with a part of the newly irrigated lands on spoil banks and an amount in cash to ensure their livelihood during the transition period. The RAP identified 1,230 non- occupancy tenants and field labourers affected by the project. The RAP gave them priority in project-related employment and entitled them to project training and credit schemes (they were expected to find employment on newly irrigated lands).

The RAP included an Integrated Regional Development Plan (IRDP) that provided for ‘health and education uplift, agricultural development, business and industrial development’ in the region. The concerns related to the impact of past projects in the region such as the Tarbela dam were taken into account in developing the IRDP (WAPDA, 1994). The plan stressed long-term job development in the region but also included specific programs for women and vulnerable groups (WAPDA, 1994).

The Government of Pakistan agreed to implement a program to address outstanding compensation issues related to the Tarbela dam project as a condition for obtaining a World Bank loan related to the Ghazi Barotha Hydroelectric Project. This aspect of the project was fairly innovative and the World Bank did not have examples of good practice in this regard to bring to the attention of the Pakistani government (World Bank, 2004). Addressing outstanding social issues and optimising benefits from existing dams were subsequently included in the strategic priorities set out by the World Commission on Dams’ 2000 Report.

¾ Resettlement Action Plan

At the onset of construction of the Ghazi Barotha dam, Project Information Centres were set up to provide information about the project and the RAP and to register complaints about project implementation. The Project Information Centres were staffed by a number of sociologists including two women focusing on gender issues. Staff of the Project Information Centers also went into the communities to increase local awareness about the project and to allow for greater participation of local citizens. The Project Information Centres were important in facilitating the implementation of the RAP (World Bank, undated). They also served as points of contact where contractors could recruit local labour.

An NGO Steering Committee was formed to undertake advocacy activities on behalf of the communities. Members of the NGO Steering Committee were chosen by the communities and meeting minutes were circulated throughout the communities (World Bank, undated).

In 1996 and 1997, the land valuation process became highly politicised as local government representatives were trying to obtain a higher price for the land and land speculation began. The cost of land which was expected to be 1.8 billion rupees skyrocketed to 8 billion rupees. By the end of 1997 the land valuation process had generated the registration of almost 500 court cases. At that point, the project was halted. In 1998, GBTI was mandated to estimate a fair market value for land to be acquired for the project. GBTI went to all of the communities explaining that without reasonable market value the project would not go forward and people would receive nothing. GBTI was able to negotiate land purchases down to 4.5 billion rupees. Through its actions, GBTI gained the trust of the affected population, the NGOs as well as of the implementing agencies – WAPDA and the World Bank (World Bank, undated). The land acquisition process went relatively smoothly after that (World Bank, 2004). However, when the military government took power in 1999, this led to some changes in the implementation of the RAP and in the respect of other commitments made by the previous government.

Part of the reasons invoked by military authorities when they took power in 1999 were linked to allegations of corruption by the former Prime Minister Mr. Nawaz Sharif and his government. As a result, many corruption investigations were undertaken throughout the country by the National Accountability Bureau (NAB) after 1999. NAB initiated in mid-2001 an investigation on the causes and consequences of the escalation in land prices for the Ghazi Barotha Hydroelectric Project to determine if it was due to any illegal acts committed by WAPDA officials and/or by the Land Acquisition Authority and/or by project-affected communities. It became apparent that the basis that NAB was using for determining “corruption” amounted to a negation of the RAP. Specifically NAB took historical land prices as an indicator of fair market value and the consultative process for establishing the value of the land was, therefore, not recognised as legally valid. Unfortunately, some project-affected people and officials got thrown into jail during the NAB investigation. Differences between the World Bank and the Government of Pakistan regarding issues related to the NAB investigation were resolved in 2003 but caused additional delays in the compensation process (World Bank, 2004).

¾ Addressing Tarbela’s Outstanding Social Issues

To comply with the Government’s commitment to address Tarbela’s outstanding compensation claims, WAPDA appointed a Review Committee to carry out an independent review of the outstanding claims. In May 1996, the Review Committee reported that 2,197 alternate lands and 1,282 residential plots had not been provided to people affected by the Tarbela dam (Asianics Agro-Dev International (Pvt) Ltd, 2000). As provincial inability to provide replacement land had been one reason of the failures of the initial compensation plan, a consultant hired for the review recommended to provide claimants with cash compensation instead of land compensation (World Bank, 2004). The numbers reported by the Review Committee were contested by the claimants and in 1998, the government set up a Commission to examine the conclusions of the Review Committee. The Commission’s report, issued in 1999, identified 4,089 additional eligible claims for alternate lands and 7,649 additional eligible claims for residential plots (Asianics Agro-Dev. International (Pvt) Ltd, 2000). The Commission also stated that land should be provided to the claimants as originally planned. The Government requested that the provinces provide land to the affectees but they were still unable to do so. Finally the Government opted for cash compensation of the claimants entitled to alternate lands and in 2003, WAPDA, federal and provincial governments deposited their shares of the compensation payments (World Bank, 2004).

Outcomes and Results

¾ Resettlement Action Plan

In 2003, GBTI was about to complete the land acquisition compensation process. GBTI had however encountered problems in receiving the funding for the IRDP. Funding was supposed to be provided through WAPDA but the government-owned corporation faced financial difficulties throughout the implementation of the project (for additional information, see World Bank, 2004). In 2003, GBTI had received 20 million of the 176 million rupees agreed by WAPDA. GBTI initiated many poverty alleviation activities such as micro-enterprises, micro credit, skills enhancement and building of small community infrastructure (GBTI, 2002). The comparison between the results of a 1994 survey and of a 2004 survey indicated an improvement in the quality of residences and an increase in the mean annual income per head of project-affected people (World Bank, 2004).

Project construction was slowed down after the September 11, 2001 events and the subsquent war in Afganistan because of security concerns. Land-for-land compensation which was to be provided following channel spoil bank restoration was jeopardised by the fact that the contractor and WAPDA put the focus on completing the power channel and did not handle the restoration works with care. As a result, the quantity of channel spoil bank lands suitable for resettlement purposes was much less than projected. The construction of the Ghazi Barotha project employed about 13,500 local people and many local companies (Government of Pakistan, 2003).

¾ Addressing Tarbela’s Outstanding Social Issues

Compensation payments for the Tarbela claimants eligible for alternate land were largely completed by the end of 2003. By 2004, the claimants eligible for residential plots had not received the residential lots promised in part because a dispute had arisen over the number of persons entitled to receive such plots (World Bank, 2004).

Assessment of Outcomes by Involved Stakeholders

The survey and scoping session held before the project in the 54 affected villages revealed that people to be resettled expected to benefit from the project as most of them were cultivating rain-fed land (barani) and would obtain irrigated land. Affected people were concerned that the entitlements they were due would not be provided on an equitable, fair and timely basis (WAPDA, 1994). It would appear that entitlements have been provided on an equitable and fair basis by virtue of the participation of GBTI in the process but the land acquisition and compensation process has been long and arduous. In 2003, just before the official commissioning of the project, representatives of the affected people and of the NGOs involved in the NGO standing committee complained about the lack of security at the site and about the fact that more than 12,000 cases of unpaid dues and compensations were still unresolved and that spoil bank restoration was not yet completed (Shahzad, 2003). No more recent assessment of outcomes is available.

