Greater Mekong Subregion Nam Ngum 3 Hydropower Project (RRP LAO 41385)

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country: Lao People’s Project Greater Mekong Subregion Nam Ngum 3 Hydropower Project Democratic Republic Title:

Lending/Financi Project Department/ Energy Division (SEEN) ng Modality: Division: Southeast Asia Department (SERD)

I. POVERTY ANALYSIS AND STRATEGY A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The project is aligned with both the country strategy and program and the 7th National Socio Economic Development Plan (NSEDP), 2011–2015 of the Government of the Lao People’s Democratic Republic (PDR), which reaffirm poverty reduction and an accelerated pace of social development as long-term goals. The government sees hydropower as the major contributor to economic growth by boosting national revenues for poverty reduction and the equitable development of poorer provinces and districts. Hydropower is a key industry in terms of investment value and its contribution to economic growth and government revenue and export earnings through dividends and royalties. The Lao PDR has an estimated hydroelectric potential of 26,500 megawatts (MW), excluding the Mekong mainstream. Of this, 18,000 MW is theoretically technically exploitable. About 14% of this potential has been developed since the mid 1970s. The government has signed commitments to supply, by 2020, 7,000 MW to Thailand, 5,000 MW to Vietnam. Additionally, Lao domestic consumption is increasing at a rate of 8%–10% annually. The project is in the poorest provinces of the northern region—Xieng Khouang and Xaysomboun, the latter now amalgamated with Vientiane—which are the focus of poverty reduction efforts under the 7th NSEDP. One implementation district, Xaysomboun, is classified as one of the poorest in Laos. The 7th NSEDP intends to strengthen links between poverty reduction and environmental management, which will be important for the project, and for sound social and environmental management, by harmonizing project activities with other hydropower and mining projects in the river basin through the government’s Nam Ngum River Basin Organization. Links between poverty reduction and strengthening environmental management capacity, a priority of the country strategy and program, will additionally be made through natural resource conservation in an integrated watershed management program.

B. Poverty Analysis Targeting Classification: General Intervention (GI) Key issues. Poverty in the Lao PDR has strong correlation with geography and ethnic identity. While poverty in the country has declined, 58% of households in northern provinces are poor, compared with 4.4% in Vientiane. This is partly because of mountainous terrain and difficult access, and partly because of the higher proportion of ethnic minorities in these areas. Poverty incidence among ethnic minorities in the Lao PDR is 40%–55%, higher than the 29% of the majority Lao–Tai population. The project is expected to generate significant, continuing revenues to the government in the form of dividends, taxes, and royalties. As these revenues will be disbursed from government central revenues to the provinces, poor communities in these provinces will indirectly benefit from targeted poverty reduction expenditures on health care, education, rural roads, environmental protection, and rural electrification. Design features. Directly and indirectly affected communities will benefit from improved access to markets, secondary education, and health-care facilities with the provision of all-weather roads. Xaysomboun's economy will be significantly affected, generating net benefits in the form of accelerated economic growth, new jobs and business opportunities. Construction activities will generate employment opportunities for Lao nationals with many more jobs expected in support services and the provision of food and other agricultural products to construction workers. Currently limited health-care infrastructure and services will be upgraded, improving year-round access to better-quality services in affected areas specifically in two villages Long Cheng and Xiengdet C. Poverty Impact Analysis for Policy-Based Lending 1. Not applicable I. SOCIAL ANALYSIS AND STRATEGY A. Findings of Social Analysis Key issues. The project has undertaken comprehensive social analysis, prepared detailed plans, and conducted participatory consultations to minimize and manage environmental and social risks. An environmental and social impact assessment has been conducted describing the risks and benefits of the project. Affected households in project areas are mainly of the Hmong and Khmu ethnic groups. These groups traditionally depend heavily upon natural resources for their food security, nutritional needs and livelihoods. Only 3% of the total land area of villages in the peri-reservoir area will be affected by the seasonal flooding due to reservoir inundation and impacts to income and livelihoods from collection of non- timber forest products (NTFP) and fishing is expected to be less than ten percent. Numerous planning documents have been prepared based on the feasibility design, including the resettlement and ethnic minority development plan (REMDP). The

