LAO PEOPLE’S DEMOCRATIC REPUBLIC NAM THEUN 2 MULTIPURPOSE HYDRO PROJECT INTERNATIONAL ENVIRONMENTAL AND SOCIAL PANEL OF EXPERTS TWENTY-SEVENTH REPORT: REASSESSING RESETTLEMENT IMPLEMENTATION AND PLANNING FOR FUTURE DEVELOPMENT May 2018 David K. McDowell Elizabeth Mann Lee M. Talbot Photo credits Cover: Rob Laking Title page: Xaykhame Manilasith for NTPC CONTENTS ACRONYMS .................................................................................................................i EXECUTIVE SUMMARY ....................................................................................... iii INTRODUCTION ................................................................................................. 1 REVIEW OF RESETTLEMENT OBJECTIVES AND PROVISIONS .......... 5 OVERVIEW: RESETTLER LIVING STANDARDS ....................................... 7 FISHING .............................................................................................................. 10 FORESTRY ......................................................................................................... 16 LAND .................................................................................................................... 20 AGRICULTURAL DEVELOPMENT .............................................................. 24 CROPPING AND IRRIGATION ...................................................................... 26 LIVESTOCK ....................................................................................................... 30 OFF-FARM .......................................................................................................... 34 POOR AND VULNERABLE ............................................................................. 38 ETHNIC GROUPS .............................................................................................. 40 GENDER .............................................................................................................. 50 INFRASTRUCTURE AND OTHER ASSET PROVISION ........................... 52 FUTURE INSTITUTIONAL ARRANGEMENTS AFTER RIP .................... 55 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ....................... 62 WMPA .................................................................................................................. 65 ANNEX A: SUMMARY OF RECOMMENDATIONS ......................................... 68 ANNEX B: COMPARISON OF NT2DF AND NP-LAF OBJECTIVES, GOVERNANCE AND MANAGEMENT ................................................................ 73 ANNEX C: INSTITUTIONAL PLATFORM FOR THE NAKAI PLATEAU WORKING GROUP ................................................................................................. 75 ACRONYMS ADB Asian Development Bank AFD Agence Française de Développement (French Development Agency) AP Action Plan CA Concession Agreement CAP Comprehensive Action Plan CBHI Community Based Health Insurance CFP Community Forest Plan CLT Community Land Title CLWP Community Living Well Program COTE Consortium of Technical Experts DAFO District Agriculture and Forestry Office DEB Department of Energy Business FMP Forest Management Plan GoL Government of Lao PDR HIT Household Income Target IFIs International Financial Institutions JWG Joint Working Group LAK Lao Kip LENS 2 World Bank Second Lao Environment and Social Project LFNC Lao Front for National Construction LMC Land Management Committee LoA List of Actions LSMS Living Standards Measurement Survey LSMS8 Living Standards Measurement Survey 8 (2017) MAF Ministry of Agriculture and Forestry MTDP Medium Term Development Plan NBCA Nakai Nam Theun Corridor Areas NGO Non-Government Organisation NHI National Health Insurance NNT-NPA Nakai-Nam Theun National Protected Area NP-LAF Nakai Plateau Livestock, Agriculture and Fisheries Project NPWG Nakai Plateau Working Group NT2 Nam Theun 2 Multi-Purpose Hydro Project NT2DF Nam Theun 2 Development Fund NTFP Non-Timber Forest Product NTPC Nam Theun 2 Power Company P&V Poor and Vulnerable PLUP Participatory Land Use Planning POE Panel of Environmental and Social Experts POE26 POE Report 26 (March 2017) PRF Poverty Reduction Fund QSEM Quarterly Socio-Economic Monitoring RC Resettlement Committee RFA Reservoir Fisheries Association RIP Resettlement Implementation Period Page | i RMS Reservoir Management Secretariat RMU Resettlement Management Unit ROPs Resettlement Objectives and Resettlement Provisions SCZ Special Conservation Zone SEMFOP Socio-Environmental Management Framework and Operation Plan SERF Social and Environmental Remediation Fund SG Subsequent Generation SSN Social Safety Net VDC Village Development Committee VDF Village Development Fund VFA Village Forestry Association VFC Village Finance Committee VFDC Village Forestry Development Corporation VFG Village Fishing Group VFZ Village Fishing Zone VIT Village Income Target WMPA Watershed Management Protection Authority WUG Water User Group Page | ii EXECUTIVE SUMMARY Introduction The 27th Report to the Government of Lao PDR (GOL) of the Panel of Experts (POE) on its mission of November-December 2017 reviews achievement of the Resettlement Objectives and Provisions (ROPs) in the Concession Agreement (CA) required for closure of the Resettlement Implementation Period (RIP), extended for two years to December 2017. A final chapter discusses the current situation of the Watershed Management and Protection Authority (WMPA). The report follows an interim report made at the close of the mission and a draft report to GOL in February this year. POE advice takes account of the project’s record over the past two decades in terms of global good practice in large dam projects. The CA’s innovations include offsetting biodiversity loss with the Nakai-Nam Theun Protected Area (NNTPA); addressing project impacts on villages downstream of the dam; improving housing, education and health; extending support to descendants of the original resettlers; and public reporting by independent external monitoring agencies. Resettler households and villages have largely exceeded their CA income targets, with many over double the target levels in terms of consumption, although there are still some risks to sustainable livelihoods. Over the past two years the programme to meet the CA’s environmental and social requirements has greatly accelerated. A Joint Working Group (JWG) of GOL, NTPC and International Financial Institutions (IFIs) has overseen implementation of a List of Actions (LoA) aimed at achieving the ROPs. The LoA does not meet all that is required by the CA but is significant evidence of progress. The NTPC has agreed to fund and complete any LoA requirements remaining after closure. Following closure, plans and finance are in place for continuing development of resettler livelihoods through to 2035. The GOL and other JWG members have asked the POE to “endorse the immediate closure of the RIP” based on a proposal to establish a Nakai Plateau Working Group (NPWG) to fulfil remaining obligations under the CA and establish a post-RIP institutional platform. We accept that all parties apart from some resettlers wish to close the RIP soon. The project’s overall innovatory aspects and its recent swift adjustment to a framework more closely aligned to the CA merit recognition. The POE is therefore prepared to recommend that the RIP be closed subject to meeting specific conditions recommended in this report. A closure decision on or around 30 June 2018 would fit the JWG’s timetable for completing CAP activities. A further POE mission would verify that the conditions have been met. Review of Resettlement Objectives and Provisions The POE has reviewed achievement of the ROPs based on the Independent Monitoring Authority (IMA) audit of compliance with the CA and Joint Working Group (JWG) agreement on actions required because of that audit. Annex A of this report summarises recommendations on compliance with the ROPs and on further institutional arrangements and priorities for development in the medium term NT2 (Nam Theun 2) development project. Overview: resettler living standards Results from the latest Living Standards Measurement Survey (LSMS8) indicate that the Household Income Targets (HITs) and Village Income Targets (VITs) required by the CA are still being met and household incomes remain mostly well above the Lao poverty line. There is a spread of incomes and wealth, due both to ethnicity and location, but the effect is not strong. Page | iii The report on LSMS8 concludes that “a strong argument can be made that resettlers are both much less likely to fall into poverty and have a great ability to recover if they do fall into poverty.” About 70% of respondents in 2017 say they are satisfied with their household income, up from 45% in 2011. Mean and median per capita consumption (a proxy for income) have fallen from a peak in 2011 but have been relatively stable since 2011. There is no significant difference between incomes of original resettler households and subsequent generation households. Around 50% of respondents however expressed feelings of concerns for the future. The two dominant concerns were access to agricultural land; and access to forest land for NTFPs, hunting, and timber. Sources of income have changed since 2011. Income from timber has collapsed as rosewood remnants have dwindled. Fishing now makes the biggest contribution to household incomes and appears sustainable. However, particularly for agriculture and forestry, there is too much uncertainty to be confident of future overall sustainability of resettler livelihoods. Resettlers’ socio-economic status should continue to be monitored at regular intervals. Fishing Fishing is the largest single source of household income. The reported fish catch continues to be stable or growing and the numbers and diversity of fish do not appear to be suffering from increased catch effort. Monitoring of fish catch and fishery health should continue. Fisheries protection effort has increased. Fixed checkpoints and mobile patrols have been re- established in the sensitive breeding zones on the far side of the reservoir where a lot of (illegal) fishing effort has been concentrated. A checkpoint on the road to the dam seems to have significantly curtailed illegal trading and fishing at the north end of the reservoir. However, the small portion of the catch being recorded at official landing points is a continuing cause for concern. Only an estimated 72% of the boats in use on the reservoir are registered and only 13% of eligible households have a fishing license. This unregulated activity is depriving fisheries management of much needed revenue. The review of fisheries co-management to simplify its organisation and regulation of the fishery, based on the experts’ report received last year, should be completed. Fishers seem to have reasonably good access to markets for their fish through the system of independent traders that has developed. The project is supporting fish processing groups: results are encouraging although sales of dried and fermented fish are still modest. There should be further development of processing facilities and attention to standards of hygiene and packaging. It may be possible to find more markets for fish products beyond the plateau. The Nakai Plateau Livestock, Agriculture and Fisheries (NP-LAF) project, jointly funded by the Agence Française de Développement (AFD) and the Nam Theun Power Company (NTPC), can contribute to development of fisheries co-management, further processing and marketing. It is essential to continue the excellent monitoring of the reservoir fishery by the NTPC Fisheries Lab. Forestry The forestry pillar remains a long way from sustainability and the forests are not making anything near the expected contribution to resettler livelihoods. Good progress is being made towards an updated Forest Management Plan (FMP), a requirement of the CA, although one is unlikely to be completed before mid-2018. But time should be taken to continue close consultation with the villages so that all stakeholders are fully committed to the FMP. Page | iv Villagers’ surveyed preferences include effective village-level protection of the community forest, improving Non-Timber Forest Product (NTFP) processing and commercialization, planting trees to enrich degraded forest, an equitable eco-tourism system, re-designated areas for farming, and plantation forestry. There was little interest in resuming commercial logging because of the failure of the VFDC to provide any real benefit and a widespread wish to lock up forests for future generations. There is currently a logging ban in Nakai following the national ban on log exports. Updated land cover maps and the participatory village surveys of community forest resources (PACFR) now underway will inform hamlet decisions on their Hamlet Community Forest Plans (CFPs). The need for a much costlier detailed tree inventory will mostly depend on decisions on the future of production forestry. The next step for planning is for hamlets to be presented with a menu of options based on the PACFR, technical studies of the resource and the economics of the options. Financial assessments are not yet available of returns to various options such as NTFPs, plantation forestry, selective logging and carbon sequestration. The analyses of some options, particularly production forestry, are likely to show significantly lower returns to the villages than the nation as a whole because of heavy government taxes. The enabling environment of government policy on technical advice and support for development, together with protection, regulation and taxation of forest activities will be critical to successful implementation. In forming its own policy, GOL needs to decide what options it will contemplate, particularly production forestry. The Forestry pillar does not yet comply with the requirements of the ROPs on sustainable livelihoods, specific objectives for forest use, protection of the forest resource, and the requirements to update the Forest Management Plan. Resolving these issues will take more than the time remaining to June 2018. The POE supports waiving requirements for compliance within the RIP so long as the GOL and NTPC are committed to the necessary actions beyond that time. Land There has been significant progress on land issues including resolution of disputes, issue of land titles and use certificates and investigation of land sales. Vetting of applications and issue of documentation is slow. Most formal disputes have been settled. Fourteen remaining disputes, all involving District officials, have been referred to the Justice Department. Many informal ones remain, often involving occupiers squatting illegally or claiming customary rights. There have been over 200 transfers of housing and agricultural land, although land sales continue to be banned. Land dispute resolution therefore remains problematic. Demand for land remains high. The demand from new arrivals on the plateau has to be recognised and better managed. There is also continuing demand for land conversion for both housing and agriculture. Community decisions on future land use is key to future livelihoods planning. The 16 hamlet Community Forest Plans (CFPs), now being developed, are particularly important. There is almost unanimous support in villages for community management of land, hopefully supported by the Sam Sang policy of the Government of Lao PDR (GoL). Future planning of land use in CFPs and VDPs must comply with established rules for community decision-making and protect the social and cultural cohesion of the resettlement hamlets. The District should develop rules for land conversion according to Community Land Title (CLT) rules. The proposed NP-LAF component on land use planning for agriculture Page | v must work within this established framework. The POE is also concerned that NP-LAF planning includes non-resident households who do not own land. Non-resettler households should not be included in project agricultural activities until all entitled households have land allocated and proper procedures for land conversion applied. Agricultural development In the present uncertain state of plateau agriculture and livestock the POE cannot advise that the CA requirements for sustainable livelihoods have been achieved. Plans for further development have been deferred for the NP-LAF project. The project agreements are in place and technical support staff are now active on the ground. A revised agricultural development plan, developed and implemented through Village Development Planning, is required for compliance with the CA. NP-LAF funding and support should be integrated into this planning. The NP-LAF project is flexible on the options it will support, and the technical team will actively draw on the accumulated experience with agricultural development on the plateau. As yet it is unclear what activities will emerge. The AFD-GoL funding agreement refers to both intensification by soil enrichment and irrigation and expanding the area under cultivation. The POE is firmly of the view that significant improvements in farm production cannot rely to any great extent on finding further land – they will absolutely depend on plateau farmers being prepared to take up new methods. We do not consider that the provisions in the CA have been met for “an agriculture development program … to develop productive and sustainable agriculture”. As part of the NP-LAF project, the agriculture development plan should be revised. Cropping and irrigation The future for cropping is still quite uncertain. A lot of the growth in 2015 and 2016 was due to contract cassava planting, which nearly halved in 2017, only partly balanced by increases in upland rice and padi. Farmers exiting cassava need targeted advice on restoration of land and options for future cropping. Vegetable production remains modest. Agroforestry is static or declining. Enrichment and watering of the soil seem to be the basis for future sustainability of cropping. The cost of soil enrichment in terms of cash and labor is a disincentive to all but a few innovative farmers. Few can meet the District’s sensible requirements for use and maintenance of repaired irrigation systems. All 22 existing gully dams have been repaired. The project should review progress with irrigation and economic options for its future development. Livestock Numbers of cattle and buffalo continue to grow well beyond estimated carrying capacity, risking substantial losses in the event of a drought or major disease outbreak. While a few wealthy families own the largest herds, a much larger number have wealth tied up in large livestock. The District needs an emergency plan for these risks. Fodder crops or pasture remain limited. Villagers report limited community land available for communal pasture. Trading in animals for income continues to be limited. A pilot auction was not a success, although it may have increased contacts between owners and traders. NP- LAF consultations should include information on raising large animals as a business, targeting the relatively few owners of large herds. There were fewer reports of foot and mouth disease in 2017, but more of hemorrhagic septicemia. Vaccination rates have increased. Page | vi The project actively supports raising chickens and other small animals as a business. The trend in numbers has been upwards, although with occasional setbacks from disease. A further campaign would be useful on safe management in small animal businesses. There are not many goats in the villages, but the number is rising rapidly. Villagers need to be aware of the benefits and considerable risks of goats in mixed farming systems. The project should revise the livestock development plan, including a reassessment of carrying capacity. Options for developing livestock can be included in Village Development Plans (VDPs) and the NP-LAF project. Off-farm Resettler income from business is still very limited although employment off-farm seems to be increasing. Planning should assume, and villagers expect, that more of second and subsequent generations will move out of farming and fishing. Planning for off-farm livelihoods has moved well beyond the original prescription. There are useful initiatives in marketing, support for small ventures and generating employment. The proposed resource centre for business start-ups should be put in place. Technical and further general education is being encouraged through scholarships. The impact of support on business and jobs should be monitored and evaluated. Evaluation is now underway and some evidence on outcomes should be available by the middle of the year. Opportunities for marketing and further processing in farming or fishing are included in actions under those pillars, including raising small livestock and fish processing. We assume that marketing and further processing will be part of the NP-LAF development strategy. The Village Development Funds (VDFs) are the main source of business finance. They need to be audited and their business lending policies reviewed. The proposed network support organisation should be put in place. A planned seed fund to complement the VDF is a priority. Tourism activity is growing: there has been additional investment in facilities and attractions, particularly at Thalang. The challenge is to get tourists to stay longer and spend more. Planning should be based on ecotourism and the wilderness as the unique selling point of Nakai tourism. The POE is pleased to see that the WMPA is studying this possibility. There have been useful studies of business options, but they need to be converted into specific joint ventures with tourism operators. Villagers need to be involved in the planning and to derive benefit from tourism. Poor and vulnerable The overall status of Poor and Vulnerable (P&V) households has improved. Lists of eligible families have been updated based on revised definitions. The provisions for Vulnerable families who cannot support themselves are set out in a new Social Safety Net manual. The existing project Community-Based Health Insurance (CBHI) may be replaced by the GoL National Health Insurance (NHI) but should only do so if it can match the existing CBHI provisions. Villages could take more direct responsibility for the activities of the Community Living Well Programme (CLWP), through VDPs. Village planning needs to include a specific process for Poor, Vulnerable and High Risk households. The needs of marginalised households, particularly for people with disabilities who cannot directly participate fully, should be properly represented in community discussions. Page | vii A single household assessment of skills, needs and opportunities should be conducted for each identified Poor, Vulnerable or High Risk household, and a support programme suitable to their abilities and wishes outlined and updated periodically. This tailored approach would also serve to support the particular needs of more marginalised ethnic groups. Ethnic groups All ethnic groups on the plateau have benefited from the improvement in material standards of living under the project, but gaps persist between incomes of more recently arrived “new” groups (mainly Lao Tai and Tai Kadai) who do better than “old” original inhabitants (mainly Makong, Tai Bor and the relatively small number of Ahoe). All groups face similar risks to livelihoods sustainability particularly in agriculture and forestry, but the challenges of adaptation have probably been greater for the old groups. Similarly, health and education status has improved considerably for all groups, but old groups do somewhat less well in education participation. Monitoring information should continue to be disaggregated by ethnic group. A compliance review concluded that the project had probably not complied with the CA requirements for special measures for ethnic groups. The GoL, whose policy is based on equal treatment for all groups, is opposed to special measures specifically for ethnic groups. Without specific ethnic targeting, the VDP process is being adapted to ensure that it captures the needs of specific groups within hamlets and villages, and livelihood support will be targeted to individual Poor, High Risk or Vulnerable households. These measures are calculated to capture the differing requirements of each ethnic group according to the latest Project assessment available to the POE. This outcome needs verification. The compliance review found the project had not complied with the CA’s broader objective of protection for existing ethnic culture and practices, which are under pressure from dominant Lao culture and GoL policy of uniform treatment. Consolidation of villages has caused conflicts in traditional practice and weakened the position of old groups in village governance. The cultural requirements of older groups need to be further studied. The Lao National Front for Construction (LNFC) should be supported in its useful work addressing ethnic group issues in villages. Although younger villagers are all fluent in Lao, older villagers have problems engaging because Lao is the official language for all communication with government and may find it difficult also to absorb further fast technological change. The District should review whether it needs further facilitation capability including language skills. Representation of older ethnic groups in village governance is improving and members are being trained for this role. The POE endorses the Provincial Governor’s call for naibans to ensure fair representation of women and all ethnic groups. The CA requirement to resettle Vietic and other vulnerable ethnic groups into separate village administrative units has only been partially successful in the one case where it has been attempted. Most Ahoe have settled in the Nam Nian enclave or in nearby villages but a few families still wish to remain in their former site of Old Sop Hia in the WMPA Wildlife Corridor. Discussions on how to support access to Old Sop Hia should continue and consideration should be given to options like redesignating the site as a Nakai Nam Theun – National Protected Area (NNT NPA) base for fisheries and wildlife protection and conservation, with minimal oversight responsibilities relating to any remaining Ahoe. Priorities for meeting CA objectives include a further expansion of educational and training opportunities for minorities, help with their accessing most livelihood programmes and the Page | viii preservation of their cultural identities and languages. The POE will wish to continue monitoring progress on these objectives. Gender The POE considers that gender-related activities comply with the ROPs and has no specific conditions to recommend attaching to the programme. It commends progress to date. Gender programmes have been well applied and generally appear to be effective. Maternal health and nutrition have improved as has women’s health generally and women's literacy and numeracy, a great deal of capacity training has been undertaken, and women have become more involved in off farm and home-based livelihoods activities such as food and fish processing. Women are reported as dominating business activities. More women than men are participating in training, and women are taking a fuller role in village administration and activities. Monitoring data indicate that in key areas, resettlers have reached a standard well above the national average for similar rural villages. The VDP process supports gender equity in separate consultations for women and men. Gender objectives are integrated into planning and progress with gender balance targets are well monitored by the project. The pleasing improvement in gender disaggregation of data should continue. Infrastructure and other asset provision The IMA identified items of infrastructure and other assets that remain to be completed for compliance with the strict requirements of the CA. Some of these specific CA provisions are no longer relevant and do not require further action. Other findings of non-compliance, particularly relating to water supply, drainage and sanitation, have been accepted for remedial action in the LoA, or for review or provision on a case by case basis. NTPC advise that all outstanding infrastructure actions will be carried over into a handover agreement between GOL and NTPC following closure. There are visible signs of the need for repairs and maintenance of community facilities. The Social and Environmental Remediation Fund (SERF) is responsible for approving and funding maintenance. Minor maintenance would be more efficient if villages could organise more of it themselves, employing and training their residents for tasks like small painting jobs and basic electrical and plumbing work. Independent monitoring of compliance with outstanding CA obligations needs to continue after (Resettlement Implementation Period) RIP closure. An audit of SERF should include the standard of SERF-funded community maintenance. Future institutional arrangements after RIP When RIP is closed, arrangements will need to be made for the company to hand over most of its responsibilities to the GoL, except those specific remaining obligations it is contracted to complete in the ROPs; for management of the GoL’s role in the longer-term development of plateau and downstream and its relationships with other stakeholders; and for a medium- term development plan to meet the livelihoods objectives of Nakai resettlers. Arrangements for all are well underway and have mostly been formally ratified by the parties. The new NPWG, representing all stakeholders (including, we hope, the resettlers themselves) will replace the JWG to coordinate relations amongst all stakeholders. The NPWG terms of reference set out the institutional framework and supporting legal agreements, with which we broadly agree. Page | ix For handover, the parties to the CA have formally contracted to complete unfulfilled obligations under the ROPs. For transition, the GoL says it has established a Transition Plan Committee and Secretariat and secured the first three years of funding for the Secretariat. For the medium-term, GoL, NTPC and AFD have mostly formally executed agreements with each other for activity planning, decision-making, implementation and monitoring, centred on a unified village development planning process on Sam Sang principles. Independent review of project activities and outcomes should continue. The longer-term role of the POE, a standing body until the end of the Concession Period, needs to be specified. Findings, conclusions and recommendations The project has made considerable effort over the past two years to achieve many of the objectives of both the CA and the CAP. There is promise of continued attention to basic development in the medium term with funding from the NT2DF and the NP-LAF facilities in particular. Nevertheless, the project has not yet achieved compliance with all ROPs, both in terms of specific Provisions and on the broader criteria of achievement and maintenance of sustainable livelihoods. Some of the compliance requirements are reflected in CAP actions carried over into 2018. The project is thus not yet compliant with the ROPs. However, recognising the achievements of the project over its life and accelerated progress made in the last two years the POE has recommended closure subject to specific measures to ensure that the basic purposes of the CA, including livelihood development and social and cultural policies, continue to be the objectives of activity in the medium term. POE Recommendation on ROPs and RIP Closure 46/27 Note the advice of the POE that as at 31 December 2017 the Resettlement Objectives and Provisions (ROPs) had not been achieved. 