The World Bank Implementation Completion Report stated that “the Bank has been satisfied that the RAP is being fully implemented” (World Bank, 2004). However, it classified the land acquisition and compensation process of the Ghazi Barotha project as ‘partly successful’. The living conditions of most of the affected people appear to have improved when compared to their pre-project situation but the land-for-land compensation aspect of the Resettlement Action Plan is not likely to achieve its intended objectives. The report criticised the performance of the Government in addressing Tarbela’s outstanding issues (World Bank, 2004).

Overall Conclusions

Review of Challenges and Opportunities

Implementation of World Bank O.D. 4.30 through the Ghazi Barotha RAP improved the outcomes of the project for many affected people but its implementation faced many challenges and was only partly successful. This exemple demonstrates that public consultations at the planning stage and rigorous evaluation of alternatives can lead to a reduction in the scale of resettlement. The creation of the GBTI has proven to be important in finding solutions to major problems that could halt the project (World Bank, undated). Unfortunately, GBTI experienced financial difficulties because its funding was provided by WAPDA who itself experienced financial difficulties. GBTI outcomes could have been optimised if it had been provided with a more secure/independent source of funding.

The introduction of new features in the Pakistani compensation process such as the involvement of affectees in the land valuation process and the attempt to address the outstanding compensation issues of the Tarbela dam were not easy to implement (World Bank, 2004). This example shows that implementing a progressive compensation policy requires much more than the establishment of an appropriate normative/policy framework. It requires strong commitments from the developer (in this case WAPDA) and strong support and follow-up from the lending agency (in this case the World Bank). This example also shows that commitments by a State-owned developer can change over time due to changes in the political context of the country.

References

Asian Development Bank (1998). Handbook on Resettlement: A guide to good practice. Available online at www.adb.org. Asianics Agro-Dev. International (Pvt) Ltd (2000). Tarbela Dam/Indus Basin, Pakistan. Case Study prepared for the World Commission on Dams. World Commission on Dams CD-Rom. London: Earthscan Publications Ltd. GBTI (2002). Ghazi Barotha Hydropower Project. Available online at www.espots.sdnpk.org/stories/gbhp.htm. Government of Pakistan (2003). Ghazi-Barotha Hydropower Project. Available online at www.infopak.gov.pk/water_reserves/ghazi-barotha.htm. Shahzad, K. (2003) ‘Affectees threaten to shut down Ghazi Barotha’ in the Daily Times, July 30th, 2003 online edition. Available online at www.dailytimes.com.pk/default.asp?page=story_30-7-2003_pg7_43 WAPDA (1994). Ghazi-Barotha Hydropower Project, Resettlement Action Plan. Available online at www.worldbank.org. World Bank (undated). Resettlement in the Pakistan Ghazi-Barotha Hydropower Project. Involuntary Resettlement Case Study. Available online at www.worldbank.org. World Bank (2004). Implementation Completion Report on a loan in the amount of US$350.0 million to the Islamic Republic of Pakistan for a Ghazi Barotha Hydropower Project. Report No 28781. Available online at www.worldbank.org World Commission on Dams (2000). Dams and Development, A New Framework for Descision-Making. World Commission on Dams CD-Rom. London: Earthscan Publications Ltd.

5. Discussion of Study Results

The examples presented in the previous chapter reveal a number of interesting points. For instance, the oldest case discussed in the report, the Arenal dam in Costa Rica which was commissioned in 1980, did not benefit from a sophisticated normative/policy framework for defining compensation and economic redevelopment requirements. Instead, the project benefited from the strong committment of government and power utility authorities and from the support of Inter-American Development Bank partners. Resettlement planners were prepared to experiment and try out a variety of solutions with project-affected persons in order to ensure that displaced persons were eventually better off after the project than before.

The Chinese case based on the Shuikou dam commissioned in 1996 constitutes an example of successful implementation both of new Chinese resettlement regulations for large and medium sized dams (1991) and to a lesser extent of a later version of the World Bank’s Involuntary Resettlement guidelines (1990). The successful restoration of incomes in communities displaced by the Shuikou dam was largely due to the willingness of Chinese authorities to stimulate the development of sustainable agricultural and non-agricultural employment opportunities in the project area through a flexible and adaptive process.

The two Indian cases, based on the Chamera Stage-1 and Uri Stage-1 dams in northern India (commissioned respectively in 1994 with CIDA funding and in 1997 with SIDA funding), consitute examples of implementation of NHPC’s Resettlement and Rehabilitation Framework which emphasises the development of community services (schools, health facilities and roads) and local employment to assist in restoring incomes in displaced communities.

The case of the Maguga dam in Swaziland (commissioned in 2002), whose development was linked to the signing of a Treaty for the Joint Development and Utilisation of the Resources of

99 the Komati Basin between South Africa and Swaziland (1992) is of particular interest because it involves an irrigation dam built to support commercial agricultural ventures as a means to contribute to poverty alleviation in rural areas. The successful implementation of the Maguga dam Resettlement and Compensation Policy (1996) was largely based on the development of sustainable agricultural employment.

As mentioned previously in the chapter on the study methodology, a few of the examples presented in the report did not demonstrably result in overall positive outcomes in regards to compensation for involuntary resettlement (Chamera Stage-1 and Uri Stage-1 dams in India, Saguling and Cirata dams in Indonesia, Ghazi Barotha dam in Pakistan). However, useful lessons can be drawn from all normative/policy frameworks described in the examples and from their implementation. In this respect, they can all be considered as examples of relevant practices.

100

APPENDIX : Data Base of References on Compensation Policy

101

Database of Relevant Policies and Frameworks Regarding Compensation from Dam Projects

Country/Name Policy/Framework References Relevant Dam References For Policy/Framework Projects For Dam Projects Governments Argentina Public Interest Appropriation Law Bartolome, L. and C. Yacyreta World Commission on Dams Provides for monetary compensation for land Danklmaier (2000) Experience (2000) Dams and Development, A owners with Dam and Resettlement in New Framework for Descision- Argentina. Submission to the Making. World Commission on World Commission on Dams. Dams CD-Rom. London: World Commission on Dams Earthscan Publications Ltd. CD-Rom. London: Earthscan Publications Ltd. Brazil Brazilian Constitution (1988) M. T. Fernandes Serra (1993) Salto Caxias Fonseca dos Santos, A. (2004) Enforced the 1986 Environmental Legislation Resettlement Planning in the Salto Caxias Hydroelectric Power which provides for 3 different licenses Brazilian Power Sector: Recent Plant consultation process and obtained after complying with environmental Changes in Approach. In M. public participation, A real tool for assessment and the establishment of an Cernea and S. Guggenheim, sustainable development. Paper adequate mitigation plan and the Anthropological Approaches to presented at the UN Symposium implementation of that plan. Assures that Resettlement: Policy, Practice on hydropower and sustainable different levels of government, including and Theory. Boulder: development in Beijing, October municipalities share in project benefits. Westview Press. pp. 63-85. 27-29 2004. Available online at www.un.org/esa/sustdev/sdissues/e Fonseca dos Santos, A. (2004) Second Master Plan for the Protection and nergy/op/ Salto Caxias Hydroelectric Improvement of the Power Sector Works Power Plant consultation International Energy Agency and Services (1990). Replaces the first process and public (2005, Draft) Implementing Master Plan of 1986. Incorporates specific participation, A real tool for Agreement for Hydropower guidelines for population relocation. sustainable development. Paper Technologies and Programmes,

presented at the UN Annex VIII – Hydropower Good Law No 8001 (1990) Symposium on hydropower Practice: Environmental Mitigation

45% of royalties from a hydroelectric project and sustainable development in Measures and Benefits (Draft).

must go to affected municipalities. Beijing, October 27-29 2004. Japan: New Energy Foundation.

