BASINS UNDER PRESSURE:THE MEKONG BASIN

EDITED BY Global Water Forum Editors

CONTRIBUTORS

JAMES BOYLE has managed community development, micro finance and livelihoodsprojects in in Sierra Leone, Malawi and northern Thailand. He has an interestin innovative ways to address social justice issues having developed a range ofsocial enterprises in the UK homeless and housing sector. Having recently com-pleted an MSc in Environment and Development from the Development PlanningUnit, UCL he is currently researching approaches to climate change adaptationand community level DRR.

RICHARD P. CRONIN is the Director of the Southeast Asia program at the StimsonCenter in Washington DC. He works on transboundary and non-traditional secu-rity issues in the Mekong Basin and Southeast Asia, from a political economyperspective. He is the lead co-author of Mekong Turning Point: Shared Riverfor a Shared Future5, which provides the basis for the present article and waspublished in February 2012. Dr. Cronin also co-authored a previous report onmainstream Mekong dams in 2010, entitled Mekong Tipping Point, and has alsorecently written or co-authored several articles on Thailand’s regional relations.He joined Stimson following a long career in the Congressional Research Serviceand has previously taught at John Hopkins University and Chuo University, Tokyo.Dr. Cronin can be contacted at rcronin@stimson.org.

MARK GIORDANO is a geographer and economist with wide experience in agricul-ture, water and development. He is currently Principal Researcher and Director

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of Water and Society Research at the International Water Management Institute(IWMI), one of the 15 Future Harvest Centers of the Consultative Group on Inter-national Agricultural Research.

FRANCOIS MOLLE is Director of Research at the Institut de Recherche pour le Dveloppe-ment (IRD) and is currently seconded to the International Water Management In-stitute, based in Cairo, where he develops research activities in the Middle-Eastand North-Africa region. He has 27 years of experience working on issues ofwater management, water governance and water policies, and has authored 200publications, including 80 journal articles, book chapters, and edited volumes. Heserves as an editorial board member for several journals and is co-editor of WaterAlternatives (www.water-alternatives.org).

STUART ORR has been with WWF since 2006 and works with the private sectoron a range of water related activities, from water accounting measures to publicpolicy engagement. Stuart has published numerous papers on water measurement,agricultural policy and water-related risk, and is recently co-drafted guidelines forthe UN Compact on corporate engagement in water policy. He has an academicand research background in agricultural systems and water resource managementand worked for many years in the private sector in Asia and the US.

DIANA SUHARDIMAN is a social scientist with experience in water resources man-agement, water policies, and water governance. She is currently Researcher at theInternational Water Management Institute (IWMI), one of the 15 Future HarvestCenters of the Consultative Group on International Agricultural Research.

PAUL WYRWOLL is an environmental economist undertaking a PhD in Economicsat the Crawford School of Public Policy, Australian National University. His re-search focuses on the use of economic mechanisms to incorporate environmentalwater flows into the profit-motivated decisions of hydropower dam operators. Hisother research interests include: climate change mitigation, trade-offs between theuse of water by energy and other uses, and biodiversity conservation.

DAVID FULLBROOK is an ecological economist and is currently senior consultantstrategy and policy with DNV GL’s renewable energy practise in Singapore. Hehas undertaken wide ranging research for development agencies on matters re-lating to agribusiness, energy, food security, and natural resources in the GreaterMekong and elsewhere in East Asia. He holds advanced degrees in Asian Politics,environmental management, and ecological economics. He writes in a personalcapacity.

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Contents

Preface ix

1 How can ecosystem services increase the resilience of communitiesvulnerable to climate change? 1James Boyle

2 Dams on the Mekong 7Stuart Orr

3 Scalar disconnect: The logic of transboundary water governancein the Mekong 11Diana Suhardiman

4 Laos’ Xayaburi dam project: Transboundary game changer 17Richard P. Cronin

5 The Xayaburi dam: Challenges of transboundary water governanceon the Mekong River 21Paul Wyrwoll

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6 Maintaining the Mekong: Using ecosystem payments to securea global food-security asset 27David Fullbrook

7 Competing for the Mekong: A case of common-asymmetricresources? 33David Fullbrook

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PREFACE

BackgroundNatural resources tied to river systems are typically common-pool in nature or

exhibit large upstream-downstream externalities. Thus, managing river basins effi-ciently and sustainably often requires overcoming collective action problems througheither bargaining or cooperation. This process is especially complicated in trans-boundary contexts, where heterogeneous populations are represented by a variety ofgovernmental and non-governmental actors and issues of sovereignty must be han-dled carefully. The Mekong River basin provides a unique example for those wishingto understand how managing water resources across national boundaries can eithersucceed or falter.

The Mekong River basin is one of the largest and most complex in Asia. It drainsan area of 795,000 km2 spread over six riparian states: China, Myanmar, Laos, Thai-land, Cambodia, and Vietnam. The river originates on the Tibetan plateau in China,and the upper portion of the basin, spanning China and Myanmar, produces approxi-mately 15-20% of annual flow. The lower portion of the basin, where the catchmentincludes areas in Laos, Thailand, Cambodia, and Vietnam, provides most of the an-nual flow. While not isolated, the lower basin does not depend on the upper basinfor an inordinate amount of annual flow, providing it with some autonomy in settingmanagement objectives.

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Seventy million people inhabit the river basin and depend upon it for water,tourism, navigation, hydroelectricity production, and food. Between sixty and eightypercent of the subregion’s (extending beyond the watershed) inhabitants are depen-dent upon agriculture and fisheries for income of sustenance. The very lower por-tions of the river, especially in Cambodia and the delta in Vietnam, are the mostagriculturally important and have the highest population density.

Meanwhile, the construction of dams for hydropower generation, which couldfuel the area’s quickly growing economy, represents probably the largest driver ofchange within the basin. Most remaining hydropower potential can be found alongthe main stem of the river, and this development could have serious repercussionsfor sediment transport, fisheries, and land use. The nature of these pressures callsfor a basin-wide approach to management that takes into account the externalitiesgenerated by the effects of dams, including on fisheries, sediment transport, landuse, and the hydrological regime.

The series of articles in this volume sheds light on the challenges and opportuni-ties that can arise in transboundary river management. The authors draw on severaldifferent disciplines and bring a variety of perspectives to bear on the most pressingissues facing the Mekong.

The Mekong River Basin SeriesJames Boyle promotes ecosystem-based adaptation in the Mekong Delta as a

means to protect against future floods and droughts while maintaining livelihoodsthrough pointed agricultural reforms in his article ’“How can ecosystem servicesincrease the resilience of communities vulnerable to climate change?” In particu-lar, wetlands should be restored to regulate larger flood events and guard againstdroughts, and continued cultivation of the land can be facilitated by exploiting syn-ergies between rice agriculture and fish aquaculture.

In “Dams on the Mekong”, Stuart Orr reports the results of research aimed atassessing the impact of eleven planned dams on the Mekong. If the dams have sub-stantial negative effects on fish catches in the lower catchment and consumers turnto other local sources of protein the fill the gap, water use and land conversion foragriculture are expected to increase markedly.

Diana Suhardiman’s article “Scalar disconnect: the logic of transboundary watergovernance in the Mekong” highlights the challenges facing the Mekong River Com-mission in facilitating Integrated Water Resources Management (IWRM). Specifi-cally, the lack of inter-ministerial cooperation both within and across national gov-ernments throughout the basin complicates the Commission’s attempts to more tightlyintegrate decision-making.

“Laos Xayaburi dam project: Transboundary game change” by Richard P. Croninchronicles downstream riparians reactions to the proposed Xayaburi dam in Laos.The skewed costs and benefits of dam construction in the lower Mekong basin, whichare quite sensitive to assumptions on a variety of economic variables, present a seri-ous challenge for cooperation across the basin.