47/27 Agree to close the RIP with a target date of on or around 30 June 2018 subject to the following: • That the POE’s recommendations in this Report as summarised in Annex A on further action to achieve the ROPs, in addition to any other actions it considers necessary, form the basis of an agreement between the GoL and NTPC on their specific remaining obligations under the CA. • That the recommendations on further institutional arrangements in Annex A form the basis of agreements between the GoL and other parties on the planning and implementation of activities for the future development of the resettlers on the Nakai Plateau to the end of the Concession Period in 2035. 48/27 Invite the POE to verify the completion of the actions in Annex A in a mission in mid-2018. WMPA There has been some progress with restructuring governance and management of the WMPA. The chairing of the WMPA Board of Directors has been transferred to the Minister of Agriculture and established new Board membership. A Consortium (“COTE”) of relevant experts and NGOs has signed a contract with WMPA to strengthen the capacity and performance of WMPA through the joint delivery of a 5-year Plan’s components and outcome indicators. The World Bank has agreed to contribute $3m over five years to the Page | x Plan. The Prime Minister has also announced that the watershed will be established as a national park. The main priorities are full participation by COTE in governance and decision- making, retrenchment of existing staff and recruiting of new staff which has been inexplicably delayed, ensuring fiduciary management, financial handling and accounting meet international standards, and ongoing effective external monitoring of WMPA. There has been pleasing progress in the relationship with COTE in the last six months. Page | xi INTRODUCTION Meeting at Ban Done 1.1 Purpose of the report This report by the Panel of Experts (POE) to the stakeholders in the Nam Theun 2 (NT2) Multi-Purpose project follows the 27th mission of the POE to Lao PDR in November/December 2017. This was more than a routine monitoring mission. Its wider mandate was – for the second time - to meet the Concession Agreement (CA) requirement that the Panel give advice to the Resettlement Committee (RC) on whether the Resettlement Objectives and Resettlement Provisions (ROPs) in Schedule 4 Part 1 of the CA have been achieved and whether the Resettlement Implementation Period (RIP) should be closed. We review the wider context of the project’s innovative approach over the years, record the acceleration in implementing the CA over the past two years and outline the arrangements which need to be made if a decision is taken by the GoL to close the RIP in the near term. 1.2 The wider context In addressing the weighty issues before them the Panel assessed and took into account the project’s record over the past two decades in terms of global good practice in large dam projects. The basic document, the Concession Agreement, was itself a document without precedent in the breadth of its scope and the undertakings made by the parties. Specific innovations in the CA included the decision to offset biodiversity loss from rising waters by Page | 1 creating an extensive biodiversity rich protected area in the project, addressing some of the problems of the many impacted villages downstream of the dam, fostering advances in social sectors like housing, education and health across the Plateau and extending many of these activities to cover the descendants of the original resettlers and setting up a number of independent external monitoring agencies whose reports went public. While the project initially struggled with such required initiatives as fostering sustainable livelihoods (and still has problems in this area – see below) and the impacts of the project on downstream fisheries, for example, the resettler households and villages have largely exceeded their CA income targets, with many over double the target levels in terms of consumption, and the stakeholders have over the past two years undertaken a greatly accelerated programme of action to meet the range of environmental and social requirements set out in the CA. A two-year extension of the project agreed in 2015 on the POE’s recommendation has stimulated a significant range of advances in sectors identified as not then having achieved CA requirements. The project’s response to the extension decision was to establish a Joint Working Group (JWG) of GoL, NTPC and IFI (International Financial Institutions) players to draw up and oversee a detailed List of Actions (LoA) designed to achieve the conditions for RIP closure by the end of 2017 and to develop a Medium-Term Development Plan (MTDP) for the period beyond closure. The former measures were incorporated in a Comprehensive Action Plan (CAP) endorsed by stakeholders and supported by the POE as a significant contribution to the achievement of the ROPs. The POE sketches in this wider context because in the Panel’s judgment it merits both recognition and a positive response. It has prompted us to review all aspects of the project and to reassess to a degree the direction and timeframe for carrying out our recommendations. We have now further developed a suggestion first presented in our interim report, that a way forward is to agree to RIP closure - but a closure with specific and agreed conditions. This suggestion is more fully discussed in the following Chapters. The original conditions included that NTPC should meet its remaining contractual obligations under the CA and the CAP, that specific plans and associated stakeholder agreements should be in place for the future development of the Plateau and that adequate institutional support at all levels from resettler hamlets and villages to overarching District and Provincial coordination machinery be put in place and adequately funded. Much progress has been achieved on these fronts over the past few months. There remain issues requiring clarification and agreement. 1.3 The POE response In the report which follows we record our updated findings on the situation on the Plateau, including the state of the major livelihood pillars, reassess what still needs to be done five months on and what specific measures have to be put in place as conditions for closure. The GOL, supported by its partners in the JWG, has asked us to “endorse the immediate closure of the RIP” and outlines a proposal to establish a Nakai Plateau Working Group with two components: “(i) Fulfillment of remaining obligations; and (ii) Post-RIP institutional platform.” In making this request, the GOL has stated that: It is widely recognized that the Nam Theun 2 (NT2) Project has contributed to economic and social development in Lao PDR. The JWG believes the project has improved the lives of the resettlers directly through income growth and indirectly through access to markets and social services. Several of the best practices and programs which were pilot-tested under the project are being mainstreamed into national level programs, policies and regulations in related sectors of social and Page | 2 economic development. During the resettlement implementation period, when achievements were short of targets, the stakeholders made course corrections and put in place mitigation mechanisms, that served to improve performance. Ultimately, the story of NT2 has been one of empowering the affected households to have more control and decision-making ability over the natural resources on which they rely for their livelihoods; and equipping the provincial and district governments with the skills and perspectives to undertake participatory planning and effective public administration.1 The POE accepts that all parties wish to close the RIP soon, though predictably enough there were some resettlers who dissented from this view in our December talks. In sum, we also accept that the project’s overall record – though it has its blemishes – merits recognition for its innovatory aspects over the years and its recent swift adjustment to a policy and institutional framework which more closely aligns with those set out in the founding document, the CA. In these circumstances the POE is prepared to recommend that the RIP be closed once the specified conditions spelled out in this report and summarized in in Chapter 16 have been met or are substantially underway and that this has been verified on the ground by the POE. The POE suggests that the target date for a determination on RIP closure be related to that already set by the JWG itself for attaining as yet uncompleted CAP activities (i.e. 30 June 2018). A subsequent POE verification mission is called for. 1.4 Recent POE assessments and advice The POE Mission 24 in 2015 had the same objective as POE Mission 27 of assessing achievement of the CA’s ROPs. The earlier Mission concluded that these conditions had not been met and recommended an extension of the RIP for a further two years. The stakeholders accepted this recommendation. A principal result of that decision was the establishment of a Joint Working Group (JWG) of GoL, NTPC and International Financial Institutions (IFIs) to oversee the detailed List of Actions (LoA) designed to achieve the conditions for closure by the end of 2017, and to develop a Medium-Term Development Plan (MTDP) for the period beyond closure. These are incorporated in a Comprehensive Action Plan (CAP) endorsed by stakeholders. The POE supported the development of the CAP and has taken the achievements of the LoA as evidence of progress towards closure. In our Report 26 we recommended specific Actions in the LoA that ought to be given priority. However, the report also said that “Achievement of the LoA will be a significant step towards closure but does not replace the Project's CA as the basis of the POE's recommendations.” In short, we do not accept the view of the IFIs that the LoA is “a clarification of the CA regarding actions required for RIP closure” if by that they mean a sufficient clarification. Some basic Objectives of the CA, which we are required to advise on, are not directly addressed in the LoA. The Panel accordingly devotes the first part of its Report (Chapters 2 to 0) to reviewing CA-mandated activities performed during the RIP and analysing whether the ROPs have been achieved. If the GoL does decide to declare the RIP closed in the near future, arrangements will need to be made for meeting the remaining CA requirements, transferring some 1 Letter of 12 April 2018 from Xaypaseuth Phomsoupha, Director General, Department of Energy Business to members of the POE. Page | 3 responsibilities from NTPC to the GoL, and continuing development planning and implementation in the project area. We discuss these arrangements in Chapter 15. Chapter 16 then sets out the POE’s conclusions and makes a recommendation on RIP closure. A final Chapter 17 outlines the current situation of the NT2 Watershed Management and Protection Authority (WMPA), its governance structure and progress in its restructuring. 1.5 Conduct of the Mission The Mission was in Lao PDR from 18 November to 5 December 2017. Those participating were David McDowell, Lee Talbot and Elizabeth Mann, POE members, and Rob Laking, adviser to the POE. The first week was spent on the project site on the Nakai Plateau, in discussion with resettlers, the District government, and Nam Theun 2 Power Company (NTPC) staff. We had intensive talks with resettlers in eight of the sixteen resettler hamlets, had a comprehensive briefing led by the District Government, and held fruitful discussions with members of the project’s multisectoral JWG. On the way back to Vientiane, we conferred with the Khammouane Provincial Governor in Thakhek. In Vientiane we called on the Minister of Agriculture, the Deputy Minister of Energy and Mines, and Deputy Prime Minister, as well as their departmental officials, and had further talks with NT2-related agencies including the World Bank, Asian Development Bank (ADB) and Agence Française de Développement (AFD). On Friday 1 December at the Department of Energy Business (DEB) we briefed stakeholders on an interim basis on our findings and conclusions. We sent an interim report to stakeholders, at their request, immediately following the mission. We supplied a draft of our full report to the GOL, as required by the CA, in February 2018. There have been further discussions with the JWG on this draft. This final report incorporates the results of those discussions and further information to April 2018. We are grateful as always to the DEB and particularly to NTPC for their excellent logistic support for our visit. We realise that our visit came at a particularly busy time for many NTPC and GoL staff, since they were managing visits from other missions to the project over the same period and thank them for their time, expertise and insights. Page | 4 REVIEW OF RESETTLEMENT OBJECTIVES AND PROVISIONS 2.1 Basis for the POE review The CA provides that the Government of Lao PDR (GoL) shall request the POE before the intended expiry of the RIP to engage the POE to analyse whether the ROPs have been achieved. The review here follows from that mandate. The intended expiry date of the RIP was 31 December 2017, two years after the GoL accepted the POE recommendation in POE24 for an initial extension to the RIP. The POE does not have the resources to undertake a detailed audit of compliance with the ROPs. We do not think that was intended. Instead, we have reviewed a May 2017 agreement by the JWG of what was required in its Comprehensive Action Plan (CAP) for compliance. This review in turn was based on an audit of compliance by the Independent Monitoring Authority (IMA), updated in early 2017. Based on its review, the JWG decided that, with some changes, completion of the Actions in the CAP would meet the requirements of the ROPs. Both the IMA audit and the JWG review were very detailed. We have focused on identifying any significant gaps between the requirements of the CA and achievements so far. Our list may include some requirements of the ROPs that in the meantime have been complied with, and it does not discuss in detail all the issues of compliance that the JWG accepted. Therefore our recommendations are not necessarily the full or exact list of remaining commitments, particularly those relating to infrastructure requirements. It is however important that the GoL and NTPC agree on a full list of commitments. If the GoL decides on closure before the requirements of the ROPs have been met in full, NTPC have accepted an obligation to continue to implement and pay for remaining specific Actions under existing Project budgets. The GoL and NTPC will conclude a formal agreement on what remains to be done. The agreement should include an exact list of the Company’s outstanding CA obligations. 2.2 The JWG review The IMA assessed compliance against each requirement of the ROPs in several categories. The relevant categories for further review were where the IMA assessment was that compliance with the ROPs clause was undocumented, non-compliant or “in progress” (meaning that it could not be tested until RIP closure). The JWG’s process was based on an initial analysis of the IMA review by the IFIs. The JWG mostly agreed with these assessments. It ended up with a list of clauses in the ROPs for further review where compliance was a priority and there was not already an adequate response in the CAP. In the process, the analysis filtered out many low priority items. A further number of “in progress” Clauses were simply marked as “accepted” but without specifically identifying them as covered in the LoA. That left 147 issues for resolution. The JWG agreed that 100 of these issues were covered by existing Actions in the CAP. The other 47 were the subject of 13 additional Remedial Actions added to the List of Actions. Finally, there are also a small number of Actions relating to CA clauses on ethnic safeguards which the IMA was directed not to assess because they would be addressed by a separate ethnic safeguards review. Page | 5 It should be noted that the JWG also agreed to defer completion of some important Actions for up to six months beyond the target date for RIP closure at the end of 2017. This was a significant decision in the context of the timing of RIP closure. 2.3 General comments on JWG review We have not worked through the JWG’s list of low priority items in detail but on initial inspection we are satisfied with their conclusions on what could be excluded. The clauses that are “in progress” include some important Objectives such as to “materially improve Resettler livelihoods on a sustainable basis”. This clause is not directly addressed in the CAP, nor could it be. We therefore cannot agree, as we have said before, that the LoA can be a full specification of remaining ROPs obligations. Although the JWG review was careful and thorough, it necessarily made some value judgements of what matters of non-compliance needed to be addressed in the LoA, and whether the LoA adequately addressed them. We must form our own opinion on these matters. Finally, the original target date for RIP closure of the end of 2017 has now passed with some Actions in the LoA incomplete and deferred into 2018 by the JWG. Other Actions that we believe are important for compliance are due to be completed in the Medium-Term Development Plan (MTDP) part of the CAP, extending for up to five years beyond the end of 2017. 2.4 The POE’s review process We first reviewed the specific evidence on whether the CA’s income targets are still currently being met and then, under each of the livelihood pillars of the CAP, the evidence for their longer-term sustainability. For each of the livelihood pillars, the social programs and for infrastructure, we then assessed whether the Actions meet the requirements of the CA and whether they have been completed. Our recommendations are categorized under five headings: (1) our general recommendations on RIP closure and associated measures; (2) those which relate to NTPC compliance with ROP and with safeguard provisions in the CA and associated IFI documents; (3) those which relate to GoL compliance with the same obligations; (4) matters that we recommend should be decided as part of a decision on closure; and (5) other matters relating to what is seen as “future development” i.e. post –RIP closure. Recommendations are attached to each chapter and summarised in Annex A, which organises recommendations in the above categories. Where we think there is a significant gap between the achievements of the CAP and the requirements of the ROPs, we highlight it as a finding of our review. We have made further recommendations in most chapters on priorities for medium-term development. Chapter 15 includes recommendations on institutional arrangements following RIP and Chapter 16 on our overall conclusions and recommendations closing RIP as requested by the GOL. Page | 6 OVERVIEW: RESETTLER LIVING STANDARDS 3.1 CA Requirements The CA sets a Household Income Target (HIT), “to be reached at the beginning of year 5 of the [RIP]” and a Village Income Target (VIT), “to be reached at the end of the [RIP]”. It also sets a more general objective to “materially improve Resettler livelihoods on a sustainable basis”. We have reported that both specific Income Targets have been reached, at different times. The language of the HIT implies that it only had to be achieved once. However, the VIT as defined needs to be assessed again as part of this further review of the conditions for RIP closure. In POE26 we also noted more generally that, although the income targets had been achieved, the incomes of resettlers remained relevant in assessing sustainability. 3.2 Household incomes Information is available each quarter on indicators of household standards of living through the Quarterly Socioeconomic Monitoring Survey (QSEM). The standard for assessing overall standards of living and sources of income and their distribution is however through the more comprehensive (but much less frequent) Living Standards Measurement Survey (LSMS). The results of the eighth LSMS (LSMS8), for which fieldwork was completed in March 2017, are now available2. On overall household incomes, LSMS8 concluded that: • Mean and median per capita consumption (a proxy for income) have fallen from a peak in 2011 but have “been relatively stable since 2011”; the large drop between 2011 and 2013 is largely due to the much-reduced contribution of significant compensation payments from NTPC after 2011; • Household incomes are nearly all still well above the Lao national poverty line; “Using this poverty line 3% ±2% of resettler households are currently living below the poverty line.”; these results are consistent with a recent “community- based” assessment made by GoL and NTPC of “5% of households [in poverty], consistent with the estimate [of] poverty made using the LSMS.” • There is no significant difference between incomes of original resettler households and subsequent generation households, “although savings and ownership of large livestock are generally lower, as is generally the case with the next generation of families in all cultures.” • Sources of income from productive activity have changed significantly since 2011. The main changes (supported by data from QSEM reports) have been the collapse in timber incomes from 2013/2014 (in considerable part because of the decline in the availability of illegally harvested rosewood), the relative importance of fishing – now ranked number one by 60% of households, and a recovery in the importance of cropping. • Both ethnic group and village location seem to explain some of the variance in standards of living, but the effect is not strong, and it is difficult to disentangle the two factors. 2 All quotes and references from Fredericks, David. ‘Nakai Socio Economic Survey Round March 2017 Summary of Results (LSMS8)’. Nam Theun 2 Power Co Ltd, 1 September 2017. Page | 7 • “An increasing percentage of respondents are satisfied with their household income - 70% of respondents in 2017, up from 45% in 2011. Around 50% of respondents [however] expressed feelings of concerns for the future”. The two dominant concerns were access to agricultural land; and access to forest land for NTFPs, hunting, and timber. Table 1: Real per capita consumption for core LSMS households LSMS round Time LAK^/month Median Mean SE (mean) 6 2011-Q2 760,000 890,000 30,000 7 2013-Q1 600,000 680,000 20,000 8 2017-Q1 520,000 620,000 30,000 ^LAK = Lao Kip *Source: LSMS8. Results for Rounds 1-5 in the LSMS Table have been removed. Because of changes in survey methodology they are not strictly comparable with results for Rounds 6-8. The POE agrees that, based on the evidence from LSMS8, it appears that most resettler households are still well above the level of the Household Income Target, estimated in the report to be 221,351 LAK/person/month at the time of the survey. 3.3 Village Incomes Village-level incomes were reported from a special survey in 2014-15 designed to assess achievement of the Village Income Target. The survey firm was able to conclude: “All villages are above [the] national rural average for consumption (comparing consumption with consumption as per VIT). Bouama is the poorest village and both mean and median incomes are slightly above target”. There is however more uncertainty about this conclusion compared with 2015 results largely because of differences in survey methods. The LSMS8 report notes that the LSMS was not designed to measure achievement of this target: the way the sample is drawn for LSMS results in several villages having quite low numbers of households in the sample, although improved somewhat by the inclusion of a random sample of second generation households in this round. 3.4 Resilience to shocks and longer-term sustainability The report asks whether resettlers are “resilient against future shocks” and concludes that “a strong argument can be made that resettlers are both much less likely to fall into poverty and have a great ability to recover if they do fall into poverty.”: In 2017 almost all resettlers have cash savings, herd numbers are about half pre- project levels, 42% of households report off-farm income and households have access to modern medical treatments. Households are better educated and have much improved access to markets and off-plateau traders. The spread of income is more diverse, only 3% of households live in poverty and median consumption is more than twice the poverty line. The GoL and NTPC have also committed to introducing a Social Safety Net for the most vulnerable households. (LSMS8) In the following sections, we report in detail on the current situation in each of the livelihood pillars of the resettlement project. It is true that, despite large changes in some sources of income in recent years – particularly from project employment, cash Page | 8 compensation, and timber mining – nearly all resettler households have managed to stay well above the Lao poverty line. Nevertheless, the future is more uncertain for some portfolios than for others. Fishing remains the biggest source of income, fish stocks seem to be increasing, and catch effort seems sustainable. There are some signs of increases in off-farm employment, but it does not yet make a significant contribution. Agriculture is in a period of significant change and its future is still uncertain. With the end of the rosewood extraction boom, the forests are making very little contribution to incomes. In effect, both agriculture and forestry development are being re-planned from the ground up. With two major pillars of resettler livelihoods in redevelopment, it cannot be confidently said that the conditions for overall sustainability of livelihoods have been achieved. 3.5 Future survey work We understand that NTPC is considering continuing to monitor the living standards of the resettlers after RIP closure. The surveys of resettlers’ economic and financial circumstances, in the form of the LSMS and the QSEM, have been a necessary and valuable overview of the state of livelihoods on the plateau. A periodic survey applied on a basis that enables comparison with LSMS results would be a valuable source of information on continued sustainability of livelihoods during the remainder of the Concession Period. 3.6 Compliance with ROPs The Household Income Targets (Clause 3.1(b) and Village Income Targets (Clause 3.4(a)) continue to be achieved. The objective in Clause 3.1.c to “materially improve Resettler livelihoods on a sustainable basis” has not been achieved. 3.7 Recommendations For future development 1/27 A survey on a methodology consistent with LSMS be conducted at intervals of three to four years for the duration of the Concession Period so that livelihood conditions in the Resettlement Villages can be regularly monitored. Page | 9 FISHING 4.1 The situation Fishing in the reservoir has consistently been the strongest and most effective pillar contributing to the resettlers’ livelihoods. The ultimate objectives for the fishery both as expressed by the POE and incorporated in the CAP are to maintain fish stocks, both in terms of total biomass and species diversity; to ensure that the resettlers realize the maximum benefits from the fishery and consequently that illegal fishing is kept to a minimum; and to increase opportunities to add value to fish caught through marketing and processing. Figure 1: Household median daily catch3 Fishing continues to be the largest single source of resettlers’ income, as reported in the LSMS8 survey. According to the NTPC household survey, household median daily fish catches have been stable or increasing since 2014.The survey estimates that 70-80% of the catch by weight is sold, 10-15% is for home consumption and 5%-10% is for further processing (by drying, fermenting etc)4. Income from further processing of fish is reportedly growing but remains modest. Fish processing groups reported average sales per month of about LAK38m in the first nine months of 2017. As the POE has reported in past years, the catch passing through Village Fishing Group (VFG) landing points is only a fraction of the total reported catch. In 2016 only 18% of the catch reported sold (based on a NTPC survey of a panel of households) was sold from official landing points. Not all of what bypasses official landing places is illegally caught but the evasion of VFG control and the levy on traded fish is depriving the fisheries co- 3 Source: data provided by NTPC from the Household Catch Survey, January 2018. 