102

Available online at COPEL (2003) Salto Caxias www.un.org/esa/sustdev/sdissu Resettlement Project, Blue Planet es/energy/op/ Prize Application.

World Bank, Operation Evaluation Itaparica Department (1998) Recent

Experience with Involuntary

Resettlement : Brazil – Itaparica

Report No 17544.

La Rovere, E.L. and F.E. Mendes Tucurui (2000) Tucurui, Tocantin River,

Brazil. A Case Study prepared for

the World Commission on Dams.

The World Commission on Dams

CD-Rom. London: Earthscan

Publications Ltd.

Bermann, C. (2000) Community- Ita managed Resettlement: Ità Dam, Brazil. Submission to the World Commission on Dams. The World Commission on Dams CD-Rom. London: Earthscan Publications Ltd.

Canada (Province of Quebec) “Paix des Braves” Agreement (2003) Agreement Concerning a New Eastmain-1 Hydro-Québec (2003) Eastmain- Provides for royalties for the Crees based on Relationship (Paix des Braves) Eastmain-1A 1A and Rupert Diversion hydroelectric production, mining extraction between the Government of Environmental Assessment and forestry harvest in the territory Quebec and the Crees of Québec (2003)

103

Opimiscow-SOTRAC Agreement Opimiscow Agreement (1994) Laforge-1 Roquet, V., D. Clement, A. Penn, J.-R. Proulx and A. Tessier (2004) Environmental Follow-up Assessment of the La Grande Hydroelectric Complex – Human Impacts Generated in the Eastern Sector Eastern Sector. Main Report. Report prepared for Hydro-Québec Production.

China Reservoir Resettlement Law (1981) Jun Jing (2000) Displacement, Shuikou World Bank, Operation Evaluation Provides for Reservoir Maintenance Fund for Resettlement, Rehabilitation, Yantan Department (1998) Recent poverty relief among the previously displaced Reparation and Development – Xiaolangdi Experience With Involuntary China Report. Contributing Resettlement; China - Shuikou Law of Land Acquisition in State Capital Paper for the World (and Yantan) Construction (1982) Commission on Dams Raised compensation rates, clarified land Youxuan Zhu, Martin ter Woort titling, protection of incomes and assets ADB (1998) Handbook on and Barry Trembath (2000) Resettlement: A Guide to Good Sucessful Reservoir Resettlement Developmental Resettlement Policy (End of Practice. Available online at in China, Shuikou Hydroelectric 1980’s) www.adb.org/documents/hand Project. World Bank, EASES Provides for incorporation of local economic book/resettlement Discussion Paper Series. development (resettlement fund) into resettlement plans. Large and medium ADB (1999) Speech by Vice- R. Fuggle and W. T. Smith (2000) hydropower projects are subject to separate President peter H. Sullivan at Experience With Dams In Water reservoir resettlement design standards the Regional Workshop on And Energy Resource (1991), with lower compensation standards National Resettlement Policy Development In The People’s than for other sectors. In reservoir projects, and Practice. Available online Republic Of China. Submission to compensation can include a maintenance and at www.adb.org the World Commission on Dams. construction fund that allocates a small The World Commission on Dams proportion of power or water revenue CD-Rom. London: Earthscan generated to support resettlement costs. Publications Ltd.

104

Land Administration Law (1999) Strengthens provision for compensation for people losing land through involuntary resettlement.

Colombia Resettlement Policy of the Electricity Interconexión Eléctrica S.A. Urra 1 De Castro Illera. M. and D. Égré Sector (1992) (1992) Politica de (2000) Successful Involuntary Provides for re-establishment of standard of reasentamiento de poblacion Resettlement: Lessons from the living of displaced population of at least their desplazada por proyectos Urra 1 Project in Columbia in The former standard of living. Resettlement International Journal of strategies must be based on land-for-land and Hydropower & Dams. Volume 7 house-for-house compensation and must Issue 2, 2000. include plans to restore the social, economic De Castro, M. (2000) Lesson from and cultural conditions of the displaced Resettlements of Urra communities. Also provides for participation Hydropower Project. Contributing of affected communities in planning and Paper to the World Commission on implementation of resettlement program. Dams. World Commission on

Dams CD-Rom. London: Earthscan Publications Ltd. Ghana VRA Guiding Principles and Policies on E. A. K. Kalitsi (2004) Akosombo, Kalitsi, E. A. K. (2003) Problems Resettlement Perspectives and experiences : Kpong, and Prospects for Hydropower Akosombo : Hydropower development and Bui Development in Africa, prepared -Option of Compensation in cash (valuation Resettlement (Ghana) for the Workshop for African of assets not of land) presentation to UN symposium Energy experts on - Option of resettlement with a core house on Hydropower and sustainable Operationalizing the NGPAD provided development Beijing 2004 Energy Initiatives in Dakar, - Upgrading of agricultural practice to Senegal scientifinc commercial agriculture De Wet, C. (2000) The Experience Kpong : with Dams and Resettlement in -Restoration of livelihood to suit more the Africa, Contributing Paper for the original lifstyle World Commission on Dams. VRA Resettlement Trust Fund (set up in World Commission on Dams CD- 1969) provided for electrification, sanitation, Rom. London: Earthscan education and health services Publications Ltd.

105

Tamakloe, M. A. (1993) Long- Term Impacts of Resettlement: The Akosombo Dam Experience. In C.C. Cook (ed.) Involuntary Resettlement in Africa. World Bank Technical Paper Number 227. pp.99-109.

Adu Aryee, V.Q. (1993) Resettlement in Ghana: From Akosombo tp Kpong. In M. Cernea and S. Guggenheim, Anthropological Approaches to Resettlement: Policy, Practice and Theory. Boulder: Westview Press. pp. 134-151.

India Before 2003, State-level resettlement ADB (1998) Handbook on Upper Krishna Operation Evaluation Department policies existed in Bihar, Orissa, resettlement: A Guide to Good of the World Bank (1998) Recent Maharashtra, Madhya Pradesh, Gujarat, Practice, available online at Experience With Involuntary Punjab, Karnataka, and Andhra Pradesh. www.adb.org/documents/hand Resettlement : India – Upper Elsewhere, land acquisition and resettlement book/resettlement Krishna (Karnataka and are governed by project-specific directives or Maharashtra). Available online at by the land acquisition act. www.worldbank.org

Land Acquisition Act (1894) Ravi Hemadri and Vijay Uri, International Energy Agency Provides for land acquisition by States for Nagraj (2000) Dams, (2005, Draft) Implementing public purpose and provide for “adequate Displacement, Policy and Law Agreement for Hydropower compensation” without specifying it. in India, Contributing Paper for Technologies and Programmes, the World Commission on Annex VIII – Hydropower Good The National water resource Council Dams Practice: Environmental Mitigation (NWRC) created in 1983 provides a forum to Measures and Benefits (Draft). discuss water policy. Japan: New Energy Foundation.

