DAMMING THE MEKONG: HYDROPOWER'S HIGH PRICE

UNCLAS SECTION 01 OF 05 PHNOM PENH 001189

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SUBJECT: DAMMING THE MEKONG: HYDROPOWER'S HIGH PRICE


1. (SBU) Summary. Existing and planned hydropower projects along
the world's eighth largest river reflect the development dilemma of
cheaper, low-polluting power vs. healthy fisheries and the interests
of downstream communities. Villagers along eastern Mekong
tributaries in Cambodia complained to Regional Environmental Officer
and Econoff of unpredictable and destructive floods, fish catch
declines, and health problems following the construction of dams
upstream in Vietnam. Cambodian government officials--who are
planning their own hydropower projects--were largely uninformed and
unconcerned about these consequences. However, given the tremendous
economic, environmental, social, and food security implications of
hydropower on the world's most productive freshwater fishery, this
issue deserves greater attention from Mekong region governments and
donors alike. End Summary.


2. (U) The recent construction of dams in Vietnam and Laos on three
Mekong tributaries--the Sekong, Srepok, and Sesan, known
collectively as the "3S" rivers--as well as on the Mekong River
itself has negatively affected villages in Cambodia's sparsely
populated and poverty-stricken northeast. Concrete, reliable
information about how many dams are in operation, how many are under
construction, how many are in the planning stage, and the locations
of all of these is hard to obtain. Various sources report a total
of five completed dams along the Vietnamese portion of the Sesan
River, "several" dams under construction along the Vietnamese
portion of the Srepok river, and five dams planned or being studied
along the Laotian portion of the Sekong River. Regional
Environmental Officer and Econoff recently traveled to Stung Treng
and Ratanakiri provinces in northeastern Cambodia to investigate the
impact of the dams on downstream Cambodian communities. Septel will
report on forestry and land challenges in the area.

Communities Flooded, But Officials Dismiss Claims
-------------- --------------


3. (U) In recent years, changes in river flow have had a variety of
economic, health, and social impacts on affected communities,
according to residents interviewed during on-site meetings with
three different villages in Stung Treng and Ratanakiri provinces and
in discussions with village representatives attending a "3S River
Celebration" in Ratanakiri. Communities reported that fish catch
has decreased over recent years, the result of both illegal fishing
practices (e.g. the use of electric shock, explosives, or illegal
nets) and the environmental impact of upstream dams. Several
communities reported more floods than normal and sudden floods at
unusual times--such as during the dry season. Coming without
warning, these floods have a disastrous affect on already poor
communities--ruining crops, drowning farm animals, and leading to
the loss of boats and other equipment. Villagers also reported
greater erosion along river banks, and, when rainy season floods
don't materialize as expected, the loss of fertile sediment normally
deposited on fields. Some villagers reported a decline in water
quality, which they blamed for outbreaks of diarrhea and skin
diseases.


4. (U) Provincial government officials were generally dismissive of
villagers' claims and ill-informed about dams in neighboring
countries or plans for dams in Cambodia. The Ratanakiri Chief of
Cabinet dismissed villagers' claims that they had experienced
flooding in May, explaining that floods simply weren't possible in
the dry season. He cautioned, "Don't believe everything they [the
villagers] tell you; they are illiterate and don't understand
science." (Comment: Evaluating the villagers' claims is genuinely
difficult. Without data about dam releases, rainfall, and river
water levels at various locations, it is hard to verify villagers'
statements and to determine if these reported problems are due to
poor dam management, well-planned releases or natural flood events.
Nonetheless, we found the officials' ready dismissal of the
villagers' claims to be worrisome. Cultural differences also seemed
to be at play, as affected communities were often members of
indigenous, non-Khmer-speaking ethnic groups, while provincial
officials are almost exclusively ethnic Khmer and often from other
parts of the country. End Comment.)

Attempts at Flood Warning Fall Short
--------------


5. (SBU) When the Yali Hydropower Plant in Vietnam's Central
Highlands first came into operation in the late 1990's, Vietnam

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failed to give advanced warning of water releases from the dam,
resulting in loss of life and property along Cambodia's Sesan River.
Cambodian officials told us that the Vietnamese government now
provides adequate notice, but an extremely inefficient communication
system within Cambodia meant that such warnings often reached
affected communities too late. Yun Chetana, the Director of the
Ratanakiri Provincial Water Resources Department, explained that
notifications of an impending release are sent from Vietnam to Phnom
Penh by fax, the faxes are retransmitted to the provincial post
office, but he is often not told that they have arrived until
several days later. Upon receiving the information, he sends
letters via motorcycle taxi to district offices, which are
responsible for passing the information to commune councilors, who
must inform the villages they represent.


6. (SBU) Although communication could break down at any point in
the chain, Chetana said the main problem was getting the incoming
notifications to his office. He said that authorities in Vietnam
could send him a fax or an e-mail directly, but that his office
lacked both a fax machine and Internet access. He also noted that an
inexpensive cell phone or radio network would speed up his outgoing
notifications. His own Department had no budget for this equipment,
he explained, and he asked whether the USG could assist with "a few
hundred dollars" for the purchase of a fax machine.


