Environmental Defense Condemns World Bank Decision To Support The Nam Theun 2 Dam In Laos

The World Bank’s Board of Executive Directors is expected today to approve as much as $270 million in guarantees and grants for the $1.3 billion Nam Theun 2 hydropower project in Laos. The Bank is supporting this high-risk project despite the Lao Government’s record of corruption, secrecy and human rights violations.  Environmental Defense expressed extreme disappointment that the World Bank will provide public funds to support a dam with questionable economic justification that will have severe negative impacts on the environment and livelihoods of more than 100,000 Lao villagers. 

“The purported benefits of Nam Theun 2 are dwarfed by the massive costs that tens of thousands of Lao farmers and fishermen will bear,” said Environmental Defense international policy analyst Shannon Lawrence. “Claims that Nam Theun 2 will help the poor ignore its irreversible social and environmental risks and political realities in Laos.”

“The approval of the high-risk, low-reward Nam Theun 2 dam sets a dangerous precedent as the Bank scales up its support for large infrastructure projects and ushers in a new president,” said Lawrence.

The 1070 MW Nam Theun 2 dam will forcibly displace 6,200 indigenous people in central Laos and devastate the fisheries, water sources, and riverbank gardens of more than 100,000 downstream villagers along the Nam Theun and Xe Bang Fai rivers. Through power sales to Thailand, the project will generate revenue for Laos amounting to approximately 5 percent of total Lao Government revenues for the 25-year concession period. The World Bank and other donors claim that the revenues will be used to fund poverty alleviation programs, but critics are skeptical based on the Lao government’s track record in managing its budget, ensuring the rights of its citizens, and protecting the environment.  By providing support to Nam Theun 2 the World Bank has ignored the World Commission on Dams recommendations and its own social and environmental standards. Nam Theun 2 is being developed by Electricite de France and two Thai companies in cooperation with the Lao Government.