National Water Policy (1987)

106

National Policy on Resettlement and Government of India (2003) Chamera International Energy Agency Rehabilitation for Project Affected National Policy on (2005, Draft) Implementing Families (2003) Resettlement and Agreement for Hydropower Provides for compensation measures for Rehabilitation for Project Technologies and Programmes, families affected by project. Compensation Affected Families Published in Annex VIII – Hydropower Good provide for land replacement, transportation the Gazette of India, Practice: Environmental Mitigation coast, allotment cost and for financial Extraordinary Part-I, Section Measures and Benefits (Draft). assistance for loss of livelihood. 1,No- 46, dated 17th February, Japan: New Energy Foundation. Compensation depends on if families: 2004. Available online at - own a house and/or agricultural lands www.rural.nic.in Sardar Sarovar Scudder T. (2003, unpublished) and/or cattle and/or a shop India’s Sardar Sarovar Project

- is below poverty line (SSP). Available online at - is part of a scheduled tribes www.hss.caltech.edu - category of employment - if entire land or not is affected The policy also provide for construction of training facilities and basic amenities at resettlement zone. Indonesia Presidential Decree No. 55/1993, on Land ADB (1998) Handbook on Kedung Ombo Operation Evaluation Department Acquisition for the Development of the Resettlement: A Guide to Good of the World Bank (1998) Recent Public Interest Practice, available online at Experience With Involuntary Presents expanded options for compensation www.adb.org/documents/hand Resettlement - Kedung Ombo (including cash, substitute land, formal land book/resettlement ADB (2000) Resettlement Policy title, and resettlement) and places emphasis Saguling and and Practice in Southeast Asia and on community consultation and reaching Cirata the Pacific available online at agreement with people affected on the form www.adb.org and the amount of compensation B. Gunawan, K. Takeuchi and O.

S. Abdoellah (2004) Challenges to Government Regulation, No. 51 on community participation in Environmental Impact Assessment (1993) watershed management: an requires a management and monitoring plan analysis of fish farming activities for environmental impacts, including land at Saguling Reservoir, West Java – acquisition and resettlement. Indonesia in Water Policy No6 pp.

319-334 available at www.iwaponline.com

107

B.A. Costa-Pierce (1998) Constraints to the Sustainability of Cage Aquaculture for Resettlement from Hydropower Dams in Asia: An Indonesian Case Study. Available online at www.dbc.uci.edu/~sustain/indo.ht ml

B. Costa-Pierce (1997) From Farmers to Fishers: Developing Reservoir Aquaculture for People Displaced by Dams. World Bank Technical Paper No 369.

International Energy Agency (2005, Draft) Implementing Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft). Japan: New Energy Foundation.

M. Nakayama (2005) Public participation in the resettlement process of dam-construction projects: A post-construction survey of the Saguling and Cirata dams in Indonesia in Public Participation in the Governance of International Freshwater Resources, United Nation University Press: Tokyo. pp.319- 328

108

Japan Act on special measures for Reservoir Area S. Yokotsuka and T. Inoue Gosho International Energy Agency Development (1972) (undated) Roles of Dam in the (2005, Draft) Implementing Provides for Reservoir Area Development Development of River Basin in Miyagase Agreement for Hydropower Plan and Fund for Reservoir Area Japan on www. www.icold- Technologies and Programmes, Development (established in 1976) providing cigb.net/ Integrated Hidaka Annex VIII – Hydropower Good for reconstruction and revitalisation of Development Practice: Environmental Mitigation reservoir area and hosting communities T. Inoue (2000) Institutional Measures and Benefits (Draft). Framework for Social Kurobegawa No 4 Japan: New Energy Foundation. Standard Regulations on Compensation Acceptability of Dam Project for Losses by the Acquisition of Land for in Japan Submission to the Yasaka Public Purposes World Commission on Dams Provides for negotiations regarding the compensation of income losses and the relocation of buildings

Lesotho Lesotho Constitution (Article 17) Lesotho Highlands Lesotho Highlands M. Tshabalala (1993) Resettlement Requires prompt payments of full Development Authority (1997) Water Project and rural development aspects of compensation for compulsory acquisition to (as refined in 2002) Lesotho (Mohale and Katse the Lesotho Highlands Water land owners and land tenants or owner of Highlands Development dams) Project. In C.C. Cook (ed.) permanent buildings Authority Compensation Involuntary Resettlement in Policy. Available online at Africa. World Bank Technical Treaty on the Lesotho Highlands Water www.lhwp.org.lh Paper Number 227. pp.59-70. Project (1986) (article 7 par. 18) affected community will be World Bank (2005) Lesotho able to maintain a standard of living not Highlands Water Project – World inferior to pre-disturbance level. Bank Implementation Review (Article 15) all reasonable measures will be Mission Aide-Memoires – March take to maintain the welfare of persons and 2004, September 2004, January community affected by the project 2005, April 2005, September 2005 and December 2005. LDHA Order (1986) (Section 44 (2)) the standard of living and www.lhwp.org.lh income of persons displaced shall not be reduce

109

Lesotho Highlands Development Authority Compensation Policy (1997) (as refined in 2002) Household eligible for compensation for loss Water and Sewage Authority of of livelihoods Lesotho (2004) The Kingdom of Lesotho Water Sector Water Sector Improvement Project Policy Improvement project (WSIP) Framework for Land Acquisition and APL Phase 1, Policy Compensation (2004) Framework for Land Provide for compensation for loss of land, Acquisition and Compensation buildings and structure, vegetable gardens, trees. Individual will choose between compensation in cash , in kind and/or through assistance. Compensation will be provided to land owners and land users (with or without legal rights). Laos National Policy on Resettlement and Lao PDR (2003) National Nam Theun II Ausaid (2005) Review of Nam Compensation (2003, Final Draft) Policy on Resettlement and Theun II Hydroelectric Dam, Lao Projects are designed so that affected people Compensation (Final Draft). PDR available at share project benefits and are assisted to Available online at www.ausaid.gov.au develop their economic, social and cultural www.namtheun2.com International Advisory Group to potential in order to improve or at least the World Bank (2005) Impacts, restore their living standards to pre-project Mitigation, Restoration, The Nam level and are not worse off than they would Theun 2 Dam in Laos have been without the project. Nam Theun Power Company NT2 Resettlement Principles (2002) Lao National Committee for (2005) Nam Theun 2 Project – Provides for replacement land being available Energy (2002) The NT2 Social Development Plan, to all those interested, cash compensation Resettlement Principles. available at www.namtheun2.com would only be considered for those with plans Available online at to move out of the district. The construction www.poweringprogress.org Scudder, T. (unpublished) The in new settlements areas will be approved by Lesotho Highlands Water Project (2003) and Laos Nam Theun 2 the Resettlement Committee and the population will be consulted in the planning Dam (2003 with 2005 updating). and design process of their new settlement Available online at www.hss.caltech.edu/tzs and production areas. The population to be

