Managing Environmental and Social Impacts of Public Disclosure Authorized Hydropower in Bhutan Public Disclosure Authorized Public Disclosure Authorized Final Report June 15, 2016 Prepared in Collaboration between the Royal Government of Bhutan and the World Bank Public Disclosure Authorized 1617739_Hydropower_CH00_FM.indd 1 9/19/16 2:34 PM © 2016 World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org www.worldbank.org/hydro Twitter: @WBG_Energy Email: [email protected] All rights reserved This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. 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Cover Photos: Rikard Liden and Kimberly Lyon, World Bank. 1617739_Hydropower_CH00_FM.indd 2 9/19/16 1:47 PM Contents Acknowledgments vii Executive Summary ix Acronyms and Abbreviations xvi CHAPTER 1 INTRODUCTION 1 1.1 Background and objective 1 1.2 Methodology 2 CHAPTER 2 GEOGRAPHIC CONTEXT 3 CHAPTER 3 HYDROPOWER DEVELOPMENT IN BHUtaN 7 3.1 Hydropower development plans 7 3.2 Institutions 11 3.3 Policies 16 3.4 Current planning methodology 18 CHAPTER 4 ANALYSIS OF KEY ISSUES FOR MANAGEMENT OF ENVIRONMENTAL AND SOCIAL IMPACTS 21 4.1 Environmental impacts 21 4.2 Social impacts and cultural assets 37 4.3 Impacts of transmission lines 47 4.4 Construction-related environmental and social impacts 53 4.5 Beyond impacts to benefit sharing 55 4.6 Beyond impacts to sustainability 56 CHAPTER 5 DISCUSSION AND CONCLUSIONS 59 CHAPTER 6 RECOMMENDatiONS 63 6.1 Policy updates 63 6.2 Strategic roadmap for future hydropower projects 64 6.3 Sustainability guidelines for hydropower development 65 6.4 Capacity building for environmental and social clearance process 68 6.5 Baseline data studies essential for environmental and social management 71 iii 1617739_Hydropower_CH00_FM.indd 3 6/30/16 12:57 PM 6.6 Capacity building for compliance monitoring and audits 73 6.7 Prioritization and way forward 76 Appendix A EXISTING AND POTENTIAL HYDROPOWER IN BHUTAN 79 Appendix B GEOGRAPHICAL ANALYSIS OF POTENTIAL IMPACTS 81 Potential environmental impacts of hydropower facilities and transmission lines 81 Impacts on aquatic connectivity and river flow 81 Impacts on the protected areas network 82 Potential social impacts of hydropower facilities and transmission lines 83 Impacts on villages and social services infrastructure 83 Impacts on cultural assets 84 Summary 85 Appendix C RAPID INSTITUTIONAL ASSESSMENT FOR ENVIRONMENTAL AND SOCIAL MANAGEMENT OF HYDROPOWER 103 National Environment Commission (NEC) 103 Department of Hydropower and Power Systems (DHPS) 109 Druk Green Power Company (DGPC) 113 Gross National Happiness Commission (GNHC) 115 List of meetings held 116 References 117 Appendix D SUMMARIZED RESULTS OF HYDROPOWER SUSTAINABILITY PROTOCOL ASSESSMENT FOR MANGDECHHU HEP 119 The Hydropower Sustainability Assessment Protocol 119 Assessment of Mangdechhu Hydroelectric Project 120 List of Boxes Box 4-1 Upstream Hydropower Planning in the Coatzacoalcos Basin in Mexico 34 Box 4-2 More Strategic Approach to Maintaining Fish Biodiversity 35 Box 4-3 Leveraging the Benefits from Hydropower Development: Experience from Peru 46 Box 4-4 Impacts of Transmission Lines in the Alto Douro Wine Region 48 Box 4-5 Different Approaches to Benefit Sharing 55 List of Figures Figure 2-1 Major rivers of Bhutan 4 Figure 2-2 Topography of Bhutan 4 Figure 2-3 Protected areas of Bhutan 5 Figure 3-1 Cumulative development of hydropower in Bhutan 8 Figure 3-2 Identified project sites with studies in at least reconnaissance phase 9 Figure 3-3 Identified storage projects 10 Figure 3-4 Existing and planned transmission corridors 13 Figure 3-5 Primary stakeholders in the energy sector 13 iv 1617739_Hydropower_CH00_FM.indd 4 6/30/16 12:57 PM Figure 3-6 Factors and weights used in multi-criteria analysis for new hydropower development 19 Figure 4-1 Protected areas and corridors affected by existing and planned hydropower facilities 24 Figure 4-2 Affected river stretches for planned large hydropower up to 21,191 MW 25 Figure 4-3 Protected areas and corridors affected by existing and planned transmission line network 49 Figure 6-1 Sequencing of main recommendations and relationship to existing RGoB initiatives 77 Figure B-1 Affected river stretches for hydropower facilities, existing and under construction 86 Figure B-2 Affected river stretches for hydropower facilities, up to 10,000 