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Paul Wyrwoll describes the positions of riparian states, such as Laos, Vietnam,and Cambodia, as well as NGOs and international actors to the proposed Xayaburidam in his article “The Xayaburi dam: Challenges of transboundary water gover-nance on the Mekong River.” It is important to note that the Xayaburi dam could actas a catalyst for more mainstream dam construction should it go ahead.

In “Maintaining the Mekong: Using ecosystem payments to secure a global food-security asset,” David Fulbrook lays out a plan to support regional stability and sus-tainability in the face of growing pressure to construct dams on the Mekong’s mainstem. In particular, downstream riparian, who stand to be harmed by dam construc-tion, can engage in a Payments for Ecosystem Services (PES) agreement with Laosand compensate upstream users for continued provision of clean flows and naturalhabitats.

David Fullbrook provides a new perspective on basin-wide cooperation in “Com-peting for the Mekong: A case of common-asymmetric resources?”, where he arguesthat categorizing the Mekong as a common-asymmetric resource is the first-step toestablishing a foundation for states to design a compatible institution, drawing oninternational law, to replace competition with cooperation.

ANDREW AYERS

Bren School of Environmental Science and Management, University of California, Santa Barbara

July 2015

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CHAPTER 1

HOW CAN ECOSYSTEM SERVICESINCREASE THE RESILIENCE OFCOMMUNITIES VULNERABLE TOCLIMATE CHANGE?

James Boyle

Development Planning Unit, University College London, United Kingdom

Introduction

The Mekong Delta is uniquely vulnerable to the effects of climate change as it isaffected by rising sea levels, a reduction in river flow, and an increase in the severityof seasonal floods and drought. Adaptation to climate risks is often dominated byexpensive engineered infrastructure options as policy makers and engineers tendto opt for fixed hard solutions. There are, however, alternatives to these strategiesincluding adoption of an Ecosystem based Adaptation (EbA) approach. Supportedby the United Nations Convention on Bio-Diversity, the EbA approach ensures thatecosystems, and the essential services they provide, are resilient to the climatic andnon-climatic strains put upon them. As such, ecosystems can themselves be utilisedto support adaptation, in turn increasing human resilience and their ability to absorb,recover and move forward from any adverse effects of climate change.

It will be the rural and peri-urban poor who are most vulnerable to climate change,particularly because their livelihoods are so heavily reliant on natural resources, suchas fishing, agriculture, and other forms of land or marine management. An EbAapproach can, therefore, increase resilience in two ways. Firstly, it can restore theregulation services of the wetlands, protecting against hydro-meteorological hazards

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and climate risk. Secondly, an EbA approach to community stewardship, placingthe ecosystem service at the centre of community adaptation, will prove beneficial tolivelihoods and developmental needs.

Figure 1.1 Agricultural systems in the Mekong Delta. Source: Ni (2005).

The Mekong Delta is one of the most productive regions in South East Asia and therice basket for Vietnam, much of which has been made possible through an extensiverange of dykes and canals transforming the Mekong Delta’s wetlands into rice paddies[1]. This drains the water away quickly, ensuring that it irrigates but does not saturateor flood the land. This is considered to be one of the world’s most drastic man-madeland transformations and has contributed to Vietnam being the 5th largest producerand 2nd largest exporter of rice globally [2]. In 2010 it exported 22 million tonnesof rice, 90% of which was grown in the irrigated paddies of the delta. It is also oneof the most productive deltas in the world with 30% of Vietnam’s GDP being derivedfrom food based goods and the agriculture sector providing a living to 85% of a localpopulation of over 17 million [3].

Rewards and vulnerabilities

The recent regional developmental achievements of the previous decades are primar-ily a result of agriculture and aquaculture. The vast majority of land use in the delta ismultiple irrigation, also known as multiple cropping; where crops are harvested more

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than once a year (see Figure 1). There is evidence, however, that draining the wetlandhas degraded water quality, depleted ground water levels, and aided the intrusion ofsalt water in the dry season. These issues have often been blamed on climate change,although in reality it is down to poor understanding of complex ecological systems andpoor central planning [1]. The reduction in river flow reduces the pressure put uponsea water, allowing for its intrusion.

There are thousands of wetlands along the Mekong that store water in the wet seasonand feed the river in the dry season. With precipitation rates in the rainy seasonexpected to increase somewhere between 1% to 5.2% (low emissions scenario) or1.8% to 10.1% (high emissions scenario) [3], an increase in water entering the Mekonglooks inevitable. As such, the importance of the water regulation service providedby wetlands in the Mekong is likely to increase in future. However, the drainingand fragmentation of many of the wetlands by the irrigation network has severelydiminished their service as a water regulator and not all wetlands are capable ofwater storage due to already high saturation rate. As a result, it is predicted that theexhaustive current of the river will decrease, causing water shortages, exacerbatedby long droughts in the dry season, with flood currents increasing in the wet season[3].

Fighting back through adaption

The opening of dykes and channels so that water can flow and flood more freelyacross the delta, albeit in a managed way, would reduce the capacity for damageby flood waters at their peak. It would also increase the peak flow of water in thedry season, combating sea water intrusion and increasing water security, as wellas replenishing underground aquifers. However, even if the floods are managed,and water regulation achieved, this will disrupt the current livelihoods of those livingon the wetlands, meaning that an EbA approach to community involvement in landmanagement is key.

Recognising the importance of such wetlands, in 1999 The Tram Chim Reserve wasdemarcated as a national park of 7,740 ha on the grounds of conservation [3]. Whileits effect on regulating the flow of the various branches of the Mekong in the delta willbe minimal, in hydrological terms it is functional [4]. The communities surrounding thepark purchase licences to harvest fish and grasses, and so continue to derive a livingfrom it without cultivating rice.

Implementing regional scale appropriate EbA strategies

On a regional scale, EbA strategies must incorporate the continued cultivation of theland. The soil and water of the delta is also suitable for aquaculture and fruit treeplanting as well as rice [5]. Poly-culture farming such as Fish-Rice could prove verybeneficial; both in yield and diversity [6]. The technique involves surrounding a paddyfield with a fish pond. The fish then act as pest control, reducing the need for harmful

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Figure 1.2 Rice paddy adjacent to Tram Chim National Park, Vietnam.

pesticides, which are known to pollute the water, and also increase the fertility of thesoil, reducing costs spent on expensive agrochemical fertilisers [6]. Fresh water fishprovide a further income stream as their wild populations have fallen significantly inprevious years due to unsustainable fishing in the Mekong River. They also can beharvested throughout the year and will go some way to dealing with the deficit leftin both income and nutrition and food security due to the inability to multi-crop. Thewaters of the ponds also provide a source of irrigation for the paddy in times of drought[5,6]. A similar technique can be implemented in areas of high salinity with sea grassand shrimp or crab farming.

As a result, not being able to multi-crop rice does not have to be a detriment to thefarmers or the delta’s productivity. Diversifying techniques and crops to incorporatepoly-culture and increasing biodiversity can be more productive as well as increasingresilience to long term effects of climate change. Adaption and conservation strategiessuch as those employed at Tram Chim, work against classic economic models andimpede localised development. This is very problematic as community participation, iskey to the success of any development project, particularly when building the resilienceof those same communities. These communities may access the land, and utilise theresources sustainably, but foraging and harvesting techniques in this setting do notallow for full utilisation of resources. It is also this kind of tactic that will tarnish EbAas ’Green Colonialism’, when in fact the aim of EbA is to respect a community’s closereliance on their natural capital and their vulnerability without it.