110

resettled should materially improve its Nam Ngum I International Energy Agency standard of living after relocating: individual (2005, Draft) Implementing household incomes should be above the Agreement for Hydropower national poverty line within four years after Technologies and Programmes, physical relocation and should be supported Annex VIII – Hydropower Good in the interim period. The policy also Practice: Environmental Mitigation provides for special measures towards ethnic Measures and Benefits (Draft). minorities and vulnerable persons to assist Japan: New Energy Foundation. them to take care of their needs and foster self- reliance. Theun Hinboun ADB (1999) Special Evaluation Study of the social and environmental impacts of selected hydropower projects. SST: REG 99033. Available online at www.adb.org Mali Senegal Water Charter (2002) Organisation pour la Mise en Manantali M. H. Horowitz, D. Koenig, C. Provides for principles and modality for water Valeur du Fleuve Sénégal Grimm and Y. Konate (1993) sharing between the different users of the (2002) Senegal Water Charter Resettlement at Manantali, Mali: Senegal River and the ways to examine and Available online at Short-Term Success, Long-Term approve new projects using or affecting www.lexana.org Problems. In M. Cernea and S. water. Guggenheim, Anthropological Organisation pour la Mise en Approaches to Resettlement: Valeur du Fleuve Sénégal Policy, Practice and Theory. (2006). Programme de Gestion Boulder: Westview Press. pp. 229- Intégrée des Resources en Eau 250. et de Développement des World Bank (2005) Usages à Buts Multiples dans Implementation Completion le Bassin du Fleuve Sénégal – Report on a Credit in the Amount Volume 2: Cadre Régional of SDR7.7 Million to the Republic Stratégique de Gestion of Senegal for a Regional Environnementale et Sociale Hydropower Development Project. Report N0 27482. Available online at www.worldbank.org U. Alam and O. Dione (2004) West-Africa – A Regional

111

Approach to Reducing Poverty in the Senegal River Basin. Presentation at the Scaling Up Poverty Reduction: A Global Learning Process and Conference in Shanghai, May 2004.

www.omvs.org

Global Environment Facility (undated) Senegal River Basin Water and Environmental Management Project, Project Brief. Available at www.gefonline.com

Nepal Land Acquisition Act 2034 and Land ADB (1998) Handbook on Kali Gandaki Nepal Electricity Authority, Acquisition Guidelines 2045 resettlement: A Guide to Good Environmental and Social Studies Provides compensation to private landowners Practice, available online at Department (ESSD) (2003?) Kali through a Compensation Fixation Committee www.adb.org/documents/hand Gandaki Post Construction book/resettlement Environmental Impact Audit Study

Kali Gandaki ‘A’ Associates, Morrison Knudsen Corp., Norconsult Int’l and IVO International Ltd (1996) Kali Gandaki ‘A’ Hydroelectric Project Detailed Design, Mitigation Management and Monitoring Plan Nepal Electricity Authority (1993) Arun-3 Arun III Hydroelectric Project Staged Development, Acquisition, Compensation and Rehabilitation Plan.

112

Middle MMHEP Neighbourhood Support Marsyangdi Program (2004) Supporting people driven development: Cumulative Progress Report, April 30, 2004

Pakistan The Land Acquisition Act (1894, with WAPDA (1994) Ghazi-Barotha Ghazi Barota World Bank (2004) Ghazi Barotha subsequent amendments) Hydropower Project, Implementation Completion Sections 23 to 24 describe criteria to be Resettlement Action Plan Report Report No 28781 followed or not in arriving at appropriate compensation. ADB (1998) Handbook on WAPDA (1994) Ghazi-Barotha Each province has its own application and resettlement: A Guide to Good Hydropower Project, Resettlement interpretation of the Act. Generally, Practice, available online at Action Plan compensation rates are set through an www.adb.org/documents/hand officially determined registered market value book/resettlement Tarbela Asianics Agro-Dev. International which draws upon past market prices and (Pvt) Ltd. (2000) Tarbela Dam, might not reflect the current market cost. Indus River Basin, Pakistan. A Case Study prepared for the World Commission on Dams. The World Commission on Dams CD-Rom. Philippines Executive Order 1035 (1985) ADB (1998) Handbook on Mahagnao International Energy Agency Sections 17 and 18 provide for resettlement resettlement: A Guide to Good (2005, Draft) Implementing of tenants, farmers and other non-titled Practice, available online at Agreement for Hydropower occupants and compensate for lost crops of www.adb.org/documents/hand Technologies and Programmes, displaced tenants, cultural communities and book/resettlement Annex VIII – Hydropower Good settlers. Practice: Environmental Mitigation Measures and Benefits (Draft). Philippines Constitution (1987) Japan: New Energy Foundation. Provide basic policy for land and requires just

compensation for expropriation of private

property by the State.

Republic Act No. 7279 (1992) on Urban Development and Housing Sets the grounds, procedures and requirements for eviction of squatters from land required for an infrastructure project.

113

Republic Act 7160 of 1992 Allows local government to exercise eminent domain on payment of just compensation.

Republic Act 7638 of the Department of Energy (1992) Directs that a share of the electricity sales be directed to a Development and Livelihood Fund and environmental improvements.

South Africa National Water Act (1998) Smithers and al. (2006) The Komati Dlamini, E.D. (2006) Decision Specifies a two component Reserve, first to development of dam operating (Driekoppies dam support systems for managing the provide water supply for human needs and rules framework for the ACRU and Maguga dam ) water resources of the Komati secondly to provide protection for model to satisfy the River Basin, Paper presented at ? downstream channels and ecosystem requirement of the National Conference: Enhancing equitable Water Act in South Africa, livelihood benefits of dams using Paper presented on the decision support systems at Working conference on Adema/Nazareth, Ethiopia Enhancing Equitable Livelihoods Benefits of Dams www.kobwa.co.za using Decision Support System in Ethiopia, January 2006 Lesotho Highlands For Lesotho Highland Water Water Project Project, see Lesotho J. Heyink Leestemaker (Muela dam, (undated) An analysis of the Mohale dam and new national and sub national Katse dam) Water Laws in Southern Africa: Gaps between the UN- Convention, the SADCprotocol Orange River World Commission on Dams and national legal systems in Development Secretariat (2000) Orange River South Africa, Swaziland and Development Project, South Mozambique available at Africa. A Case Study prepared for www.waterpage.com the World Commission on Dams. The World Commission on Dams CD-Rom.

114

Thailand Thailand has no resettlement policy. EGAT ADB (1995) Involuntary Pak Mun Operations Evaluation Department prepares a resettlement strategy for each new Resettlement. Policy Papers. of the World Bank (1998) Recent project Available online at Experience With Involuntary www.adb.org. Resettlement : Thailand – Pak Mun

Amornsakchai, S.et al. (2000) Pak Mun Dam, Mun River Basin, Thailand. A Case Study Report prepared for the World Commission on Dams.