4 This conflicts with an estimate in LSMS8 of about 50% each by value of home consumption and sales. The NTPC survey data uses a different panel and is collected via an interview based logbook with a much shorter recall period, which may explain some of the difference. Page | 10 management system of a lot of revenue that could be used to strengthen the management regime. As we discuss below, enforcement of fishing regulations remains a significant issue for the future. The reservoir fishery however continues to be in good health and able to sustain the increasing total catch. Experimental fishing appears to confirm that fish biomass and species diversity are not suffering from increased catch effort5. In the villages, there were one or two complaints that fishing was harder but other fishers claimed no concerns and (in one case) that they were catching more and bigger fish. The catch statistics do not seem to bear out the reports of a decline in the fishery. There appears to be little reason at present to consider limits on legal catch or restocking6 although the CA refers to both. Overall, then, the POE continues to believe that current returns for resettlers from the reservoir fishery are sustainable and that the fishery remains the strongest livelihood pillar for the resettlers. As we reported in March this year, the main future priorities “remain an efficient regulatory environment and effective enforcement to back it up”. A subsidiary objective will be to increase the value added for resettlers of the existing catch both by further processing and product marketing. We discuss these priorities in terms of the requirements of the CA, and progress with actions in the CAP, in the following sections. 4.2 CA requirements and priorities for action There are several bases for action on CA commitments: the CAP, both LoA and MTDP, a Fisheries Management Plan for 2016-2020 prepared as a requirement of the CA, and activities funded by the Nakai Plateau Livestock, Agriculture and Fisheries development project (NP-LAF), which as a fisheries component, and potentially the NT2DF. We discuss here what remains to be done to discharge the requirements of the ROPs and what the priorities are in the medium term. The basic principles of the CA for the fishery are: • Exclusive access for resettlers: The resettlers have exclusive rights to “the fisheries resource in the Reservoir (and trading of that resource)” until a review in 20307. • A sustainable fishery: the objective for the CA fishery program “will be to devise a sustainable Reservoir management program that can sustain itself by meeting all costs of production, provide secure income to entitled beneficiary fishing associations and gradually improve the fish stock to ensure a stabilised production rate by 5 to 10 years after impoundment.” (Clause 9.10.1) • Co-management: to “ensure that communities have a sense of ownership over resources by enabling the fishing community to make, supervise and enforce rules and regulations in consultation and collaboration with the fisheries authorities” (Clause 9.10.1). 5 Although catches are dominated by lower-value species such as Nile Tilapia and Hampala barb. 6 The fisheries scientists have recommended against a restocking program for the reservoir due to its large size and low food availability. The rumour in a couple of villages that NTPC was restocking seems unfounded. It turned out to be based on the release of several thousand fingerlings for a Buddhist ceremony – a tiny number in relation to what would be required for restocking. 7 Clause 9.1.2. Originally 10 years from commercial operating date (2010) but extended by GoL decree for a further 10 years. Some other fishers living in the watershed also have rights in the “inundation zone” where the reservoir waters back up into the tributary rivers. Page | 11 4.3 Management for rights and sustainability Fisheries management is designed both to protect the fish stock from over- exploitation and secure rights of access to it. The objective of the regime has been to restrict fishing to licensed fishers in registered boats, in specified zones of the reservoir; and to ensure that fish is sold legally. Past POE reports have highlighted the failings of this regime: it was evident that a lot of the catch was being caught in restricted zones or by outsiders or both and sold illegally on the water or at unofficial landing points. Since we last reported, there has been significant progress in some parts of the management system. Chief among these has been the re-establishment, from September 2017, of fixed and mobile checkpoints in the Special Conservation Zone (SCZ) on the far side of the reservoir from the villages. Fishing surveys have indicated that the mouths of rivers flowing into the reservoir are both particularly sensitive for fish breeding and an (illegal) source of a significant portion of the reservoir fish catch. NTPC estimated in early 2017 that “more than 47% of the catches may be from fishing habitats inside the WMPA” and that “catches reported from the far-shore area (31% of total reported catch) may be likely to largely originate from the transition area inside the WMPA area.” With the active participation of WMPA, permanent checkpoints were re-established at the mouths of the Nam Theun, Nam Xot and Nam On rivers together with two mobile checkpoints. Co-patrolling has resumed: by WMPA, district staff and Reservoir Fisheries Association (RFA). In addition, a permanent checkpoint was established on the road to the dam site at the northern end of the reservoir where we reported in March that there was clear evidence of blatant illegal fishing and trading. These measures seem to have resulted in an immediate and dramatic reduction in illegal activity8. It may also be increasing landings at the VFG site at Thalang and thereby reducing the losses of RFA revenue needed to fund management activity. When we asked, villagers confirmed that they were regularly patrolling their own Village Fishing Zones (VFZs). Experiences varied. One village complained about incursions from outside and said there was little they could do to stop them. For others, incursions did not seem to be a major problem. One village said they had signed an agreement with their neighbours to allow fishing in each other’s zones. In a couple of villages, we heard however that there was extensive illegal fishing on the other side of the reservoir. POE26A identified marking out protected areas and accelerating implementation of patrols and checkpoints as priority Actions in the CAP. We commend the District and WMPA for this effective action and observe that the vigilance needs to continue. On the other hand, the registration of boats and licensing of fishers is still conspicuously falling short of targets. The CA provides that “the [Resettlement Management Unit (RMU)] shall ensure that all boats located in the Reservoir will be registered in order to control fishing and the use of access to the Reservoir for access to the [Nakai Nam Theun Corridor Areas (NBCA)].” After a further round of boat registration by the Department of Transport in early 2017, the proportion of boats in use that are registered is estimated to be about 72%. Fishing licenses are issued annually by the RFA. Only about 13% of eligible households have a license. 8 In one of our village meetings in November, a resident complained vigorously about being chased away from his usual fishing spot in the SCZ, evidence that the enforcement system is working but implying that some further stakeholder education might be necessary. Page | 12 We also argued in March that it was time for a more comprehensive review of an unnecessarily complicated and cumbersome system of regulation. An evaluation of the existing co-management system, included in the CAP, got as far as a report from two experts in 2016 and preliminary responses from the stakeholders. The report identified some weaknesses in the organisation of the system, particularly the overlapping remits of the District Agriculture and Forestry Office (DAFO), WMPA, the Reservoir Management Secretariat (RMS) and the RFA, and the limited capacity of the RFA to carry out its role of oversight of the member VFGs and fishers. It recommended unifying management of the reservoir under the RMS. The experts also made some recommendations on how to simplify the current system of registration and licensing to focus it more clearly on fisheries management objectives. Consultations with stakeholders on the co-management report were held in early 2017 but further consideration of its findings and any revision to the co-management regime as a result has been deferred to the MTDP, when GOL (DAFO) will complete the review and issue a new management plan. No date has been set in the CAP for issuing the new plan. In the meantime, no clear conclusion has been reached on reorganisation of the governance of the fishery, partly it seems because of turf protection. It seems that, de facto, DAFO has assumed most of the central management responsibilities. There was no enthusiasm either for reviewing regulations, particularly since the District Governor was just about to sign off a revision in line with national fisheries law and regulation. We said in POE26A that we did not necessarily endorse the recommendations in the experts’ report but we thought they merited more attention, at least to spark off serious debate on what seems to us to be a cumbersome, confused and at least partly ineffectual system of co-management. The report recommends completion of the review as a matter of compliance with the ROP, based on Clauses 9.10.1 and 9.10.2 of Schedule 4 Part 1 of the CA. Ineffective enforcement is an issue of compliance with ROP. Clauses 9.10.1 and 9.10.2 are both shown as a joint responsibility of RMU and RO, with RO leading (“XL”) but clearly issues of regulation and institutional development are a GOL responsibility. (Boat registration is specifically a responsibility of the RMU). The fact that much catch effort is still unregulated remains a risk for the future. We think it should be possible to complete a review and make the necessary changes at Village and District level by the end of 2018. 4.4 Marketing and further processing The CA includes provisions to consult resettlers on the establishment of a fishing cooperative that would also be involved in trading, and on training resettlers in processing and marketing fish. The CAP includes actions for the MTDP on improving the existing marketing system, including equipment for improving facilities; and on supporting the development of fish processing. We suspect that the idea of a trading cooperative is a non- starter after several years’ experience with fish selling. A trading system has developed with direct sales from fishers to traders. Villagers complain about uneven access to traders and low fish prices but the general impression from our meetings in villages is that the system is mostly meeting needs. A trading cooperative would be unlikely to do better at marketing. In 2105 DAFO and the RFA took the lead in setting up fish processing groups in the six northern hamlets, involving 19 households. Production for market of dried and fermented fish and padek seems reasonably well-established there. Groups have since been set up in Oudoumsouk and the southern hamlets with a further 24 households now regularly processing fish. All participants are women. DAFO and NTPC have supported the groups Page | 13 with necessary tools and equipment to enable hygienic processing. As noted above, the results are encouraging but relatively modest in terms of income generated but could develop further. The main issues are identifying markets beyond each hamlet participating and ensuring that standards of hygiene and packaging can be met. 4.5 Compliance with ROPs The fisheries pillar has so far been successful in meeting the requirement for sustainable livelihoods in Clause 3.1c. In some specific respects of fisheries management and marketing, the pillar does not meet the full requirements of the ROPs. The POE considers that these requirements as specified are either redundant or need to be reconsidered. On fisheries management: there has been good progress on enforcement with the marking out of protected zones and a new system of patrols and checkpoints, in welcome cooperation with the WMPA. Although it was referred to in the LoA, we have yet to see action on our recommendation for an outpost with fisheries and wildlife protection functions at Old Sop Hia: we discuss this further in Chapter 12. Two specific clauses in the ROPs – setting catch targets (9.10.1) and consideration of a moratorium on dry season fishing (9.10.2) are not a priority in the current healthy state of the reservoir fishery. The system of registration and licensing is still very far from covering all fishers: the inability of the District to register all boats working the reservoir is a specific failure of compliance with the CA (Clause 9.10.1). However rather than focusing on this specific measure, we would prefer to see a reconsideration of the overall co-management of the reservoir and its resources: how it is organised, regulated and funded. As we said above, we consider this a matter of compliance with the ROPs. On marketing: a system of trading has developed that mostly meets the requirements of the fishers, and the need for further collective effort, either to improve distribution or strengthen sellers’ hands over prices, is not demonstrated. There have been modest but encouraging efforts to add value to fish with further processing. With further development of facilities and attention to standards of hygiene and packaging, it may be possible to widen markets beyond the immediate village and the plateau. 4.6 Future planning For the medium term, the most important actions are to maintain effective enforcement in the SCZ and north of the Thalang Bridge; simplify and strengthen the system of co-management; and further develop products and markets to add value to the fish catch. These objectives are mostly covered by the Fisheries Management Plan, released in draft in April 2017, and echoed in the MTDP. The NP-LAF project can also contribute to future fisheries development. Although its objectives for the fishing part of its mandate are spelled out in very general terms, they are aimed at marketing and further processing of fish and fishery products and fisheries resource management. We assume that the NP-LAF Technical Assistance Team will discuss these objectives with DAFO and the NTPC Resettlement Office (RO) staff in planning their technical assistance. 4.7 Ongoing monitoring An important priority is to ensure that the rich store of data about the reservoir, its ecology and fish life, and about the effects of the fishery, is continued. The excellent Fisheries Lab will be maintained for the duration of the CA. Plans are in place for a handover of other monitoring responsibilities. DAFO will take over the databases on fish landing and fish catch monitoring and staff will be trained to maintain it. RFA will receive training on monitoring fish landings. WMPA will receive “All relevant documentation on fish Page | 14 biodiversity in the Nakai Watershed” and the “List of endangered species for a better control.” Continued monitoring of these variables is an essential part of fisheries management. 4.8 Recommendations Compliance with ROPs (GOL) 2/27 Complete a review to simplify and strengthen the organisation, funding and regulation of the co-management regime on the reservoir and implement the results at Village and District level by the end of 2018. For future development 3/27 Continue to monitor fisheries control activity including co-patrolling and check points, for effectiveness and revision if necessary 4/27 Further develop marketing and processing to add value to the fish catch 5/27 Review and if necessary revise fish marketing regulations 6/27 Maintain the current system of monitoring of reservoir ecology, fishery health and species diversity, household fish catch and co-management operations. Page | 15 FORESTRY 5.1 Re-dedicating community forestry The failure of the forestry sector to make a significant contribution to resettler livelihoods has been a persistent theme of POE reports for the past several years. In September 2016 (POE25) we commented that there was no chance of turning the situation around in the time remaining to December 2017. The best hope was for a commitment by all the major stakeholders – GoL, NTPC and IFIs and not least the resettlers themselves – to a re-dedicated community forestry strategy. There is now good reason for such hope. 5.2 A revised strategy and Forest Management Plan The CA in fact requires a revision of the original Forest Management Plan (FMP). The POE agreed that this would be the appropriate vehicle for a new forest strategy. In our mission earlier in March-April 2017 we were pleased to see that the CAP included a well- articulated process for getting to a new FMP. There has been a significant acceleration in productive planning activity over the past year and a revised target of mid-2018 or even beyond that time is reasonable and acceptable given the complex processes underway. A significant and positive feature of the new process so far has been the close involvement of the villagers, with active fostering of village and hamlet-led consultations on forest management priorities. The indications are that the resettlers have been fully engaged and have strong and near unanimous views on their desired outcomes, and that the authorities are listening to them. We agree that the necessary time should be taken to make sure that this consultation-based process results in a FMP to which all the stakeholders are fully committed. We discuss below progress with the process, issues for the strategy and possible implications for RIP closure. 5.3 Developing the FMP 5.3.1 Initial consultation with hamlet-dwellers on their preferences The initial hamlet consultations led to clear statements of villagers’ priorities. Based on feedback from all hamlet consultations, villagers wished to “preserve the community (hamlet) forest for the use of villagers and their children; the hamlet to be the unit for community forest management; [and] stop logging by outsiders”. For the future, the most common preferences of hamlet dwellers were for effective village-level protection of the community forest, improving NTFPs processing and commercialization, planting trees to enrich degraded forest, an equitable eco-tourism system, identifying areas for additional cropping, agro-forestry, economic plantation forestry, or grazing. An important finding of the initial consultations was that there was virtually no interest in continuing production forestry. The POE itself heard this message repeatedly in village meetings, accompanied by strongly worded complaints about the failure of the Village Forestry Development Corporation (VFDC) to provide any real benefit for resettler households, and a widespread wish to lock up the forests for future generations. In fact, following on the Prime Minister’s decree banning the export of logs from Laos, in March 2017 the Province and District banned further logging in Nakai, at least until a revised strategy covering all the options can be agreed. 5.3.2 Participatory assessment of community forestry resources (PACFR) Properly identifying what the forests can contribute is an important part of the study. A land cover map updated in 2017 provides a coarse-grained distribution of different classes of forest land, validated by walk-throughs, and will be useful supplementary information for Page | 16 further consultation on the hamlet forest plans. But the process includes a more detailed participatory assessment on the ground. Transect and field observations will provide a more detailed picture of resources and uses in the various forest zones, covering tree species, Non- Timber Forest Products (NTFPs) and animal products. By mid-November 2018, four of these assessments, jointly conducted by the national Department of Forestry, PAFO and DAFO with the full participation of villagers, had been conducted. Based on our reading of a pilot assessment in Nongbouakham, they not only provide a valuable basis for understanding the resource which is at the base of the community forest plans but probably also help to increase each hamlet’s sense of ownership of the resource on its community lands. They are not a detailed inventory of trees, which is a much finer grained and costlier exercise. Although we have advocated preparation for an inventory in the past, we agree that whether it is required depends essentially on decisions taken on the wider strategy, not least on the future of logging. The point reached in early May 2018 is that work is proceeding on the preparation of PACFR documents for the ten hamlets where assessments have been completed. The project forestry team is focussing on compiling the results for hamlets in order to inform the overall strategy. DAFO is heavily involved in the process and PAFO will be involved during the final stages of the FMP formulation process. A workshop will prepare the submission of an updated FMP for approval of all stakeholders. Negotiations with hamlets and villagers are ongoing. 5.3.3 Technical studies Technical studies commissioned in parallel with the hamlet consultations are underway and can illuminate the economics of options for future forest use, covering combinations of NTFP, plantation forestry, selective logging and maintaining village forests to maximise carbon sequestration. The results of these studies should be made available to hamlets to inform their decisions on future forest use. The financial analyses are likely to show significant differences between returns to activities from a village viewpoint and from a national viewpoint. From a village viewpoint some adverse factors bear particularly hard on production forestry. With or without further processing of logs, as we have commented frequently in past reports, returns to producers are reduced significantly by very high taxes and levies. Taxation was not the only reason for the failure of the VFDC: the low value of timber species remaining in the forest, inefficient use of wood, and limited processing capacity in the factory due to the dilapidated state of the assets all played their part. A full financial audit of VFDC could not be completed because no basic accounting records were available for inspection, but the government’s taxes clearly also reduced returns. From a national point of view, benefits ought to include these taxes which, among other things, could pay for improved services to villagers and necessary forest protection activities. 5.3.4 Description and presentation of options to government and formulation of strategy The results of initial hamlet consultations, technical studies and resource assessments are being pulled together for consideration by the major national stakeholders, and particularly the GoL’s DoF. This discussion is to develop a menu of options for presentation to each hamlet. It is also particularly important for the GoL to decide on the enabling environment for the community FMPs. As we have underlined in previous reports and emphasize here, GoL policy as it applies to the community forests will be critical for implementation. This policy stance includes national and local technical advice and support Page | 17 (including for a detailed forest inventory, if required), District support for village forest protection, government policy (negotiated with international agencies) on eligibility for carbon sequestration grants, regulation of forestry and forest products, and forestry taxation. The environment that GoL provides can support or effectively deny specific activities. Some senior GoL officials have made it clear that they are in favour of locking up the old forests for regeneration and do not support further logging, apart from meeting local needs for construction timber. It is therefore important for the GoL to decide whether commercial-scale logging is still really in the mix. The POE endorses the current approach of presenting all feasible options to hamlets, but there is little point in offering options that are not real choices. 5.3.5 Development with hamlets of Community Forest Management Plans The next step is to return to villagers with a menu of specific options, based on the economic and financial analyses, from which the hamlets can develop their community plans to be consolidated into an overall strategy and Plan. We have seen an outline Plan for Nongbouakham which, given that it is an outline only, seems to be developed logically from the previous steps, and is based on allocation of activities to each of several resource zones in the hamlet community forestry area. We noted that the Plan starts with a general statement of government policy on village forestry. As we say above, it needs to be specific on how GoL policy affects the Community Plan. 5.4 Compliance with ROPs The Forestry pillar has not as yet met the requirements of the ROPs in several important respects including: the overall objective of sustainable livelihoods in Clause 3.1c, the specific objectives for forest use contributing to livelihoods in Clause 9.6.1, the protection of the forest resource from illegal use in Clause 9.6.5, and the requirements to update the Forest Management Plan in Clause 9.6.7. It is the firm view of the POE that the immediate need is for the policy, management and institutional issues before the project forestry sector to be satisfactorily resolved. It seems likely that this will probably take more than a couple of months. As made clear in the Introduction, the POE is prepared to be flexible about timing and proposes, given the big advances made and the path outlined for completion of the steps remaining, to waive the CA objective of securing sustainability in the forestry pillar before RIP closure. Compliance with the forestry ROPs remains a firm goal but an arbitrary deadline for attaining this state no longer seems appropriate. 5.5 Conclusions The recent confluence of view among stakeholders, particularly in MAF and its Department of Forestry, the IFIs, NTPC and the POE on how to progress development of the forestry pillar has produced a remarkable turnaround in the direction and intensity of activities in the sector. Much has been achieved but there remain important steps to be taken which should not be unduly rushed. The required actions include completion of strategy consultations and incorporation in a revised FMP; agreement within GoL on a comprehensive and Plateau-wide forest inventory if required; initiation of programs to follow up on major activities such as cropping, including agroforestry, in Community Forest Plans (CFPs); developing ecotourism in hamlet forests; providing technical support for organization of a NTFP management and value chain; incorporating hamlet CFPs in overall Village Development Plans (VDPs); and not least, negotiating new arrangements, with assistance from Provincial or District agencies, with law enforcement agencies for enhanced protection of Hamlet Forests. It is obvious to all involved that these remaining agreed activities will take effort and time. Page | 18 There seems little point then in attempting to set deadlines which may well be exceeded. Completion of all LoA forestry actions by 30 June 2018, which is a target date set by the project not POE, may be feasible but this will require the present momentum to be maintained and the negotiation of a broad consensus, national and local, on future Nakai Plateau forest management. Such a consensus has been the missing element in achieving success thus far in this important sector. Finally, the sector obviously remains a long way from sustainability. There is, for example, no early prospect that forestry will contribute on a regular basis the proportion of income (one third) for the resettlers which was originally hoped for. The villagers have flagged that away and the failure to produce any dividends at all in recent years has sealed the decision. It remains to be seen whether the new approach to a community strategy, encouraging as it is, can generate the desired outcomes. In the interim, truly enhanced protection, regeneration and conservation of the existing resources would amount in themselves to a potentially huge contribution to sustainability in the longer term. 5.6 Recommendations Compliance with ROPs (NTPC) 7/27 Complete the formulation of Hamlet Forest Management Plans (HFMPs) with full participation of hamlet dwellers and coordinate the development of HFMPs with the VDPs. Completion date 30 June 2018. 8/27 Based on the HFMPs and consultations with all stakeholders and hamlets, formulate an overarching strategy and incorporate this in CFPs, VDPs and a revised Forest Management Plan. Completion date 30 June 2018. 9/27 Formulate a revised FMP, approved at all levels of the GoL, for the management of the Nakai Plateau Community Forests. Completion date 30 June 2018. 10/27 Finalize the development of HFMPs for all hamlets with full participation of hamlet dwellers. Completion date 31 August 2018. For future development 11/27 Agree GoL policy at all levels on major issues, including: • a comprehensive and Plateau-wide forest inventory, if required; • initiation of programmes like extending cropping, including agroforestry in CFPs, developing ecotourism in hamlet forests, providing technical support for organization of a NTFP management and value chain; • incorporating CFPs in VDPs. Completion date 31 December 2018. 