The two pronged EbA strategy of flooding the wetlands of the Mekong and encour-aging a change in farming techniques puts the ecological systems at the centre of an

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adaptation strategy. The hydrological system already exists and so it is cost effectiveand can be implemented quickly. It only needs a change in attitude from multi-cropping, mono-culture cultivation to integrated farming techniques and governmentinvolvement in reengineering the vast irrigation network to work with the hydrologi-cal system, rather than against it. Climate change is going to drastically affect thelandscape of the delta and opportunities for land use, whether it be through shockevents such as floods or droughts or more gradually through sea water intrusion. EbAprovides an approach to tackling climate change as an opportunity to renegotiate therelationship between communities and the way they engage with natural resourcesand the ecosystems services they rely upon.

References1. International Union for the Conservation of Nature (2010). Mekong Region WaterDialogues Water and Wetlands, the Mekong’s Blood and Heart.2. International Rice Research Institute (2014). Vietnam.3. Institute of Strategy and Policy on Natural Resources and Environment (2009).Viet Nam Assessment Report on Climate Change (VARCC).4. Ni, D.V. (2005). Living with Water and Building with Nature: Solutions for theMekong River and Vietnam Coastal Areas. Cantho University, Vietnam.5. Berg, H. (2002). Rice monoculture and integrated rice-fish farming in the MekongDelta, Vietnameconomic and ecological considerations, Ecological Economics 41:95-107.6. Ramsar Convention on Wetlands (2014). The Annotated Ramsar List: Viet Nam.

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CHAPTER 2

DAMS ON THE MEKONG

Stuart Orr

WWF, Switzerland

Recent research carried out by WWF and The Australian National University showsthe indirect impacts of 11 proposed dams on the mainstream of the lower MekongRiver [1]. The study evaluates the volume of additional water (water footprint) andarea of land (land footprint) that would be required for the four Lower Mekong Basin(LMB) nations to replace calorie and protein loss from affected fish catches.The waterfootprint and agricultural land analyses presented in this study are based on thelimited available data. While the specific results may be contested, this researchhighlights the need for more detailed understanding of the indirect consequences ofthe proposed dams to better inform decision making.

Background

A recent Strategic Environmental Assessment of hydropower on the Mekong main-stream concluded that such projects would have significant negative impacts on bothfisheries and agricultural sectors [2,3]. The losses in fisheries due to the mainstreamdams were estimated at US$476 million per year, excluding effects on the coastal anddelta fisheries. In addition, 54% of all riverbank gardens along the Mekong would beinundated, which, combined with losses in agricultural land for reservoirs and trans-mission lines, was calculated at US$25.1 million per year. Estimates of the freshwater

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fisheries catch in the LMB vary; for the purposes of this research, WWF has relied onthe most recent MRC assessments [4]. The annual yield is about 2.6 million tonnes,or 2% of global marine and freshwater fisheries landings. The per capita freshwaterfish consumption in the region is 33.7 kg per year, or around 80g per person per dayfor each of the 60 million people in the basin. The economic value of the LMB wildmigratory fishery is US$2.5 billion.

Research

This piece summarizes the land and water requirements for alternative livestock pro-tein sources, assuming the 11 proposed mainstream dams reduce the productionof fish by 60-70% as a major source of dietary protein for the people of the lowerMekong basin. People might adopt any number of dietary habits to substitute the lossof calories and protein from fish. The dynamics of consumer behaviour are complex,and this study was limited to the most plausible scenario: that the share of meat andother proteins consumed in the LMB nations would increase. Vegetable protein intakecould also increase and would come with its own costs - such scenarios have notbeen considered in this research, but should be explored.

Assuming greater demand for meat protein to replace lost fish catches, our calcu-lations suggest that water consumption for livestock protein production - the waterfootprint - will increase from 6% to 17% and will be considerably higher in Cambodiaand Laos. Southeast Asia as a whole is not particularly water scarce; however, sucha major increase in consumption is likely to have significant opportunity costs. Sub-stantial volumes of water in the natural environment are needed to sustain importantecosystem services in the basin, such as capture fisheries, low-input flood recessionagriculture and maintenance of the delta. The proposed hydropower reservoirs wouldhave a land footprint of at least 14,865 km2 - including 1,350 km2 of land proposed tobe inundated for the dams - land that includes some of the most productive riversidefarmland. Additional pasture land required to replace fish protein with domestic live-stock ranges from 7,080 to 24,188 km2 (13% to 63%). This will not be easy given thathigh quality agricultural land in the region is already occupied and agricultural rates ofconversion are stagnant.

Consequently, the change in protein away from local river fisheries will have substantialsocial, economic and environmental implications, including greater water consump-tion, land use conversion, and greater reliance on imports. Increased food pricesassociated with higher costs of livestock production could impact the poor and ex-acerbate poverty. The supporting institutional and investment infrastructure requiredto accommodate these changes is substantial, yet the very basics of ensuring thatdam construction does not impact the food source for vulnerable populations havebeen overlooked. All stakeholders should be entitled to know what alternatives andstrategies are in place for any situation where basic food supplies are at such highrisk of disruption.

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Conclusion

Hydropower development is often justified by the projections of social and economicadvantages, using assessment processes that are often narrowly focussed only onthe environmental and social impacts of the areas directly impacted by dam construc-tion and inundation [5]. Indeed the current assessment processes underway for theproposed dams on the main stem of the LMB appear to mirror this approach. Thedata used in our assessment is the best available and these findings are first approx-imations of land and water requirements. The methods adopted here to estimate theimpact on protein supplies due to dam construction are conservative in the use of SEAassessments of loss in ï‹~sh production, and scaling up supply of other proteins inproportion to their existing consumption. FAO and MRC data used here does not yetaccount for future population increases and resulting demand for protein. Similarly,other possible protein scenarios could be modelled and would add considerably toa wider understanding of the impacts and options available. Fuller estimations arerequired to establish more detailed accounting of food costs, land and water use andaccess, livelihoods, equity and poverty. Studies for individual nations will determinea wider range of impacts and explore the institutional challenges that lay ahead. Thisway the beneï‹~ts of dams can be better compared to the negative trade-offs involved.Regulatory authorities for these dam projects have an obligation to draw on the bestavailable data to ensure their decisions optimize the benefits for their citizens and theenvironment.

References1. Orr, S. et al. (2012), Dams on the Mekong River: Lost fish protein and the im-plications for land and water resources, Global Environmental Change, Volume 22,Issue 4, October 2012, Pages 925-9322. ICEM, 2010a. MRC Strategic Environmental Assessment (SEA) for hydropoweron the Mekong mainstream. Fisheries Baseline Assessment Working Paper. Interna-tional Center for Environmental Management, Hanoi.3. ICEM, 2010b. MRC Strategic Environmental Assessment (SEA) of hydropoweron the Mekong mainstream: Final report. International Center for EnvironmentalManagement, Hanoi.4. Baran, E., Myschowoda, C., 2009. Dams and sheries in the Mekong Basin.Aquatic Ecosystem Health and Management 12, 227-234.5. WCD (2000), World Commission on Dams: Final Report.

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CHAPTER 3

SCALAR DISCONNECT: THE LOGIC OFTRANSBOUNDARY WATERGOVERNANCE IN THE MEKONG

Diana Suhardiman

IWMI, Colombo, Sri Lanka

Introduction

This article provides an institutional analysis of the Mekong River Commission (MRC)and highlights the institutional dissonance between regional and national decision-making landscapes in the Lower Mekong Basin. It questions the theoretical under-pinnings of Integrated Water Resources Management (IWRM) concepts and brings tolight the issue of bureaucratic competition and fragmentation in transboundary watergovernance.

Institutional challenges to apply IWRM persist globally along with criticisms of itstheoretical underpinnings [1]. At the national level, the need for integration is arguedunder the premise of cross-sectoral or inter-ministerial coordination regardless of howkey ministries perceive this integration. Within the context of transboundary watergovernance, IWRM application is emphasized in terms of the need to coordinate theincreasingly complex and multiple uses of water across sectors and scales, from localto supranational/regional, without taking into account the missing linkages betweennational and regional decision-making landscapes and processes.