Chiew Larn International Energy Agency (2005, Draft) Implementing Bhumibol Agreement for Hydropower Technologies and Programmes, Annex VIII – Hydropower Good Practice: Environmental Mitigation Measures and Benefits (Draft). Good Practice Reports. Japan: New Energy Foundation. Vietnam Land Law of 1993 ADB (1998) Handbook on Song Hinh International Energy Agency States that land belongs to the people, with Resettlement: A Guide to Good (2005, Draft) Good Practice the State as its sole administrator. The State Practice, available online at Report. Japan: New Energy determines the value of land for purposes of www.adb.org/documents/hand Foundation. taxes and compensation. book/resettlement

Decree 90/CP of 1994 Sets compensation levels for recognised users. Illegal land users are not compensated. Compensation provides an alternative piece of land of a similar class, or else cash compensation according to the class and type of land. The value will be determined according to the government price scale.

115

Bilateral Lending Agencies48 Bilateral lending agencies who are members of the OECD follow, in principle, the OECD/DAC guidelines (see International Associations, Agencies and Organisations above) ACDI-CIDA - www.acdi-cida.gc.ca Rehabilitation of CIDA-Industrial Co-operation Program Canadian the Warsak Hydro (INC) Guidelines on contribution to new International Electric Power dam projects (2005) Development Station. (Pakistan,) Agency Canadian Partnership Branch (CPB) requires the conduct of a preliminary assessment of impacts including resettlement plan of communities to World Bank standards.

AFD - Agence La Charte du Groupe (2004) www.afd.fr Nam Theun II See Laos above Française pour le Provides for AFD commitments toward social (Laos) Développement responsibility

AusAID – Ausaid (2005) Review of Nam Nam Theun II See Laos above Ausaid shows deference to WCD’s findings Australian Aid Theun II Hydroelectric Dam, (Laos) Agency Environmental Management Guide for Lao PDR available at Australia’s Aid Program 2003 www.ausaid.gov.au

Environmental Management plan required maximising affected population benefits form Ausaid (2003) Environmental the activity Management Guide for Australia’s Aid Program available at www.ausaid.gov.au

DANIDA - Danish DANIDA (2000) Water Energy Sector Policies International Resources Management. Danida will not support large hydropower Development Available online at dams Agency www.amg.um.dk

48 Research covered the following agencies : ACDI-CIDA, AfD, DANIDA, DFID, GTZ, KfW, SIDA, USAID, JICA, JBIC, OPIC, Directorate General for Development Co- operation (Dutch Ministry of Foreign Affairs), Directorate General for Development Co-operation (Italian Ministry of Foreign Affairs).

116

DFID - United DFID (1997) Eliminating Victoria (Sri- White Paper on International Development Kingdom World Poverty – A Challenge Lanka) (1997) Department for for the 21st Century, White International Promotes Sustainable Livelihood Approach. Paper on International Development A livelihood is sustained when natural Development capital, human capital(skills, knowledge, health), social capital, physical capital Carney, Diana, ed. (1998) (infrastructure and production equipment) and Sustainable Rural Livelihoods, financial capital are maintained or enhanced. what contribution can we make, paper presented at DFID Second White Paper on International conference July 1998 Development (2002) DFID (2002) Better Promotes Sustainable Livelihood Approach. Livelihoods for Poor People: The Role of Land Policy Available online at www.dfid.gov.uk

Moorhead, DFID, ESCOR Unit (undated) Poverty Elimination: the role of economic and social research. Available online at www.dfid.gov.uk

GTZ – German GTZ aims to implement the World GTZ-KfW (2004) Pak Mun See Thailand above Corporation for Commission on Dams principles in a country- Implementation of the WCD (Thailand) International appropriate manner via dialogue with its recommendation within See Brazil above Cooperation partners. German Development Tucurui (Brazil) Cooperation. Available online See Brazil above at www.gtz.de Salto Caixas (Brazil)

ERDESU S.A. (Ecuador)

117

KfW – German KfW verifies compatibility of dam project GTZ-KfW (2004) Ghazi Barotha see Pakistan above Bank for with the World Commission on Dams Implementation of the WCD (Pakistan) Development recommendations. recommendation within Middle Marsyangdi German Development (Nepal) see Nepal above Cooperation. Available online Naga Hammadi at www.gtz.de (Egypt)

JICA- Japan JICA Guidelines for Environmental and JICA (2004) JICA Guidelines Upper Seti (Denali) International Social Considerations (2004) for Environmental and Social (Nepal) Coopperation In cases of resettlement or relocation, Considerations. Available Agency proponent must make an effort to improve online at www.jica.go.jp standard of living, income opportunities and production level of people affected or at least restore them to pre-project level. Measures to achieve this may include providing land and monetary compensation, supporting the means for an alternative livelihood, providing expenses necessary for relocation and reestablishment of community. USAID- United Policy Framework for Bilateral Foreign USAID Policy Framework for Aswan Dam States Agency for Aid Bilateral Foreign Aid. (Egypt) International Guidelines on Environmental Impact Available online at Tarbela Dam Development Assessment address resettlement issues. www.usaid.gov (Pakistan) See Pakistan above

SIDA –Sweden Sustainable Energy Services for Poverty SIDA (2005) Sustainable Song Hinh See Vietnam above International reduction (2005) Energy Services for Poverty (Vietnam) Development Sida follows as far as possible the WDC’s Reduction. Available online at Agency recommendations for planning construction www.sida.se and resettlement

SDC - Switzerland SDC has adopted the Integrated Water www.deza.ch Development Co- Resources Management (IWRM) approach operation Water 2015 (2005)

118

SDC is opposed to financing large-scale dam SDC (2005) Water 2015 : projects but can be involved in rehabilitation Policy Principles and Strategic of existing schemes. SDC insists on Guidelines for Integrated appropriate compliance with World Water Resources Management. Commission on Dams Guidelines. Available online at www.deza.ch

Multi-lateral Lending Agencies49 African Involuntary Resettlement Policy (2003) www.afdb.org Lupohlo–Ezulwini Development Bank Replaces Guidelines on Involuntary (Swaziland), (AfDB) Displacement and Resettlement (1995). AfDB, Operation Evaluation One policy objective is to ensure that Department (1998) Review of M’Bali (Centre- displaced people received resettlement the Bank Experience in the African Republic) assistance in order to improve their standards financing of dam projects. of living, income earning capacity and Available online at Mape, (Cameroun) production levels. Displaced persons (with www.afdb.org legal rights or with customary recognition) Rwegura (Burundi) should be compensated at full replacement cost. Occupants of project area with no legal or recognised rights should be eligible to resettlement assistance (such as land, housing and infrastructure).

Asian Development Policy on involuntary Resettlement (1995) ADB (1998) Handbook on Kali Gandaki See Nepal above Bank (ADB) In case of resettlement, people should be : Resettlement: A guide to good (Nepal) - compensated for lost assets and loss of practice. Available online at income and livelihood; www.adb.org Theun Hinboun See Laos above - assisted for relocation ; (Laos) - assisted so that their economic and social future will generally be at least as Ghazi Barotha See Pakistan above favourable with the project as without it; (Pakistan) - provided with appropriate land, housing,

49 Survey of the following Multilateral Agency was done : The Islamic Development Bank, the Asian Development Bank, the Inter- American Development bank, The African Development Bank, the World Bank, the International Finance Corporation and the European Bank for Reconstruction and Development.