MW Program “Plus” 87 Figure B-3 Affected river stretches for hydropower facilities, up to 21,191 MW 88 Figure B-4 Free-flowing river stretches for hydropower facilities, existing and under construction 89 Figure B-5 Free-flowing river stretches for hydropower facilities, up to 10,000 MW Program Plus 90 Figure B-6 Free-flowing river stretches for hydropower facilities, up to 21,191 MW 91 Figure B-7 Planned storage projects 92 Figure B-8 Protected areas and corridors affected by hydropower facilities, existing and under construction 93 Figure B-9 Protected areas and corridors affected by hydropower facilities, up to 10,000 MW Program Plus 94 Figure B-10 Protected areas and corridors affected by hydropower facilities, up to 21,191 MW 95 Figure B-11 Protected areas and corridors affected by existing transmission lines 96 Figure B-12 Protected areas and corridors affected by transmission lines, existing and under construction 97 Figure B-13 Transmission lines, existing and under construction 98 Figure B-14 Major rivers of Bhutan 99 Figure B-15 Topography of Bhutan 100 Figure B-16 Protected areas of Bhutan 101 Figure B-17 All identified project sites with studies at least at reconnaissance level 102 Figure C-1 Organizational chart for NEC 104 Figure C-2 Organizational chart for DHPS 109 Figure C-3 Organizational chart for DGPC 113 Figure C-4 Organizational chart for GNHC 115 Figure D-1 Sustainability profile 121 List of Tables Table 3-1 Existing and pipeline hydropower projects in Bhutan 8 Table 3-2 Hydropower projects in Bhutan—financing terms 12 v 1617739_Hydropower_CH00_FM.indd 5 6/30/16 12:57 PM Table 3-3 Key environmental laws, policies, and instruments for hydropower development 16 Table 3-4 Standard weights for the subcriteria used in the MCA 20 Table 4-1 Typical environmental impacts of hydropower plants 22 Table 4-2 River length affected by hydropower project 23 Table 4-3 E-flow prescriptions in the EIA reports for projects 29 Table 4-4 Fish impact mitigation measures in the EIA reports for projects 30 Table 4-5 Afforestation measures in the EIA/EMP reports for select projects 31 Table 4-6 Typical social impacts from hydropower plants 38 Table 4-7 Land acquisition under different projects 38 Table 4-8 Impact on vulnerable groups 39 Table 4-9 Cultural assets affected by hydropower projects 40 Table 4-10 Social impacts to be assessed according to Bhutan guidelines for environmental assessments 43 Table 4-11 Impacts beyond land requirements mentioned in EIAs 43 Table 4-12 Impact of existing and planned transmission lines on protected areas and corridors 49 Table 4-13 Impacts of transmission lines mentioned in EIAs 50 Table 4-14 Mitigation measures included in the EMPs for select transmission line projects 52 Table 4-15 Expected power generation and subsidy allocations 56 Table 6-1 Topics included in the hydropower sustainability assessment protocol 71 Table A-1 Hydropower development scenarios 79 Table B-1 Affected river stretches and reservoir area by scenario 82 Table B-2 Free-flowing river stretches by scenario 82 Table B-3 Impacts of hydropower facilities on protected areas and corridors by scenario 83 Table B-4 Impacts of transmission lines on protected areas and corridors by scenario 83 Table B-5 Impacts of hydropower facilities on villages by scenario 84 Table B-6 Impacts of transmission lines on villages by scenario 84 Table B-7 Impacts of hydropower facilities on schools and health facilities by scenario 85 Table B-8 Impacts of hydropower facilities on cultural assets by scenario 85 Table D-1 Table of significant gaps 121 vi 1617739_Hydropower_CH00_FM.indd 6 6/30/16 12:57 PM Acknowledgments his report is the output of Economic and Sector Work (ESW) requested by the Royal Government of Bhutan, under the leadership of the Ministry of Economic Affairs (MoEA), the National Environment Commission (NEC) and the Gross National Happiness TCommission (GNHC). Special gratitude is extended to the following officials: X From the MoEA: Dasho Yeshi Wangdi (Secretary); Sonam P Wangdi (Director General, Department of Hydropower and Power Systems or DHPS); Karma P Dorji (Chief Engineer, DHPS); Karma Tshewang (Chief Engineer, DHPS); Tashi Pem (Executive Engineer, DHPS); Sonam Tshering (Deputy Executive Engineer, DHPS); Sonam Dorji (Engineer, DHPS); Deshen Wangmo (GIS Specialist, DHPS); and Wangmo Wangmo (GIS Specialist, DHPS).