Son-La Dam Construction in Vietnam: Go / No Go Analysis

1. Statement of the Problem

1.1 Basic facts of scenario
Vietnam is endowed with a long coast of 3,000 km and 112 river estuaries which are the ways for salt water intruded into the cultivated land, especially in Red River and Mekong River Deltas. So that production of agricultural in particular and socio-economic development in general of Vietnam always faces with water related disasters, mainly flood draught and salinity intrusion. In order to achieve the goal of self sufficient food for such a populous nation with small cultivated land which are frequently threatened by flood, draught and salinity intrusion, since 1955, as the war ended, Vietnam has paid much attention to develop water resources for agriculture, electric generation and to reduce damages by water related disasters. The construction of reservoirs and dams has been proceeded since 1965 (WCD, 2000). Son-La province is located in North-western Vietnam about 308 km away from Hanoi capital and in the upper stream of the Da (Black) River (Figure 1). It borders on the countries of Laos in the South and China in the North. Topographically, it has mountains, high lands, an abundant system of rivers, and rich water resource for development of hydro-electric power industry. 870,000 people are settled in Son-La province, and they makes their livelihood by mostly agricultural and forestry product-processing industries (VNA, 2006).

Figure 1 Geographical location of Vietnam and Son-La province (UT Libraries, 2006)

Unlike most other countries in the region, Vietnam is experiencing a more rapid rise in demand for electricity than economic growth. The economy is growing at a very healthy 7-8% a year but the government predicts that demand for electricity will increase by a massive 15% per year between 2005 and 2010. At the end of 2004, state owned Electricity Vietnam (EVN) was forced to sign a deal to import electricity from China because of impending shortages, and it is also expected to sign up for imports from Laos from 2008. Currently, Vietnams energy demand heavily relies on coal fired generating capacity but hydro is set to provide an increasing proportion of national capacity over the decade to come. Although some new coal fired plants plan to be developed, these will not be sufficient to cope with rapidly rising electricity demand (ADB, 2005). Therefore, Vietnam government is deciding whether or not to do the great hydro expansion. The biggest project under development is the Son-La scheme. This hydroelectric plant in Son-La province located in the upper stream of the Da River will be the largest of its kind in the South East Asia and provide one sixth of the countrys electricity demand. This plant can have a generating capacity of 2400MW when completed in 2012. Development costs are estimated at $2.3 billion, including around $700 million for the resettlement of families living in the area to be flooded. Table 1 shows the characteristics of Son-La dam. Table 1 Characteristics of Son-La dam (WCD, 2000) Normal Water Level Dam Height Volume of Reservior Surface of Reservior Installment Capacity Energy Production Project Life Cycle 265 m 177 m 25.4 billion m3 440 km2 3,600 MW 14,124 GWh/year 100 years

Note that the project has 100 years life cycle. For large dam construction like Son-La dam, the rapid clearing of the steep hillsides along most of the reservoir edge has resulted in deforestation and associated soil erosion, leading to accelerated siltation of the reservoir. For example, the projected life of Hoa Binh dam has been reduced from more than 100 years to about 50 years as a result of the increased sedimentation of the reservoir. Many observers fear that a similar situation may occur at Son La.

1.2 Decisions to be analyzed

The most important decision driver is apparently high electricity capacity of Son-La dam. At present, the total installed capacity of hydropower plants that have been set up in Vietnam is about 3,000 MW, or just 17% of the total techno-economic potentials (WCD, 2000).From the Son-La dam construction, the Vietnam government can satisfy increasing electricity demand. The plant will provide enough energy to the newly formed industrial network in Vietnam. The total annual savings is estimated to be $500 million, which would be almost irresistibly attractive to a modest economy of $40 billion annual GDP. Also, local economic benefits are major issues. The construction of Son-La dam is supposed to revitalize the economy of the large mountainous north-eastern region of Vietnam, where the living standard and industrial development are still below the countrys average. The

infrastructure inherited from this massive construction project will open the gates to access other economic centers in the region and will bring opportunities to the local people to enjoy more technological advances and improve their life quality. However, the dam construction poses several environmental, social, cultural, and safety concerns. First, the dam project will destroy the whole habitat and inevitably damage the ecosystem of the Da River, the most important river network in the north of Vietnam. Second, this project might cause social impacts because of resettlement of current residents. The construction of Son-La dam will involve in force resettlement of about 90,000 residents who are mostly ethnic minorities with distinctive cultural lifestyle, traditions, and values. Historic architecture of these ethnic groups can be submerged into the dam. The approximate cost of resettlement alone is estimated to be $700 million. Last, the most important concern related to the dam construction is safety. For this project, this is even more critical since the area does not have enough forest to protect the reservoir from flooding and sediment deposition. The likelihood of a reasonably strong earthquake cannot be ignored, which makes it even more of a challenge to ensure dam safety. Therefore, profound decision making process should be needed. We can say the Son-La dam has potential power to be constructed only when it is possible to maximize project benefits while minimizing project risks. There are many challenges to balancing benefits and investments for needs. To make Go or No Go decision, every positive and negative factors should be investigated and analyzed thoroughly.

