Published by: Case Study Compensation and Livelihood Restoration at Nam Theun 2 Hydropower Project Network for Sustainable Hydropower Development in the Mekong Region Case Study Compensation and Livelihood Restauration at Nam Theun 2 Hydropower Project Case Study: Compensation and Livelihood Restauration at Nam Theun 2 Hydropower Project Page 5 Table of Contents 1 Introduction .................................................................................................................. 14 2 Case Study Scope ....................................................................................................... 23 3 Resettlement Policy Framework ................................................................................... 24 3.1 Involuntary Resettlement in Lao PDR ................................................................... 24 3.2 Donor Resettlement Policy .................................................................................... 25 3.3 Compensation ....................................................................................................... 26 3.4 Integrated Resource Development Plans for the Affected Population ................... 27 3.5 Indigenous People/Ethnic Minorities ..................................................................... 27 3.6 National Policy ...................................................................................................... 28 3.6.1 National Policy on Sustainable Hydropower ......................................................... 28 3.6.2 Compensation and Resettlement in Development Projects .................................. 28 3.6.3 Key Differences in Lao PDR Law and World Bank Policies .................................. 31 3.7 Legal Framework of NT2 Compensation Policy and Entitlements ......................... 31 3.7.1 The Constitution (August 14, 1991) ...................................................................... 32 3.7.2 The Land Law (October 21, 2003) ....................................................................... 32 3.7.3 Land Titling Legislation ........................................................................................ 32 3.7.4 The Road Law (April 3, 1999) .............................................................................. 33 3.7.5 Nam Theun 2 Resettlement Policy ....................................................................... 33 3.7.6 Resettlement Committee Regulations .................................................................. 33 3.7.7 ADB and World Bank Operational Procedures ..................................................... 34 3.7.8 The Concession Agreement ................................................................................. 35 3.7.9 General Principals of Compensation and Livelihood Restoration ......................... 35 4 Brief Introduction to the Nam Theun 2 Hydropower Project .......................................... 38 4.1 Background of the Project ..................................................................................... 39 4.2 Project Design and Operation ............................................................................... 40 4.3 Financing and Project Developers ........................................................................ 44 4.4 The Role of the WB and ADB in Supporting NT2 .................................................. 46 4.5 General Role and Benefits of NT2 in Lao PDR ..................................................... 47 4.5.1 Nam Theun 2 Revenue Management Arrangements ........................................... 48 4.5.2 Initial Resource Usage Charges........................................................................... 49 4.5.3 The Public Expenditure ........................................................................................ 49 4.6 NT 2 Social and Environmental Impacts and Monitoring and Evaluation ............... 50 4.6.1 Reservoir Area on the Nakai Plateau ................................................................... 50 4.6.2 Nam Theun Watershed ........................................................................................ 54 4.6.3 Xe Bang Fai Basin ............................................................................................... 54 Page 6 Case Study: Compensation and Livelihood Restauration at Nam Theun 2 Hydropower Project 4.6.4 The Nam Theun Basin ......................................................................................... 60 4.6.5 Other Project Lands ............................................................................................. 61 5 Implementation of Upstream Mitigation ........................................................................ 62 5.1 Implementation of Resettlement ............................................................................ 62 5.1.1 Government Structure for Compensation and Mitigation ...................................... 62 5.1.2 NTPC’s Resettlement Office ................................................................................ 64 5.2 Organisations Related to Resettlement and Compensation .................................. 65 5.2.1 Grievance Committee .......................................................................................... 65 5.2.2 Provincial Authorities ........................................................................................... 65 5.2.3 Lao Women’s Union ............................................................................................. 65 5.2.4 Consultants and Contractors ................................................................................ 66 5.2.5 NGO Involvement ................................................................................................ 66 5.3 Resettlement Process ........................................................................................... 66 5.3.1 Resettlement Stage 1: Consultation and Planning ............................................... 68 5.3.2 Resettlement Stage 2: Physical Relocation .......................................................... 70 5.3.3 Resettlement Stage 3: Livelihood Development ................................................... 74 5.4 Compensation in the Nakai Reservoir Area .......................................................... 74 5.5 Building New Livelihoods for the Resettled Nakai Communities ............................ 75 5.5.1 Pillar 1: Agriculture and Livestock ........................................................................ 76 5.5.2 Pillar 2: Community Forestry ................................................................................ 81 5.5.3 Pillar 3: Reservoir Fisheries ................................................................................. 85 5.5.4 Pillar 4: Off-farm Income ...................................................................................... 88 5.6 Household Income and Consumption ................................................................... 90 5.7 Education and Health ............................................................................................ 94 5.7.1 Education ............................................................................................................. 94 5.7.2 Health .................................................................................................................. 96 5.8 Community views .................................................................................................. 99 5.9 Capacities and Interests of the First and Second Generation of Resettled Families 102 5.10 The Handover Process ....................................................................................... 103 6 Implementation of Downstream Mitigation.................................................................. 105 6.1 Nam Theun Downstream .................................................................................... 106 6.2 Xe Bang Fai Downstream ................................................................................... 107 6.2.1 Mid-Term Review ............................................................................................... 107 6.2.2 Livelihood Improvement and Restoration ........................................................... 108 6.2.3 Village Restoration Fund .................................................................................... 112 6.2.4 Fish Catch Monitoring Programme ..................................................................... 114 Case Study: Compensation and Livelihood Restauration at Nam Theun 2 Hydropower Project Page 7 6.2.5 Water Supply, Sanitation, and Hygiene .............................................................. 115 6.2.6 Water Quality ..................................................................................................... 117 6.2.7 Riverbank Gardens ............................................................................................ 118 6.2.8 Handover of the Downstream Programme to the Government ........................... 118 7 Monitoring and Evaluation .......................................................................................... 120 8 Conclusion ................................................................................................................. 122 9 Lessons learned......................................................................................................... 124 10 Recommendations ................................................................................................. 128 11 Bibliography ..........................................................................................................