12/27 Submit the HFMP developed for each hamlet to DAFO, PAFO and DoF for approval. Completion date 31 October 2018. Page | 19 LAND 6.1 Current situation In the two years since the GoL agreed to the extension of RIP recommended in POE26, there has been significant progress on land issues. Many of the priority actions recommended by POE26 for December 2017 have been addressed. Both the District and NTPC have worked hard to promote awareness of rights and responsibilities over collective land, resolve land disputes, and allocate Land Titles and Land Use Certificates to eligible first and second-generation households. Announcements have been made to reinforce the ban on selling land. District staff have received training on land allocation, conflict resolution and technical land management skills. Village-level Land Management Committees (LMCs) have been re-assigned to hamlet LMCs, more faithfully reflecting individual title, community title and community land use rights. Hamlet LMCs have been re-trained and involved in land allocation and conflict resolution. Demand for more land is mainly from ineligible households: out of 243 applications, only 95 first generation households were found eligible. However, the POE noted in December 2017 progress in issuing legal documentation even for first generation households remains slow, with 42 of the 95 eligible households being issued land documentation and 53 still pending. With population growth, this will be an ongoing process up to and after RIP, mainly for Land Use Certificate (LUC) issued for individual use of community land. As of November 2017, 147 official land dispute cases had been lodged. Of these, 133 are said to be resolved with 14 pending and forwarded to the Justice Department for resolution. It was a disturbing sign that all the 14 forwarded cases involve District officials: we would like to see the outcome of the Justice review. The largest number of conflicts has been with second generation households for housing and agricultural land. Due to land use restrictions and length of time taken to resolve conflicts, people have acted unilaterally and settled on land or are using it for various commercial or agricultural purposes. Once someone has established a house or land use, it is very difficult to remove them, even if the land has already been allocated to someone else. Land dispute resolution therefore remains problematic. Although most formal disputes have been resolved, it was clear to the POE that many informal ones remain. Where resettlers have issue with a land dispute it has been raised to the grievance procedure for resolution. However, allocated land in some cases is not taken up by the eligible person because someone else has a customary use right, for example as the first who clears and uses land. Therefore, land may be formally allocated to one family but in reality be used by another. If the eligible person recognises customary rights, this use is not disputed, but it leaves them with no additional land to cultivate. If a dispute is not formalised, non-compliance with ROPs cannot be asserted, but it leaves a situation of simmering discontent and oversight failure. An independent inquiry into illegal land occupation does not seem to have been conducted, nor seems likely. Land sales continue to be banned but there seems to have been no follow up or reinforcement of the announcements. Transfers have taken place for 37 housing plots, and even more agricultural plots (154 0.66ha plots and 21 0.22ha plots sold). This trend is likely to continue, despite the CA requiring dealings to be restricted (CA Schedule 4, 8.1.3) until the end of RIP or until common agreement that sales are permitted. The pressure of demand from new arrivals on the plateau cannot be ignored indefinitely. The current practice of unsystematic and poorly managed land use is unsustainable and must be addressed. The integration of newcomers is a reality and cannot be Page | 20 avoided. The alternative is that long term viability of resettler livelihoods and well-being cannot be assured and ill feeling between resettlers and newcomers increases. The ideal is to arrive at a satisfactory balance of forest conservation, sustainable land management, and restoration of productive land resources. There was also almost unanimous feedback to the POE from both villagers and Provincial officials that land should be managed by communities themselves. This is what the CA envisaged from the outset (CA 9.6.1) but was difficult to achieve, partly due to the very top-down approach of the project, partly due to the VFA management formula, and partly due to unease in government about communities having decision making authority over their own land. There has nonetheless been a change in attitude and approach since December 2015, both in the project and in local government. The national policy of Sam Sang devolves planning to village level and encourages more community responsibility for management of their own resources. This policy, coupled with a more participatory attitude by NTPC, has resulted in improved progress over the past two years towards meeting CA Objectives and Provisions on different types of land use, on community involvement in planning resource management, and in respecting the ethnic differences in the original resettlement hamlets. There remains some way to go, but activities to complete these initiatives are continued in the MTDP. It is important however that land issues are managed at the hamlet level, not least because they better represent the varied ethnic composition of resettler households and reflect where clan and kin loyalties lie. Consolidation of the original 16 resettlement hamlets into 10 villages meant that village authorities did not necessarily represent the rights of different ethnic groups who lost equal, fair and secure access to their land, and further misuse occurred between villages that had been consolidated as reported in POE Report 24. Community planning has now reverted to hamlet level, which is intended to better represent Resettlement Provisions that “the social and cultural cohesion of villages will be protected”, and that “traditional organisational structures, religious beliefs and resource use will be recognised and respected”9. The POE is pleased that 16 hamlet CFPs are now being developed. Integrating the CFPs into the VDPs also meets the POE's recommended action in Report 26 to reach consensus on land use plan development. This is an important CA requirement (Schedule 4, 15.1(a) 6). Enabling this new approach to continue requires more support to the District and villages to prepare a legal and permitted land conversion procedure of collectively titled land, based on existing Community Land Title regulations. The POE expects this change to happen with the majority consent of eligible titleholders and in a transparent way. There is critical need to achieve solid governance of resettler plateau land resources, whether agricultural, forest or housing land. If this cannot be achieved, any planned activities will face continued problems and resettlers will not participate in future. GoL law as well as GoL-approved CLT rules allow hamlets to reconsider and revise land use areas, particularly of what is now degraded forest land, to meet the purposes of changing times. The intention of such regulations was to build in opportunities for change 9 CA, ibid Page | 21 based on the voted wishes of eligible titleholders. This is an innovation for the plateau, and further guidance and support to the District will be required. Current efforts to resolve land issues must continue, but action will depend on finalising CFPs and VDPs, which are now scheduled for completion by June 2018. Each hamlet has different remaining forest and agricultural land resources, and the villagers themselves have different ideas as to their use and management. The POE is not against commercial use of community forest land; however, it needs to be undertaken in a way that benefits villagers, not outside interests. It is hoped that the CFPs will reflect positive ways of forest utilisation that take better account of its management for eligible families. We note that Component 1 of the NP-LAF project on development and reallocation of land is for “an analysis of the agricultural potential of the resettlement land and will define, on a participatory basis and in coordination with local authorities, land use plans which shall provide land tenure security, avoid conflict management, favour agricultural production and articulate, where necessary, with forestry issues.” We are pleased to see that land use and reallocation would be participative and coordinate with local authorities but would re- emphasize that land use planning should work within established community processes for decision-making on community land, which have clearly defined rules for deciding these issues. The established framework should be an integral part of Village Development Planning. We also have concerns that the NP-LAF project includes all households in target villages, not only resettled ones. The NP-LAF team considers that the project’s “ownership paradigm” requires that a wide range of activities needs to be offered to households according to their capacities and including all households, whether or not they own land. We would point out that ownership of agricultural land seems a prerequisite for participating in most agricultural development. As non-resettler households have no land rights on the plateau, at least for the time being, any livelihoods involvement could only focus on marketing or processing. 6.2 Compliance with ROPs It seems from available information that CA compliance has finally been met on settling outstanding unresolved land allocation, titling and certification to eligible persons (CA, Schedule 4, Part 1, 15.1[1.1]). There appears to be no breach of compliance on settling outstanding formal land disputes (including the 14 Justice cases). However, unless a dispute over land rights is made formal it is not possible to test enforcement for compliance. Illegal land occupation and land use by non-Government outsiders is non-compliant with CA Resettlement Provision (3.2 (a)) which specifies exactly who is and who is not eligible for Resettlers' housing and agricultural land entitlements. Land and property sales are also non-compliant with this Provision, but since these are already a fait accompli and original resettlers are reported to have moved out of the plateau after sales, there is little that can be done at this stage to enforce compliance. An important CA Objective (3.1) is to “have the Project Affected Persons participate in the consultation, planning and design process of their new settlement and production areas”. Since production areas include forest areas, compliance with this Objective has been sorely lacking in the past, but it now being addressed through development of CFPs and VDPs. Full compliance has not yet been achieved but is targeted for mid-2018. 6.3 Recommendations For future development Page | 22 13/27 Ensure that decision-making on land use in development of CFPs and VDPs complies with the established legal procedures for community decision- making on community land and with CA requirement to respect social and cultural cohesion of original resettlement villages and to ensure village resource use is recognised and respected; 14/27 Provide additional assistance to the District to develop a procedure for land conversion according to CLT regulations. 15/27 No inclusion of non-resettler households in NP-LAF agricultural activities until eligible resettler and subsequent growth households first have land allocated and legal documents issued, and proper procedures for land conversion have been applied. Page | 23 AGRICULTURAL DEVELOPMENT Clause 9.7.1 of the CA required that NTPC, “with assistance from the RMU, will develop and implement an agriculture development program with the objective of enabling Resettlers on the Nakai Plateau to develop productive and sustainable agriculture as part of their livelihood system.” There is similar language for a “livestock development program”. Given the current uncertain state of the future of cropping and the potential emerging problems with excess livestock numbers, the POE cannot advise that these Provisions have been achieved. As the POE has previously reported, the CAP defers plans for the development of agriculture and livestock mostly to the medium-term NP-LAF project to be jointly funded by AFD, the Nam Theun 2 Development Fund (NT2DF) and the GoL. The NP-LAF promises to provide support for farming options tailored to fit the preferences of villagers. It is not yet clear how it will change the options for dealing with the constraints of the poor quality and poorly watered soils of the plateau any better than past efforts, or whether farmers will alter customary production methods and take up the methods that require significantly greater inputs of cash and labour. These fundamentals, which the NTPC project has been addressing for the last decade, haven’t changed. The AFD-GoL funding agreement refers to the potential for intensification by soil enrichment and irrigation and expanding the area under cultivation, including use of some community forest land. (Elsewhere we note that there are competing uses for forest lands – including regeneration or plantations, agro-forestry and cropping, and livestock grazing: any decisions made in villages on community forest lands must take account of the full range of options.) The POE is firmly of the view that significant improvements in farm production cannot rely to any great extent on finding further land – they will absolutely depend on plateau farmers being prepared to take up new methods. In POE26A we recommended that by the end of 2017 there should be a firm process in place for planning, funding and implementation of NP-LAF and that the GoL, NTPC and AfD should have signed up for it. This objective has been achieved. The NP-LAF project is gathering momentum with a senior technical advisor and some supporting staff in place. Discussions with DAFO and the NTPC staff have begun, and the team is engaged with the village planning process. However, is too soon for any firm predictions about what is likely to emerge in the form of a new agricultural strategy. The plan is flexible on the options it will support, and the technical team will actively draw on the accumulated experience with agricultural development on the plateau. It will be important to retain Lao staff agricultural expertise on the plateau and not to reinvent the wheel after 10 years of NTPC activity. We also have recommendations later in this Report covering the relationship between NP-LAF and the overall planning processes in the resettler villages. 7.1 Compliance with ROPs Overall, we have found that the requirements of Clause 3.1 of the ROPs for sustainable livelihoods have not yet been achieved for agriculture. We discuss our detailed findings on achievement of the ROPs in the following sections on cropping, irrigation and livestock. 7.2 Recommendations For future development 16/27 The GoL agree on a revised agricultural development plan on the principles in the CA, to be developed and implemented by DAFO with support from NP-LAF, through Village Development Planning. Page | 24 17/27 The GoL ensure that the funding and technical support provided by NP- LAF in the medium term is fully integrated into future planning and implementation of agricultural development on the plateau. Page | 25 CROPPING AND IRRIGATION Market garden farmers 8.1 Cropping The CAP’s focus has been on increasing the use of allocated agricultural land and improving its productivity through irrigation and soil enrichment. As we have previously reported, there has been a turn back to cropping in terms of area under cultivation and participating households in recent years. There has been a significant increase in the area under cultivation in both dry and wet seasons in recent years. The increase in use of barbed wire fencing, promoted by NTPC, to protect crops from wandering stock has been a visible success, with many more fenced-off plots evident, but overall this has yet to translate into increased vegetable production. A major inhibitor on increased use in the dry season has been insufficient water or damaged irrigation. The future for cropping is still quite uncertain. A lot of the growth in 2015 and 2016 in use of both .66ha plots and additional land was due to contract cassava planting. In 2017, there has been a halving of the area under cultivation for cassava. With one exception, villages have reported declining yields and significant losses on cassava cultivation, as a reason for exiting production10. The statistics for area under cultivation show that the reduction in cassava planting has been partly balanced by further plantings of padi (only 10 The exception was Nam Nian who were more optimistic about cassava. Villagers are selling to both a Vietnamese trader and to the Gnommalat company. There had been no further reduction in area planted and those in third year of production say they will plant in the fourth year. The Gnommalat company said they would lend money for fertiliser. Farmers can use also use weeding machine for free to mulch or compost land. Page | 26 possible in some villages) and upland rice; but it appears also that some land has been returned to fallow. Table 2: Cropping: areas and households Area under cultivation 2015 2016 Nov-17 Change Change 2015-2016 2016-2017 Paddy rice 200.0 302.6 348.0 51% 15% Upland rice 364.3 241.6 322.0 -34% 33% Cassava 319.9 403.4 212.0 26% -47% Agro-forestry 203.9 246.2 185.0 21% -25% TOTAL 1088.1 1193.8 1067.0 10% -11% Households 2015 2016 Nov-17 Change Change 2015-2016 2016-2017 Paddy rice 324 413 484 27% 17% Upland rice 587 354 493 -40% 39% Cassava 476 592 292 24% -51% Agro-forestry 333 396 290 19% -27% TOTAL 1720 1755 1559 2% -11% Source: GoL/NTPC briefing for POE, November 2017. We recommended in POE26 that there should be advice and support to all cassava farmers on mitigating soil impacts or alternative uses of land. This depended on there being some clear view, given the retreat from cassava, on what crops might replace it. Observers comment that there is still no consensus on that issue. Farming practices based on enrichment and watering of the soil seem to be the basis for future sustainability of cropping. A small number of enthusiastic farmers are showing that the land can be used productively and sustainably, but uptake of these practices by others is still limited. Very few households engage in vegetable production for market and, even allowing for weather variations year to year, there is no clear evidence of increased production in recent years. LSMS8 reported farmers’ views that the main inhibitors are lack of water and household labour. The uptake of agroforestry at economic levels is improving marginally but is still not substantial: about 140 of the 300 or so plots generate income. Overall, both the number of households reporting, and plots used for, agro-forestry are falling. Page | 27 Table 3: Dry and wet-season vegetable production 2015 2016 2017 DRY RAINY DRY RAINY DRY RAINY (till Aug) N° of HH 96 84 120 85 94 49 producing crops Maximum area 5.8 9.2 8.9 6.4 4.9 2 (ha) cultivated Total production 26,554 32,442 192,510 9,628 41,657 3,077 (kg) Average yield 4,578 3,526 21,630 1,504 8,501 1,539 (Kg/ha) Average value of 1,217 2,694 2,428 998 847 457 sale (‘000 LAK/HH) Source: GoL/NTPC briefing for POE, November 2017. Note: “High fluctuation of the number HHs involved in crop production and the cultivated area depending on factors (e.g. market, season, availability of water...)” Experiments with soil enrichment and extension work continue both for rice and other crops, which we considered a priority. Trials for agroforestry and padi rice indicate that some modest improvements in soil quality and yields are possible with use of organic methods or artificial fertiliser. It seems however that the cost of soil enrichment in terms of cash and labor remain a significant barrier to all but a few innovative farmers. 8.2 Irrigation Irrigation – including the willingness of farmers to use and maintain it – remains a significant constraint on dry-season agriculture. In POE26A we said that the Actions for repair of gully dams and pumped irrigation systems sufficient to ensure water for vegetable crops should be treated as a priority. Thanks to a program of refurbishment, all 22 existing gully dams should now be functioning, but use and maintenance of appropriate irrigation systems is still limited. An ongoing problem has been the high number of systems that have fallen into disuse and disrepair. Partly this may be a problem of the inappropriate complexity of the systems installed, but the POE agrees that repair also ought to be based on a genuine demand for water and a commitment from users to maintain the repaired systems. Repairs are now based on three sensible principles: that the land to be watered is being used for cropping, repairs are “relevant and necessary” for effective irrigation and that the cropping supported is economically viable. The District and NTPC have been insisting that Water User Groups (WUGs) to take responsibility for repaired systems and have been trying to strengthen farmer responsibility for systems by training WUGs in the requirements and costs of maintenance and recruiting volunteer water dealers to take responsibility for maintenance. The new conditions make sense, but it is an indicator of the distance still to travel with irrigation that few schemes can actually meet them. Further study is required of the options for irrigation, including the economics of drilling deeper wells to supply vegetable crops during the dry season. Page | 28 8.3 Compliance with ROPs The major requirements of the ROPs for cropping and irrigation are all reflected in the CAP. In some cases, such as for vegetable production or agro-forestry, the targets set have been modest, and their achievement therefore is a not a major contribution in relation to the potential scale of cropping on the plateau. In particular, we do not consider that the provisions in Clause 9.7.1 have been met for “an agriculture development program … to develop productive and sustainable agriculture”. Overall, the main issue has been the limited uptake by resettler households of the options available for improving the productivity of the land. Given this limited uptake and the current state of uncertainty following the turn back from cassava planting, we have concluded that cropping and irrigation cannot meet the requirements for sustainable livelihoods in Clause 3.1c. On unresolved issues like the options for replacement crops for cassava, the national office of the Ministry of Agriculture and Forestry (MAF) is likely to have answers not necessarily accessible to District extension services. MAF has proved to be a helpful source of expertise in relation to the enhanced prospects for project forestry and has access for example to national and international examples of what works and what does not in circumstances like those on the plateau. Further involvement by MAF in agriculture would pay dividends. There are several specific IMA findings of non-compliance with the requirements of the CA for cropping and irrigation. We comment in Chapter 0 on some commitments to provide assets for farming that we agree are probably now redundant or need reappraisal. Others are deferred in the CAP to the MTDP and NP-LAF. 8.4 Recommendations For future development 18/27 Review progress with irrigation and the economic options for future development, utilizing MAF’s national expertise in the process. 19/27 Arrange targeted discussions with farmers moving out of cassava on restoration of land and options for future cropping. Page | 29 LIVESTOCK Buffalo in NNTPA 9.1 Cattle and buffalo The CAP has continued the company’s focus on improving animal health, increasing feed supply for large animals, and encouraging the raising and management of both large and small animals as a business. Despite warnings about the risk of continued growth in numbers of buffalo and cows, the numbers are now more than a third above carrying capacity estimated in 201011. In the three years to June 2017, buffalo numbers grew by 37% and cattle by 86%12. Table 4: Large Livestock numbers Cattle Buffalo TLUs 6- Households month with large change animals Jun-14 1788 1532 2962 518 Dec-14 1912 1451 2981 1% 492 11 As measured in Tropical Livestock Units (TLUs) by the Livestock Strategic Management Plan (2010). TLUs are an index measurement of ruminant herds based on relative feed requirements. Weightings vary. The table uses the same weightings as the Plan: adult buffalo = 1 TLU, and adult cow = 0.8 TLU. 12 These numbers, reported by Village Extension Workers, are probably an underestimate. A report on vaccination cautions that “animal statistics can only reflect global trends since some resettlers do not want to report the exact number of animals they keep, especially the animals free-ranging in the WMPA (protected area).” Other observers confirm this problem with the statistics. Page | 30 Jun-15 2129 1432 3135 5% 508 Dec-15 2369 1664 3559 14% 615 Jun-16 2635 1713 3821 7% 619 Dec-16 3052 1961 4403 15% 660 Jun-17 3328 2094 4756 8% 715 Source: GoL/NTPC Briefing for POE, November 2017 Although the number of households with some large animals has grown, only a few households are reported as owning more than 20. A third of these animals are owned in two villages: Ban Done and Ban Nakai Tai. In the 2017 vaccination campaign, the District reported an increase in vaccination rates for hemorrhagic septicemia, the most lethal disease, for both cattle and buffalo. Reported rates were 68% for cattle and 55% for buffalo. There were fewer reported animals infected with foot and mouth disease than in 2016, but more with hemorrhagic septicemia. Table 5: Reported infections and deaths of large livestock 2016 2017 Foot and Hemorrhagic Foot and Hemorrhagic mouth septicemia mouth septicemia Infected 352 32 127 61 Cattle Died 1 14 5 2 Infected 79 0 72 131 Buffalo Died 0 0 0 24 Source: NTPC, February 2018 There is little visible evidence this dry season of stress on animals but there is likely no safety margin. The options are stark: either meet the feed and land requirements for the increased numbers, manage them down by sales, or face the risk that a dry season drought leads to mass starvation. Although animal stress impacts disproportionately on a few wealthier households with large herds, as indicated above it can still have a significant effect on a larger number of poorer households13. NTPC and the District have tried to encourage livestock owners to increase the supply of feed by developing either communal pasture or individual forage plots and to support the development with distribution of barbed wire, fertiliser and fodder seed. Although there has been some growth in the area for pasture or fodder, it seems marginal compared with the requirements for the increased numbers. Difficulties with repurposing land for livestock feed, including villagers’ respect for customary rights to fallow land together with past failure to inform hamlets about their rights to set aside forest land for pasture, seem to have contributed to the problems. From the report on the LoA Action to increase feed supplies: Communal pasture development did not generate interest by villagers because there is no available communal land to use for the pasture. Also, the village authority cannot 13 Although only wealthier households have large herds, large animals represent a substantial fraction of the wealth of a significant number of households who are less well off. LSMS8 Table 108 shows that wealthy households hold a larger proportion of their wealth by value in livestock but vulnerable and poor families still hold about a third of their wealth in livestock. This doesn ’t distinguish between large and small animals but the average numbers of large animals owned as reported in LSMS8 are: for rich households – 4.3 buffalo and 2.2 cattle and for poor 0.9 and 1.9. Page | 31 gather large fallow land to use for communal pasture purpose. This is because the land is occupied by custom from individual households who were the original clearers in the past. All villagers recognize that the land belongs to the one who cleared and slashed and burned the forest first in the past. Other villagers respect this customary right, so nobody will use this land without prior permission from the original household. Table 6: Forage establishment Beneficiary HH (no) 201 0.66+0.22 plots (no) 49 Area in 0.66+0.22 plots (ha) 24.34 Plots in additional lands (no) 76 Area in additional lands (ha) 68.1 Total plots (no) 175 Total area (ha) 97.44 Source: NTPC/GoL briefing for POE, November 2017 The other main course of action, of managing herd numbers by regular sales, has also so far proved unsuccessful. Villagers were not interested in bringing animals to a pilot auction. A trade fair organised instead, for traders to visit villages and negotiate with owners, resulted in only three sales. Ostensibly the problem was a gap in price expectations, but it seems likely also, as the POE heard in villages, that the trade fair too was outside owners’ traditional ideas about selling. Nakai farmers will sell animals - every village we went to reported ongoing, sporadic, relatively infrequent sales, either directly or through traders – but mostly only when they need cash for a celebration or an emergency, not as an ongoing business. Observers commented that the trade fair had the advantage of increasing contacts between owners and traders but getting plateau farmers to consider managing livestock as a business still seems likely to require a significant shift in cultural attitudes. The consultation on village plans should include information on options for raising large animals as a business, which could then be supported by the NP-LAF and may involve review of lending criteria from VDFs. Planning could start with targeting the few owners of relatively large herds. IN POE26 we recommended an additional Action, which was not taken up, to re- assess livestock carrying capacity and possible land use options in relation to stock numbers. In the meantime, reported stock numbers have grown further. The District must prepare for the steadily increasing risk of a severe shortage of feed in the dry season. It should give thought soon to developing a coping plan, covering both emergency feed supply and what to do with the animals when there is not enough of it. 9.2 Small animals The CAP includes actions actively promoting raising small animals, particularly chickens, as a business. Reported numbers of small animals, particularly chickens, but also pigs and more recently goats, have been on an upward trend since 2010. On a head count, numbers reached a recorded peak in mid-2016. There was a sharp reduction in the second half of 2016, and some recovery since then. Some of the drop undoubtedly was due to disease. In Khon Kaen village women told us in 2016 that they had a flourishing and profitable business raising chickens for market, with a trader living in the village. When we went back in November, they said that their Page | 32 poultry had been virtually wiped out by disease. In another village, women said they were cautious about getting into the poultry business because of this risk. Vaccination rates for pigs (for swine fever – 28%) and poultry (for Newcastle disease, fowl cholera and duck plague – 59%) were significantly higher in the 2017 campaign than in 2016. Getting into chicken raising in a big way requires careful attention to management to reduce the risk of disease. NTPC advises that there were no major losses for households in the local chicken raising program, where the birds are penned. Despite setbacks, it does appear that interest is growing overall in raising small animals, especially chickens but including pigs, goats and ducks, not only for the table but as a business. There are useful initiatives in supporting chicken rearing. We visited one farm in Phonesavang, supported by NTPC’s Happy Nakai program, for raising chicks for distribution, that appeared well-organised and managed, with lots of room for expansion. The rather modest targets for supporting small animal businesses could well be raised. The POE notes that goat numbers on the plateau are rising quickly from a small base. Goats are a cheap and efficient source of meat (and income) for rural smallholders but they carry their own risks. As numbers grow, owners can no longer let them range freely, because they compete for forage and can damage crops and are another vector for ruminant disease like foot and mouth. DAFO extension services (and NP-LAF) may therefore need to consider the role of goats in mixed farming systems and advise farmers accordingly. 