The Social Dimensions of Hydropower

Investigation of Downstream Communities in Laos

Abstract — Hydropower generation and the sale of electricity to neighbouring countries form a key economic development strategy in Laos. The environmental and social implications of the strategy are not as yet fully understood. This paper presents research on the social impacts of hydropower with focus on communities located downstream from hydropower projects. The sustainable livelihoods framework is used to categorise and quantify impacts across environmental, financial, social and other domains. The results show that hydropower provides compelling net benefits for the case study downstream communities. Employment, social programs and infrastructure development are key benefits and outweigh negative impacts such as on riverine fisheries. Minimising negative impacts and maximising the potential benefits requires a number of conditions to be met regarding construction, operation, and direct and indirect relations of the project operator with the communities. Policy implications of the research for hydropower policy in Laos are discussed.

Keywords – hydropower; downstream impacts; livelihoods; livelihoods capital

Amphone Sivongxay*, Romy Greiner and Stephen T. Garnett
Research Institute for the Environment and Livelihoods
Charles Darwin University
Darwin, Australia


Laos is one of the least developed countries in South-East Asia: with a low income per capita, weak human resources and a lack of economic diversification [1][2]. The majority of the Laotian population lives in rural areas and about two thirds live with less than USD 2 per day [1]. In 2012, life expectancy at birth for Laotians was 67.8 years. The country was ranked 138 out of 178 countries according to the UNDP human development index (HDI = 0.54). Its citizens’ mean years of schooling was 4.6 [2]. Adult literacy rate was 69 per cent [1].

In 2003, the Government of Laos (GoL) adopted the National Growth and Poverty Eradication Strategy (NGPES) that aimed to eradicate poverty through sustained and equitable economic growth [3]. The strategy identified Laos’ propitious niche as having favourable hydrological conditions, terrain suitable for construction of hydroelectric dams and accessibility to regional electricity markets, in particular China and Thailand. It thus singled out hydropower as the prime economic development pathway for Laos [4][5]. Hydropower is promoted as a means by which the GoL can eradicate poverty, with the revenue being used to further the country’s social objectives [4][5][6][7]. The GoL regards the sustainable development of the country’s water resources as a primary mechanism to promote long-term, broad-based economic growth to reduce rural poverty and to achieve the social development objectives identified in the United Nations Millennium Development Goals initiative [8]. Forests, rivers and minerals (bauxite) are the major components of the country’s natural resources [9]. Export of tropical hardwood used to be the major export earner, but the GoL realised that exploitation of old-growth forests is finite, unsustainable and environmentally degrading in the long term [4].

It is thought that Lao PDR has the potential to build more than 100 hydroelectric dams on the Mekong and its tributaries with a combined generating capacity of 26,000 MWt [4][10][11]. As of 2014, Laos has realized just over 10 percent of this potential with sixteen hydropower projects with total capacity of 2937 MWt in operation on the tributaries of the Mekong [12]. Export of electricity first became an important foreign exchange earner in 1971 when the first large scale hydropower project 155 MW Nam Ngum 1 (NG) started its commercial operation [4]. NG1 supplies electricity to most of Lao domestic grids including the whole of Vientiane the capital but the majority of electricity (70% to 80%) is exported to Thailand [9]. The 1070 MWt Nam Theun 2 (NT2) is currently the largest hydroelectric project in Laos. It was completed in March 2010 and about 90% of the electricity it generates are exported to Thailand. Over the first 25 years of its operation, the government of Laos will accrue royalties and taxes estimated at over USD 2 billion [6]. An even bigger project, the country’s first Mekong mainstream dam, the 1285 MWt Xayaburi (Sayaburi) Dam, is in its construction phase [7]. Nine additional Lao Mekong mainstream dams are proposed and expected to generate annual revenue equivalent to 18% of the country’s 2009 GDP (or about USD 1 billion), during the first 25 years of operation [13]. Hydropower exportation is the third largest [5][9] and accounts for 30% of all export earnings [5]. The GoL has committed to supplying 7000 MWt to Thailand, 5000 MWt to Vietnam and 1500 MWt to Cambodia by 2020 [14]. Many of the recently constructed and proposed hydroelectric plants in Laos are large dams (with a generating capacity greater than 100 MWt) that aim to serve the country’s electricity export commitment [6]. The large-scale hydropower projects are mostly implemented by complex foreign shareholder entities referred to as independent power producers (IPP).


