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Report: Economic, Environmental and Social Impacts of Hydropower Development in the Lower Mekong Basin

The Mekong River is the largest freshwater fishery in the world (estimated fish catch 2.1 to 2.5 million tons/year) and the third most bio-diverse river system (with approximately 800 fish species) after the Amazon and the Congo. However, this would change drastically if all proposed hydropower projects are constructed as fish migration routes would be blocked.

This paper focuses on potential economic consequences and is based on the Costanza report which in turn used much of the data, assumptions and projections reported in BDP2 and SEA. The main differences between the Costanza report and BDP2 were the estimated fish value, valuation of ecosystem services and discount rates for natural capital such as capture fisheries and wetlands.

By Mae Fah Luang University

Mekong River, January 8, 2016

Mae Fah Luang Univrersity

The Mekong River is the largest freshwater fishery in the world (estimated fish catch 2.1 to 2.5 million tons/year) and the third most bio-diverse river system (with approximately 800 fish species) after the Amazon and the Congo. However, this would change drastically if all proposed hydropower projects are constructed as fish migration routes would be blocked.

This paper focuses on potential economic consequences and is based on the Costanza report which in turn used much of the data, assumptions and projections reported in BDP2 and SEA. The main differences between the Costanza report and BDP2 were the estimated fish value, valuation of ecosystem services and discount rates for natural capital such as capture fisheries and wetlands.

The proposed hydropower projects on the Mekong River and its tributaries would block fish migration routes, change flood areas, change sediment/nutrient flows and reduce the catch from the largest freshwater fishery in the world. The Costanza report showed that by changing some key assumptions in the MRC Basin Development Plan BDP2 (discount rates for natural resources; fish value) the economic feasibility of the planned hydropower projects would change from positive (as in BDP2) to negative in terms of Net Present Value (NPV).

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