No More Dams on the Mekong

International New York Times | 3 September 2014

Credit Jean-François Mutzig/Biosphoto, via Agence France-Presse

BANGKOK — The Mekong River runs more than 4,000 kilometers, from China into Myanmar and then through Laos, Thailand, Cambodia and Vietnam, where it empties into the sea. Traditionally a major transport route and food source, it is also increasingly becoming a supply of energy — at its own peril and at the cost of instability among states in the region.

Several large dams already straddle the Mekong in China, and construction on more dams downstream is underway. Hydropower is a well-established source of renewable energy, and the countries of the lower Mekong see it as an attractive way to help meet their exploding energy demand while diversifying their energy portfolio. Over 80 percent of Thailand’s total energy consumption, for example, is satisfied with fossil fuels.

And so Thai, Malaysian, Chinese and Vietnamese developers and investors in the private sector have set out to build 11 dams on the Mekong’s main stem in Laos and Cambodia. Only about one-tenth of the power to be produced will go to the two host countries; the bulk will serve energy-hungry Thailand and Vietnam. Laos, the location of nine of these dams, is tapping the river, one of its few natural resources, to generate needed export revenues.

Energy security and economic development are legitimate goals, of course, but these main-stem dams were conceived with little regard for their environmental consequences and socioeconomic repercussions. The proposed dams will prevent sediment from the upper stretches of the Mekong River from reaching its delta, depriving rice fields in lower Vietnam of essential nutrients. They will also disrupt the migratory patterns of fish, which will endanger the stocks on which Cambodians, especially, rely for much of their protein intake.

Such prospects have already caused tensions, and have even strained relations among some governments in the region. Laos, for example, has proceeded with construction on the Xayaburi dam, the first in the main-stem series, over objections from the governments of Cambodia and Vietnam, which are concerned about the project’s impact on the environment and food security.

Formal mechanisms already exist to foster regional cooperation on this issue. The most prominent is the Mekong River Commission, which since 1995 has served as an important forum for the four countries of the lower Mekong to discuss how best to develop the river basin. The organization has also carried out extensive technical studies to advise policy makers. But with no real enforcement mechanism, it has so far been unable to resolve boundary disputes, including those over Xayaburi. The commission stands little chance of influencing the other dam projects.

It will not be possible to stop or even slow down construction of these main-stem dams without coming up with alternative sources of energy. Fortunately, there are other, and better, ways to generate power for the region.

Existing dams could be retooled to increase their efficiency and limit their environmental impact. Other options include developing small-scale hydro- power in Vietnam and solar power in Vietnam and Thailand. In fact, according to a recent study by the International Center for Environmental Management, an NGO, developing a thoughtful combination of renewables could supply several times as much energy by 2025 as the amount expected to be generated by the proposed dams. And improving energy efficiency and implementing conservation measures — say, to cut electricity consumption in large commercial buildings throughout Thailand — could mean substantial savings and help curb demand.

Yet innovative energy projects rarely seem attractive, or competitive, against large hydropower projects, partly for lack of substantial financial backing up front. And the mega-dams tend to attract too much support. They are capital-intensive, which means that they boost foreign direct investment and stimulate G.D.P. growth (at least temporarily). They also allow host governments to collect money quickly by granting construction rights to private developers. And in countries where the rule of law is weak, they provide opportunities for skimming and cronyism.

But proponents of large dams almost always underestimate the environmental costs while overestimating the rates of return. And such projects can spur get-developed-quick schemes at the expense of broad social and economic progress.

A better approach — one that recognizes both the legitimate energy needs of the lower Mekong countries and the environmental and social costs of Big Hydro — would be to create an investment fund to finance the large-scale development of alternative forms of energy.

This sustainable-energy fund could be partly modeled after the Global Fund to Fight AIDS, Tuberculosis and Malaria. Like the Global Fund, it would pool resources among governments, foundations and the private sector. But unlike the Global Fund, which gives grants to various types of actors, this fund would finance only public-private joint ventures. The government partners would grant the necessary concessions and regulatory authorizations; the private partners would handle the implementation of the energy projects, including the construction of infrastructure.

Access to the fund would be conditional on the government partners’ willingness to adopt sustainable-development guidelines akin to the Equator Principles. As an incentive for governments to undertake such wide-ranging commitments (and abandon some lucrative deals), the fund should give out major grants; thus it must be endowed with several hundred million dollars. Big start-up grants could also be leveraged by the joint ventures to secure even bigger loans, allowing them to rapidly gain a foothold in the market and so stand a chance against main-stem hydropower projects.

On the other hand, the fund would exist only for a limited time — long enough to set the energy policy of the lower Mekong countries on a more sustainable path, but not so long that its grants would eventually distort the regional market by suppressing the price of certain renewable sources of energy.

Where would the money come from? Potential contributors include multilateral banks like the World Bank or the Asian Development Bank, and the United States, Australia, Japan and major European states. After all, these actors are already spending millions of dollars to mitigate environmental damage and promote resource management in the lower Mekong. Contributions could also come from private actors with a strategic interest in creating new energy markets.

This sustainable-energy fund could be administered by a multilateral bank, such as the A.D.B., which already has expertise and connections to governments. Or, better yet, it could be like the Global Fund, a stand-alone organization whose stakeholders, be they public or private, all share in the decision-making.

The rush to build big dams along the lower Mekong reflects an outdated vision of energy policy; it is a throwback to the environmentally irresponsible hydropower ambitions of the 1960s. Setting up a bold and generous start-up funding mechanism that promotes other ways of meeting the region’s energy demand is a much better approach: It would stabilize relations among the states that share the Mekong, even as it protected that mighty river.

David Roberts was regional strategic adviser of USAID-Asia from 2012 to 2014.