Hydropower is not without costs. While at a national level hydropower is helping Laos achieve economic development and poverty alleviation goals [4][5][6], costs accrue at the local level, with a diverse range of effects on people, households and villages [15][16]. Much attention has focused on ‘direct resettlement’, where villages have had to be relocated to make way for project infrastructure, in particular reservoirs [9][17][18][19][20][21]. In the World Commission on Dams 2000 report [22], the discussion of social impacts focused on the physical displacement of local populations living in the immediate vicinity of dam construction. However, the impact of a hydropower project also extends upstream and downstream,where people’s livelihoods depend on the ecosystem services provided by the rivers and consequently affected by modification of their flow regimes and other hydrological effects [15][16][23][24][25][26]. Downstream communities are typically not considered in a project’s social impact studies, nor are they entitled to any compensation for their losses under the World Bank safeguard policies [27][28].

It is estimated that worldwide, about 470 million people have been negatively affected as a result of being downstream of large dams [28]. This is about six to 12 times more than the estimated number of those directly displaced by hydropower infrastructure [28]. Of these, 400 million live in Asia [27]. Dam development projects aimed at reducing poverty or improving economic opportunities benefit many but are also deepening poverty and hunger for others.

It is claimed that the production and export of hydropower will bring many benefits to the country and improve the standard of living of the average Lao citizen [29]. However, little attention is given to the distributional effects at a local level, including the benefits and costs on downstream communities. Many rural communities in Laos live in the riparian zone of major rivers and their livelihoods are critically dependent on the ecosystem services provided by the surrounding forests and rivers [4][30]. Large hydropower projects interrupt, alter and inhibit the delivery of resources and ecological services that have supported rural livelihoods in these areas for generations. Hydropower installation affects the quality and quantity of water released downstream of dams, thus affecting the riverine and riparian ecosystems services in particular [15] [31] [32].


The research presented here makes an important contribution to the understanding of social impacts of large-scale infrastructure projects. To illustrate the types and extent of impacts likely to be experienced by local people, a case study was undertaken of villages located downstream from four existing hydropower projects. The villages were chosen systematically. To be able to mimic possible changes in impacts over time, a ‘replicated cross sectional design’ [33] was adopted for the choice of case studies. To provide a systematic and comprehensive picture of Lao hydropower’s social dimensions, case studies consisted of four hydropower projects which were at different operating stages. To facilitate analytical comparison and interpretation of hydropower impacts among the downstream villages, selection of these hydropower projects were confined to different locations within central Laos. Table 1 provides an overview of the case study hydropower projects and their respective downstream villages. The location of these dams in relation to the river systems is shown in the Appendix.

The sustainable livelihoods framework (SLF) was used to identify, categorise and quantify hydropower impacts. The SLF interprets sustainability from a rural livelihoods perspective and identifies five (natural, financial, human, physical and social) types of capital upon which livelihoods are built. These assets influence the ability of households to achieve positive livelihood outcomes such as more income, improved food security and increased well-being [34][35]. It is a contemporary framework with an appealing ease of use for participatory [36][37] and has been extensively used by social scientists, researchers and aid organisations to evaluate the impacts of programmes on local communities [38][39] [40][41][42].

The data for this study were collected in 2011 using a social survey in which 160 households participated (40 per case study). Information regarding demographic details, hydropower related employment, and any other association with hydropower was collected about each member of the household. Using a five-point bipolar rating scale, respondents were asked to rate the hydropower projects’ impacts on each component of the five livelihood capitals. They were asked to provide ratings for the household level and the village community as a whole. The questionnaire also explored the narratives behind the rating scores. An integrated assessment of the perceived impacts was conducted.


Table 1. Villages and number of households interviewed to determine hydropower project impacts


In general, hydropower projects had impacts on the livelihoods of downstream communities. For all four villages, many of the impacts were beneficial. Qualitative assessment of the impacts on livelihoods by respondents indicated that people generally benefited from hydropower. Almost all respondents rated the hydropower projects as positive to their household livelihoods (Figure 1). Livelihoods improvement programs and hydropower infrastructure were most frequently rated (by 26% and 24% of the respondents respectively) as the most positive aspect of hydropower projects. However, some impacts were negative. Changes to the rivers were most frequently rated (by 45% of the respondents) as the most negative aspect of hydropower.

downstream impacts

Figure 1. Perceived impact by hydropower projects on the livelihoods of households, by village

Note: sequence of the villages is by time of the hydropower project construction, oldest at top;
impact rating scale: -2 = very negative, -1 = somewhat negative, 0 = neither positive nor negative, 1 = somewhat positive, 2 = very positive.
The mean scores were 1.15 (Naxeng), 1.48 (Kengsavang & Mahaxai), 1.65 Namsanam, and 1.77 (Sengsavang). Krukal-Wallis tests showed no significant differences in the rating scores among the villages.