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Taking the MRC as a case study, this article highlights recent research where webroadened the scope of analysis in transboundary water governance, beyond a state-focused approach [2,3]. It does this by incorporating the role of international playersand the implications of state-level bureaucratic infighting. In addition, it comparesinternationally-induced regional decision-making rules and procedures with the formalnational-level decision-making structure of its member countries.

The Mekong River Commission

Figure 3.1 Overview of MRCS organizational structure. Source: Mekong RiverCommission Secretariat.

The MRC was established in 1995, following the signing of the Mekong Agreementin the same year by the governments of Laos, Cambodia, Thailand, and Vietnam [4].Institutionally, the MRC has a policy making body, the Council, which is comprised offour members (each with the rank of a minister or equivalent) from each of the fourcountries (Laos, Vietnam, Thailand, Cambodia) in the Lower Mekong Basin. Underthe Council, the Joint Committee (JC) acts as the operational decision-making body.

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The JC is comprised of the director generals of their respective ministries. In its day-to-day operations, the MRC is equipped with a Secretariat (MRCS) as its technicalunit. In its functioning, the MRC relies mainly on donor funds channeled through itsvarious programs (see Figure 1). Outside the organizational structure of the MRC,the National Mekong Committees (NMCs) of each member state are designed tolink the MRC’s regional programs with national ministriesâ^ development plans. Atpresent the secretariat of each NMC is located in the Ministry of Natural Resourcesand Environment (MoNRE).

IWRM application has become the foundation of the MRC’s organizational function-ing, as supported by international donors discursively and financially. This is mostapparent in the formation of the Basin Development Program (BDP), Information andKnowledge Management Program (IKMP), and Environment Program (EP) as theMRC’s cross-cutting programs. Theoretically, these programs would integrate sectoralministriesâ^ national development plans through the establishment of inter-ministerialplatforms in each of the four countries. In practice, however, the inter-ministerial plat-forms do not function as sectoral ministries fail to see how they can benefit from suchintegration and coordination.

National-level bureaucratic landscapes and transboundary water governance

National-level bureaucratic landscapes form an integral part of the transboundarydecision-making network and processes. These landscapes represent the forcesthat shape decision-making processes, rather than a fixed organizational boundary.Furthermore, they mirror the particular governance entities or networks, each of whichcan authorize and enforce its own decisions and conduct in water management,regardless of the formal linkage to regional governance frameworks.

The way the MRC attempts to address the issue of cross-sectoral coordination throughthe establishment of the inter-ministerial platforms conflicts with the lack of sectoralintegration at the national level. As shown in Figure 2, water resources managementat the national level is hardly a domain of one particular ministry. From the perspec-tive of IWRM as a ’neutral’ management concept, this should not pose a problemto MRC/NMC’s coordination efforts. In reality, however, the establishment of inter-ministerial coordination bodies often overlaps with the issue of regulation. Regulationobviously involves overall restructuring of power relationships between the differentministries. This restructuring generates potentially extensive conflicts and heavy bu-reaucratic infighting between the NMCs, the agencies assigned with the regulationtasks, and sectoral ministries, the agencies who need to be coordinated.

Research implications

Our institutional analysis of the MRC highlights the politics of integration and chal-lenges the assumption that a well-functioning inter-ministerial decision-making plat-form could be set up at national level regardless of how sector ministries perceive

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Figure 3.2 Overview of bureaucratic actors in water resources management in the four LMBcountries. Source: Challenge Program for Water and Food workshop in Vientiane, 4-6 May2009. See footnote for explanation of acronyms.

the need for integration. It identifies the structural constraints in establishing such aplatform, its implications for IWRM application and transboundary water governance.Experience from the Mekong highlights the need to understand the relationships be-tween new and existing governance structures. In the water sector specifically, callsfor IWRM highlight the need to configure hydrological boundaries into existing politicalboundaries. While these boundaries are often discussed literally, it is equally crucialthat they exist within the administrative and sectoral landscapes in which decisionmaking actually take place.

References1. Biswas, A. K. (2004), Integrated water resources management: A reassessment.Water International 29(2): 248-256.2. Zeitoun, M. and J. Warner (2006), Hydro-hegemony: A framework for analysisof transboundary water conflicts. Water Policy 8: 435-460.3. Suhardiman, D., Giordano, M. and F. Molle (2011), Scalar disconnect: The logic

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of transboundary water governance in the Mekong. Society and Natural Resources:An International Journal 25(6): 572-586.4. Radosevich, G. E. (1995), Agreement on the cooperation for the sustainable de-velopment of the Mekong river basin: Commentary and history. Bangkok, Thailand:UNDP.

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CHAPTER 4

LAOS’ XAYABURI DAM PROJECT:TRANSBOUNDARY GAME CHANGER

Richard P. Cronin

Stimson Center, United States

Planned construction of up to 12 mainstream dams on the Lower Mekong is testing thestrength and effectiveness of a 1995 treaty commitment by Cambodia, Laos, Thailand,and Vietnam to cooperative and sustainable water resources development under theframework of the intergovernmental Mekong River Commission (MRC). China andMyanmar (Burma), which also share the river, are only observers within the MRC.Several developments provide grounds for cautious optimism that the transboundaryecosystems and resources of the Lower Mekong can be effectively and sustainablymanaged. The Laos government’s approval of a highly controversial hydropowerdam project in the country’s northern Xayaburi Province became the primary triggerfor these developments. The regional reaction to the Xayaburi dam project thus farmakes clear that the seriously skewed distribution of the transboundary costs andbenefits of mainstream dams has the potential to be a game-changer for regionalgovernance [1].

Energy-hungry China’s construction of a massive cascade of eight dams on the upperhalf of the Mekong already poses a direct and significant threat to the future of the riverand the livelihoods of 65 million people-mainly in the lower, Southeast Asian half of theriver. The first four completed Chinese dams are already altering the river’s hydrologyand impeding the flow of nutrient-rich silt that sustains soil productivity and nurtures

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fisheries downstream, as well as keeping the sea at bay in the Mekong Delta. Theproposed Lower Mekong dams would block the migration of hundreds of fish speciesthat are an important source of food and income, as well as cause the extinction ofseveral species such as the giant Mekong catfish. In return, all of the power generatedwould constitute only about six to eight percent of the total estimated electrical demandin the Lower Mekong Basin (LMB) by 2030. Most of the power would go to Thailand,which has hardly begun to institute energy efficiency measures that could make themainstream dams unnecessary.

Figure 4.1 Mekong Mainstream Dams

All of these threats are compounded by the ongoing and expected future effectsof climate change; specifically, rising sea levels, shifting rainfall patterns, and morefrequent extreme climate events such as drought, flood, and coastal inundation fromcyclonic storms. Climate change has not been factored into hydropower developmentplans either in Yunnan or the Lower Mekong countries, where scores of large damshave already been built or at various stages of planning and construction on tributaries.The biggest obstacle to a shared future for the Mekong Basin may be the inevitablyinequitable distribution of the costs and benefits of mainstream dams, should theybe built, among communities and countries. At the same time, the \transboundary

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difference" radically changes the geopolitical dynamics in a manner that gives reasonfor cautious optimism.

Developing country governments regularly ignore the costs borne by poor commu-nities who subsist on a natural resource to gain a perceived larger national benefit.It’s another matter when a project largely benefits country A and the environmen-tal and socioeconomic costs are disproportionately borne by countries B, C, and D.The upstream countries, China and Laos, have the most mainstream hydropowerpotential, and are positioned to reap most of the benefits of damming the river. Theheavy socioeconomic costs will be disproportionately borne by downstream countries,especially Cambodia, Vietnam and riverine parts of Thailand.

