The potential environmental, social, and economical impacts of the Project have been the subject of many years of comprehensive assessment, study and evaluation by the project sponsors, the Government, domestic and international Non-Governmental Organisations (NGO), independent consultants and multilateral development institutions. These studies commenced in the early 1970s when the Nam Theun was first identified as having significant hydropower development potential. Following Laos’ invitation to the World Bank to become involved in the Project in 1994, the Project’s environmental and social assessment and study requirements were determined to be, at an absolute minimum, those required by the World Bank.
Accordingly, the Project has been designed to meet and often exceed the 10 applicable World Bank guidelines on environmental and social issues. Three project areas are involved, namely the Watershed and Nakai-Nam Theun National Biodiversity Conservation Area (NNT NBCA), the Nakai Plateau, and the Downstream areas.
At the national level, the Government of the Lao PDR has committed to both the World Bank and the IMF that its policy is to implement a development framework aimed at poverty reduction and environmental protection. This policy is viewed by the international donor community as a unique opportunity for the Lao PDR to considerably improve the livelihood of its population, both at local and national levels, in a manner that is environmentally sustainable.
In general, the Project is widely seen as a model of sustainable development focussing on the country’s development and its social and economic benefits to the people. The Concession Agreement contractually defines, incorporates and costs all the relevant environmental and social obligations, including appropriate compensation principles and payments, that have been identified in the expert studies and that are to be strictly followed by the Project Company and the Government.
These environmental and social obligations represent a significant amount of the total Project cost with the Project undertaking and funding additional ongoing environmental and social responsibilities throughout the concession period.