Detailed analysis of hydropower impacts on the five livelihood domains found that two villages (Sengsavang & Namsanam) had reaped more benefits than the others while one specific village (Naxeng) experienced many negative livelihood impacts. Table 2 provides a synthesis of the findings.

Hydropower projects were seen to deliver positive financial impacts in all villages (Table 2). Financial benefits accrued particularly to those households who could provide labour to the project construction. There were negative economic impacts associated with the experienced loss of river-based fisheries, but people in Sengsavang and Naxeng gained reservoir-based fisheries. All villages also benefited from improved roads and accessibility. Human and social capitals were also improved, particularly in Sengavang and Namsanam where hydropower operators constructed schools and health clinics. Impacts on the natural capital were more adverse in the villages with the newer dams. Impacts on the rivers, in particular, varied among the villages. While Sengsavang experienced no apparent impacts of the NG1 on Nam Ngum River, Nam Lik River was described as ‘being polluted’ by the Nam Lik 2 (NL2) in Naxeng.


Table 2. Integrated assessment of hydropower project impacts on livelihood capital assets

Note: LIP = hydropower project livelihoods improvement programs;

Assessment scale:
‘- – ‘= very negative, ‘-‘ = negative, ‘+/-‘ = balance between positive and negative,
‘+’ = positive, ‘++’ = very positive, ‘o’ = no apparent impact, and ‘na’ = not applicable

Overall, Namsanam benefited most while Naxeng experienced very negative livelihoods impacts from their hydropower projects. The contrast of livelihood impacts in these two villages were influenced by multiple factors concerning both village and hydropower specific elements. In Namsanam, the Theun Hinboun (THB) project was simultaneously in operation and construction. Namsanam therefore had significantly higher level of hydropower project related employment compared to Naxeng where the NL2 project was in operation only. THB project also provided livelihood improvement programs, education and health care services to Namsaman villagers. In Naxeng, the NL2 project implemented no measures to mitigate its downstream impacts nor contribute to the improvement of local schools or health clinics. As the NL2 was in its first few years of operation, the downstream river was ‘polluted’ due to decaying plant matter in the recently created NL2 reservoir. Details of hydropower projects’ impacts on the financial and natural capitals are as follows:

A. Financial capital:

Respondent households derived cash income from sources including seasonal labour hire for agriculture and the selling of the local non-timber forest products in addition to fishing. Hydropower projects offered downstream households off-farm job opportunities such as being construction labourers, hospitality workers, and security guards. More villagers involved in construction-only employment, mostly as unskilled labourers, as opposed to operation based employment which usually required higher skills or qualifications. Occupations required for hydropower project operation such as administrative workers, engineers and technicians tended to generate long term employment. All case study hydropower projects created employment opportunities for people living in downstream villages. In 39% of respondent households, at least one household member worked with the local case study hydropower projects, either directly or indirectly. When asked to rate the employment impact on households, 36% of all respondents rated the hydropower employment impact as positive.

At the time of the face to face interviews, the estimated ‘workforce’ for the four villages was 487 persons. Of these, 49 household members were working with the hydropower projects. An additional 38 household members had previously worked with the hydropower projects, but were now pursuing other income sources. ‘Hydropower employment to workforce ratio’ was the proportion of estimated workforce that was working with the hydropower projects. Assuming that the respondents were representative of their respective villages, hydropower projects employed 8% of the total estimated workforce in the four villages. The employment-to-workforce ratios were about 6% in three villages (Sengsavang, Kengsavang & Mahaxai and Naxeng). In Namsanam, the employment-to-workforce ratio was 25% because the THB project was simultaneously in operation while its expansion project was under construction. Part time or casual workers earned daily wages of LAK 20,000 to LAK 50,000. Full time positions received a monthly salary ranging from LAK 600,000 to LAK 5,000,000. Occupations such as engineers and administrative workers tended to earn higher salaries than other occupations. Hydropower project construction laboureres earned average monthly income higher than security guards, hospitality workers, or project facilitators.

At the villages where downstream livelihood improvement programs were in place (Sengsavang, Namsanam, and Kengsavang & Mahaxai), households benefited from access to improved basic amenities. In Namsanam and Kengsavang & Mahaxai, households also benefited financially from additional income earning activities such as handicraft production, fruit tree plantations, and livestock rising. When asked about the livelihood support programs provided by the respective hydropower projects, 80% of Kengsavang & Mahaxai, half of Namsanam, and half of Sengsavang respondents noted positive impacts on their households.