Estimates of the costs and benefits of the proposed Lower Mekong dams are highlysensitive to assumptions regarding key economic variables. The MRC’s Basin Devel-opment Plan (BDP2) estimates a cumulative net economic benefit of $33.4 billion over20 years [2]. An extensive Strategic Environmental Assessment (SEA) commissionedby the MRC used the same data base, yet found that the risks and uncertainties areso great that it urged a ten year moratorium on mainstream dam construction to allowfurther study of these risks [3].

Another study commissioned by the US Agency for International Development (US-AID) carried out a \sensitivity" analysis of the BDP2 estimates and reached an evenmore alarming conclusion. A range of assumptions were applied to the BDP2 data for:the current market value of lost fisheries, the value of wetlands, and the discounted netpresent value of lost environmental services. Radically different estimates emerged.The total economic benefits for 11 dams ranged from an unimpressive $6.6 billion toa staggeringly negative $274.4 billion. Whereas all four MRC countries had positivetotal economic benefits under the BDP2’s assumptions, only Laos has a net benefitunder the assumptions in the later study. The worst case impacts ranged from -$128.9billion for Thailand, -$110.3 billion for Cambodia, and about -$50 billion for Vietnam[4].

The drumbeat of negative findings has attracted the attention of Laos’ neighbors andemboldened civil society. Vietnam, in particular, actively encouraged public meetingsand media coverage of the threat that mainstream dams posed to the Mekong Delta,which is already suffering the effects of pollution, poor water management, and a risingsea level. Fortunately, the 1995 treaty that created the MRC includes procedures fornotification, prior consultation and agreement (PNPCA) in the case of mainstreamdams. Beginning in October 2010 the MRC organized a series of public meetingsthroughout the region that was much criticized for being inadequate. Nonetheless,when representatives of the four countries met in Vientiane, Laos, in April 2011, afterthe conclusion of the specified 6-month review period, Vietnam, Cambodia, and evenThailand declined to give their approval, citing concerns about the environmental andsocioeconomic impact of the project on their countries. In a subsequent meeting withthe Prime Minister of Vietnam and at a meeting of all four prime ministers in the wings

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of the ASEAN Summit in Bali, in November 2011, the Lao Prime Minister committedto an indefinite suspension of the project pending further studies and agreed to seekfunding from Japan for that purpose. The four governments formally ratified theagreement at a special meeting of the MRC Council on December 8, in Siem Reap,Cambodia.

Whether the delay of the Xayaburi project will be a permanent turning point towardscooperative and sustainable development depends critically on follow-up action. Theconstruction of access roads to the site is well advanced and continued despite theannounced suspension of the project by the Lao government. The suspension ofthe Xayaburi project was thrown into question when the Thai development companyannounced in early April that it had signed a contract with its own Lao-registered sub-sidiary to begin dam construction on March 15, 2012. Not only did environmentalistsand civil society cry foul; in an unusual public show of regional discord Vietnam’srepresentative to the MRC charged that the action contradicted both the Lao govern-ment’s commitment and the subsequent agreement of the MRC Council. Cambodiahas raised the possibility of legal action.

The MRC, its member countries, and the international donor community must supportcomprehensive new analysis of the potential costs and benefits, and do so quickly.In the best case, a new norm, a ’Mekong Standard’ for project planning, engineering,and environmental and socioeconomic impact assessments will emerge and form thebasis for regional decision making [5]. The most urgent need is for the US, Japanand other ’friends of the Mekong’ countries to provide the resources to support furtherstudies. In April 2012, Japan announced that it would fund such a study; what happensnext is unclear. Laos cannot be expected to keep the project suspended if the newstudies of mainstream dam impacts do not begin soon, but the issue would be mootif dam construction is already underway.

References1. Mekong River Commission (MRC) 2011, ’Replies from Notified Countries’2. MRC 2011, Basin Development Plan Programme -Phase 2: Assessment of Basin-wide Development Scenarios Main Report.3. International Centre for Environmental Management 2010, Strategic Environmen-tal Assessment of Hydropower on the Mekong Mainstream -Final Report.4. Costanza, R, Kubiszewski, I, Paquet, P, King, J, Shpresa, H, Sanguanngoi, H,Bach, NL, Frankel, R, Ganaseni, J, Intralawan, A & Morell, D 2011, Planning Ap-proaches for Water Resources Development in the Lower Mekong Basin, PortlandState University and Mae Fah Luang University.5. Cronin, R & Hamlin, T 2012, Mekong Turning Point: Shared River for a SharedFuture, Stimson Center, Washington DC.

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CHAPTER 5

THE XAYABURI DAM: CHALLENGES OFTRANSBOUNDARY WATERGOVERNANCE ON THE MEKONGRIVER

Paul Wyrwoll

Australian National University, Australia

The title of the Lao P.D.R government’s hydropower website is explicit: ’PoweringProgress’. With the stated objectives of alleviating poverty and accelerating develop-ment, the government intends for Laos to become the ’battery of Asia’: nine dams areplanned for the Mekong River mainstream in Laos and a further 63 dams on tributaryrivers (Powering Progress 2011). The demand for this expansion originates from thesurging energy requirements of neighbouring countries, with Laos looking to benefitfrom large export earnings and foreign investment. Progress on the first mainstreamproject at Xayaburi is not going smoothly. On December 8, construction was officiallysuspended following a meeting of the member countries of the Mekong River Commis-sion (MRC): Cambodia, Laos, Thailand, and Vietnam. This is the second suspensionthis year due to concerns over potential environmental and social impacts.

The Xayaburi project is the first of 11 planned mainstream dams (including two in Cam-bodia), and many commentators view it as a yardstick for later projects. If constructionproceeds without sufficient consideration for the risks, the dam will be a catalyst forothers to proceed likewise. Despite being a relatively cheap and low-carbon source ofenergy, large-scale hydropower bears significant environmental costs. Dams obstructthe fundamental processes of river ecosystems. Though China has built four largedams on the upper reaches in Yunnan Province, the mainstream in the Lower Mekong

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Figure 5.1 Map of Mekong mainstream dams in the Lower (dark blue) and Upper (lightblue) Basin. Xayaburi appears as Sayabouly. Source: MRC (2011)

Basin (LMB) remains dam free. Hydropower development on the Lower Mekongmainstream will drastically alter the river’s most productive region. There is, however,great uncertainty concerning the size of these changes and how much the associateddamages can be mitigated.

Of particular importance is the impact on fisheries. The LMB is the largest inlandfishery in the world and, if all 11 projects proceed, mainstream dams would preventthe migration of over fifty fish species, leading to an estimated 26-42% loss in annualfish production (MRC 2010). In addition to being an important source of income, fishare the major source of protein for over 23 million people living in the riparian areas

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of the Lower Mekong. Such production losses would have devastating consequencesfor food security in the region, particularly for subsistence communities. The LaoP.D.R government and dam developers have argued that fish passages can mitigatethe problem; most scientists disagree, however, that there is sufficient evidence thatcurrent technology could accommodate the sheer volume and diversity of local fishmigration.

Given the transboundary course of the Mekong River, dam construction is a regionalissue: mainstream dams in Laos would alter the hydrology and ecology of the TonleSap lake and its banks, the life-source for much of Cambodia’s population. In Viet-nam’s food bowl, the Mekong Delta, blockage of sediment hundreds of kilometresupstream would reduce the productivity of agriculture, as well as river and oceanfisheries. Reflecting these transboundary issues, the MRC was established in 1995as a dialogue forum. The MRC plays a facilitating role, with members having no rightto veto the internal actions of other countries and only being obligated to consult.In 2010, the MRC commissioned a report that recommended a 10 year moratoriumto allow further study of the large and uncertain risks associated with mainstreamdam construction (MRC 2010). This recommendation has been widely supported byscientists, environmental groups, and aid donors.