1.3 Positive and Negative Impacts analysis

Positive impacts of Son-La dam construction 1) Energy production: 14,124 GWh/year Hydropower is cheap. Looking back at the history, one can see that almost all developed countries have been making the maximum use of their hydropower potential. In Vietnam, since 1981 the annual growth rate of electricity consumption is of 5%, hydropower occupying 75% of the total electricity production. Some major hydropower plants are: Thac ba (108 MW), Da nhim (160 MW), Tri an (420 MW) and Hoa Binh (1,920 MW) (WCD, 2000). Comparing with these plants, Son-La dam can provide lager amount of electricity (3,600 MW), and it is sure that this plant will play very important role in supporting the economic development of the country. 2) Economic benefit Son-La dam construction can create new opportunities for regional socio-economic development. It is supposed to revitalize the economy of the large mountainous north-eastern region of Vietnam, where the living standard and industrial development are still below the countrys average. The infrastructure inherited from this massive construction project will open the gates to access other economic centers in the region and will bring opportunities to the local people to enjoy more technological advances and improve their life quality. 3) Water supply for production, especially agricultural production, and domestic use Water reservoir allows people to collect fresh surface water during rainy season and storing it for use in dry season, providing a controllable supply of water for irrigating lands, industrial and domestic uses in downstream areas. In Vietnam, the economy still depends on agriculture which is largely based on wet rice cultivation. Water demand for the spring rice crop is 5,500-6,200 m3/ha, for the autumn rice is 5,500-6,000 m3/ha. Increased irrigated areas in these last years have

been helping raising notably agricultural production. For example, Dau Tieng Reservoir with the capacity of 1.5 billion m3 is providing water for irrigation to more than 135,000 ha (WCD, 2000). 4) Regulation flood stream Son La dam construction is very important for Hoa binh dam and downstream areas, including Hanoi. Since Hoa Binh reservoir has had a greater and greater effect on downstream flow during floods season in the period 1987 1997 (WCD, 2000), it has positive impacts by regulating water levels in downstream areas. 5) Improvement of microclimate With its big volume of water and large surface, reservoir can help to regulate climate in surrounding areas. In most dam areas, several observations are showing that the air temperature in these areas are a bit lower in summer and higher in winter, compared to that was before the formation of the reservoir. 6) Improvement of fluvial navigation. Opportunity for recreation and tourism Water reservoir creates opportunity for improving fluvial navigation by overcoming obstacles such as water falls, therefore makes the former river more navigable. The dam construction can give access to new sites such as good landscapes and caves which were inaccessible in the past. It can create lots of opportunity for recreation and tourism near Son-La province. 7) Reducing air pollution and carbon dioxide emissions Hydropower provides an alternative to the conventional thermoelectricity, avoiding the burning of fossil fuels and reducing significantly air pollution. Negative impacts of Son-La dam construction 1) Environmental and social impacts It is usually the heaviest environmental and social impacts of the dam because of inundated areas and the resettlement of the local people. While hydro power has benefits in terms of carbon dioxide emissions and air pollution, it also has significant negative environmental impacts. Hydro-electric power installations have a detrimental effect on river flows and water supplies. Large-scale hydro schemes result in the flooding of large areas of land, and often leading to negative impacts on local fauna and flora. Also, the dam construction involves in forced resettlement. The project is expected to displace 95,442 people. This includes 10 different ethnic groups, of which Thai people comprise 74%. Many people raise concerns that construction of the dam would cause destruction of the Black and White Thai cultures. The population is made up of about 86% rural and 14% urban dwellers. Rural people live mainly on products from forest, farming, gardening, fishing and fishponds. Some of the local people in the project area still practice shifting cultivation, but most of them have stable land to grow annual crops, such as paddy rice, cash crops, or perennial trees. The compensation for farm households will be in terms of land-for-land to maintain agricultural activities among these families. The movement of a large amount of people for the project could cause huge impacts in surrounding areas in terms of soil erosion, increased deforestation and social upheaval. Some affected people would be resettled in Son La and Lai Chau provinces. However, the majority of affected people would be moved to Ialow, Iamo, Easoup districts in the Central