The case-study villages were riverine communities where fishing was an important livelihoods activity. The majority of respondents from each village (68% or more) engaged in fishing and owned domestic fishing gear such as small wooden boats, fishing nets, and traps. Two villages namely Sengsavang and Naxeng had access to reservoir-based fisheries. For other villages, fish were predominantly caught in the rivers. Aquaculture was limited for all villages to two respondent households in Kengsavang. Fish provided a source of protein and additional income for respondent households. Respondents were asked to estimate the contribution of fish to household consumption and cash income. Mean values for the four villages were 16% (SD = 6.82) to household consumption and 14% (SD = 16.22) to income. In these same villages, 50% noted increased fishing effort and reduced catch due to a reduction in fish stocks in the rivers, which they attributed to (i) poorer water quality, (ii) increase in the village population and consequently more people fishing, and (iii) artificially fluctuating water levels, with sudden releases washing away fishing gear such as boats, nets and hooks. Sengsavang respondents also attributed reduction in fish stocks in the reservoir to the degrading secondary fish habitats.

B. Natural capital:

Hydropower projects affected natural capital of downstream communities by altering the natural environment that had supported rural livelihoods. Downstream households gathered food, water, craft and housing materials from their surrounding rivers, wetlands and forests. Consumptive materials for downstream households were derived from sources or enterprises such as crops, crafts, non-timber forest products, livestock, and fishing and aquaculture. Hydropower projects had impacts on the rivers, land and biodiversity. They altered both the rivers’ flows and water quality. Artificial fluctuations of the rivers’ levels and degraded river water quality adversely impacted the services that the rivers provided to livelihoods. Riverbank erosions, shortage of clean water, and diminishing local aquatic flora and fauna were noted by the respondent households.

Rivers were one of the main household water sources for reverine communities. Water in the rivers was utilized by downstream villagers for various domestic purposes including cleaning, washing, and gardening. Depending on the river water quality at hand and the household’s affordability for alternative clean water sources, some households still use the water in the river for human consumption. The attributes commonly used by the respondents to describe the quality of water from a source include turbidity, smell, and taste. Some referred to its purity as defined by the absence of contaminants and chemical substances. They inferred to the consistency of the water’s colour, smell and taste in identifying the possibility of contamination.

None of Sengsavang respondents noted any adverse hydropower project impact on the river’s water quality from the NG1 project. In the other three villages, most of respondents (93%) noted adverse impacts from the hydropower projects on the river water quality. They attributed degradation of river water quality to (i) presence of contaminants including chemical substances and oil as a result of run-off from hydropower project construction sites, (ii) dissolved oxygen deficiency for the river receiving tail water discharge from a recently created reservoir and (iii) higher turbidity, especially during dry season for the rivers receiving tail water discharges from a trans-basin project.

Land provided a means for households to produce crops, raise livestock, and other products including firewood. Therefore, access to land played prominent role in influencing households’ food security and income. Owning land also served as fixed capital asset that could be liquidated when a large amount of money was needed, particularly as funds for education in the provincial centres or Vientiane. Arable land for annual crops such as rice paddies was the main land use, followed by permanent pastures for livestock grazing and crop land for fruit tree plantations. Villagers also seasonally cultivated along the riverbanks.

Hydropower project reservoirs inundate vast areas of land, creating anthropogenic wetlands and storing of huge volume of water with irrigation development potential. None of the respondents lost land to the creation of the reservoirs. However, some reported that the reservoir inundated or prohibited access to non-timber forest product collection sites. In Namsanam and Naxeng, part of the respondents’ land, specifically agricultural land, was acquired by the hydropower projects. In Naxeng, normal agricultural practices and soil productivity were disrupted or interfered with because the project physically obstructed the existing irrigation network, produced unwanted fine sediment run-off and resulted in onsets of flooding events that were unpredictable or unfamiliar to farmers. In the four villages, 35% of the respondents gave a negative score for the hydropower project land impact on their households.

Mixed impact on access to aquatic resources was reported with more respondents noticing a decline rather than an improvement. About half of the respondents noticed that increased effort to collect edible aquatic resources that were frequently consumed by their households. They attributed reduction in the local aquatic food stock to (i) loss of vegetable strips (riparian vegetation) along the riverbanks to erosion and flooding, (ii) more restricted access to riverine collecting sites due to the presence of the hydropower project infrastructure or reduced safe access to the river, and (iii) reduced riverine biological productivity due to poor water quality. In contrast, 9% indicated it was easier to collect aquatic resources due to
access to the projects’ reservoirs.