119

infrastructure, and other compensation, comparable to the without-project situation; - fully informed and closely consulted on resettlement and compensation options. The Policy also specifies that lack of formal legal title to land is not a bar to compensation and other assistance. It further requires that ADB assist the government and other project sponsors to: - adopt and implement the objectives and principles of the Policy within their own policy, legal, administrative and institutional frameworks; - build and strengthen developing member countries’ (DMC) capacities and national frameworks for resettlement.

EBRD – European Environmental Policy (2003) EBRD (2003) Environmental Enguri Bank for Project must meet IFC Guidelines on Policy. Available online at rehabilitation Reconstruction and Involuntary Resettlement www.ebrd.com (Georgia) Development IFC - International IFC Policy and Performance Standards on IFC (2006) IFC Policy and Finance Social and Environmental Sustainability– Performance Standards on Corporation Performance Standard No.5 Land Acquisition Social and Environmental and Involuntary Resettlement (2006) Sustainability – Performance Displaced persons and communities will be Standard No 5 Land compensated for loss of assets at full Acquisition and Involuntary replacement cost and will be provided other Resettlement. Available online assistance to help them improve or at least at www.ifc.org restore their standards of living. Compensation in kind will be offered in lieu of cash compensation where feasible. Where livelihoods of displaced person are land-based, or where land is collectively

120

owned, they will offer land-based compensation, where feasible. In case of persons with no formal land title, they will be compensated for asset loss and will be offered a choice of options for adequate housing with security of tenure. If land acquisition causes loss of income or livelihoods, people should be promptly compensated at full replacement cost. Transitional support base should be provided on reasonable estimate of time required to restore income earning capacity, production levels and standards of living. Inter American Involuntary Resettlement Operational IDB (1998) Involuntary Arenal (Costa- W. Partridge (1993) Successful Development Bank Policy (OP-710) (1998) Resettlement, Operational Rica) Involuntary Resettlement: Lessons (IDB) Compensation and rehabilitation are deemed Policy and background Paper. from Costa-Rica Arenal fair and adequate when, within the shortest Available online at Hydroelectric Project. In M. possible period of time, the resettled and host www.iadb.org Cernea and S. Guggenheim, population will : Anthropological Approaches to - achieve a minimum standard of living Resettlement: Policy, Practice and and access to land, natural resources and Theory. Boulder: Westview Press. services at least equivalent to pre- pp.351-374. resettlement conditions; - recover all losses caused by transitional Annex I of J. Milewski et al. hardship; (1999) - experience as little disruption as possible Yacyreta in their social networks, opportunities for (Argentina/ See Argentina above employment or production and access to Paraguay) natural resources and public facilities; - have access to opportunity for social and Playas (Columbia) economic development. La Fortuna When indigenous communities or low income (Panama) minorities are involved, the resettlement

must: Salto Grande - result in direct benefits in comparison (Argentina/ with prior situation; Uruguay)

121

- customary rights will be fully recognised and fairly compensated; - compensation option will result in land base resettlement.

World Bank Operational Policy on Involuntary World Bank (2004) Xiaolangdi (China) See China above Resettlement (OP/BP 4.12) (last revised in OP/BP 4.12 - Involuntary Shuikou (China) See China above 2004) Replace OD 4.21 on Involuntary Resettlement available online Resettlement (1999) which replaced O.D. at www.worldbank.org Yantan (China) See China above 4.30 on Involuntary Resettlement (1990) Chiew Larn See Thailand above One objective of this policy is to provide World Bank (2004) Water (Thailand) sufficient resources to enable the persons Resources Sector Strategy displaced to share in project benefits. available online at Pak Mun See Thailand above « Resettlement activities should be conceived www.worldbank.org (Thailand) and executed as sustainable development programs ». « Displaced persons should be Nam Ngun (Laos) See Laos above meaningfully consulted and should have Nam Theun 2 See Laos above opportunities to participate in planning and (Laos) implementing resettlement programs ». Lesotho Highland Another objective is to assist displaced See Lesotho above persons «in their efforts to improve their Water Project livelihoods and standards of living or at least (Lesotho) to restore them, in real terms, to pre- Saguling and Cirata See Indonesia above displacement levels or to levels prevailing (Indonesia) prior to the beginning of project implementation, whichever is higher ». Akosombo (Ghana) See Ghana above Kpong (Ghana) See Ghana above Upper Krishna See India above (India)

Manantali See Mali above (Senegal/Mali)

122

Other Lending Agencies Coface – France’s Environmental Guidelines (2003) www.coface.com export credit Uses criteria based on the work of ICOLD, agency the IEA, the WCD and World Bank’s Operational Guidelines

ECGB – United Activities take into account the DFID White www.ecgb.gov.uk Muela Hydropower See Lesotho above Kingdom Export Paper on International Development Project (Lesotho Credit Guarantee Highlands) Department Ilisu (Turkey) Morvaridi, B. (2003) Social Review of the Ilisu Dam Resettlement Action Plan. Available online at www.ecgd.gov.uk

Turkwell Gorge (Kenya) Pergau (Malaysia) Hydri (Thailand) Mini Hydros (Thailand) Natha Jhakri (India)

EIB-European EIB Social Assessment Approach (2004) EIB (2004) The Social Lesotho Highlands See Lesotho above Investment Bank Refer to safeguard policies of World Bank, Assessment of Project in Water Project Asian Development Bank and African Developing Countries: The Nam Theun II See Laos above Development Bank approach of the European (Laos) Investment Bank available at

www.eib.org Naga Hammadi

(Egypt)

Maguga (Komati) See South Africa above (South Africa)

123

ERG – ERG Guidelines for assessing www.swiss-erg.com Switzerland’s environmental and social issues export credit States that it should be demonstrated to what agency extent the recommendation of the WCD will be met

HSBC Freshwater Infrastructure Sector HSBC (2005) Freshwater Shaanxi Ankang Guideline (2005) Infrastructure Sector Guideline Xunyang Will not provide financial assistance to dams available at www.hsbc.com Hydropower Plant that do not conform with the WCD (China) Framework

JBIC – Japan Bank Japan Bank for International Co-operation JBIC (2002) Japan Bank for Kali Gandaki See Nepal above for International Guidelines for Confirmation of International Cooperation (Nepal) Co-operation Environmental and Social Considerations Guidelines for Confirmation of (2002) Environmental and Social Ghazi Barotha See Pakistan above Unified guidelines of two previous Considerations. Available (Pakistan) environmental guidelines applied to online at www.jbic.go.jp International Financial Operations and Overseas Economic Co-operation Operations respectively. The Guidelines have been in force since October 1, 2003 Proponent must make an effort to improve standard of living, income opportunities and production level of people affected or at least restore them to pre-project level measures to achieved this may include providing land and monetary compensation, supporting the means for an alternative livelihood, provide expenses necessary for relocation and reestablishment of community. Nordic Investment No information on compensation policy Urrá-1 (Colombia) See Colombia above Bank available on their website at www.nib.org

124

OPIC – Overseas OPIC Environmental Standards OPIC (2004) OPIC Private Investment For projects involving large dams, OPIC has Environmental Handbook. Corporation (U.S. adopted and implemented those elements of Available online at agency) the WCD policy that inform good public www.opic.gov policy and that are within OPIC’s capacity to implement. OPIC apply categorical prohibition on large dams contained within Appendix F of this environmental handbook including project that displace more than 5000 person and project that would have an adverse impact on local inhabitant livelihoods. For dam projects to be eligible for further consideration, EIAs prepared for hydroelectric and irrigation projects should, at a minimum, address issues cited in the International Finance Corporation’s Application of EA to Large Dam and Reservoir Projects. OPIC’s assessment also includes an evaluation of potential for income restoration and compensation in the case of resettlement.

