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Laos turns to hydropower to be 'Asia's battery'

The Laos government is banking on hydropower - with plans to build 55 dams - to sell electricity to its Asian neighbors. But critics say hydropower comes at the cost of more displaced farmers and altered rivers.

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He and other villagers received new houses, schools, and health centers. But some pledges, such as electricity, were not honored, says the villager, speaking on condition of anonymity for fear of government reprisal.

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Worst of all, he says, they were not provided enough farmland. In their old villages, agriculture was the main source of food and income, and people did not need to hire themselves out as laborers. Now, "almost every family is unable to grow enough food to feed themselves. Now they depend on selling their labor."

Some resettled villagers still sneak back to their old farms inside Huouay Ho dam's watershed, he says. The old farms are about 36 kilometers from the current settlement, so farmers have built shacks to sleep there for days at a time.

Two years ago, the villager says, 59 families signed a petition asking to be allowed to return to their former homes. The government responded by pressuring villagers into writing a pledge that they would not go back.

Ikuko Matsumoto, a researcher with the nongovernmental organization International Rivers, worries that people affected by NT2 have also lost access to forests and rivers. "I think the most important issue for villagers is the food security issue," she says in a telephone interview from Khammuan Province where she visited communities affected by NT2 just days after its turbines began humming.

"Their everyday life relies on fishing, rice cultivation, and collecting material from the forest," says Ms. Matsumoto. "How can companies and the government help restore a similar way of life? That is the biggest challenge and I really haven't seen much success."

Matsumoto says villagers told her they were worried about fish stocks declining, and they feared that rising water levels would flood riverside gardens.

Benefits outweigh costs

Nam, the industry minister, admits that massive development of Laos's energy sector has had some negative impacts. "Development is never pure good," he says.

He argues that the benefits far outweigh the costs, though, saying that building the energy sector is a key element of the government's plan to reduce rural poverty. Laos is ranked 133 out 177 nations on the United Nation's Human Development Index, which measures education, income, and life expectancy. The World Food Program estimates that 40 percent of children under age 5 are chronically malnourished.

The Laos government also touts NT2 as a way of reducing its dependence on international donors, who provided $560 million in fiscal year 2008-09, about 1/10th of total gross domestic product, according to the CIA World Factbook.

Critics remain skeptical that huge profits generated by hydroelectric plants will actually trickle down to those displaced – especially in a country that Transparency International in 2008 ranked one of the world's 10 most corrupt. "How about the loss from hydropower development that is not part of formal economic data?" says Matsumoto. "I think this is a big question for the Laos government."