Though the recently announced suspension is consistent with the MRC report, theannouncement did not include a timeline and the final outcome is still very uncertain.On one hand, the suspension may be a temporary demonstration that due process hasbeen followed, with construction eventually continuing regardless. Alternatively, thismay be a face-saving method for Laos to accede to its neighbours’ vocal concerns(particularly those of its powerful ally Vietnam) and cancel the project. Whateverthe outcome, it will reflect the many, complex interests involved. The Lao P.D.R.government has consistently demonstrated the intention to proceed with the Xayaburidam. A Bangkok Post investigation revealed that preparatory construction activitieshad already begun in early 2011 during the official MRC consultation process. Afew months later, the Ministry of Energy and Mines informed the dam developerthat construction should proceed, although the official consultation process is stillyet to be completed today. Officials have frequently invoked notions of sovereigntyand highlighted the nation’s poverty in public statements. Recently, Laos has cited thefavourable recommendations of a self-commissioned report to allay external concernsregarding environmental impacts.

The position of the Cambodian government is more complex. Although it has lobbiedfor delay and is concerned about the effects of all nine mainstream dams plannedin Laos, it is not opposed to mainstream dams more generally because of the twoplanned Cambodian projects. Given Cambodia’s poverty, these dams would generatea significant amount of national revenue. On the other hand, the Vietnamese gov-ernment has been very vocal in its public opposition, particularly by the diplomaticstandards associated with ASEAN’s non-interference principle. Vietnam stands tolose the most and gain the least from mainstream dam construction. Accordingly, it

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supports the 10 year delay for all projects. However, Vietnamese companies are de-veloping three of the planned mainstream dams, among many other tributary projectsin Laos, to export electricity to a Vietnamese economy which is gradually becomingexposed to energy insecurity.

Thailand is the principal destination for hydropower generated in Laos. Therefore itis largely the demands of Thailand’s economy (and the state-owned electricity com-pany) driving construction and the government could use this leverage to ensure asustainable outcome. However, Thailand stated before the recent MRC meeting that adecision on construction is an internal matter for Laos and refused to use its influence,at least not publicly. There is significant domestic opposition to the government’s tacitsupport, largely because the stretch of the Mekong that functions as the Thai-Laosborder will be heavily affected by the six dams planned in northern Laos (includingXayaburi).

China is less directly involved in the Xayaburi dam but its overall role in the LMB ishighly significant. In addition to the four large dams already operational on the upper-Mekong in Yunnan, there are a further 18 mainstream dams planned. The Chinesedams provide a precedent for Laos: if China is building dams on the Mekong whyshouldn’t Laos? More importantly, Chinese developers and financiers have interestsin at least four of the planned mainstream dams and around half of the tributary dams.China exerts significant economic and political power in the region, particularly inLaos and Cambodia where its investments are rapidly increasing. If China perceivesmainstream hydropower development as aligned with its self-interest then it may seekto influence progress. China’s increasing willingness to protect its regional interestsis reflected in the deployment of armed Chinese police vessels on the piracy-affectedwaters of the Mekong in northern Laos and Myanmar.

Other prominent actors, such as environmental NGOs and development agencies,have consistently voiced their support for the decade long moratorium. It shouldbe noted, however, that the Asian Development Bank is funding and developing in-frastructure projects, such as long-distance power transmission lines, that facilitatemainstream dam construction. European countries, Australia, and Japan are activeas aid donors in the region, with the latter facilitating the recent suspension announce-ment and leading the upcoming study of potential impacts.

There is also a global geo-political element to this issue. The United States haslaunched a Lower Mekong Initiative that emphasises sustainable hydropower devel-opment and the US Congress recently adopted a resolution expressing opposition toadvancement of the Xayaburi project. It may be that the US seeks to counter risingChinese influence in the region by supporting opposition to mainstream dams. Delin-eating these interests into a coherent picture of how the Xayaburi project will progressis out of the question and it is unclear what the ultimate outcome of the recent sus-pension will be. What is certain is that the outcome will have critical economic, social,and political consequences throughout the region. The Xayaburi dam will certainly be

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a catalyst for other projects and while such developments may generate significanteconomic benefits, they could potentially be outweighed by costs to the environment,food security, and poverty alleviation. For a region experiencing its longest period ofrelative calm for decades, transboundary water governance is likely to be a, if not the,defining issue in the Lower Mekong Basin for many years to come.

References1. MRC (Mekong River Commission) 2010. Strategic Environmental Assessmentfor Hydropower on the Mekong Mainstream.2. MRC (Mekong River Commission) 2011. Web site of the Mekong River Com-mission.3. Powering Progress 2010. Website of the Department of Energy Promotion andDevelopment, Ministry of Energy and Mines, Lao P.D.R Government.

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CHAPTER 6

MAINTAINING THE MEKONG: USINGECOSYSTEM PAYMENTS TO SECUREA GLOBAL FOOD-SECURITY ASSET

David Fullbrook

DNV GL Clean Technology Centre, Singapore

In good times, rice fills plates and bowls from Bangkok to Brussels, Dhaka to Dakar.However, if supplies tighten trouble looms. When prices tripled in 2008, protests flaredin many poor importing countries, riots struck West Africa, and the government fell inHaiti. Surprisingly, the world was not short of rice [1]. Nevertheless trouble with otherstaples sowed doubts, which telegraph quickly in a world of transnational farming,globalised food markets, and nervous policymakers. Worse could have happened.Soaring rice prices in 1979 helped tip Liberia into war [2].

Even without the drama of surging prices, people face malnourishment when pricessteadily outpace wages, with long-term consequences for health and well-being. En-suring ample supplies of rice to avoid malnourishment, or hunger, while maintainingincomes to keep farmers in business is a delicate problem for public welfare andnational security. Unfortunately, the outlook is not promising. Increasing demandfrom an urbanising world collides with tougher conditions for cultivating rice and otherfoods, for two key reasons: dammed rivers and climate change. Dams damage riverecosystems and harm communities on such a scale that the costs can easily equalnarrowly conceived benefits, and often the impacts are simply too great to mitigate[3,4,5]. Furthermore, energy technologies like solar, wind, and improved efficiency

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are cheaper and faster alternatives, which generate power without causing the heavydamage to ecosystems associated with large dams [6].

A weaker ecosystem can leave communities poorer, with fewer options for adaptingagriculture and fisheries to the higher temperatures, greater floods, worse droughts,and rising seas of climate change. Floods and drought might in some locations betempered by dams, particularly by those with small reservoirs for local needs. Yetgiven the time and resources dams soak up, plus the long-term damage, it might bewiser to learn to live with flood patterns [7] and plan for droughts as was the caseuntil recent times. How large dams affect rice production will become clear overthis decade in the Mekong River basin, shared by China, Myanmar, Laos, Thailand,Cambodia, and Vietnam. What happens there matters globally for two main reasons.

One: food security. In 2012, the Mekong Delta supplied half of Vietnam’s rice and18 percent of rice traded internationally [8,9]. The Mekong, accounting for about aquarter of global inland fish catch [10], is an increasingly important source of proteinfor the basin’s growing population [11] (see Chapter 2 ). Farming and fishing are beingstressed by rising seas and extreme weather events caused by a changing climate inaddition to upstream dam building in China and especially in Laos. Two: extensivedamming foreshadows plans elsewhere. Dam building is booming across developingAsia and picking up in Africa. China has built six dams on the Mekong, alteringseasonal water levels [12]. Laos now has eleven dams on Mekong tributaries, mostbuilt within the last decade. Another ten are due by 2019 [13]. Among them is theXayaburi, the first dam across the Mekong mainstream south of China (see Chapter5). The second mainstream dam will partially block the Don Sahong falls.