7. (SBU) Villagers reported that they often received no warning at
all of coming floods, or that the warnings arrived too late. In one
tragicomic case, villagers experienced a destructive and unexpected
flood in the dry season, only to receive word about a week later of
another major water release scheduled for the 6th of the month. The
villagers put considerable effort into moving all their remaining
animals, boats, etc. to higher land in anticipation of the flood,
which never came. Only then did they realize that the warning
pertained to the first flood--but had arrived nine days after the
flood occurred.

Attempts to Coordinate with Other Countries Falter...
-------------- --------------


8. (SBU) Few of the Cambodian government officials we met seemed
particularly concerned about the dams, and none saw themselves as
being in a position to have any influence on the operation of
existing dams or the construction of new ones. River guards just
south of the remote Khone Falls at the Lao-Cambodia border told us
they had informed the Director of the Stung Treng Fisheries
Administration about the construction of a new dam on a channel of
the Mekong in southern Laos and that they had been hearing
explosions coming from the river just north of their station.
(Note: The location would suggest that this is the Don Sahong dam,
though Lao officials report that no action has yet been taken on
this dam. End Note.) When we asked the Director, however, he
stated that he had not investigated their reports and said that
discussions with other countries were not part of his job.
Similarly, the Governor of Stung Treng province said he had not
heard anything at all about the proposed construction of a dam at
Don Sahong. He reported that he had no input into discussions about
the construction of dams in Laos or Vietnam nor was he aware of any
investigation into their downstream effects on Cambodia.


9. (SBU) Staff from the Cambodia National Mekong Committee (CNMC)
in Phnom Penh and the Director of the Water Resources Department in
Ratanakiri province were more engaged and well informed than other
officials we met, although one CNMC staffer reported that he
obtained his information from the newspaper rather than from his
government colleagues. Even these interested officers reported
difficulties in coordinating with Vietnam. Officials from both
agencies told us that although the two governments schedule regular
meetings to discuss issues related to the dams, a lack of funding
for them to travel to Vietnam frequently caused those meetings to be
cancelled. As a result, consultations take place most often in
Cambodia, and far less frequently than they should.


10. (SBU) Environmental Impact Assessments (EIAs),which include
assessments of impacts on local and downstream communities, are
supposed to be completed before dam construction begins, but
experience suggests this rarely occurs. NGOs claim that without
their pressure, some EIAs would not have been performed at all.
Moreover, EIAs are paid for by the developers building the
dams--raising serious questions about the independence and integrity

PHNOM PENH 00001189 003 OF 005


of the assessments. CNMC members told us that they had just
received a lengthy Vietnamese-language EIA to be discussed at a
meeting to be held in less than a month. They complained that it
was unrealistic to expect them to have the document translated from
Vietnamese to Khmer and find time to read it in that time. They
planned to translate and read only the Executive Summary.


11. (U) The Mekong River Commission (MRC--an international
organization composed of representatives from Thailand, Laos,
Cambodia, and Vietnam) has a Flood Management and Mitigation Program
(FMMP),which includes a component for mediation of trans-boundary
flood issues. The MRC receives donor funding to implement various
technical and scientific studies, as well as some practical and
community-based projects. A 2005-2009 USAID/RDMA project aims to
strengthen the MRC's capacity and skills to prevent, address and
mitigate conflicts in the Mekong River Basin. Initial activities
involve raising awareness on conflict issues, developing common
terminology and identifying conflict hotspots. The 3S rivers, the
Mekong delta, and fisheries management in general have all been
identified as hotspots.


12. (U) The MRC Secretariat holds semi-regular (about twice per
year) Steering Committee meetings for the FMMP, which bring together
MRC staff, representatives from the national Mekong committees,
donors, and some observing NGOs. Additionally, the MRC Secretariat
hosts an annual Flood Forum, which brings together national Mekong
committees, donors, NGOs, Red Cross societies, line ministry
officials, and others for discussion on a number of flood-related
topics. The MRC is also co-sponsoring an October 17-19 conference
in Bangkok on Flood Risk Reduction in the Mekong Basin.


13. (SBU) And yet, as evidenced by what we saw in northeastern
Cambodia, all these MRC activities appear to have little effect on
the ground. One of the MRC's weaknesses is that it has no mandate
to help countries and step into conflicts unless specifically called
upon to do so by member countries. It may be that the relevant
Cambodian officials are not doing enough to raise these issues at
the MRC, or that the MRC is simply not the right forum for such
issues.

Cambodia Has Hydropower Dreams of Its Own
--------------


14. (SBU) In addition to being affected by dams near its borders,
Cambodia is developing its own plans for hydropower. Tun Lean,
Director General of the Department of Energy at the Ministry of
Industry, Mines, and Energy (MIME),explained that because
Cambodia's electricity prices are among the world's highest (30 to
50 cents per kWh in rural areas),hydropower is an attractive,
eco-friendly investment. The Ministry estimates that the country
could produce a total of 10,000 MW of electricity through
hydropower. One-third of this total would come from just one dam
spanning the Mekong at Sambor. This proposed dam across the main
river channel would be the only such dam from the Chinese-Lao border
to the Mekong delta.