9.3 Compliance with ROPs Clause 9.7.1 of the CA requires NTPC to develop and implement a livestock development program and plan to support “productive and sustainable” livestock production and to “review and revise” the plan from time to time. Given the risks posed to raising cattle and buffalo by the continued rise in their numbers, we cannot advise that the resettlers have achieved sustainable livestock production in terms of CA Clause 9.7.1. In our view a review and revision of a livestock development plan, deferred to the MTDP for attention of NP-LAF, is required for achievement of ROPs. The most urgent task is an emergency plan for managing numbers and effective responses in the event of a drought or a disease epidemic. We consider that a review and issue of a new plan covering emergency action should be possible by the end of 2018. On the other hand, the present growth in numbers of small livestock and in chicken farming as a business does appear to be on a sustainable path, provided disease can be managed. 9.4 Recommendations Compliance with ROPs (NTPC) 20/27 Review and, by the end of 2018, revise the livestock development plan, including a reassessment of the carrying capacity of the plateau and development of an emergency plan for managing large livestock feed and numbers in the event of a significant drought and for effective responses in the event of a disease epidemic. For future development 21/27 Include options for supporting development of large livestock businesses in Village Development planning and in NP-LAF. 22/27 Launch a further campaign aimed at households raising small animals as a business to encourage safe management and effective vaccination practice. Page | 33 OFF-FARM Thalang restaurant 10.1 CAP off-farm actions The general principles in the CA for replacing loss of livelihood (Clause 15.1.a.4) include: Access to skills training for off-farm employment such as tailoring and weaving, small machine repair shops and spare parts shops (pushbikes, motorbikes, power tillers), small goods shops; marketing - buying and selling local produce; processing of locally produced produce; employment in NT2 project facilities (guards, gardeners, boatmen); taxi and boat taxi drivers; other services related to tourism and construction related unskilled and semi-skilled labour). The planning for developing off-farm opportunities has moved well beyond this original prescription. It includes a useful focus on further general and technical education as well as specific training. There is an expectation that the children of resettlers need to be equipped for life in the wider world beyond Nakai. In past reports we have applauded the various initiatives by NTPC to develop jobs and businesses for resettlers and their children. The CAP is a logical development through identifying off-farm opportunities, matching them to the needs and preferences of resettlers, supporting them with education, training, advice, and finance, and finally to monitoring results. CAP Actions have generated a lot of potentially valuable activity for resettlers, such as the job fair held last November that some of us were able to observe, which exposed Page | 34 resettlers to available opportunities in both business and employment and enabled some useful contacts to be made. A consultant study, which included discussion with villagers on their preferences, has identified some small-scale business opportunities. Small-scale handicrafts made under the Happy Nakai initiative have generated modest but encouraging returns for villages. A business startup venture program has identified some further initial businesses for support through an accelerator program. The establishment of a Resource Centre to support startups, on the LoA, was underway at the end of 2017. We note that opportunities for marketing and further processing in farming or fishing are included in actions under those pillars, including raising small livestock and fish processing. Other observers have commented that further opportunities include vegetable processing and processing of food products for restaurants and tourism outlets. Value-added processing is an important part of the GOL’s development strategy for agriculture. We assume that marketing and further processing will be part of the NP-LAF development strategy. 10.2 Finance for development In POE25 and POE26 we identified availability of finance as important for business development. The CAP includes an Action, deferred to the MTDP, to “make finances available to resettler entrepreneurs through reimbursable seed funding and ensuring access to [Village Development Funds (VDFs)]”. VDFs continue to be the main source of finance for a wide range of household activities, including business capital. At about LAK800m VDF loans for business were the biggest category in late 2017, but a priority is to ensure that the amounts and terms of loans are adequate to meet business requirements. At the same time – although delinquency is not a major problem for most VDFs –all VDFs need risk management policies. In POE25 and POE26 we emphasized the importance of reviewing the operations of VDFs to ensure that they were meeting financing needs and being managed properly, and that Village Finance Committees (VFCs) had the support they required for decision-making and management. We specifically recommended in POE26 for completion by December 2017: • A planned audit of the operations of each VDF be accelerated and remedial actions be put in place for funds with arrears problems • Review of the lending decisions and policies of the Funds to suggest how they can ensure that access is equally available to all groups who wish to borrow and can manage its requirements • The creation of a Network Support Organisation to support VDFs None of these Actions had been completed at the end of 2017. We have no advice on the timing of an audit. Discussions were underway with the Lao Microfinance Association on the other two issues. All three Actions remain in our view priorities for early completion. 10.3 Evidence of impacts We have also said that the success of CAP Off-Farm Actions will be measured by the contribution they make to villagers’ employment and business income. In POE25 we proposed indicators for the end of 2017 in terms of the percentage of graduates from school, further education or training in employment and additional income-earning businesses. These Page | 35 indicators are not yet available14. Information available from LSMS8 indicates that income from business is still vanishingly small, but there does seem to be some resurgence in employment. The project is offering fewer jobs, but employment still seems to be growing in importance as a source of income. It provides an estimated 15% of mean household income for resettlers, and 25% for the subsequent growth households. The biggest source of growth in employment has been with private employers (including other villagers), as jobs with the company and with government have reduced since 2011. Some further research into where these jobs are to be found would be useful. We are impressed by the continued growth in the education and experience program that awards long-term scholarships and supports vocational training. In 2017-18, 27 students will be studying on long-term scholarships. However, it is not clear how much growth in business or employment income can be attributed to education and training offered by the company or support for business development. We agree that education is a longer-term investment and – particularly for younger resettlers – essential for most further skills development; but clearly at some stage it is important to know whether the specific support provided through the CAP or into the medium term is in fact having an impact on jobs and business. Table 7: Sources of household income Resettlers Subsequent Growth Fishing 29% 30% Crops 28% 27% Employment 15% 25% Livestock 13% 8% Other 9% 5% Forest 5% 4% Business 1% 1% TOTAL 100% 100% Source: LSMS8 10.4 Tourism Tourist activity is growing and there is further study underway of its potential. Currently it is generating income for a small number of local businesses, particularly at Thalang. Tourist traffic is not large. Last year, an “estimated 5000 international tourists … visited the Nakai plateau, many of them [young] backpackers who travel ‘The Loop’”. They are on a “tight budget” and spend USD15-25 a day, compared with average daily tourist spend in Khammouane of USD58. An increasing number are staying in the two guesthouses in Thalang. The challenge is to get the backpackers to stay longer and spend more, and to widen the market appeal of Nakai. There is interest from existing operators in boat tours or fishing trips on the reservoir or overnight stays in the protected area and possibly homestays including classes in gardening, cooking or handcrafts. A market research report on tourism outlined plans for possible ventures including an ecolodge, bed and breakfast, restaurants and 14 In the CAP, actions for monitoring of new resettler businesses and increased employment were deferred into 2018 but initial monitoring is expected to be completed by June 2018. Page | 36 fishing and boating trips. Increasing the numbers and average spend of tourists in Nakai probably depends mostly on its unique selling point of the natural beauty and wildlife of the Watershed, which might appeal to more adventurous visitors. We were advised that WMPA are studying this possibility at present with the assistance of an ecotourism consultant. The CAP actions include linking with a Khammouane Tourism Project funded by ADB. So far it has produced little beyond an initial meeting and there is nothing concrete to report on cooperation with the CAP initiatives. This is not necessarily a problem if the Project has in fact little to offer for the plateau, but we hope it might be a source of funding and technical assistance. 10.5 Compliance with ROPs Because of the ambitions and scope of the off-farm program, and its development beyond the original CA, we do not find any specific significant shortfall in relation to the ROPs, although the program is still only making a small contribution to resettler livelihoods. We have recommended completion of some specific actions in the CAP off-farm pillar. Some of them have been deferred to the MTDP, but we believe they can and should be completed in the first half of 2018. 10.6 Recommendations For future development 23/27 Accelerate a planned audit of the operations of each VDF and put in place remedial actions for funds with arrears problems 24/27 Review the lending decisions and policies of the Funds to ensure that access is equally available to all groups who can manage the Funds’ requirements 25/27 Complete the creation and staffing of a Network Support Organisation to support VDFs 26/27 Establish a venture seed fund to complement VDFs with longer-term finance 27/27 Complete the establishment of the planned resource centre for business startups 28/27 Complete planning for joint venture with Lao tourism operators for tours to the protected area 29/27 Review District capacity to manage the off-farm program and recommend further development if required. 30/27 Begin monitoring new businesses established and employment created Page | 37 POOR AND VULNERABLE 11.1 Operation of the programme The overall status of the Poor and Vulnerable (P&V) has improved since Project inception. The Project has revised and amended (but not reduced) their definitions, and of High Risk, to include subsequent generation (SG) households. Lists of eligible families have been updated, and as of March 2018 there are 28 Poor households and 24 Vulnerable households (plus 5 individuals) included in the total of 81 High Risk households. Support will continue for all these households until RIP. After RIP, support will remain for the 24 Vulnerable HHs until the end of the Concession Period but not for Poor or other High Risk. All families have been informed of the changes that will take place. Of resettlers remaining on the plateau, only 3-5% of households are now classified under these categories. The Project recognises that some households will always remain poor or will move in or out of poverty over time. The critical issue for NT2 is whether there is provision to support those who cannot support themselves. This has been provided through development of a Social Safety Net (SSN), with different levels of support for Vulnerable households. Support at other levels has been provided in the special Program or under CA obligations for High Risk and Poor households. An SSN Manual has been developed, outlining the continuing provisions for Vulnerable families. These include: • Nutrition support and full health cover to continue to end of concession period • The District and NTPC will share responsibility for the SSN • Eligibility criteria have been updated, to include age, disability, orphans, those without household labour, and those without carer support • Period follow-up assessments of Vulnerable family situations will be conducted GoL is introducing a new National Health Insurance (NHI) scheme, which may come to replace the project’s support to High Risk households not classified as Vulnerable. However, it will only do so if it meets the same criteria and provisions as the SSN. Assessment of the NHI scheme and its efficacy in Nakai are first required before any transfer is made. While the NHI is a very necessary initiative and the policy contributes to the concept of sustainability, the implementation remains experimental and does not yet provide a sustainable alternative as of this Report. Actions under the Community Living Well Programme (CLWP) also cover vulnerable households and will continue into 2018. By 2017, activities were mainly implemented by GoL staff, and this will continue. However, future CLWP activities could be implemented also by villagers directly and integrated into VDP processes or in conjunction with other projects. The CLWP team is currently working on a plan to ensure sustainability along those lines. There do not appear to be significant non-compliances with ROPs. An important achievement has been to ensure that the voices of economically marginalised households are not lost in the new decision-making process of Village Development Planning, and to ensure that their needs and wishes are included in discussions as well as in activities identified for future funding applications. To some extent the VDP methodology reflects this, but the inability of some very disadvantaged households - particularly the physically or mentally disabled - to attend relevant discussions means that village authorities must represent their interests and base recommendations on household analysis of needs. Though it has already been recognised as a need by the MTDP and NT2DF Page | 38 programmes, this is something the POE recommends the VDP methodology improves and incorporates to bring it more in line with Resettlement Provision 3.2(l), which requires “special consideration will be given to gender issues, vulnerable households and ethnic minorities during detailed planning, design and implementation of the social plans.” In line with this, we believe that a more tailored livelihoods approach for Poor, Vulnerable and High-Risk households be adopted. This means a specific assessment of skills, needs and opportunities for each identified household, and a support programme suitable to their abilities and wishes be integrated into the VDP and updated periodically. Apart from the ongoing assistance provided to Vulnerable households, this should help to prevent Poor and High-Risk households falling into the Vulnerable category. Given that many of these households are from more marginalised ethnic groups, this would also serve to support their particular needs under required Special Measures. 11.2 Compliance with ROPs We are satisfied that the provisions for poor and vulnerable households meet the requirements of the CA. The following recommendations are related to implementation of the Special Programme. 11.3 Recommendations For future development In addition to the ongoing Special Programme activities: 31/27 Include a stand-alone component for Poor, Vulnerable and High-Risk households in VDP methodology. 32/27 Develop a livelihoods plan for each of the High-Risk households specifically tailored to individual situations. Page | 39 ETHNIC GROUPS 12.1 Introduction Since the CA was written, interpreting and applying its requirements for ethnic groups has generated a particularly sensitive set of issues, characterized by different perspectives at all levels and among most interested parties. The POE has regularly commented and made recommendations on ethnic group issues but so far there has been limited progress with resolving them. This lack of progress remains a potential obstacle to attaining compliance of the project with the CA’s Objectives and Provisions. In this chapter we discuss the major remaining issues of compliance. The CA addresses the situation of “ethnic minority groups” on two levels. The economic or material dimension is covered first, concentrating in the Resettlement Objectives section on enhancing resettler incomes and improving livelihoods on a sustainable basis and calling for special measures to improve the socio-economic status of vulnerable persons and ethnic minorities. The Resettlement Provisions which follow cover a range of requirements which may be defined broadly as protection of the identity of the resettlers and their social and cultural cohesion, recognition of and respect for their traditional organizational structures and religious beliefs and ways of consulting with and ensuring wide participation of all resettlers in project planning and implementation. Reference is made to “special consideration” being given to “gender issues, vulnerable households and ethnic minorities” during planning and implementation phases. The Project's Social Development Plan (SDP) is part of the CA and includes an Ethnic Management Development Plan (EMDP). As provided for in the CA we have had regard to the requirements of the World Bank and ADB Safeguard Policies in making the assessments below. We have followed below the above sequence of issues in the approximate order set out in Schedule 4 Part 1 of the CA. 12.2 Terminology The CA frequently refers to “ethnic minorities”. The GoL does not officially recognise this term, because of the implication that minorities have specific rights and need special protections when GoL policy is to accord “equal rights for all and participation by all”. Additionally, there is the practical reality that ethnic groups who would be minorities in the overall ethnic composition of Laos add up to a substantial majority on the plateau, especially among resettler households. This difference has been more sharply delineated by a change in survey questions about how ethnicity was identified. LSMS7 in 2011, following previous practice, reported that on the basis of “mother tongue”, 61% of the resettler households were Lao Tai and 31% were Makong, Tai Bor or Ahoe. In LSMS8, ethnicity was recorded on the basis of what householders declared themselves to be. The results were dramatic: only 24% said they were Lao Tai, and 67% said they were Makong, Tai Bor or Ahoe. As one woman said to us in a village meeting: “I don’t speak Makong, but I am Makong”. For these reasons, we have generally either referred to particular groups (such as Makong, Tai Bor or Ahoe), or to “old” groups (original plateau inhabitants) or “new” (more recent arrivals), rather than “ethnic minorities”. As a shorthand we use “ethnic groups” below when we are referring to such groups in general. 12.3 Standards of living Starting with the survey of ethnic groups in 2014, the quality of statistical information on resettlers by ethnicity has improved considerably. We reported in Chapter 3 that, based Page | 40 largely on the LSMS8 in early 2017, overall real household incomes remain well above pre- project levels and that Household and Village Income Targets are still being met. LSMS8 data by ethnicity confirms that all ethnic groups have participated in this improvement. However, pre-project differences between ethnic groups have largely persisted: the “new” ethnic groups on the plateau (mainly Lao Tai and Tai Kadai) continue to be significantly better off than the “old” (mainly Makong, Tai Bor and Ahoe)15, who represent roughly two thirds of the project population. LSMS reports the following differences in mean and median expenditures: Table 8 Ethnic groups: household expenditures Group Mean Median Lao Tai 600,000 740,000 Makong 460,000 520,000 Ahoe 480,000 550,000 Tai Bor 540,000 640,000 Other/Kadai 620,000 690,000 Source: LSMS8 Estimates made in 199616 were that the “old groups” had cash incomes of 170,000- 290,000 LAK/household/year and the “new” groups of 360,000 LAK/household/year. Although the differences in expenditure between groups are significant, they may not be solely due to ethnic differences. An analysis in the LSMS8 report concludes that it is impossible to disentangle the effects of ethnicity on livelihood differences from those of geography: the resource endowments of northern, central and southern villages differ substantially, so Makong from Done will have higher incomes than Makong from Bouama, for example. This is a problem for further discussion of special measures, particularly with respect to livelihoods. All ethnic groups have participated in the significant improvement in education enrolments and health status since resettlement. Makong and Bor primary school enrolments were below those for Lao Loum in 2016 but still above 90%; Vietic enrolments stood at 82%. There was less statistical evidence on health status by ethnicity available to the POE. It seems likely from NTPC regular reports that all ethnic groups have benefited from the general improvement in health status on the plateau; but some more detailed information on comparative ethnic health status should be included in further surveys. The great majority in all ethnic groups feel that they are better off now, but there are differences in experience between groups. The differences don’t line up neatly between “old” and “new”. LSMS8 reports that “Approximately 95% of Ahoe, Tai Bor and Other / Tai Kadai ethnic groups felt they were better off than before resettlement, whereas 87% of Lao Tai and 88% of Makong felt they were better off.” 15 The distinction between “new” (more recent migrants to the plateau) and “old” (original inhabitants) was made by Chamberlain et al 1996. 16 Chamberlain et al 1996, adjusted to 2017 prices, and reported in LSMS8. NB: rough estimates only. Exact comparisons over time are difficult because of adjustments for inflation, valuation of food grown for home consumption, and changing definitions of ethnicity. Page | 41 12.4 Livelihood sustainability We have concluded in Chapter 3 that “With two major pillars of resettler livelihoods in redevelopment, it cannot be confidently said that the conditions for overall sustainability of livelihoods have been achieved.” Whether the livelihoods of some ethnic groups are more at risk than others is difficult to say. Geography, education, cultural traditions and motivation to accept change will all play their part. All groups also face the same future challenges of livelihoods: all have adapted well to reservoir fishing, but all are also reliant on farming for a significant portion of their incomes; the “old” groups are perhaps somewhat more dependent on the land than the “new”, who are somewhat more likely to have incomes from employment. On the positive side, the children of the first generation are benefiting from education not available to their parents and may be more adaptable to new farming practices and will have more opportunities off the farm. There is certainly resistance among the “old” to adopting new farming methods like improving soil quality: the POE’s view is that there would be advantage in more focus on agroforestry in both allocated and community land, both because this would tend to benefit poorer households and because forest resources have traditionally been more important to consumption and incomes for poorer households and customary ethnic groups anyway. An inescapable conclusion is that for many of the original ethnic group inhabitants of the plateau the challenges to adapt have been great for reasons of language, culture, attitudes to change and history. Their need for specific support is correspondingly large and sustainability of their livelihoods beyond fishing is not yet secured. 12.5 Special measures for ethnic groups Not yet having available the Completion Report on the subject, the POE cannot affirm with confidence that a second major CA Objective - that special measures be taken to meet the needs and improve self-reliance of ethnic groups – has been achieved on a significant scale. There have been several attempts over the years to define and promote special measures. For example, what might have been useful in this context was a set of constructive measures incorporated in the 2005 Ethnic Minorities Development Plan (itself a CA requirement). But in the view of the Compliance Report insufficient attention appears to have been given to implementing them in the thirteen years since. The JWG has set out what appeared to be an achievable set of activities, mostly drawn from the CA, in its Ethnic Group Action Plan (AP). The Plan included identification by an IFI safeguards specialist of additional measures “to bring the project into compliance”. An ongoing issue has been that the GoL is unwilling to subscribe to measures specifically targeting ethnic groups. This block is as much philosophical as it is procedural. The GoL view is that giving special attention to particular ethnic groups is incompatible with its ethnic groups harmonization policy, summarized by the objective of “equal rights for all and participation by all”. Special measures could therefore be considered to divide groups instead of unifying them. The counter-argument is that the point of taking special measures is to achieve equal participation for all rather than the unequal access to project initiatives which exists in some instances. There are ways through this essentially philosophical difference. One is to adapt the VDP process to ensure that it captures the needs of specific groups within hamlets and villages. District and NTPC representatives last May discussed adjustments to the VDP process based on a participatory planning model, drawn from the methods used by the Poverty Reduction Fund across Laos and consistent with the newly adopted Sam Sang national policy. The particular needs and conditions of all vulnerable groups are identified to Page | 42 ensure that the priorities selected by ethnic groups are in line with their expectations and culturally appropriate. The approach is also designed to lower the access threshold to ethnic groups whose first language is not Lao and relies in part on visual methods of ranking development options. Follow-up interviews with ethnic groups would lead on to the selection of activities to be financed under the NT2DF. This approach has considerable promise. The model has been further developed, with the JWG deciding that the best mechanism to ensure maximum engagement and benefits to the various ethnic groups is to adopt what is called a tailored approach to Village Development Planning. The specific requirements of ethnic groups are to be met by tailoring targeted livelihood support based on Poor/High Risk/Vulnerable status to different hamlets and households within hamlets. Although District and NTPC agree that ethnic status does not correlate exactly with vulnerability in terms of standards of living, tailored support would have a better prospect of reducing gaps where ethnicity is a factor. A specific change in the VDP Manual is to require that the top priorities of disadvantaged groups become the top priorities of the Hamlet Plan. Further extending the tailor-made approach to the post-RIP period - which would have a longer-term implementation than the CAP – and expanding the category of families, or perhaps groups of families, who are assessed as having problems with developing livelihoods, would also incidentally help many of the old ethnic groups’ households at risk as well as others. Through either or preferably both the VDP process and the Vulnerables programme, the needy among ethnic groups will presumably be covered, along with others. These approaches have the merit of addressing the requirements for additional assistance for the Makong, who on the basis of both needs and affected numbers are lagging behind other groups. The measures, if proven successful, would help weaker ethnic groups and others access project initiatives more effectively and would thus amount in sum to an acceptable level of compliance on the livelihoods side. The outcome of these measures is, however, not yet assessed. This calls for verification. 