Prior to having the NL2 dam, the most prominent edible aquatic flora in Nam Lik River was ‘Kai Hin’, a type of river weeds (Chlorophyta spirogyra) that grew seasonally on the riverbed. Harvesting of Kai Hin began in January and continued until the end of the dry season in May. The shallow water level allowed collectors to navigate the river on foot or by long-tailed boats. Kai Hin was collected by hand, washed, and could be stored for up to five days before consumption or sale. It was a commercial wild product sold in towns and cities and provided additional income to some collectors. The respondents pointed out that, since the NL2 project started its operation, Kai Hin was disappeared due to the degraded river water.


This research conducted a systematic investigation of the impacts of hydropower projects on communities located downstream from hydropower projects. It is the first empirical study in Laos focusing on downstream communities and systematically exploring the benefits and costs that accrue to them from the establishment of hydropower projects. Having interviewed 160 households in five villages, the research found that, on balance, downstream communities benefited from the hydropower projects through employment and improved infrastructure such as roads, and in some circumstances, better schools and health care clinics.

Financial benefits experienced by the downstream communities, particularly employment during the construction phase, substantiate findings by a recent study of hydropower livelihood impacts on local people in China [43]. In [43], resettled households in Yunan Province had more income partly due to wage labour created by hydropower projects’ construction as well as cash payment from the Chinese government as compensation for loss of land.

Due to the lack of industrial development in rural Lao communities, hydropower projects have become a major employer for downstream households, particularly during the construction phase [44][45]. As rural people are characterized by a lack of educational qualifications and formal technical training, their hydropower project employment has been dominated by un-skilled occupations including labourers, security guards and hospitality workers. The Government of Laos can help enhance this benefit by increasing the capacity of rural people through improved education and training of specific labour skills so that people secure jobs not just as construction, but on-going jobs with the hydropower projects. The government could encourage local-employment-friendly policies by the project operator, or set targets for the proportion of hydropower project construction workforce that must be filled by local people.

The downstream ecosystems, however, are adversely affected by the altered flow regimes with detrimental impacts on those households who in the past relied on riverine fishing for their livelihoods. Adverse impacts on natural capital have been common among large-scale hydropower projects in other countries including China and South Korea [46][47].

To minimise the project impact on ecosystems, the Government of Laos could set a requirement for hydropower operators to provide environmental flow ─flows of a particular quantity, quality and timing necessary to maintain downstream ecosystems and their benefits from economic, social (including cultural) and environmental perspectives [48]. For instance, in Naxeng where the rivers received reduced discharge due to the dam, environmental flow regimes that are similar to the natural regimes could be implemented to help balance ecosystem and human needs for water [49][50].

In most cases, the villagers whose land was acquired by hydropower projects had no option but to take cash compensation. Land is an essential livelihood asset of rural communities and whenever possible, the compensation program ought to provide a land for land option to the villagers. Without land suitable for crop production, people’s livelihoods will not be sustainable even with cash compensation [20].

Over time, people can get used to life downstream of a dam and take advantage of the environmental conditions, financial opportunities and social infrastructure that a dam produces [51]. In Sengsavang, for instance, the reservoir became a natural asset in its own right and was utilized for multiple purposes including water supply, fishing and water transportation. Sengsavang villagers also built stalls, restaurants and operated boat tours in the reservoir tourism precinct. In Namsanam, the hydropower project operators were the major sponsor of social gathering and community development activities including upgrading of local school facilities. The results revealed that communities near the older dams had a more positive perception of the environmental and social impacts than did those near the newer dams.


This research explored the livelihood impacts on four downstream communities of hydropower projects in Laos. The study found that hydropower has profound impacts on downstream communities. Hydropower was shown to have the potential to be a major employer in downstream communities, thus generating financial benefits, provided that members of the communities can secure hydropower related employment. Improved rural people’s education and/or technical skills would increase their capacity to secure on-going employment with the hydropower projects. Some villages also benefited from livelihood improvement programs, local schools or health care facilities which are operated by the hydropower operators. Not all projects had such programs. However, hydropower comes with a cost to natural capital as it artificially alters the rivers and fundamentally affects riverine ecosystems, in particular fisheries. Provision of environmental flows and land for land compensation would help mitigate the impacts of hydropower projects on the natural capital of downstream communities.

Studies similar to this research would shed more light on the neglected social aspect of large-scale economic development. More empirical studies on the impacts of hydropower on the livelihoods of local people will help demonstrate the extent to which the conclusions of the current research can be generalised.


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Locations of dams used to study the downstream effects of hydropower projects in Laos

Source of base map: Mekong River Commission (MRC)

livelihoods capital

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