Exim Bank – Environmental Guidelines - Table 9: www.exim.gov Export Import Bank Hydropower and water resource of United States management Encourages project participant to address, to the extent practical, relevant principles contained in the final report of the WCD. Resettlement Action Plan must be developed in accordance with host-country regulation and World Bank Group Guidelines such as the Operational Policy on Involuntary Resettlement

125

Utilities Hydro-Québec Integrated Enhancement Policy (1990 and Roux and Seelos (2004) Sainte-Marguerite- Milewski, J. and Corfa, G. (1998) subsequent amendments) Building on partnership with 3 Sainte-Marguerite-3 Hydroelectric Dedicates 1% of a project total investment aboriginal communities in The Development – Case Study No.2. capital to finance communities projects to International Journal on Presented to E7 Seminar on Social improve environment and community Hydropower & Dams, Issue 4 Trust and Public Confidence . development February 1998

Partnership with local communities Hydro-Québec International and Whenever it is economically feasible, Hydro- Vincent Roquet & Associates Inc. Québec proposes a partnership with local (2004) Quality Management of communities affected by new projects, Safeguards in Dam Projects, Final including Indigenous communities and Report – Volume 2: Database. nations. Local communities are able to invest Report presented to The World directly in the projects. Profits are distributed Bank. among the partners in proportion to their share of the working capital. Toulnustouc Roux, D. and K. Seelos (2004) Building on partnership with Minashtuk aboriginal communities in The International Journal on Hydropower & Dams, Issue 4

International Associations, Agencies and Organisations ICOLD-CIGB – Position Paper on Dams and Environment ICOLD (1997) Position Paper International (1997) on Dams and Environment Commission on States that resettlement must result in “ a www.icold-cigb.org Large Dams clear improvement” of resettled communities living standards.

European Union Follows OECD Guidelines Rew, A., E. Fisher and B. Pandey (2000) Addressing Resolution on Indigenous Peoples within the Policy Constraints and Framework of the Development Co-operation Improving Outcomes in of the Community and member States (1998) Development-Induced

126

Indigenous people have the right to choose Displacement and their development paths and can refuse Resettlement Projects. A development project on their traditional land. review prepare for ESCOR and They should be compensated when project the Refugee Studies Centre, negatively affect their livelihoods. University of Oxford. Available online at www.reliefweb.int.

IEA – International Hydropower Agreement for Hydropower IEA (2000) Hydropower and Energy Agency Technologies and Programmes the Environment – Present States that “proponents must ensure that Context and Guidelines hydropower projects result in improved www.iea.hydro.org standards of living for affected people”

IHA - International Sustainability Guidelines (2004) IHA (2004) International Hydropower Point 6 on Social Aspects of Sustainability Hydropower Association Association addresses compensation issues and Sustainability Guidelines in community acceptance issues among others. CD-Rom Sustainable The objective is to ensure that livelihoods of Hydropower website displaced groups (and host communities where applicable) are improved or re- established at no disadvantage. People affected include persons displaced by the project itself or by associated infrastructures, upstream and downstream communities affected by loss of livelihoods and those who depend on common resources such as forests or land. Project affected people should be compensated in a timely manner. A negotiated and agreed outcome should be achieved wherever possible but compensation standards should apply to all groups whether they agreed or not. Regional and local resources (including labour) should be used in project construction and operations.

127

OECD/DAC – Guidelines on Aid and the Environment, OECD/DAC (1992) Organisation for Guidelines No 3 : Guidelines for Aid Guidelines on Aid and the Economic agencies on Involuntary Displacement and Environment Cooperation and Resettlement in Development Projects Development / (1992) Development Provides for compensation of losses at Assistance replacement cost and assistance during Committee transition period. Displaced people should be assisted in their efforts to improve their former living standards or at least to restore them. OCDE (2005) Arrangements Recommendation on export Credit and the on Officially Supported Export Environment (2003) (‘Common Credits Available at Approaches’) www.ocde.org Provides for benchmarking against the World Bank Safeguard Policy on Involuntary Resettlement (OP/BP 4.1.2 and OD 4.30)

Agreement on Special Financial Terms and Conditions for Renewable Energies and Water Project (2005) Same criteria as 2003, for trial until June 2007

SADC – South Protocol on Shared Watercourse Systems SADC (1995) SADC Protocol African (1995) on Shared Watercourse Development Members sharing a water course shall Systems. Available online at Community establish a co-operation in the pursuit of a www.sadc.int project on such watercourse. Members shall Leestemaker, J. (undated ) An use shared watercourse in an equitable analysis of the new national manner, taking into consideration the social and sub national Water Laws and economic needs of the member states. in Southern Africa: Gaps

128

between the UN-Convention, the SADC protocol and national legal systems in South Africa, Swaziland and Mozambique. Available online at www.waterpage.com

UNDP - United United Nations Development Assistance United Nations Development Nation Framework Assistance Framework. Development The main goals are promoting gender- Available online at Program equality and strengthening decentralisation www.un.org.in/undaf.htm

UNCHR - United The Practice of Forced Evictions: UNHCR (1997) The Practice Nations Comprehensive Human Rights Guidelines of Forced Evictions: Commission on on Development-Based Displacement Comprehensive Human Rights Human Rights (1997) Guidelines on Development- All persons and communities have the right to Based Displacement suitable resettlement which includes the right to secure, safe, affordable and accessible housing. Resettlement must ensure equal rights to vulnerable groups. FAO – Food and Environmental Guidelines for Burbridge, Norgaard and Agriculture Resettlement Projects in the Humid Hartshorn (1988) Organisation Tropics (1988) Environmental Guidelines for Assist in identifying potential adverse effects Resettlement Project in the on the environment and in identifying ways Humid Tropics. to mitigate them. Projects are less likely to be sustained when the socio-economic well- being of local people is disrupted and they do not benefits from the project.

UNEP-DDP - UNEP-DDP Vision Available online at United Nation www.unep.org/dams/ Environment Program - Dams

129 and Development Project WCD - World Set of Guidelines for Good Practice, World Commission on Dams Commission on Guideline 19 : Implementation of the (2000) Dams and Dams Mitigation, Resettlement and Development Development: A New Action Plan (2000) Framework for Decision- A Mitigation, Resettlement and Development Making. World Commission Action Plan should be negotiated with on Dams CD-Rom. London: affected people and could include a benefit Earthscan Publications Ltd. sharing mechanism.

The Equator The Equator Principles www.equator- Principles The Equator Principles are a framework for principles.com/principles.shtm financial institutions to manage l environmental and social issues in project financing. For projects involving involuntary resettlement (Category A projects), a mitigation and action plan should be addressed in an Environmental Management Plan

130