12.6 Wider social and cultural requirements These approaches to livelihood development - planning on the revised VDP methodology and tailored delivery to groups or individuals with needs and conditions being the basic measures for tailoring – will help step around the policy problem for the GoL of “special measures”. It is also clear from NTPC reports that on the health side, for example, ethnic groups and individuals are visited regularly by health specialists where there is a need, but this is not perceived as a special measure since other resettlers also benefit from such visits. The CA has a broader objective of according “respect to existing indigenous and ethnic institutions, culture and practices in all aspects of resettlement”. Complying with this requirement is not possible without acknowledging ethnic identity and its associated cultural values as a basic right in Lao society. The Compliance Review found the project non- compliant on this score. It found “no record of any attempts to promote or preserve the ethnic groups’ culture, tradition, religion, rituals, customs/clothes and language” and no records “of either the project or the government having spent time listening or asking about the special needs of a particular ethnic group.” It reported that: “The discussions with project staff and the district officials suggested that the aforementioned ethnic groups’ aspects are not a priority at the moment and that the project has focused its efforts on livelihoods development to ensure that income targets are being met.” Page | 43 Looking back to the actual move to the new hamlets, this was not always the case. The project in fact put a lot of effort into ensuring that the move was respectful of the cultural and religious values and wishes of the ethnic groups concerned, and to ensure the ethnic composition of the original resettlement villages reflected these. It is certainly plausible, however, that in the implementation period, other priorities and pressures have dominated. The opening up of the plateau to new populations that are more predominantly Lao Loum has been a major factor. While different languages remain important within the family, Lao is the medium of communication with government and newcomers. Education has provided a younger generation fluent in Lao, but the lack of the language has also served to separate some of the older generation from understanding and contributing to their futures in discussions with both the project and government. This tendency to an erosion of a sense of cultural identity has been reinforced by the consolidation of the resettler villages, which were originally developed on relocation - as noted above - in such a way as to maintain where possible the ethnic, clan, and cultural identities of affected clusters of families. Consolidation has meant that newly appointed decision makers and office holders are not necessarily drawn from the same ethnic group, and that amalgamated land and forest resources are considered available for everyone, not just the original villagers. This has in the past caused conflict. For example, one ethnic group may bury their dead in the forest and keep sacred areas separate, while another visits the forest in disregard of these beliefs. It is thus not surprising that there are some non-compliances with the wider social and cultural CA objectives. The CA requires that the social and cultural cohesion of villages be protected and that traditional organizational structures, religious beliefs and resource use be recognized and respected. These elements are not covered specifically in the CAP’s Ethnic Groups’ AP. The Ethnic Compliance Review notes carefully that, although the project and the GoL do not, for example, prohibit ritual ceremonies and the presentation or promotion of the ethnic groups’ cultural heritage, the project’s area of focus has been elsewhere. The project has, on the other hand, supported building village temples to compensate for loss of a temple in the original village. The Compliance Review found that there is little evidence that protecting and preserving the ethnic groups’ cultures and languages have been specifically addressed. The Review states that some ethnic ritual ceremonies, social customs and ethnic institutions have diminished or disappeared “due to their integration into the Lao culture and traditions, with socio-cultural events now being similar to the ones performed by the Lao Loum group”. The Review also found that the ethnic groups’ cultural heritage, which often varies considerably from group to group, “currently seems to present some kind of confusion” and that “this may require more careful study in order to get the true feeling of the resettlers.” It suggested that one way to improve the situation was to continue and expand the current assistance provided by the Lao Front for National Construction (LFNC) to hamlets in addressing cultural, language and wider community problems. The POE supports these two sensible suggestions. Wider study and appreciation of the cultural heritage of the ethnic minorities may lead to positive developments in thinking on a range of matters which do not necessarily lend themselves to being addressed at governmental level. Similarly, an organization like the LFNC may well bring new ideas to the table in relation to some of the merits of diversity in cultural practices. Page | 44 12.7 Communication issues The CAP addresses CA provisions on communication and ethnic group representation in Plateau institutions. The Compliance Review found likely non-compliance with CA objectives in several areas related to communication where, as noted above, language and cultural barriers inhibit involvement of the older generation in accessing development initiatives. The younger generation has acquired facility with the Lao language through their schooling and some are able to interpret for their parents. The POE’s impression from discussions with hamlet dwellers is that there nevertheless remains a communication problem since the generation gap goes beyond language facility to the capacity of the older folk to absorb further fast technological change. They have already adapted to new ways at an impressive rate. There remains a requirement for skilled interpretation and facilitation in the crucial consultations which lie immediately ahead. GoL sources believe that this problem is being handled adequately through the use of government specialists. The POE has no independent verification of this. Hamlet dwellers complained that there remain language and conceptual problems. 12.8 Representation There is considerable progress to report regarding representation on Village Development Committees (VDCs). A District analysis revealed that “there is reasonably representative involvement of most ethnic groups in the VDCs, on average.” At the same time there is room for improvement. The Khammouane Provincial Governor has required that in selecting members of VDCs and other village and hamlet bodies naibans shall ensure fair representation – in both leadership and support positions – for women and households from ethnic groups. The outcome of this progressive move should be monitored. The expectation is that the District will approve the necessary policy changes and that compliance with CA provisions will occur, though new members’ admission will be delayed in the case of VDCs until after elections scheduled for later in 2018. The POE would interpret fair representation as membership of all important hamlet and village bodies which reflects the percentage of each ethnic group in the overall resettler population of hamlets or villages. In the interim, training of existing representatives appears well underway. 12.9 Separate administrative village units The CA decreed that “Vietic or other vulnerable groups” are to be relocated into “separate administrative village units with clearly demarked boundaries and rights to resources…in order to overcome the problems of exploitation by other ethnic groups and to ensure equity in the distribution of goods within the village.” To be fair there have been several attempts by GoL agencies and NTPC to give effect to the CA requirement but only one has been a (partial) success. The first (Nam Pan in Khamkeut District) was ruled out when cyanide pollution of the adjacent river from an upstream gold mine was discovered. A second site (Poung Phai) was not supported by the younger generation, apparently because of poor access to services. A third attempt in Nam Nian has been partially successful in that an area at the southern extremity of the village has a concentration of housing occupied by Ahoe families which is, in the view of the JWG, a “relatively autonomous” unit. As reported in POE interviews in Nam Nian, however, it does not participate fully in village decision-_making processes. The ethnic group is split four ways with some in this enclave at Nam Nian, others elsewhere in Nam Nian, others in New Sop Hia and other villages and a few families back in the old site at Old Sop Hia (see below). Whilst originally Ahoe resettlers in Nam Nian complained that they were being allocated Page | 45 agricultural land already occupied by others, LSMS 8 reports that Makong and Ahoe have the highest level of ownership of farm plots. As always, land ownership and use are contentious issues worldwide. 12.10 The Ahoe The Ahoe are currently the most under-represented group in VDCs, partly it seems through their own choice. This is not the only respect in which there are difficulties in ensuring that this small minority’s resettlement is accomplished to the satisfaction of all. While most Ahoe have resettled and are now living in project-built houses in the resettlement villages there are still a few families preferring to occupy their former site at Old Sop Hia, reportedly for both spiritual and resource reasons. The JWG called for an assessment of the latter situation from several perspectives, including legal, environmental, GoL policy and IFI Safeguard requirements. This is a complex matter and one of longstanding discussion. The POE’s views over the years are set out in its Report 24 of October 2015. The recommendations were that the right of the Ahoe to continue to live at Old Sop Hia be reaffirmed and that, should the OSH site continue to be the Ahoe’s preference for permanent residence then they should be allowed to return with a WMPA office being established there for conservation as well as socio-economic reasons. It now appears that the WMPA, with the assent of the Nakai and Khamkeut Districts, has set up a new checkpoint designated as the “embarkation site of Nakai Dam” but not at the Old Sop Hia site. This move is a sensible one for a range of reasons, but it does not solve the issue of the future of the handful of Ahoe families at the old site. Whilst acknowledging that there are logistic problems in a site with no road access - but easy access by water - and acknowledging also that most Ahoe have accepted their relocation to resettlement villages, it is the POE’s impression that the ongoing discussions with the Ahoe, on which the POE has not been briefed, may not be looking at all the possible options. One might be to redesignate the Old Sop Hia site as a Nakai-Nam Theun National Protected Area (NNT-NPA) hamlet with conservation and development functions. The site is of course inside the WMPA Wildlife Corridor so there is some logic in treating it as a WMPA site. A second option might be to use the site as a base for overnighting by mobile fishing and wildlife patrols whose movements are too easily observed from their home base in Thalang and reportedly conveyed to illegal fishers and fish traders. A third option might be simply to provide minimal facilities to enable WMPA to extend their conservation efforts in the area. One objective of such options as these would be to provide a level of oversight of Ahoe remaining in the area and some limited support for them. In the interim, negotiations on the future should continue with LFNC participation and support. Of particular interest is the current debate in the National Assembly of the rights of ethnic groups to remain in their ancestral lands in protected areas, which may help to inform future decisions. Attaining compliance with the World Bank’s Guidelines for Ethnic Minorities should be one objective of any solution arrived at. The POE will continue to monitor the situation. 12.11 Ways forward The POE appreciates the difficulties in devising viable solutions to the problems encountered in fostering development among a heterogenous population of ethnic and cultural groups and acknowledges the efforts made to address the remaining problems. Nevertheless, there are both CA and CAP requirements for Nakai ethnic groups that are met only partially or not at all. The current one-size-fits-all approach effectively precludes decisive action for the old ethnic groups on issues like an expansion of educational and Page | 46 training opportunities (though there have been more made available recently), help with accessing most livelihood programmes, adaptation to non-traditional land cultivation methods, and the preservation of their cultural identities and languages. A step forward would be for an authoritative GoL response to be prepared to the thought-provoking and constructive CA Compliance Review, followed by a series of roundtable discussions of possible solutions to the issues the Review raises among key officials, Ministers and social scientists, with wide participation from hamlet dwellers. In summary, while incomes of “old” ethnic groups are well above the CA Targets on average, some lag behind those of other ethnic groups. Ways to address this disparity are being actively developed but are not yet proven and there are inadequacies in meeting the CA requirement to protect the interests of ethnic groups in several social and cultural areas. For these reasons, the project has fallen short of CAP expectations and requirements for ethnic groups and cannot yet be held to have complied with the CA. [Delete original formulation in its entirety.] The POE intends to continue to monitor the evolution of policy towards meeting more adequately the requirements of the CA regarding ethnic groups and assumes that the IFIs will do likewise in respect of compliance with their Safeguard Policies. It accepts that this is a sensitive area and that progress will take time. 12.12 Compliance with ROPs Household Income Targets and sustainable livelihoods Chapter 3 of this report notes that the Household Income Targets are being achieved but that it is not possible to say that the objective to “…materially improve Resettler livelihoods on a sustainable basis” has been reached in either agriculture or forestry. These conclusions apply to all Resettlers including the individual Resettler ethnic groups surveyed. It is unclear however whether some groups are more at risk than others. Future surveys of socio-economic status, recommended elsewhere in this report, should continue to disaggregate data by ethnicity. Special measures for ethnic groups Clause 3.1 (f) is to “…apply special measures as required towards ethnic minorities and vulnerable persons to take care of their needs and foster self-reliance and to improve their socio-economic status.” We assess this as not presently compliant, but progress is underway. Achievement so far falls short of the objective, focused on access by ethnic groups to livelihood support and social services. There are measures, which we strongly support, which should improve future performance, based on the VDP inclusive processes and tailoring livelihood support to the needs of hamlets, groups of households and individual vulnerable households regardless of ethnicity. Outcomes should be measured. Should a greater focus on agroforestry be adopted as a more realistic way of ensuring future livelihoods security (given the poor plateau soils), the ability of different ethnic groups to fully participate in these strategies should be measured. Special consideration in planning, design and implementation Clause 3.2(l) is that “special consideration will be given to gender issues, vulnerable households and ethnic minorities during detailed planning, design and implementation of the social plans.” We assess this as partial compliance. The specific needs of ethnic groups have not received sufficient attention in the past. The level of consultation varies but has improved markedly over the past year. New methodologies for developing VDPs should improve the prospects for incorporating resettlers’ views. Page | 47 Protection of social and cultural cohesion of villages Clause 3.2(g) is that “the social and cultural cohesion of villages will be protected…”. Only partial compliance has been achieved. Cultural diversity appears to be diminishing on the Plateau but enhanced social cohesion may be strengthening as a result of measures to make the hamlets more autonomous. Recognition of traditional structures, beliefs and resource use Clause 3.2(h) provides that “traditional organizational structures, religious beliefs and resource use will be recognized and respected.” Overall, the project has been compliant. Despite rapid social change, adherence to traditional ways and beliefs among the older generation remains strong, although some have adopted Lao Loum ceremonial practices as more appropriate to today’s context. The pace of technological change however poses a challenge to traditional ways. Closer study of cultures and languages of the area is called for. Consultation and participation methods to be appropriate Clause 3.2(i) is that “…appropriate consultation methods are to be used, utilizing local knowledge’s in developing production systems that suit the Resettlers’ needs and environment and which results in a self-sustained livelihood.” There has been partial compliance. Consultation methods have improved in past year, but the older generation are still not fully involved because of language, conceptual and presentational problems. There is insufficient use of local knowledge and skills in fostering development suited to villagers’ experience and livelihood expectations. Improved communication skills are called for including a fulltime specialist and village facilitator with knowledge of ethnic languages including Makong and if feasible other languages. Representation at hamlet and village level In Clauses 4.5 (a) to (g) the CA provides for Village Resettlement Committees to represent the interests of the village and develop VDPs. With respect to ethnic groups, the project is achieving compliance. These Committees have evolved into Village and Hamlet Development Committees which have become under the Sam Sang principles key village institutions. They have finally – after years of little involvement – assumed a primary role in drawing up VDPs. They have not been truly representative until recently, with women and some ethnic groups under-represented. But this is now changing. Verification called for. Separate administrative village units Clause 9.4.1 provides for “… relocation of Vietic or other vulnerable groups into separate administrative village units with clearly demarked boundaries and rights to resources… in order to overcome the problems of exploitation by other ethnic groups…”. We assess the project as non-compliant in general and partially compliant only in Nam Nian. Early attempts to establish such enclaves failed. Nam Nian, the only one which remains in place, has some inadequacies. The Vietic-speaking Ahoe are a special case in this category, being split as a group with a breakaway set of three or four families living in their old village site away from the majority grouping in Nam Nian. Negotiations on the future are in train. The project should keep track of the current National Assembly discussions on acknowledging “traditional rights of people living in protected areas since the time of their ancestors” in order to ascertain whether the outcome may influence decisions relating to the Ahoe and possibly other ethnic groups. Ethnic sensitivity training for RO and GoL staff The project is compliant. Further training was completed in January 2018. Page | 48 Adult literacy classes The project is compliant. The majority of participants are from non-Lao groups and include 41% Makong and 37% Bor. 12.13 Recommendations Compliance with ROPs (GOL) 33/27 Extend across the Plateau the measures newly being introduced through the VDP process designed to improve economic performance and based on tailoring livelihood support to hamlets, groups of households and vulnerable families on the basis of needs and conditions rather than ethnicity and further extend the tailor-made approach to the post-RIP period. Completion date: 31 October 2018. For future development 34/27 Further upgrade project communication and presentational skills to involve the older generation more effectively in hamlet and village affairs and consider appointing a fulltime village facilitator with knowledge of ethnic languages particularly Makong to improve older people’s access to upcoming planning and design consultations. 35/27 Take early action to widen further ethnic representation in the VDCs, in line with CA provisions and with the requirement of the Khammouane Provincial Governor that in selecting members of VDCs and other important hamlet and village bodies naibans ensure fair representation for women and households from ethnic groups. 36/27 With some evidence of cultural and language diversity diminishing in spite of apparent enhanced social cohesion resulting from the measures to accord the villages and hamlets more autonomy, initiate closer studies of the cultures and languages of the Plateau before they erode further. 37/27 Encourage and support the LFNC in expanding its valuable roles in fostering cultural protection and undertaking conflict resolution work on the Plateau. 38/27 Continue the patient negotiations with and through the LFNC seeking resolution of the issue of access to the Old Sop Hia site, with options like redesignating the site as a NNT NPA hamlet with conservation and development functions or as an overnighting facility for conservation patrols being considered. Page | 49 GENDER 13.1 Operation of the gender programmes Gender programmes have been well applied and generally appear to be effective. Maternal health and nutrition have improved as has women's literacy and numeracy, a great deal of capacity training has been undertaken, and women have become more involved in off farm and home-based livelihoods activities such as food and fish processing. Women are reported as dominating business activities, more women than men are participating in training, and women are taking a fuller role in village administration and activities. Monitoring data indicate that in key areas, resettlers have reached a standard well above the national average for similar rural villages. Women and children have greatly benefited from the well run NT2 health programmes, which were handed over to local government in 2013. Since then it has been GoL's responsibility to monitor standard indicators on health and nutrition. Health information started with a 2008 baseline (which included some data as early as 2005), followed up with a midline in 2010, and a completion survey for NTPC in 2013 before handing over. These surveys have allowed the project to establish trends over time against global standard health indicators. Monitoring continues by District health authorities, and NTPC accesses this information to track continuing progress. At the time of this completion survey, it was judged that CA requirements for the health programme were largely met (health infrastructure build, and service delivery established and functioning). The District Health Office was assisted to continuously improve the handed-over system. Some LoA clauses remain in progress until RIP is declared via the CLWP, which follows up with activities. The last IMA assessment listed a few CA non- compliances which the JWG considered low or medium priority and not requiring any corrective action. The effectiveness of NT2's health and education programmes and achievement of ROPs are reflected in targets set for various wellbeing activities. Data show results that are well above the national average and reflect huge improvements for women and girls. Vaccinations for diseases such as polio, hepatitis and measles, have achieved almost 90% coverage, compared to a national average of 41%. The incidence of malaria has gone from almost half the population at the start of the project, to 1% in 2017. Infant mortality has more than halved, and no maternal mortalities have been reported since 2010. Literacy for young female adults has doubled since 2006, and primary school enrolment has increased from 54% to the current 94%. All these are excellent achievements and well in compliance with CA requirements. An important step to ensure gender equity has also been in the VDP process - the POE advised implementers to separate consultation groups not only into those of men and women, but to poorer and richer households as well. This has of course made the consultation process longer but has resulted in fairer and more gender-balanced outcomes. It has also brought the project into closer compliance with Resettlement Provision 3.2[l] (op cit). To its credit, the NT2 project has now created a useful precedent for the Poverty Reduction Fund (PRF) national programme which intends to revise its own consultation methodology as a result. Consultations to developing CFPs have also followed this pattern, which may well prove to be even more useful as these have been undertaken on hamlet basis rather than consolidated village basis. Thus, the resulting plans should reflect both men and women's hopes for forest use and management. Page | 50 One past weakness has been limited gender disaggregation of data gathered across various project programmes17. This is now being addressed by the Project; for example, in response to POE requests in Report 26, livelihoods data have now been gender disaggregated, with interesting results. It is noteworthy that women are now reported as taking equal or greater time on agricultural activities than men and 65% of small businesses are run by women. Women's agricultural roles should be better understood by extension and agricultural staff, almost all of whom are men and who tend to talk to men. It is time this changed. Gender programmes are targeted in the MTDP and in VDPs, with both men and women taking on more responsibilities for implementing their own identified activities. 