The dams are cutting off breeding grounds in the tributaries for hundreds of migratoryfish species, trapping nutrient-rich sediments, and disturbing flood cycles. As a result,yields and incomes are expected to fall significantly for rice farmers and fishers down-stream in Cambodia and Vietnam [14,15]. Meanwhile, evidence suggests peopleliving downstream suffer worse health [16]. Over the last few years, Cambodia andVietnam, plus local and international campaigners, have urged Laos to rethink damplans. Laos has not been persuaded, preferring instead to bank on revenue from theexport of hydroelectricity, primarily to Thailand, to help reduce dependence on mineralexports and eliminate poverty. Ironically, poverty is partly caused by environmentaldamage from rapid expansion of plantations, mines, and dams. The failings of weakregulation are compounded by corruption, a severe problem acknowledged by thegovernment.

An impasse has been reached. If dams are abandoned, Laos foregoes revenue, whileCambodia and Vietnam benefit from stronger food security and agricultural income.If dam building continues, Laos benefits from the revenue while the costs accumulatedownstream in Cambodia, Vietnam, and beyond. The trade-off illustrates the asym-metric distribution of resource endowments, which is the basis for conflicting interestsamong riparian states. Interests could align, however, if countries which benefit from

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Figure 6.1 Comparison of modes of upstream-downstream coordination.

the free-flowing river made payments, dependent upon stewardship performance, toLaos to support the ecosystem. The basic principle of payments for maintainingecosystems is well established and has been applied in Europe, North America, andLatin America [17,18,19]. New York City, for example, avoids higher water treatmentcosts by paying farmers upstream to reduce pollution.

Payments would introduce a new flow of tangible semiotic signals from downstream toupstream communities (see Figure 1), superseding intangible rhetoric and providinginformation to shape behavior and coordinate interests. Payments would complementthe tangible biophysical signals people currently receive downstream in the form ofnutrients and fish in the water, the flood cycle, and so on. Benefits of paymentswould include preserving food and livelihoods in Cambodia and Vietnam, generatingrevenue for development in Laos, and promoting regional peace and cooperation.For Laos to supply stewardship services, such as maintaining the free flow of water,silt, and nutrients, protecting fish spawning grounds, and tackling water pollution fromagriculture and sewage, payments would at the least have to approximate expectedrevenues from hydroelectricity exports.

That revenues from dams have not transformed Laos suggests payments are afford-able. The Mekong Delta alone, for example, already earns $10 billion annually inexports, mostly from rice, fruit, and fish [20]. Cambodia and Vietnam may in thefuture earn even more if the river ecosystem is maintained, making payments to Laosrelatively cheaper. The international community should also contribute because theMekong, through exports of rice and fish, is a global food-security asset. Granted,

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payments for ecosystem services, or more helpfully stewardship, can be problematic.What gets valued by whom under what conditions raises issues of equity and power.This valuation and any rights that follow can, if not handled carefully, lead to commod-ification which ends up taking precedence over the holistic management necessaryto maintain ecosystems and their communities [21,22,23]. Yet, those issues and riskspale in comparison to the notably imperfect processes for establishing the economicbenefits and evaluating the environmental and social costs of dams [24]. Moreover,dismantling a dam and restoring a river appears vastly more difficult than makingcorrections to flaws in a management method such as ecosystem payments.

Establishing payments on such a scale will nevertheless be challenging. Internationalsupport and guarantees to help ensure performance and timely payments, perhapschanneled through the Mekong River Commission, could help build confidence andstart the process of finding a formula for calculating payments and agreeing on meth-ods for measuring performance and sharing costs. In return, international supporterswould enhance food security, buttress regional stability, and establish a model thatcould be transferred elsewhere. Introducing ecosystem payments into the Mekong tosecure rice production, livelihoods, and regional stability is ambitious and will requirea concerted effort by many actors. Nevertheless, the prospect of reducing risks tofood security and regional stability is good cause for riparian states and other partiesto act.

References1. Food and Agriculture Organization. 2011. The 2007-2008 Rice Price Crisis: Howpolicies drove up pricesand how they can help stabilize the market. Economic andSocial Perspectives Policy Brief 13.2. Aker, J., Ramachandran, V., Timmer, P. 2011. West African experience with theWorld Rice Crisis, 2007-2008.3. World Commission on Dams. 2000. Dams and development.4. Ansar, A., Flyvbjerg, B., Budzier, A., Lunn, D. 2014. Should we build more largedams? The actual costs of hydropower megaproject development. Energy Policy 69:43-565. Leslie, J. 2014. Large dams just arent worth the cost. New York Times.6. Kahn, J., Freitas, C., Petrere, M. 2014. False Shades of Green: The Case ofBrazilian Amazonian Hydropower. Energies 7: 6063-6082.7. White, G.F. 1945. Human Adjustment to Floods: A Geographical Approach tothe Flood Problem in the United States. Department of Geography Research PaperNo.29. Chicago: University of Chicago8. Mekong rice exports in 2012 estimated at 6.9m tonnes. VietnamPlus. 2012.Mekong Delta rice exports up 7.8 percent in 2012.9. World rice trade 2012 37.4m tonnes. International Rice Research Institute. RiceStatistics.10. Baran, E., Jantunen, T., Chong, C.K. 2007. Values of inland fisheries in the

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Mekong River Basin. World Fish Center.11. Mekong River Commission. Fisheries.12. Rsnen, T., Koponen, J., Lauri, H., Kummu, M. 2012. Downstream hydrologicalimpacts of hydropower development in the Upper Mekong Basin. Water ResourceManagement 26: 3495-3513.13. Ministry of Energy and Mines. 2013. Electric power plants in Laos March 2013.Available at: poweringprogress.org/new/power-projects.14. Ziv, G., Baran, E., Nam, S., Rodrguez-Iturbe, I., Levin, S. 2012. Trading-offfish biodiversity, food security, and hydropower in the Mekong River Basin. PNAS109(15): 5609-561415. International Centre for Environmental Management. 2010. Mekong RiverCommission strategic environmental assessment of hydropower on the Mekong main-stream - final report.16. Polimeni, J., Iorgulescu, R., Chandrasekara, R. 2014. Trans-border public healthvulnerability and hydroelectric projects: The case of the Yali Falls Dam. EcologicalEconomics 98: 81-8917. Darghouth, S., Ward, C., Gambarelli, G., Styger, E., Roux, J. 2008. WatershedManagement Approaches, Policies, and Operations: Lessons for Scaling Up. WorldBank.18. Engel, S., Pagiola, S., Wunder, S. 2008. Designing Payments for EnvironmentalServices in Theory and Practice: An Overview of the Issues. Ecological Economics65(4): 663-67419. Wunder, S. 2005. Payments for Environmental Services: Some Nuts and Bolts.Centre for International Forestry Research. Occasional Paper Number 42.20. Luu Van Dat. 2014. Mekong Delta an untapped trade giant. Viet Nam News.21. Fisher, B. et al. 2008. Ecosystem Services and Economic Theory: Integrationfor Policy-relevant Research. Ecological Applications 18(8): 2050-206722. Kroeger, T. 2012. The Quest for the optimal Payment for Environmental Ser-vices Program: Ambition Meets Reality, with Useful Lessons. Forest Policy andEconomics 37: 65-7423. Barnaud, C., Antona, M. 2014. Deconstructing ecosystem services: Uncertain-ties and controversies around a socially constructed concept. Geoforum 56:113-123.24. See for example references 3-5, 16.

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CHAPTER 7

COMPETING FOR THE MEKONG: ACASE OF COMMON-ASYMMETRICRESOURCES?

David Fullbrook

DNV GL Clean Technology Centre, Singapore

The Mekong River has in recent years been a source of deepening discord. Laos isbanking on dozens of large dams to generate electricity for export and boost govern-ment revenue [1].However, dams have consequences downstream, disturbing floodcycles, nutrient flows and sediment transport. Cambodia and Vietnam face mountingcosts from damage to fisheries, farming, food security and even the existence of theMekong Delta [2,3,4].

