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Hydropower development in the lower Mekong basin: alternative approaches to deal with uncertainty

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Abstract

Governments in the Lower Mekong Basin (LMB) face decisions that involve trade-offs between the economic benefits from hydropower generation and potentially irreversible negative impacts on the ecosystems that provide livelihoods and food security to the rural poor. As a means of comparing these trade-offs, a sensitivity analysis of the benefit-cost analysis of certain Basin Development Plan (BDP) scenarios was undertaken. By changing some key assumptions in the BDP about discount rates, the value of lost capture fisheries, future aquaculture production in the LMB, and the value of lost ecosystem services from wetlands to reflect the full range of uncertainty, at the extremes, there could be a reversal of the Net Present Value (NPV) estimates of the scenarios from a positive $33 billion to negative $274 billion. This report recommends when dealing with large-scale, complex projects: a more comprehensive, integrated human and natural systems framework and adaptive management approach to LMB planning and development that deals with the entire watershed; a more comprehensive analysis and treatment of risk and uncertainty; a more thorough assessment of the value of direct and indirect ecosystem services; a broader set of scenarios that embody alternative models of development, broader stakeholder participation; and better treatment of the effects of infrastructure construction on local cultures and the poor.

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Notes

  1. Definite Future Scenario (DF): 2015-Upper Mekong dams plus 26 additional hydropower dams in LMB and 2008 irrigation and flood measures.

  2. LMB 20-Year Plan Scenario with 6 mainstream dams in Northern Lao PDR: 2015 Definite Future plus 6 LMB mainstream dams in upper LMB and 30 planned tributary dams, irrigation, and water supply. This scenario also includes climate change for average year between 2010 and 2030 and 17 cm sea level rise.

  3. LMB 20-Year Plan Scenario with climate change: 2015 Definite Future plus 11 LMB mainstream dams and 30 planned tributary dams, irrigation, and water supply. This scenario also includes climate change for an average year between 2010 and 2030 and 17 cm sea level rise.

  4. This assumption may be challenged on the basis that capture fisheries in the LMB are already under enormous threat from habitat destruction and pollution and therefore additional human investment is needed to maintain the fishery in a healthy state. However, for the purposes of our sensitivity analysis this represents a boundary condition.

  5. This estimate is based on two separate sources:

    1. 1.

      The average ex-vessel price of fish from Sumaila et al. (2007). This number is highly variable, changing over time and species from less than $1/kg to more than $4/kg.

    2. 2.

      The FAO Statistics estimates a world’s value of production in 2008 in Asia for chicken to be between $1.77 and $5.18 per kilogram. They estimate pork to be between $1.72 and $6.44 per kilogram.

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Acknowledgments

This paper is a derivation of a longer report entitled “Planning Approaches for Water Resources Development in the Lower Mekong Basin,” funded by the United States Agency for International Development (USAID), Regional Development Mission for Asia (RDMA).

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Correspondence to Ida Kubiszewski.

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Kubiszewski, I., Costanza, R., Paquet, P. et al. Hydropower development in the lower Mekong basin: alternative approaches to deal with uncertainty. Reg Environ Change 13, 3–15 (2013). https://doi.org/10.1007/s10113-012-0303-8

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  • DOI: https://doi.org/10.1007/s10113-012-0303-8

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