13.2 Compliance with ROPs The POE commends and supports continuing progress with gender activities on the plateau. In considers the activities comply with the ROPs and has no specific conditions to recommend attaching to the programme as a condition for RIP. 17 CA, 9.1.5: “the GRS will also include: the collection and analysis of disaggregated community data by gender, ethnicity and poverty levels”. This has also been identified by LoA GE.2.3.1. Page | 51 INFRASTRUCTURE AND OTHER ASSET PROVISION Village community pump 14.1 Asset provision and compliance The CA includes many items of infrastructure and other fixed assets to be provided by NTPC. Some relate to the requirements for livelihood provision, and others to the buildings and associated infrastructure (such as housing, community buildings, electricity supply, and water services) required for the Resettlement Hamlets. We have gathered our comments on these items together here for convenience, and to identify where we believe further action is required to meet the requirements of the ROPs. We have reviewed the findings of the IMA on compliance and the JWG assessments of further action required in the same way as for other sections of the report. On quite a few of these infrastructure requirements we think that the RC can accept that compliance has substantially been achieved or that further action would achieve little in relation to cost. A lot of the items in question are relatively ancient history: going back nearly a decade to assets originally provided when the villages were first established. They may relate to relatively minor discrepancies between specifications such as building dimensions and what the IMA audit reported18. We visited two health centres during our Mission and 18 Some of these IMA measurements were disputed following an assessment by a joint team of GOL (District and RMU) and NTPC. Page | 52 although the IMA had recorded (as required by their mandate) that the centres had not been built to specification and were much smaller than originally planned we found no complaints from staff about the available area of the centres or about supplies and equipment. In some cases, it has simply been impossible to meet the CA standard: for example, the standard for boreholes in three villages has run into the limitations of the water table19. Although the breaches do not seem to be major, this is clearly a matter of concern for the households affected. An NTPC feasibility study to assess the potential of a home water supply and distribution system for Nakai will report in February, when installation and funding of a system will be considered further. In other cases, the requirement was not met because it turned out it was not what villagers wanted – community cattleyards are a case in point – or assets were provided but fell into disuse – like community tree nurseries or ice plants. (A conspicuous white elephant in most villages is the village market which we have very rarely seen being used at all, let alone for its intended purpose). In the case of support for ploughing, it has been difficult to come up with an ecologically sound basis for providing it. Arguably also, the failure to construct forest management roads has probably been a good thing in the absence of a sound basis for further exploitation and the risks of greater access. In these cases, the principle of defining genuine demand, as adopted for repair of irrigation systems, makes more sense than sticking to the letter of the law as written in the CA. The JWG and NTPC have been accommodating in their approach to the IMA findings. Many findings, particularly relating to water supply, drainage and sanitation, have been accepted for remedial action in the LoA. Others have been accepted for review or provision on a case by case basis. NTPC advise that all outstanding infrastructure actions were agreed between GOL and NTPC, included in an Addendum to the CAP, and will be carried over into a handover agreement between GOL and NTPC following closure. Provided that they are, the POE has nothing to recommend adding to the agreement reached by the JWG. 14.2 Asset maintenance After nearly a decade of use it is not surprising that there are visible signs of the need for repairs and maintenance of community facilities. There are signs of deterioration in roofing of storage sheds and school buildings, and the unpainted corrugated iron of village houses is now rusting comprehensively. In our village meetings we saw roof sections missing and broken or corroded electrical fittings. Some roads are deteriorating under heavy traffic load and there is continuing criticism of the condition of the unsealed road to Khon Kaen. The Social and Environmental Remediation Fund (SERF) will fund maintenance of some, but not all, of community assets through to 2035. SERF funding covers grading village roads; routine road maintenance is a village responsibility. The District or Province is responsible for maintaining the main arterial road along the reservoir connecting the villages from Khon Kaen to Thalang. SERF pays for maintaining village community assets inclusive of painting, annual electrical safety check and resulting maintenance, building and services repairs. (Individual householders must maintain their own houses and other assets.) SERF is responsible for contracting with approved contractors and suppliers to do the work. In practical terms it would help greatly to get the work done if each village had its own trained 19 In an earlier village visit we were disturbed to discover that one household had illegally fenced off a community pump and was limiting access for other users. If there are limits to the number of pumps that can be provided, it becomes even more important that community access to community assets is protected. Page | 53 handymen (and women) that the Village Authority was able to employ on its own authority for small painting jobs and basic electrical and plumbing work, to be paid for by SERF. 14.3 Monitoring If the IMA is not to continue after RIP is closed, then an ongoing arrangement for independent monitoring of infrastructural features including the remaining examples of non- compliance with CA specifications may need to be established. Similarly, an audit of SERF operations needs to cover the standard of maintenance of community assets funded by SERF. 14.4 Compliance with ROPs The Actions discussed in this section on remaining infrastructure and asset items are required for ROPs. 14.5 Recommendations Compliance with ROPs (NTPC) 39/27 NTPC and GoL should confirm CA infrastructural requirements included in the LoA and a Handover Agreement. For future development 40/27 Compliance with the remaining infrastructure requirements should be part of independent monitoring of the LoA or Handover Agreement. 41/27 An audit of SERF should include periodic independent monitoring of the standard of maintenance of community assets that it funds. Page | 54 FUTURE INSTITUTIONAL ARRANGEMENTS AFTER RIP Nakai District officials meet with POE 15.1 Introduction This section discusses the required institutional arrangements following RIP closure to continue development on the Nakai plateau. It covers: 1. Handover: the arrangements required at the end of RIP to terminate the Company’s Resettlement obligations in the CA, and specifically its defined Objectives and Provisions, including a further agreement by the Company to meet any obligations outstanding as at the date of RIP closure. 2. Transition: as defined in the GoL’s Transition Plan, to be implemented following RIP closure, to create machinery for the management of the GoL’s role in the longer-term development of both plateau and downstream and its relationships with other stakeholders. 3. Medium Term Plan: a project to be implemented following the closure of RIP to develop and secure the livelihoods of the people of the Nakai Resettlement Villages and covering the funding and institutional arrangements for the project. Page | 55 The timing and content of all these arrangements depend on the GoL’s decision on the closure of RIP, which is the subject of our advice in this Report. The following discussion however assumes that RIP will be closed in the near term. Most of this section was written on the basis of information available to the POE in December 2017. Since then, a set of agreements has been formalised which, in the POE’s view, will satisfy the institutional arrangements proposed here for the medium-term development of the plateau. A list of these arrangements, provided to the POE by the JWG, is shown in Table […] at the end of the chapter. The POE recommends that prior to its decision on closure the GOL confirm that these institutional arrangements are in place. 15.2 Handover At the end of the RIP, NTPC will be relieved of some contractual obligations under the CA, including managing and funding environmental and social activities defined in the CA; and the GoL will assume primary responsibility for the planning and delivery of these activities. The CA provides that the company will continue to pay for some activities, such as maintenance of certain project assets through the SERF, until the end of the Concession Period in 2035. NTPC have also voluntarily committed to fund the SSN until the end of the Concession period through the NT2DF. Additionally, NTPC has agreed that it will continue to implement and pay for any of its outstanding Resettlement obligations remaining at the time of closure. In Annex A, we have summarised these obligations, with our recommendations for the completion standard that ought to apply. The list covers priority Actions that, on information available to us in mid-January, were incomplete, in terms of either the existing standard of the LoA or what we think ought to apply. It includes some Actions for which the JWG specifically agreed that completion would need to be deferred into 2018. At time of writing, work continues on closing off Actions in the LoA, so we are analysing a moving target of reported completions. The definitive complete list should be agreed between the GoL and NTPC at the time of closure. 15.3 Transition: future GoL organisation The GoL is developing a three-year Transition Plan for the transition from the present pre-RIP organization and plans to the post-RIP conditions. We have been advised that the Khammouane Provincial Governor has formally agreed to the Transition Plan Committee and its Secretariat and that the Ministry of Finance has recently agreed to funding for all three years and funds for the first year have been transferred to the Secretariat. For our discussion of the Plan, we are relying on a draft of a decision by the Provincial Governor. The details require further clarification, but what follows is our current understanding of the arrangements. In fact, the Transition Plan is more than a plan for a transition with a finite life: it will be creating machinery for the management of the GoL’s role in the longer-term development of both plateau and downstream and its relationships with other stakeholders. The Plan is to be managed by a Secretariat based in Thakhek and reporting to the Provincial Governor. The Secretariat appears to incorporate functions equivalent to the present RMU, acting both as a contact point with outside development partners such as the NT2DF and AFD (and perhaps as relevant the IFIs); and as a coordinating agent for the activities of the relevant Districts – in the case of the Nakai District, the District Working Group, which will continue following RIP. Page | 56 The Plan covers management of activities in all NT2 project areas, including both the Resettlement Programme and the Downstream Programme. The headquarters of the plan is in Thakhek, but much of the secretariat and staff are on the Nakai Plateau and the downstream area. The Secretariat’s responsibilities are very broad, covering coordination not only of the full range of development initiatives on the plateau, but also activities in the downstream project, including livelihood support for the project affected villages; support for fishing and aquaculture, and monitoring riverbank erosion. (We comment briefly below on the continuation of the Downstream Programme, which we fully support). According to the draft resolution, the Transition Plan will be funded from the state budget to the value of about $1.4m over three years 2018-2020. This should support staffing and other costs particularly of District management of plan activity. The budget will need to be renewed after 2020 to enable continued support of the new Nakai development project, which will at least continue until 2022. The POE agrees that this form of organisation is essential for the coordinated management of the GoL role and relationships in future development. 15.4 Note: Downstream Programme As noted above, the Transition Plan arrangements cover both the Nakai development project and future GoL activity in the downstream area. The POE welcomes the planned further actions relating to the Downstream Programme following the World Bank’s review mission including the reactivation of the Adaptive Management Committee to track erosion and fish catch data and monitor hydro safety and water quality issues. Having in earlier reports expressed concerns about a premature termination of the DSP the Panel strongly supports the Bank’s proposal that additional analysis be conducted to determine whether households in the Downstream areas have reached the rural poverty line and similarly supports the RMU’s request to the Poverty Reduction Fund for support on poverty targeting and livelihood planning. 15.5 Medium-Term Development Plan (MTDP) 15.5.1 Funding commitments and institutional arrangements The development project that will follow the closure of RIP has secured the basic commitment and generous promises of funding of the three major parties - GoL, NTPC (through the NT2DF) and AfD. Not all the funding sources have been legally committed yet, but it seems likely that they will be. The major funders seem fully engaged with each other and committed to working through GoL planning and implementation processes to select and support projects. The project is complex, with 16 hamlets, 3 levels of government, and three major funding sources. There are prospects of others as well: the World Bank Second Lao Environment and Social Project (LENS2) in the WMPA, the ADB's possible support for tourism, LuxDev involvement in health and education, and others. The project covers every aspect of livelihoods on the plateau. It is not necessarily confined to the activities currently included in the MTDP which forms part of the CAP. There is additional complexity imposed by the role extending into next year for NTPC’s management of its remaining responsibilities under the CA. Cooperation to harmonise processes is essential. The main risks to this complex process are planning and approval cycles out of sync, double funding, unclear, inconsistent and overlapping approval criteria, and separate control and review procedures for each funder. The remedies are: Page | 57 1. A single source of project funding proposals based on village priorities developed in VDPs; 2. Unambiguous allocation of each village priority project to one of the funding sources; 3. A business case for each project proposal expressed in terms of contributions to household livelihoods; 4. Technical review of proposals before decision; 5. Safeguards against double-funded activities; 6. A single mechanism for financial control, output monitoring and evaluation of outcomes designed as part of the VDP process; and 7. Adequate machinery for regular consultation and coordination amongst the funders and between funders, the District as overall manager, and the villages as the source of priorities and implementing units. The full documentation of these requirements is mostly complete. Agreements have been signed between GoL and NTPC on the NT2DF, and between GoL and AFD and NTPC and AFD on the NP-LAF project. These Agreements, together with supporting documentation, adequately cover governance, project decision-making, plan process and implementation, project management and technical support, and monitoring and evaluation. Annex B is a detailed comparison of the main features of the NT2DF and NP-LAF agreements. 15.5.2 Sam Sang and Village Development Planning (VDP) VDP process The NT2DF process will (similarly to NP-LAF) be “shifting from CA-based planning to participatory planning”, from a top-down approach governed by the detailed prescriptions for each pillar in the CA, to a post-RIP period in which “VDPs capture communities’ own perspectives to plan – individual for each hamlet.”20 There are general GoL guidelines for participatory planning but no detailed guidance on how to incorporate VDPs into District Plans. District Officials, assisted by NTPC, have largely developed their own. With support from the World Bank PRF, the approach has been piloted in four hamlets and is being rolled out to all 16. The process was due to be completed by January 2018 so that proposals for funding should be available in time for the first planned NT2DF budget round in mid-2018. We have been advised that the NP-LAF technical team has been participating in the final round of the VDP process. The VDP consultative process itself seems to have been carefully thought through particularly to ensure that all voices were heard. The process was adapted from the standard PRF approach, which focuses mostly on infrastructure, to incorporate discussion of livelihood options. It incorporates separate discussions for men and women in both “poor” and “non-poor” households on livelihood options and joint discussions on infrastructure and on social issues such as education and health. It seems to have generated a good range of practical livelihood activities in the four pilot hamlets. Hamlet plans are then integrated into a single consolidated village plan. 20 (Joint Working Group 2017e). Although the “top-down” nature of NTPC’s livelihood support can be exaggerated (it was always based on offering resettlers a range of livelihood options) there have been some conspicuous failures of the more prescriptive aspects of the CA policy of supplying assets such as irrigation systems without evidence of demand or capacity. Page | 58 There are a couple of significant issues in this process: one is ensuring the villagers are well-informed on the options available to them for village development and the other is that what emerges in terms of what is funded actually reflects village priorities. The first critical step in planning is to ensure that when hamlets are consulted they have a realistic idea of the options for their development and their costs and benefits, as well as the priorities of other hamlets in consolidated villages. Achieving this is probably a combination of good technical support in developing options and presenting them clearly to villages. In fact, getting good bottom-up planning depends on having good top-down support. The FMP process for forestry offers a good model: initial discussions in hamlets on priorities, followed by a return to discuss options for community forest plans informed by technical analysis of their costs, benefits and risks. It will be particularly important to ensure that agriculture and forest planning are brought together at the village and hamlet level, because they both require decisions, potentially competing, about land use. The second critical step is to fit what villagers want to do with the available resources – including their own commitments of assets and labour – so that the highest priorities get served first. Traditionally village planning has been a process where officials collect wish lists from village meetings and are then left to decide what they (the officials) think is important and what the government can afford to fund. It is not clear yet that the new process will be any better at matching priorities to budget constraints than the old. An example of the results from Nongbouakham (one of the villages piloting the new approach) includes both some specific livelihood activities, most of which could be supported either by NT2DF or by the NP-LAF window, and a long list of “infrastructure and social issues” for which funding is described as “unclear”. Again, it seems necessary for villagers to consider their priorities given a budget constraint as well as information on costs, benefits and risks. As we have commented in previous reports, we nevertheless believe that the GoL’s Sam Sang policy provides a sound organising principle for a complex development project like this. It certainly supports the single source of project funding in Point 1 and the single mechanism for control and review (provided by the District) in Point 5. Overlaid on that would be the strategic role of the Province centred on the Transition Plan Committee. We believe that its principles should underpin all the agreements relating to the Nakai development project. Embedding VDP into MTDP processes The GoL-NTPC Cooperation Agreement together with its supporting flowcharts on the decision process is a model of how the VDP process would be the foundation for future development planning. The NP-LAF process has yet to be worked through in similar detail but the NP-LAF agreements embrace the principle of “coordination of the planning of project activities with … Participatory Village Development Planning” and it should be possible to develop something like the NT2DF flowcharts. We have been advised via the JWG that the NP-LAF Plan of Operation will include a similar decision process for selection of projects to be funded, based on “relevance, feasibility and economic viability” and with project priorities selected by villagers themselves. 15.5.3 Monitoring and evaluation On point 5 on monitoring, we note that both NT2DF and NP-LAF incorporate monitoring of progress and evaluation of results. We hope also that the proposed Nakai Plateau Working Group (see below) will regularly review and discuss progress on the overall Page | 59 development project. We are particularly concerned to ensure that the overall project is adequately monitored and evaluated during implementation by an independent, preferably external, reviewer able to report publicly on progress and results. The reviewer must have appropriate qualifications for assessment of major development projects, should report at least annually, and must be appropriately resourced for the task. This is essential for the credibility of the development project during its life. We comment further on the POE’s own role later in this Chapter. 15.5.4 Coordination On point 6 above, the POE would also recommend that the three main parties to the development project – GoL, NTPC and AfD – should conclude a joint and publicly available Memorandum of Understanding summarising the main features of project management. The MOU should record the funding commitments they have made in terms of the above agreements; together with their agreement on harmonised procedures for selection, implementation and review of projects based on the GoL Sam Sang process, their arrangements for consultation with each other as required during the project life; and procedures for joining other funders to the project. Finally, ongoing collaboration amongst the parties would be greatly assisted by a standing body of cooperation similar to the current JWG. The JWG is a valuable source of advice and has achieved the sort of implementation coherence which is not normally achieved in the usual way, and which was not the approach before RIP extension in 2015. It has done a truly remarkable job in developing the CAP and in guiding the strategy for the past 2 years of RIP extension. The consequence has been to promote a much more effective development methodology, based as it is on reaching stakeholder consensus, cross- programme coordination, and identifying the most important priorities from numerous competing demands. The Project has acknowledged that this approach has been a game changer for them and that it should have been done from the very beginning. It is important that such lessons learned are translated into a handover period. In the light of the foregoing, we were pleased to see that the parties have agreed to the establishment of a Nakai Plateau Working Group (NPWG), to succeed the JWG following closure of the RIP, composed of stakeholders from GoL (at all relevant levels), development partners and NTPC. We would like to see resettlers included in the stakeholders represented at the NPWG. At the request of the JWG, we have attached the NPWG’s Terms of Reference as Annex C to this report setting out the institutional framework for the NPWG and the supporting legal agreements. We agree that the TOR and agreements cover all of the arrangements we have discussed here. A further step would be a joint memorandum establishing the NPWG, which would meet our point 6 above. 15.5.5 Future role of the POE We note that there is no mention of a continuing POE role in the post-closure table. Our understanding is that it has been agreed that the POE will monitor the completion of any remaining ROP requirements post-closure and verify this on the ground. Beyond this task, however, there is the question of the continuing role of the POE in the longer term. The CA provides that “The GoL must maintain the Panel of Experts as a standing body from the date of this Agreement until the later in time of the Construction Demobilisation Period and the end of the Concession Period.” (Cl.30.22). It provides further (Cl.5.3) that: Page | 60 Internal and independent external monitoring of the Resettlement Process will be undertaken by the parties in respect of a resettlement…until the later in time of: (a) the expiry of the Resettlement Period; and (b) the time at which it can be demonstrated to the satisfaction of the Resettlement Committee, with the advice (if the Resettlement Committee deems appropriate) of the independent monitoring agency and the Panel of Experts, that the Resettlement Objectives and the Resettlement Provisions have been achieved and maintained for a reasonable period of time. In addition, there are POE functions in relation to the Environment Programme - and notably also in relation to the monitoring of the WMPA operations - which have no termination date as such and remain in place to the end of the Concession Period. The POE would welcome discussion of its role both in verifying status at closure and for the remainder of the Concession Period. 15.6 Recommendations Prior to a decision to close RIP: 42/27 Confirm that the institutional arrangements set out in Annex C are in place as requirements for the medium-term development project on the Nakai plateau. 43/27 Agree that the Nakai Plateau Working Group should include representatives from the resettler villages and that an initial action by the group would be to conclude a joint and publicly available Memorandum of Understanding summarising the main features of project management. 44/27 Agree to a periodic review of project progress and results by an independent reviewer of international standing, with the reviewer’s reports made public. 45/27 Confirm the future role of the POE as a standing body under the CA in relation to social and environmental matters, the WMPA, review of continued achievement of the ROPs, longer-term monitoring of performance of the medium-term development project, and any other matters relating to the CA. Page | 61 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 16.1 The context The project implementers, guided by the JWG and with improved management resources and commitment at hamlet, village, District and national levels, have made a considerable effort over the past two years to achieve many of the NT2 objectives set out in both the CA and the CAP. All deserve credit and recognition for this effort. Evolution of policies at the national level has also been a factor in this achievement. In forestry a Prime Ministerial decree prohibiting the export of logs and advocating the production by Lao firms of value-added wood products instead has been seriously advanced, encouraging new thinking about the future of the project forestry sector. The introduction of the Sam Sang principles – favouring the empowerment of villages and hamlets to run their own affairs while backed up by a District administration providing supervisory and technical functions and the Province being the broad strategist – fits the Nakai situation well. The creative and consensus-building role of the representative JWG has also brought a new and more cohesive momentum to NT2’s work and the NTPC has adapted to its new role in stepping back from its hands-on management functions and beginning to hand them over to strengthened District, village and hamlet institutions. Donors have also come forward in financial terms, promising to carry over funding to complete CA-required activities and to finance post-RIP activities, some of them through to the end of the Concession Period in 2035. Though not necessarily ensuring sustainability, such funds and the provision of ongoing expertise will help the project navigate its way through the transition period ahead and are far-sighted moves. It must finally be recorded that the resettlers themselves have stepped up to the mark, beginning to assume their wider responsibilities with some confidence, a trend which is an essential component in meeting the collective challenges which still lie ahead of the project. 