15. (SBU) Environmentalists are alarmed by plans for hydropower in
Cambodia. While Tun Lean was quick to say that no projects had been
approved yet, NGO contacts say they would be surprised if any
proposed projects were not implemented eventually. Brian Lund of
Oxfam USA notes that the potential revenue from hydropower is
enormous--perhaps even bigger than from oil--but that this aspect of
the issue has received little public attention.


16. (U) Environmentalists are particularly worried by the prospect
of a dam at Sambor, saying it would virtually guarantee the
extinction of the endangered Mekong Irrawaddy dolphin, threaten
scores of other species, reduce fish catches, and potentially affect
the crucial reversal of the Tonle Sap River. The heavy volume of
water in the Mekong River from July to September causes the
intersecting Tonle Sap River to reverse its flow for several months
each year. Cambodia depends on this unique phenomenon to replenish
the fisheries of the Tonle Sap Lake, which supplies 90 percent of
the protein in the diet of the Cambodian population. If the water
volume of the Mekong should one day become insufficient to cause the
flow of the Tonle Sap to reverse direction, the result could have a
catastrophic impact on Cambodia's food resources.


17. (SBU) NGO contacts also are worried that the Chinese are taking

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control of hydropower development in Cambodia. They note that as
Chinese mining and hydropower interests have grown in Cambodia, the
Chinese have gained extraordinary influence over MIME decisions.
And they are not impressed with China's record on alleviating the
environmental and social impacts of dam construction. Just who the
developers are and where the financing comes from is far from
transparent. MIME provided us a list of 13 proposed dams. Out of
the ten dams where the names and nationalities of the developers
were included, six were Chinese, including the proposed dam at
Sambor.

Energy or Food Security: A Development Dilemma
-------------- --------------


18. (U) Hydropower and its downstream effects pit two great Mekong
basin development challenges against each other: providing cheaper,
low-polluting electricity; and protecting the environment, both for
its own sake and because downstream populations rely on clean river
water and healthy fisheries for their survival.


19. (U) The need for electricity is particularly stark in Cambodia,
which has an incredibly low electrification rate: 15 percent, less
than half the rate in neighboring Laos. On a per capita basis,
Cambodians consume half as much electricity as Laotians consume and
only one-tenth of what the Vietnamese consume. Cambodia's power
generation is almost entirely based on the burning of polluting
diesel and fuel oil, and rising oil prices mean that Cambodia's
electric rates--already among the world's highest--continue to rise.
Would-be foreign investors are frequently put off by the country's
electrical limitations. Meanwhile, existing dams in Thailand, Laos
and Vietnam provide electricity to industries and homes in those
countries, while already-marginalized Cambodians deal with the dams'
effects but fail to reap the electrification benefits.


20. (U) At the same time, the Mekong River is a critical resource
for human and animal populations across the region. The river
contains 1,200 species of fish, making it the world's third most
biologically diverse river, behind the Amazon and Congo. The wild
fish catch in the Lower Mekong Basin is the most productive in the
world, reaching an estimated 2.6 million tons a year with a value of
USD 2 billion per year. However, because most of this fish is
consumed by subsistence fishermen or sold in local village markets,
Cambodian government officials pay little attention--they are more
concQed with tourism, garments, and other visible parts of the
formal economy.


21. (U) Comment: Informed decisions by Cambodian government
officials about hydropower development should take into account
energy needs, environmental and social concerns, and food security.
However, lack of knowledge, apathy, unclear responsibilities across
ministries and levels of government, and the profitability
hydropower projects promise--not only to the Cambodian treasury, but
to individual pockets as well--all work against considered and
informed decisions. The construction of dams and the development of
hydropower are necessary to meet Cambodia's electricity needs, but
planning is not being done in a transparent manner and public and
private stakeholders are not being consulted. Furthermore, we are
concerned that environmental aspects are not being considered, that
impacts on fisheries resources are being ignored, and that release
of water from poorly managed facilities without effective flood
warning systems will cause more flooding, rather than alleviate it.



22. (U) Comment continued: The USG should engage Cambodia and
other governments in the region constructively on hydropower
development to ensure that the dams that will inevitably be
constructed will be constructed and managed properly. Embassy Phnom
Penh and State's Regional Environmental Office in Bangkok suggest
that, as a first step, the OES Bureau take the lead in organizing
inter-agency discussions in Washington on regional hydropower
development in Southeast Asia to develop USG policy and determine
how best to engage individual governments on the issue. The
discussions could include USAID and State's EEB and EAP Bureaus, as
well as scientific experts from NOAA's Fisheries Service, Department
of Interior's Bureau of Reclamation and U.S. Geological Survey, the
Department of Energy's Hydropower Program, EPA, and the U.S. Army
Corps of Engineers. At the same time State's Regional Environmental
Office in Bangkok will coordinate with Embassies Bangkok, Rangoon,
Vientiane, and Hanoi to develop more information and reporting on

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hydropower development in the region.

MUSSOMELI