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Research: Economic Evaluation of Hydropower Projects in the Lower Mekong Basin

This paper is an update of a previous study entitled ‘Working Paper on Economic, Environmental and Social Impacts of Hydropower Development in the Lower Mekong Basin’ published in 2015. This was a revised, condensed version of the report ‘Planning Approaches for Water Resources Development in the Lower Mekong Basin’

Credit: Roengchai Kongmuang/SEI

By Apisom Intralawan, David Wood and Richard Frankel

Chiang Rai, Thailand, May 12, 2017

MFU news

This paper is an update of a previous study entitled ‘Working Paper on Economic, Environmental and Social Impacts of Hydropower Development in the Lower Mekong Basin’ published in 2015. This was a revised, condensed version of the report ‘Planning Approaches for Water Resources Development in the Lower Mekong Basin’ (Costanza et.al. 2011).

The main findings in the current paper are:

1. The overall economic impact of planned Mekong hydropower projects would be negative.

2. The negative economic impact is mainly due to the economic value of capture fisheries loss being much larger than benefits from hydropower.

3. Social mitigation costs and loss of sediment/nutrients also have a significant economic impact.

4. The economic impact on Lao PDR and Thailand is forecast to be positive, with Thailand being the main beneficiary. Vietnam and Cambodia are forecast to suffer large negative economic impacts.

The above findings are contrary to Mekong River Commission reports (Basin Development Plan 2 – BDP2) which forecast a large benefit from the mainstream projects (more than $ 30 billion) which would mainly accrue to Lao PDR. However, it seems that BDP2 grossly overestimated the hydropower benefit from electricity sales and underestimated the loss of capture fisheries.

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