16.2 Overall assessment In the wider context of innovative practices adopted over the years and the intensive acceleration in recent years of project actions designed to meet most of the CA’s requirements the project has displayed a level of flexibility which merits a degree of reciprocity. This view has been reinforced by the evolution of GoL policy, notably in the forest management sector and through the incorporation of the Sam Sang principles of village and hamlet empowerment across the Plateau. The achievement – in some cases a doubling - and maintenance of the CA’s household and village income targets is an impressive achievement and resulted in the removal of the Nakai District from the national poverty list, with household incomes nearly all well above the national poverty line. While - based on global trends in resettlement projects associated with large dams - not wholly in agreement with the project assertion that “resettlers are unlikely to fall [back] into poverty” the POE accepts that such indicators as comparatively substantial cash savings and ownership of household possessions suggest a high level of resilience beyond the income figures. Sustainability among the major livelihood sectors has been attained thus far only in fisheries, which produces 60% of total incomes. Though there has been a redirection of resources into the agricultural sector which has lifted the level of cropping (some of it, like cassava, proving largely unsustainable), the agriculture and livestock sectors are currently being redeveloped from the ground up and cannot be said to be sustainable at this point. Page | 62 There has been a substantial turnaround in the forestry sector which, given the resettlers’ opposition to commercial logging and support for regeneration and conservation, appears headed towards medium term sustainability in terms of the resource itself but will not contribute significantly to resettler incomes at anywhere near the scale originally planned. A “locking up” of the forests will nevertheless help restore their traditional and still important role as a source of NTFPs. There are some signs of increases in off-farm employment, but it does not yet make a significant contribution. In response to flexibility shown by the project in terms of innovation and adaptation and the emphasis we have repeatedly laid on the long-term nature of fostering development in conditions like those found on the Nakai Plateau, the POE is prepared to waive the CA requirement for the attainment of sustainability of livelihoods before RIP is closed. The achievement of sustainability nevertheless remains a central goal of the project and its attainment in the various livelihood ventures should continue to be actively addressed and independently monitored. In the light of the above findings on incomes and livelihoods, not all of which are conclusive and some of which call for further verification, and bearing in mind our assessment in earlier chapters of important CA requirements in social areas like support for the poor and vulnerable and measures to address the situation of ethnic groups, the POE has drawn up a list of recommendations relating variously to the short period until the JWG’s target date for LoA completion (30 June 2018) and beyond and drawing a distinction between those recommendations which are ROP required for NTPC implementation and are binding, those same obligations which are seen as requiring GoL compliance, are not binding but cover matters it is responsible for and other recommendations for future development (not binding as such). Our overall recommendation is that, on balance and subject to verification on the ground, we are prepared to consider closing the RIP at or around 30 June 2018 if the Resettlement Committee is prepared to agree to the recommendations in this Report as summarized in Annex A, covering an agreement between the GoL and the NTPC on their specific remaining obligations under the CA and recommendations on further institutional arrangements between the GoL and other parties covering the future development of the resettlers to 2035. We also seek an invitation to verify the completion of the actions in Annex A in mid- 2018 and agreement on the future monitoring roles of the POE through to the end of the Concession Period. 16.3 Recommendations In terms of Schedule 4 Part 1 Clause 2.1(c) of the Concession Agreement, the Panel of Experts (POE) recommends that the Resettlement Committee: 46/27 Note the advice of the POE that as at 31 December 2017 the Resettlement Objectives and Provisions (ROPs) had not been achieved 47/27 Agree to close the RIP with a target date at or around 30 June 2018 subject to the following: • That the POE’s recommendations in this Report as summarised in Annex A on further action to achieve the ROPs, in addition to any other actions it Page | 63 considers necessary, form the basis of an agreement between the GoL and NTPC on their specific remaining obligations under the CA. • That the recommendations on further institutional arrangements in Annex A form the basis of agreements between the GoL and other parties on the planning and implementation of activities for the future development of the resettlers on the Nakai Plateau to the end of the Concession Period in 2035. 48/27 Invite the POE to verify the completion of the actions in Annex A in a mission in mid-2018. Page | 64 WMPA Rangers and trekking party at Anoulak conservation camp, NNTPA 17.1 Introduction The Nam Theun 2 watershed (which is also the Nakai-Nam Theun National Protected Area) contains some of the world’s most outstanding biological and cultural diversity. As the POE has noted consistently from the time of its first report (POE #1, 1997) protection of the area’s biological and cultural riches was recognized as essential to the success of the NT2 Project. As an offset to mitigate the loss of biodiversity and its habitat that would be inundated by the proposed NT2 Reservoir, the World Bank made protection of the watershed a prerequisite for Bank support of the project. Subsequently the Socio-Environmental Management Framework and Operation Plan (SEMFOP) and the Concession Agreement further formalized the requirements for the area’s conservation as part of the NT2 Project. The WMPA was created in 2001 by Prime Minister’s Decree, subsequently amended, to manage the area for the protection of the biodiversity and the welfare of the people living in enclave villages within the watershed and to assure an adequate supply of water with low sediment load for the proposed hydro-electric project. Initially there were high hopes for the WMPA’s success. Unfortunately, it has not achieved either its biodiversity conservation or its cultural objectives. By 2013 the situation had become so bad that the POE wrote “the WMPA has been totally ineffective in protecting the watershed’s biodiversity,” and two outside reviews further documented the WMPA’s failures. Consequently in 2014 the GoL created a Task Force to restructure and reorient the WMPA. Page | 65 17.2 Restructure and Management The Task Force convened a workshop in November 2016, which produced an Action Plan to reorient and reorganize the WMPA. Among the key points of the Plan was a call for a Prime Minister’s Decree reassigning the chairmanship of the WMPA Board to the Ministry of Agriculture. The Task Force recognized that the culture of the staff was a major contributor to the WMPA’s failures and consequently the Plan repeated the call for removal of all the existing WMPA staff, other than a temporary director, followed by independent recruiting. To date this process of retrenchment and recruitment has been inexplicably delayed. The Plan also called for cooperative management of the WMPA with outside Non- Government Organisation (NGO) or NGOs. In 2017 the planned decrees transferred the chairmanship of the WMPA Board of Directors to the Minister of Agriculture and established new Board membership. A Consortium (“COTE”) of relevant experts and NGOs was created to strengthen the capacity and performance of WMPA through the joint delivery of a 5-year Plan’s components and outcome indicators. A contract between WMPA and COTE was signed on 13October 2017. The contract included detailed terms of reference and among other things, required that WMPA expenditures be co-signed by the Directors of the WMPA Secretariat and COTE. It also directed the Director of COTE to go to the WMPA Secretariat Director and/or the WMPA Board, if COTE found poor performance by WMPA staff. COTE also helps develop the programs of WMPA. Clearly the intent was for COTE to be an integral part of the reorganization and restructuring and subsequent management of the WMPA. As such, it seems clear that COTE should be represented at the WMPA Board meetings. The POE strongly recommends that for COTE to function in accordance with the contract with WMPA, and for the Board to have access to their technical advice, a representative of COTE should be present at WMPA Board meetings. The strengthening of the WMPA’s fiduciary management, financial handling and accounting, prepared with COTE per the contract, is also critically important. It is urgent in part because of the recent budgeting to WMPA of over $US 3 million It is essential to assure that the past abuses are not repeated with this new amount. In October 2017, an agreement was signed with the World Bank LENS 2 project to provide over 3 million $ US through the Environment Protection Fund. A five-year project is under preparation along with a revised annual work plan and budget. In the six months of operation since its October, 2017 contract with WMPA, COTE has accomplished very substantial and encouraging results. In administration, COTE and WMPA have made unparalleled progress in general administration compared with previous years. The implementation of accounting systems is finally in place, three manuals have been completed and approved by the WMPA Board, a fixed asset count and fleet management completed. The Annual Work Plan and Budget for 2018 was completed and sent to stakeholders and approved by the WMPA Board and World Bank. Very substantial progress has been made with Law Enforcement. Among the accomplishments are development of a strategy, establishment of all planned checkpoints on land and rivers, and reestablishment of the Village Cluster Law Enforcement Network and Reservoir Patrol Units which are now fully operational. Cooperation with DOFI/POFI and the Lao and Vietnam armies is being established, and the draft Wildlife Threat Assessment should be finalized by May, 2018. Page | 66 There has been impressive progress in reestablishing Community Engagement. Substantial accomplishments have also been made with biodiversity monitoring and awareness raising. The forest cover analysis is completed and camera trap monitoring, occupancy surveys and training are on-going and collaboration with numerous international bodies is on-going. There is continuing positive progress with WMPA Staffing and Senior Leadership, but this is the area of greatest concern to the POE. The releasing and re-hiring of all WMPA staff has not yet happened. However, we are encouraged by the arrangement with IUCN to be staffing advisor and to handle inputs to strategic staffing planning and staff acquisition, although the contract has not yet been signed. A Deputy Director of Administration Planning and M&E has been appointed by the WMPA Board. He is experienced and reportedly makes decisions in a transparent manner, unlike the previous practice.Continued, effective, external monitoring of WMPA management and operations, including the new management with COTE, is essential to demonstrate that the organization is meeting its responsibilities and functioning effectively. We would underline at this point that, as reported above, there are promising developments in the arrangements for endeavouring to attain the conservation and development goals of the WMPA. This is an overdue evolution of policy and practice in a watershed which was seen formerly as a biological and cultural diversity hotspot in global terms. It is time that the potentiality of this magnificent stretch of still largely intact forest and of its denizens, human and animal, began to be realized. With a fresh infusion of youthful and committed conservationists and development specialists and a wealth of human talent and energy in the watershed’s villages the chances of this becoming the wonderland it once promised are enhanced. The POE wishes them well in uplifting the standing of what is an integral part of the NT2 project as a whole. 17.3 National Park Status The Prime Minister’s Decree referred to establishing the watershed area as Laos’ first National Park. The POE warmly welcomes and supports this initiative. We hope that it will be implemented as soon as possible, and also that it may lead to World Heritage Status of the area, which the POE has recommended since its first report. 17.4 Recommendations For future development 49/27 The Director of COTE participate in meetings of the WMPA Board of Directors 50/27 The retrenchment of existing staff and recruiting of new staff which has been inexplicably delayed be pursued and accomplished rapidly; 51/27 The WMPA fiduciary management, financial handling and accounting, prepared with COTE per the contract, should be transparent and consistent with international standards. 52/27 Effective external monitoring of the WMPA should be maintained. Page | 67 ANNEX A: SUMMARY OF RECOMMENDATIONS The recommendations here are organised as follows: • Three overall recommendations relating to closure. • For compliance with the ROPs in Schedule 4 Part 1 of the CA: both NTPC and GOL have agreed to be bound by these requirements. In addition, NTPC has agreed to be bound by POE recommendations for the Company’s compliance with the ROPs. There are six recommendations relating to NTPC compliance and two relating to GOL compliance. The POE recommends that these recommendations are agreed as part of a decision to close the RIP. • Other matters for GOL decision at the time of a decision to close the RIP: these constitute the POE’s recommendations (11 in total) on the conditions that ought to apply if the RIP is to be closed in the near future. • Other matters recommended for consideration in the Nakai development project following closure. There are 30 recommendations in this category. 1. Overall POE recommendations on closure Chapter 16 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 46/27 Note the advice of the POE that as at 31 December 2017 the Resettlement Objectives and Provisions (ROPs) had not been achieved 47/27 Agree to close the RIP with a target date of on or around 30 June 2018 subject to the following: • That the POE’s recommendations in this Report as summarised in [this] Annex A on further action to achieve the ROPs, in addition to any other actions it considers necessary, form the basis of an agreement between the GoL and NTPC on their specific remaining obligations under the CA. • That the recommendations on further institutional arrangements in [this] Annex A form the basis of agreements between the GoL and other parties on the planning and implementation of activities for the future development of the resettlers on the Nakai Plateau to the end of the Concession Period in 2035. 48/27 Invite the POE to verify the completion of the actions in Annex A in a mission in mid-2018. 2. Recommendations on compliance with ROPs (NTPC) Chapter 5 FORESTRY 7/27 Complete the formulation of Hamlet Forest Management Plans (HFMPs) with full participation of hamlet dwellers and coordinate the development of HFMPs with the VDPs. 8/27 Based on the HFMPs and consultations with all stakeholders and hamlets, formulate an overarching strategy and incorporate this in CFPs, VDPs and a revised Forest Management Plan. 9/27 Formulate a revised FMP, approved at all levels of the GoL, for the management of the Nakai Plateau Community Forests. Page | 68 10/27 Finalize the development of HFMPs for all hamlets with full participation of hamlet dwellers. Chapter 9 LIVESTOCK 20/27 Review and, by the end of 2018, revise the livestock development plan, including a reassessment of the carrying capacity of the plateau and development of an emergency plan for managing large livestock feed and numbers in the event of a significant drought and for effective responses in the event of a disease epidemic. Chapter 14 INFRASTRUCTURE AND OTHER ASSET PROVISION 39/27 NTPC and GoL should confirm CA infrastructural requirements included in the LoA and a Handover Agreement. 3. Recommendations on compliance with ROPs (GOL) Chapter 4 FISHING 2/27 Complete a review to simplify and strengthen the organisation, funding and regulation of the co-management regime on the reservoir and implement the results at Village and District level by the end of 2018. Chapter 12 ETHNIC GROUPS 33/27 Extend across the Plateau the measures newly being introduced through the VDP process designed to improve economic performance and based on tailoring livelihood support to hamlets, groups of households and vulnerable families on the basis of needs and conditions rather than ethnicity and further extend the tailor-made approach to the post-RIP period. 4. Recommendations for future development to be agreed as part of a decision to close the RIP Chapter 5 FORESTRY 12/27 Submit the HFMP developed for each hamlet to DAFO, PAFO and DoF for approval. Chapter 7 AGRICULTURAL DEVELOPMENT 16/27 The GoL agree on a revised agricultural development plan on the principles in the CA, to be developed and implemented by DAFO with support from NP-LAF, through Village Development Planning. 17/27 The GoL ensure that the funding and technical support provided by NP-LAF in the medium term is fully integrated into future planning and implementation of agricultural development on the plateau. Chapter 10 OFF-FARM 29/27 Review District capacity to manage the off-farm program and recommend further development if required. 30/27 Begin monitoring new businesses established and employment created Chapter 15 FUTURE INSTITUTIONAL ARRANGEMENTS AFTER RIP 42/27 Confirm that the institutional arrangements set out in Annex C are in place as requirements for the medium-term development project on the Nakai plateau. Page | 69 Chapter 14 INFRASTRUCTURE AND OTHER ASSET PROVISION 40/27 Compliance with the remaining infrastructure requirements should be part of independent monitoring of the LoA or Handover Agreement. 41/27 An audit of SERF should include periodic independent monitoring of the standard of maintenance of community assets that it funds. Chapter 15 FUTURE INSTITUTIONAL ARRANGEMENTS AFTER RIP 43/27 Agree that the Nakai Plateau Working Group should include representatives from the resettler villages and that an initial action by the group would be to conclude a joint and publicly available Memorandum of Understanding summarising the main features of project management. 44/27 Agree to a periodic review of project progress and results by an independent reviewer of international standing, with the reviewer’s reports made public. 45/27 Confirm the future role of the POE as a standing body under the CA in relation to social and environmental matters, the WMPA, review of continued achievement of the ROPs, longer-term monitoring of performance of the medium-term development project, and any other matters relating to the CA. 5. Recommendations on other matters for consideration in future development on the plateau Chapter 3 OVERVIEW: RESETTLER LIVING STANDARDS 1/27 A survey on a methodology consistent with LSMS be conducted at intervals of three to four years for the duration of the Concession Period so that livelihood conditions in the Resettlement Villages can be regularly monitored. Chapter 4 FISHING 3/27 Continue to monitor fisheries control activity including co-patrolling and check points, for effectiveness and revision if necessary 4/27 Further develop marketing and processing to add value to the fish catch 5/27 Review and if necessary revise fish marketing regulations 6/27 Maintain the current system of monitoring of reservoir ecology, fishery health and species diversity, household fish catch and co-management operations. Chapter 5 FORESTRY 11/27 Agree GoL policy at all levels on major issues, including: • a comprehensive and Plateau-wide forest inventory, if required; • initiation of programmes like extending cropping, including agroforestry in CFPs, developing ecotourism in hamlet forests, providing technical support for organization of a NTFP management and value chain; • incorporating CFPs in VDPs. Chapter 6 LAND 13/27 Ensure that decision-making on land use in development of CFPs and VDPs complies with the established legal procedures for community decision-making on community land and with CA requirement to respect social and cultural cohesion of Page | 70 original resettlement villages and to ensure village resource use is recognised and respected; 14/27 Provide additional assistance to the District to develop a procedure for land conversion according to CLT regulations. 15/27 No inclusion of non-resettler households in NP-LAF agricultural activities until eligible resettler and subsequent growth households first have land allocated and legal documents issued, and proper procedures for land conversion have been applied. Chapter 8 CROPPING AND IRRIGATION 18/27 Review progress with irrigation and the economic options for future development, utilizing MAF’s national expertise in the process. 19/27 Arrange targeted discussions with farmers moving out of cassava on restoration of land and options for future cropping. Chapter 9 LIVESTOCK 21/27 Include options for supporting development of large livestock businesses in Village Development planning and in NP-LAF. 22/27 Launch a further campaign aimed at households raising small animals as a business to encourage safe management and effective vaccination practice. Chapter 10 OFF-FARM 23/27 Accelerate a planned audit of the operations of each VDF and put in place remedial actions for funds with arrears problems 24/27 Review the lending decisions and policies of the Funds to ensure that access is equally available to all groups who can manage the Funds’ requirements 25/27 Complete the creation and staffing of a Network Support Organisation to support VDFs 26/27 Establish a venture seed fund to complement VDFs with longer-term finance 27/27 Complete the establishment of the planned resource centre for business startups 28/27 Complete planning for joint venture with Lao tourism operators for tours to the protected area Chapter 11 POOR AND VULNERABLE 31/27 Include a stand-alone component for Poor, Vulnerable and High-Risk households in VDP methodology. 32/27 Develop a livelihoods plan for each of the High-Risk households specifically tailored to individual situations. Chapter 12 ETHNIC GROUPS 34/27 Further upgrade project communication and presentational skills to involve the older generation more effectively in hamlet and village affairs and consider appointing a fulltime village facilitator with knowledge of ethnic languages particularly Makong to improve older people’s access to upcoming planning and design consultations. 35/27 Take early action to widen further ethnic representation in the VDCs, in line with CA provisions and with the requirement of the Khammouane Provincial Governor that Page | 71 in selecting members of VDCs and other important hamlet and village bodies naibans ensure fair representation for women and households from ethnic groups. 36/27 With some evidence of cultural and language diversity diminishing in spite of apparent enhanced social cohesion resulting from the measures to accord the villages and hamlets more autonomy, initiate closer studies of the cultures and languages of the Plateau before they erode further. 37/27 Encourage and support the LFNC in expanding its valuable roles in fostering cultural protection and undertaking conflict resolution work on the Plateau. 38/27 Continue the patient negotiations with and through the LFNC seeking resolution of the issue of access to the Old Sop Hia site, with options like redesignating the site as a NNT NPA hamlet with conservation and development functions or as an overnighting facility for conservation patrols being considered. Chapter 17 WMPA 49/27 The Director of COTE participate in meetings of the WMPA Board of Directors 50/27 The retrenchment of existing staff and recruiting of new staff which has been inexplicably delayed be pursued and accomplished rapidly; 51/27 The WMPA fiduciary management, financial handling and accounting, prepared with COTE per the contract, should be transparent and consistent with international standards. 52/27 Effective external monitoring of the WMPA should be maintained. Page | 72 ANNEX B: COMPARISON OF NT2DF AND NP-LAF OBJECTIVES, GOVERNANCE AND MANAGEMENT Topic NT2DF NP-LAF Project “Purposes: measures that will result in improvement of livelihood, The project’s primary objective is “to achieve a sustainable improvement in objectives education, health, poverty alleviation, youth empowerment, equal incomes for the plateau’s inhabitants involved in farming, livestock and opportunities for women and men of all ethnic groups, institutional fishing activities, as well as their integration into the province’s economy, strengthening and emergency response to natural disasters.” with particular focus on the contribution of women. It will work towards defining the plateau’s rural management tools, in conjunction with economic activities.” Duration Concession Period to 2035 Five years from 2018 Beneficiaries First five years: Nakai district residents or (for capacity Nakai district residents. building/institutional strengthening) District Government or Village organisations. After five years, can be extended to “the people living in other NT2 Project Areas in Khammouane Province”, on the advice of the Expert. Funding LAK1000/MwH generated each year by the NT2 scheme until the end of Total financing over a five-year period of EUR 3 million, split equally the Concession Period (2035). Currently estimated as US$750,000 p.a. between AFD and NTPC. Counterpart funds from GoL. NTPC contribution funds TA. AFD contribution funds project activities. Governance Steering Committee of four GoL members, four NTPC members and two Steering Committee of Governor of the Khammouane Province (Chair), Village representatives. representatives from MAF, PAFO, Nakai DAFO, RMU or its successor and NTPC. AFD as observer. Project Steering Committee “select the Projects based on the eligibility criteria of Steering Committee will “supervise the project activities and validate decision- this Agreement” and “submit[s] a budget proposal … for NTPC’s annual workplans.” AFD has a right of “no objection” to the annual work making approval”. Decisions have to be unanimous but if there is a veto of a plan and budget. proposal, on the motion of four SC members, it can be referred to an Independent Monitoring Expert (Expert) whose decision shall be final. Monitoring The Expert “shall monitor the selection and implementation of the “The development and coordination of the M&E systems to facilitate and review Approved Project[s]”. The Expert reports annually on an assessment of exchanges and avoid duplication of effort.” Half-yearly reports, general the NT2DF, the SC Budget Proposal, and “the impact of the Approved report at end of implementation period, and report against “impact Projects on the local communities during his/her annual visit at the Nakai indicators” (based on project log frame, to be advised). AFD may District.” commission its own project evaluation. Plan process “All the Projects submitted must result from consultations with the local Principle: “Coordination of the planning of project activities with the communities covered by this Agreement.” For Technical and Community Participatory Village Development Planning”. “Definition and planning of Projects: Originate in VDPs or MTDP; VDPs screened for suitable activities” actuated (according to flowchart) through PAFO/DAFO and projects by a NT2DF Support Team before submission to the Steering TAT. DAFO is “focal point” for technical support for villages. Committee. Page | 73 Project Support Team of five GoL officials from the Nakai District Government Technical Assistance Team of international technical advisor and local Technical and Mass Organisations with a parallel group of seven NTPC staff. experts. Support Project District Government: manages VDP process PAFO (with DAFO) supported by PONRE especially on land issues Management VDC: submits project proposals. Joint GoL/NTPC Support Team reviews “responsible for overall supervision and financial and technical and recommends to Steering Committee. management of the project.” TAT members paired with PAFO/DAFO staff. Coordination Joint GoL – NTPC Steering Committee. Joint GoL - NTPC Steering Committee. “TAT will work in close cooperation with the District and NTPC teams to ensure a smooth and sound transition between the RIP and the new agricultural project”. Coordination with other “institutional actors” with a role in Nakai plateau development Page | 74 ANNEX C: INSTITUTIONAL PLATFORM FOR THE NAKAI PLATEAU WORKING GROUP21 Subcomponent Scope and Status Funding for all three years agreed by the Ministry of Finance. Status: Transition Plan first year funds have been transferred to the (now established) Transition Plan Secretariat, to be overseen by the Transition Plan Committee. Activation of the NT2DF (approx. $750,000 per year) upon formal closure of the RIP, to be managed through the VDP process and NT2DF supported by an external monitor. Cooperation Agreement between NTPC and Province of Khammouane to be signed in April 2018. • Technical Assistance Grant Agreement between AFD and Government of Lao PDR, inclusive of funding, institutional structure, implementation arrangements and results framework consistent with Lao/French modalities; signed 23 August 2017 • Memorandum of Understanding between AFD and NTPC signed 16 NP-LAF June 2017 • Technical Assistance Contract between NTPC and IRAM/CCL; signed 20 September 2017 • Framework Agreement between PAFO of Khammouane and IRAM/CCL signed 29December 2017 A monitoring plan was presented in the JWG’s response to the PoE Interim Report #27 (December 2017). It included annual consolidation of monitoring results (supplemented by GoL poverty tracking statistics), Monitoring as advice to the GoL and stakeholders, supplemental to yet separate from the CA. All commitments are funded and have an identified monitor. They are documented in various project agreements, including those noted above. Establish a “Nakai Plateau Working Group” (NPWG), successor to the CAP Joint Working Group, to be established upon closure of the RIP, composed of stakeholders from GoL (at all relevant levels), development partners and NTPC to: Coordination • nurture significant changes introduced in village forestry and village development planning; • coordinate partnerships amongst stakeholders; • ensure development priorities are rooted in village; consultations and effectively understood by stakeholders; and 21 Source: Joint Working Group. Page | 75 • ensure scarce development funds are used efficiently, are well coordinated and align with established priorities. • The NPWG would be chaired by the District Governor, facilitated by the Transition Secretariat, with each stakeholder bearing its own costs of membership. Page | 76