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Jayne Jung, Contributor
I focus on energy and environmental and social issues
Markets |3/22/2012 @ 9:35Pm
Today is UN’s World Water Day with water and food security as its theme. Leading up to it, panelists gathered at the 6th World Water Forum in Marseille, France last Friday to discuss creating a more systematic approach in understanding the linkages between water, food and one additional sector, energy, and the policies that increase the productivity of all three.
“In a lot of countries you can’t produce water without energy, in particular when you need to sanitize it. Then you can’t produce food without water and energy,” says Gérard Wolf, Paris-based senior vice president of international operations and group synergies at Électricité de France (EDF), speaking to Electric Eclectic.
“Clearly at the end of the day if you want to provide water, energy and food to a household, the nexus between them is evident. The real problem is to have a global policy approach to the question rather than a silo-based approach,” he continues. Along with EDF, Paris-based GDF Suez is another major energy company pushing for a more comprehensive approach at the national or regional level.
Irrigation uses 70 percent of available fresh water sources. And for hydropower in particular, although it doesn’t use water it can alter river cycles, which in turn can affect the livelihoods of farmers or fishers who rely on them.
Alain Vidal, director of the research consortium Consultative Group on International Agricultural Research’s (CGIAR) Challenge Program on Water and Food (CPWF), says that biggest hinderance to creating integrated policies is more political than economic. “The way to protect the environment and to make a dam productive not only for energy but also for food production exists. Most of the time it’s the lack of the political will power, political cooperation, and political coordination that doesn’t allow for it,” says Vidal, who co-convened the panel with EDF.
For corporations as well as the general public that roadblock could present a long-term risk. Navigating the water-energy-food-security nexus presents new challenges for business, wrote Lauren Koopman, a New York-based director of sustainable business solutions at PwC in a March report. PwC published another report last November showing that over 60 percent of the CEOs in Asia think that water security is critical to free trade. So, as water security concerns increase so too does the need for better policy solutions.
A good example of such a policy at the project level is EDF’s hydropower plant Nam Theun 2 in Laos, according to CPWF’s Vidal. However, it came after years of discussions with local activists starting in the mid-1990s, after the project had already been designed and finalized. As is in most cases, the Government of Laos currently does not have integrated national policies governing the corporate social and environmental aspect of dam building.
With an installed capacity of 1,070 megawatts, Nam Theun 2 is the largest hydropower project in the country. It is located on the Mekong River’s fourth largest tributary, and has required about 450 square kilometers (174 square miles) to be flooded on the Nakai Plateau, displacing 7,000 villagers there and more than 100,000 downstream.
The $1.3 billion plant is owned by the Government of Lao PDR’s Laos Holding State Enterprise (20 percent), Electricity Generating Public Company of Thailand (35 Percent) and EDF International (40 percent). Together they operate Nam Theun 2 Power Company. Thailand receives about 90 percent of the energy generated by the dam, while Laos receives the remaining 10 percent.
The project took many years to get started. Commissioned in 2010, groundwork for the plant began as early as 1986 when the the World Bank conducted a pre-feasibility study. The initial design created in the early 1990s was based on the Asian Development Bank guidelines, which did not take into account social and environmental issues.
By 2000, a Water Saving Convention was signed requiring EDF to pay the farmers if they achieved water savings objectives. Farmers and fishers were also given access to the reservoir. Irrigation flow schedules were created. Reforestation programs established. And for the 7,000 upstream villagers affected, Nam Theun 2 Power Company constructed new housing facilities, schools, health clinics, and community centers. Downstream, the power company oversaw the diversification of farmers’ crops and the introduction of water resource education. The total cost of the dam was $1.3 billion with about 13 percent allocated to social and environmental issues. “13 percent is enormous in a sense, because you have to convince the lenders and the countries,” says EDF’s Wolf.
And the list of lenders is long. They include support from France’s Coface, Sweden’s EKN, Norway’s GIEK, the ADB, Multilateral Investment Guarantee Agency, the World Bank, the French Development Agency, the Export-Import Bank of Thailand, Nordic Investment Bank, nine international banks and seven Thai banks.
But to some activists like Berkeley, California-based International Rivers and Washington, D.C.-based Environmental Defense Fund the money still may have not been enough or appropriately allocated depending on the process that Nam Theun 2 Power Company went about creating the programs. Also, the environmental groups have called for legally enforceable resettlement, mitigation and development rights for all the affected villagers and an independent organization to audit the programs’ progress.
Their concerns again point to the need for national and international policies that consider the nexus between water, energy and food. In the end, Wolf says that although the cost may be significant from a project perspective, the amount is necessary to achieve a sustainable solution. “The whole story is having a policy that can assure everybody that there’s a sustainable long-term solution for the local population,” he says. “We have to bring multi-purpose solutions.”