Highlands, where population density is low and there is no infrastructure. There is concern about potential conflicts over resource use and access between those resettled and local residents already living in the Central Highlands. Moving far away from their ancestral lands will also have serious psychological impacts on affected people. Some are concerned about the seismic safety of the project. The compensation and resettlement process should be considered with big efforts of the government and the local population. There can be many problems, such as disruption of traditional agriculture practices, some households have had to move many times, difficulties in stabilization of resettled people in new localities and its affects on those present there, shortage of water in some areas, threat to remaining forests near the resettlement sites. Table 2 represents a detailed list of social and environment impacts from Son-La dam. Table 2 Social and environmental impacts from Son-La dam (WCD, 2000) Inundated areas People to be resettled Loss of infrastructures Loss of biodiversity Cost for resettlement 40,500 ha (Agriculture land: 9,650 ha, Forestry land: 3,900 ha) 95,600 Houses (1,600,00 m2) and Roads (300km) Some increase in aquatic populations and deterioration of other, but most important would be the potential exploitation of bioresources near new resettlement sites. $700 million

As stated above, the construction of Son La dam will involve in forced resettlement of about 95,000 residents currently living in the area. Most of these people are ethnic minorities with distinctive cultural lifestyle, traditions and values. The removal of ethnic minorities form the land that they have been living on for generations raise serious concerns among the historians, the socialists, the cultural preservation leaders and the human right activists. 2) Ecological Impacts Deforestation in watershed areas can become a real threat, not only to biodiversity, but also to the lifetime and the normal and sustainable function of the reservoir itself. Local inhabitants and newly relocated people would log and burn forests for their survival. Such practice might engender also forest fires, exacerbating the situation. Loss and fragmentation of habitats can cause deterioration of species and populations. 3) Hydrologic Impacts Suspended particles carried from upstream (especially when deforestation is continued in river watershed) by river flow settle in the reservoir, therefore limiting its storage capacity and shortening its lifespan. For example, average annual siltation in the Hoa binh reservoir has reached 60 million m3 (1990-1995), but in 1990 and 1991 the figures were 90 million m3. Compared to the design, siltation speed has just doubled (WCD, 2000). 4) Dam safety issues The most important concern related to the dam construction is safety. For this project, this is even more critical since the area does not have enough forest to protect the reservoir from flooding and sediment deposition. Out of the 740,000 ha of natural land in the construction region, only 160,000 ha are covered by forests, and most of these are newly replanted forests.

This raises the concern of safety for the dam, since there is not enough forest to project it in the rainy season. Furthermore, the plant is within a reasonably active earthquake zone. An earthquake of 8 degrees Ricter scale happened in 1983 just 60km away from where the dam would be (USGS, 2006). The possibility of similar scale earthquakes is not absent, and if the dam is broken, it will flood the whole north-eastern region of Vietnam, including the capital Hanoi some 300km downstream. The consequences are extreme, and damage is unquantifiable. Another safety issue is related to the fact that the Vietnam government does not have enough capability to either plan far ahead or react promptly in emergency. The dam will be built and managed mainly by Vietnamese workers, technicians, and experts, using Russian technologies. The lack of an inspection panel composed of international experts is a risk to the safety of the project, since Vietnam and its government have not been that famous for either their project management capability or their cutting-edge quality control technology. 4) Political issues Since Da River is the downstream reach of a big river network originating from China, and the Chinese of course have exploited the river in any way possible. This means that the behavior of the river and its current is less natural and predictable, depending on what the crafty neighbors decide to do upstream. And when it comes to China, worrying about national security is never redundant. 5) Others Changes in nutrient levels and decrease of the river water quality can have major impacts on the productivity of estuaries Increase in humidity and fog locally creates favorable conditions for insect disease vectors and leads to the increase of water-related diseases, especially malaria. Serious changes in downstream areas Loss of mineral resources Some geological problems needs further study: potential loss of water stability of the dam

1.4 Assumptions
For the whole decision making process, several assumptions are needed. 1) The analysis for weighting objective criteria by the Analytic Hierarchy Process (AHP) method is based on trial-and-error efforts until optimum weights are gained. Pair-wise comparison is a subjective task. 2) The proposed Son-La dam has 100 years life cycle. For large dam construction like Son-La dam, the rapid clearing of the steep hillsides along most of the reservoir edge has resulted in deforestation and associated soil erosion, leading to accelerated siltation of the reservoir. For example, the projected life of Hoa Binh dam has been reduced from more than 100 years to about 50 years as a result of the increased sedimentation of the reservoir. Many observers fear that a similar situation may occur at Son La. Therefore, we determined Son-La dams life cycle as 50 years same as the cycle of the Hoa Binh dam. 3) 5% interest rate was used for the sensitivity analysis.

4) Several undefined investments such as maintenance cost, maintenance cycle, or design cost for earthquake prevention system were assumed. 5) Only three most sensitive variables were chosen from the results of sensitivity analysis for deriving decision trees.