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REMDP covers the following impact areas: dam and power station site and project construction lands, peri-reservoir villages, upstream and downstream areas, access roads, and the transmission line from the power station to Nabong substation. As detailed in the REMDP, the project will provide compensation and inputs to restore the livelihoods of affected people to higher than pre-project conditions, and to improve health care, housing, and community infrastructure. Livelihood development strategies are linked to conservation through natural resource in a watershed management in an integrated program. As there are ethnic minorities in the project impact areas, the REMDP has a gender action plan (GAP), construction social management plan (CSMP), and a public health action plan (PHAP). The CSMP includes a local labor recruitment policy, code of conduct for workers, a social management and mitigation program for camp followers and camp service providers, and awareness campaigns on human trafficking and sexually transmitted diseases (STD) such as human immunodeficiency virus. The planning, implementation, and evaluation of development activities is participatory, involving affected people and other stakeholders in all aspects of decision making. Comprehensive and continuous consultation will continue through the project cycle, using participatory planning with affected communities and households to determine how affected people will receive entitlements under resettlement and livelihood restoration, and manage grievances. B. Consultation and Participation 1. Provide a summary of the consultation and participation (C&P) process during project preparation. While communities have been aware for more than 10 years that a project would be undertaken, delays in finalizing the project have extended the consultation process, which formally started in 2007 with workshops and meetings with village, district, provincial, and national stakeholders. The C&P has been well documented to date, and future consultation and participation is described in the communication and consultation plan, an annex of the REMDP. Discussions with the government and the Nam Ngum River Basin Organization concerning the broader, basin-wide impacts of multiple development activities are described in the Public Consultation and Disclosure Report (Annex B, REMDP). Consultation methodologies vary, depending on the objectives, the audience, language differences, gender biases, and literacy factors. For physically displaced ethnic groups in Ban Xiengdet, consent has been secured through village meetings and individual household consent forms and documented in the REMDP. 2. What level of C&P is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment 3. Was a C&P plan prepared for project implementation? Yes No C. Gender and Development Gender Mainstreaming Category: EGM 1. Key issues. Gender analysis indicates that 5%–6% of households in affected villages are headed by females. Key issues are (i) low literacy rates of ethnic minority women compared with men; (ii) poor health of ethnic minority women, considering heavy physical workloads, frequent pregnancies, poor hygiene and sanitation, and limited health-care facilities; (iii) livelihoods and the differing roles of men and women in the domestic economy of affected households; (iv) the low status accorded girls compared with boys and the risk of parents selling girls as domestic or sex workers. While the workers camps area approximately 10km away from existing villages and access is controlled by the military, the presence of large numbers of workers during construction can still pose risks of STDs and trafficking of women and children, and opportunistic marriages by outsiders to obtain local land rights. Land acquisition for the project will affect the work of both men and women in the mainly subsistence economy. 2. Key actions. As women from marginalized ethnic groups and disadvantaged households are more vulnerable and overburdened than others in the project area, a gender action plan has been prepared and gender-sensitive actions have been mainstreamed. A public health action plan has also been prepared with gender-specific health initiatives. The CSMP will also restrict the movement of workers, ensure that camp service providers are confined inside the workers, and enforce strict compliance to the Workers’ Code of Conduct which is applicable to all project and contractor staff. ADB's social protection requirements covering core labor standards will also be complied with as stated in the CSMP. Gender action plan Other actions or measures No action or measure III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Significant/Limited/ Plan or Other Measures Issue No Impact Strategy to Address Issue Included in Design Involuntary Significant, Category A: Less A Resettlement and Ethnic Combined resettlement plan resettlement than 200 households will be Minority Development Plan and indigenous peoples directly affected by physical (REMDP) has been prepared plan displacement and loss of to address impacts, including a agricultural land in Ban livelihood restoration plan. The Xiengdet and villages affected REMDP will be updated after by the public roads and detailed engineering design transmission line. Households has been completed for each

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in peri-reservoir, downstream, project component. and upstream areas will experience indirect economic impacts. Indigenous peoples Significant, Category A: The See above. As the majority of Combined indigenous majority of affected are from affected people are from ethnic peoples plan and poor ethnic groups, including minorities, the resettlement resettlement plan Khmu, Hmong, and Tai plan and indigenous peoples Phouan. Physical displacement plan has been integrated into of Khmu in Ban Xiengdet for one document. Other social which the Project has obtained plans are also integrated in the consent or broad support of REMDP. Ethnically diverse the community from the consultation and affected community. implementation strategies have been integrated into planning processes. Labor Management of workers’ A CSMP has been prepared Plan camps and camp followers. that includes arrangements to Employment Employment opportunities to develop (i) a Local Labor opportunities local people. Recruitment Policy that complies with the core labor Labor Contractors’ contracts with retrenchment standards, (ii) a detailed public sub-clauses for preferential health action plan (PHAP), Core labor affected families’ employment (iii) a Camp Follower standards Management Policy, and (iv) Workers’ Code of Conduct. Affordability None None Action No action

Other Risks and/or Significant. The labor influx The PHAP includes strategies Plan Vulnerabilities and large number of to address these risks, Other action spontaneous camp followers including occupational and No action HIV/AIDS will lead to more pressure on community health and safety, Human trafficking existing sanitation and health- human trafficking, STDs, HIV care facilities. Women may be and acquired immune Others (conflict, at risk of sexual exploitation deficiency syndrome (AIDS) political instability, and human trafficking might be management and awareness etc.) an issue. raising. CSMP has been prepared to address labor and working conditions as required in ADB’s Social Protection Strategy IV. MONITORING AND EVALUATION Are social indicators included in the design and monitoring framework to facilitate monitoring of gender and social development activities and/or social impacts during project implementation? Yes No Local employment indicators include the number of new jobs generated for local people and compliance with core labor standards. Social safeguard indicators include the number of affected people satisfactorily compensated and resettled, sustainable livelihoods in place, and incomes improved at least to the national poverty line. Health indicators include the incidence of maternal and child mortality, child wasting and stunting, and the most common diseases. Gender indicators include the ratio of girls to boys in school, literate men to women, share of women's wage employment outside of agriculture, and women named in statutory property ownership documents; staff capacity to mainstream gender into activities; gender balance in project organizational and implementation structures; women's participation in decision-making and consultations; and women's participation in livelihood support training.