Competing and conflicting interests have revealed the limitations of the Mekong RiverCommission amid shifting political currents and the legacies of war-torn decades. TheCommission was established by Cambodia, Laos, Thailand and Vietnam, encouragedby western states, to undertake research, provide advice and facilitate discussions.Members did not grant supranational power to draft policy, impose regulation, andtake enforcement action to ensure sustainable use. Moreover, China and Myanmar,two of the six riparian states are not members. In the absence of a strong coordinatinginstitution, states pursue divergent interests with growing risks to the river, its people,and regional security. Collective-action problems of international rivers are complexfor at least three reasons. One, local and regional ecosystems and environmentalprocesses interface with global hydrological cycles and climate dynamics. Two, therelative arrangement of states to each other and the character of the resource within

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their borders may present a series of nested or interconnected collective-action prob-lems. Three, interplay between competing and conflicting interests prizing differentelements of the river.

Resources, whether simple or complex, are usually managed with reference to theeconomic framework for rivalry which categorizes resources in terms of public, private,common and club goods and proscribes outlines for policy accordingly. Fox andSneddon, for instance, argued that the Mekong’s flow is a common-pool resource,a type of common good, because there is rivalry in use and exclusion is costly [5].Consequently, states pursue private interests of appropriation or provision at theexpense of each other and the ecosystem, playing out the dilemma of common-pool resource users [6]. Characterizing the Mekong as a common-pool resourceis however unsatisfactory in two ways. One, in practice exclusion turns out to beaffordable for upstream states, because of international norms of sovereignty and thelimited recourse to international law over riparian rights and responsibilities betweenstates.

Consequently, upstream states, for example, can treat the river as a private good,at least in terms of reorganizing the river to generate electricity and revenues. Bycontrast, it is hard to see how downstream states can physically or economically ex-clude intrusion imposed by the externalities arising from activities by upstream states.If remedies are unavailable via negotiation or international law few options remainother than those that would probably breach international norms and be extremelycostly. Two, the river, for states, is not a pool, interpreted as implying more or lesssymmetric access, illustrated by the classic cases of fisheries or pastures. Instead,endowment, access and impacts associated with the one-way flow of a transnationalriver are inherently asymmetric, a product of the relative positions of riparian statesgiving rise to relationships of relativity. The resulting problems are uneven, whichmakes resolution even harder than the omnidirectional externalities facing users ofcommon-pool resources [7].

Prospects for states to establish institutions fostering confidence and collaborationmight improve if the conceptual framework explicitly recognized structural, ecologicaland power qualities of a transnational river like the Mekong. One way to incorporatethe qualities shaping rivalry over a transnational river is to introduce the categoryof common-asymmetric resources, defined by uneven access, rivalry, excludability,and indivisibility, at least not without risk of great, and probably irreversible, impacts.Common-asymmetric resources are open to affordable exclusion because structureand relative position obstructs even access by users and allows consumption withuneven benefits and costs. Users favoured by structural realities of a common-asymmetric resource can capture benefits without regard to the costs for others who,disadvantaged by power inequalities, are unable to foster cooperation to alleviate theirlosses.

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Figure 7.1 Simplified comparison of common symmetric and asymmetric resources.

Common-asymmetric resources are the structural opposite of common-symmetric(pool) resources (Figure 1). Furthermore, the physical structure of common-asymmetricresources contrasts with common-pool resources with asymmetrical problems of al-location, such as irrigation systems. For such resources, physical factors may berearranged to provide symmetrical access by reversing flow or off-take sequence.8Reversing common-asymmetric resource flow is impractical. Great quantities of en-ergy would be necessary and the toll on ecosystems heavy.

Common-asymmetric resources also draw attention to perceptions of users high-lighting another dimension of complexity. Depending upon scale of perception, a re-source may appear common-symmetric to one observer, while appearing as common-asymmetric to another. For example, within territorial boundaries fish are in theabsence of enforced regulation a common-pool resource for citizens, implying citizen-ship in certain circumstances gives membership to club goods. On the other hand,when that stream is viewed from the perspective of the river as an indivisible systemasymmetry emerges.

The consequences of asymmetry depend on whether states compete or voluntarilyestablish an institution to govern their competing and conflicting interests as a sin-gle community in ways which reflect and maintain the wholeness of the river. Thechallenge is to identify institutional remedies for holistically managing and collectivelysharing the bounty and potential of a nurtured river, under conditions of power in-equalities with potentially uneven distribution of benefits and costs.9 Moreover, aninstitution must remain nimble if it is to adapt sustainable scale to the evolving limitsof the river’s nature driven by climate change.

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An institution governing use has to ensure scale does not exceed the limits of sustain-ability, the resource is allocated efficiently without putting the ecology at risk, and thedistribution of benefits is considered fair. The latter point is critical because if states feelthe outcome leaves them disadvantaged cooperation may be reduced or withdrawn.More so where culture and history make sovereignty an especially sensitive matteras is the case for the Mekong. Categorizing the Mekong as a common-asymmetricresource is the first-step to establishing a foundation for states to design a compatibleinstitution, drawing on international law, to replace competition with cooperation. Rec-ognizing the asymmetric competing and conflicting interests affecting the river wouldopen the possibility for redesigning the Mekong River Commission.

In the case of the Mekong, a redesigned institution might foster enduring collabo-ration between riparian states by, for example, employing the proven mechanism ofecosystem payments, which provides a positive incentive to coordinate sustainablebehaviour [10]. Opportunity costs are compensated providing a basis for conservationand sustainable use which is economically sensible [11] and preserves the prospectfor benefits to increase over time [12]. The economics will certainly not be easy, evenif rivers like the Mekong only present a single collective-action problem. Harder yet willbe the politics of cooperation to secure the future of a common-asymmetric resourceand its people. Left untreated the social, economic and environmental consequencesof states treating the river as a private good risk causing problems with costs whichwill ripple beyond the Mekong.

References1. Times Reporters. Hydropower major revenue earner for the country. VientianeTimes. 30th January 2015.2. Unquiet grows the Don. The Economist. 20th December 2014.3. Ziv, G., Baran, E., Nam, S., Rodriguez-Iturbe, I., Levin, S. 2012. Trading-off fishbiodiversity, food security, and hydropower in the Mekong River Basin. Proceedingsof the National Academy of Sciences of the United States of America.4. 2010. Mekong River Commission strategic environmental assessment of hy-dropower on the Mekong mainstream -final report. International Center for Envi-ronmental Management, Hanoi.5. Fox, C., Sneddon, C. 2005. Flood pulses, international watercourse law, and com-mon pool resources. United Nations University - World Institute for DevelopmentEconomics Research, Helsinki.6. Gardner, R., Ostrom, E., Walker, J. 1990. The nature of common-pool resourceproblems. Rationality and Society, 2(3), 335-3587. Bernauer, T. 2002. Explaining success and failure in international river manage-ment. Aquatic Sciences, 64, 1-19.8. Ostrom, E., Gardner, R. 1993. Coping with asymmetries in the commons: self-governing irrigation systems can work. The Journal of Economic Perspectives, 7(4),93-112.

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9. Ciriacy-Wantrup, S. 1971. The Economics of Environmental Policy. Land Eco-nomics, 47(1), 36-45.10. Fullbrook, D. 2015. Maintaining the Mekong: Using ecosystem payments tosecure a global food-security asset. Global Water Forum.11. Balmford, A., Bruner, A., Cooper, P., Costanza, R., Farber, S., Green, R., et al.(2002). Economic reasons for conserving wild nature. Science, 297, 950-953.12. Fisher, A., Krutilla, J., Cicchetti, C. (1972). The economics of environmentalpreservation: a theoretical and empirical analysis. The American Economic Review,62(4), 605-619.

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