Dam mania on the mighty Mekong.

The Mekong River begins its 4000-kilometre journey in Tibet, and then flows down through southern China, Burma, Laos, Thailand and Vietnam, before discharging through the Mouths of the Mekong into the South China Sea.

More than 50 million people depend upon the Mekong River and its tributaries for food, water, transport and many other aspects of their daily lives. The river's annual flood cycles are essential for the sustainable production of food crops on the floodplains. So the construction of about 50 dams on the trunk stream and its tributaries will have widespread impacts, including:

* the inundation of thousands of square kilometres of agricultural and wetland regions

* the loss of unique fish habitats

* a worsening situation for endangered species 

* an end to floodplain farming due to the loss of floods and silt deposition

* forced resettlement of hundreds of thousands of people

* the break up of complex social fabrics.

For a downstream country such as Vietnam, the fertile Mekong delta contributes almost 50 per cent of its rice production and 44 per cent of its fish and other aquatic produce. Local fishing communities recognise that their livelihood is under threat.

`If the dams store up a lot of water and reduce water in Cambodia, there will be less fish in the delta. Why do they want to build a lot of dams? Why don't they discuss this before they do something?", asks Toe, whose livelihood is dependent on fishing in the Mekong delta.

Dr Nhan Nguyen of the Hydrometeorological Office of Vietnam, and his colleague Dr Eric Wolanski, from the Australian Institute of Marine Science in Townsville, suggest that three key problems will arise if dams limit the annual cycle of flooding on the Mekong. The mouth of the delta would clog up with silt as far as 30 kilometres upstream, saltwater incursions from the sea would not be flushed out, and coastal erosion would occur because protective mudflats would not be replenished by silt.

Australia is a significant player in the region. Our bilateral aid agency, AusAID, has funded the Lao government's Hydropower Project Office, the Mekong River Commission and the World Bank's Mekong Finance Facility. The Asian Development Bank, to which Australia is now the third-largest donor shareholder, has taken a leading role in Mekong developments. Its ambitious plans, which incorporate dozens of hydro schemes to promote energy trade in the region, and investment in road, rail, air and water transport projects, are being developed without meaningful consultation and involvement of local communities.

Australian companies are well known in the countries along the Mekong River. Transfield, John Holland, the Snowy Mountains Engineering Corporation and the Hydro Electric Commission Enterprise Corporation (HECEC is the privatised arm of Tasmania's Hydro Electric Commission) are extensively engaged in dam protects from feasibility stage through to construction.

HECEC has signed a memorandum of understanding with the government of Laos to develop the Xe Kaman dam on a Mekong tributary. At 187 metres, this would be one of the highest dams in Asia and flood 230 square kilometres, impacting on the proposed Dong Ampham Nature Reserve in the process. Much of the area is covered in pristine forest and is home to tigers, leopards, black bears and other rare species of mammals and birds. Fish diversity and numbers would be reduced, and the endangered Irrawaddy dolphin put at risk. About nine villages would be submerged, sustainable agricultural livelihoods would be lost, and 13,000 people living downstream would be seriously affected.

Uncertainty surrounds the economic viability of the project. In the extraordinary world of Lao development projects, this does not mean that foreign companies will be out of pocket. All companies connected with the project are making healthy profits from project-related activities: management contracts for Austral-Lao Power, engineering consultancy contracts for HECEC, environmental and technical consultancies for the Tasmanian consultants Gutteridge, Haskins and Davey and Forestry Tasmania, and logging of the reservoir area for the Malaysian company, Idris. Meanwhile the Lao government is the only one of the equity holders relying on the hydro project itself as the source of its profits.

Transfield heads a consortium that is lobbying hard to construct a hydropower project, the Nam Theun 2, on one of the Mekong tributaries in Laos. The predicted economic bonanza that Transfield and other backers argue will accrue to Laos from the sale of electricity to Thailand, is now looking very shaky. The Electricity Generating Authority of Thailand has cancelled its agreement to purchase electricity from this $US1.5 billion project.

As with many large infrastructure projects in low-income countries, backers of this dam require the Lao government to take out risk insurance to protect their financial investments. The amount of this guarantee for the Nam Theun 2 project is 20 per cent of the total project cost which, on current estimates, could amount to $US300 million. The World Bank is currently considering whether it will provide half of the guarantee as a loan. The other half would be borrowed by the government as a commercial loan that would incur interest rates at approximately 20 per cent. The cost of this guarantee has to be carried by the government and people of Laos, in addition to the money required to cover the Lao government's 25-per-cent equity in the development. All these costs will add to the country's foreign debt burden.

For Mekong countries, the failure of dams to deliver on promised benefits is illustrated right on their doorstep. The Pak Mun dam in Thailand, about five kilometres upstream from where the Mun joins the Mekong river, has generated much controversy but very little electricity. When the dam works at full capacity, a very rare occurrence, it contributes less than half of one per cent of Thailand's total electricity generation. Production of this relatively small amount of power has come at the expense of local fishing and agriculture communities, who are still fighting for compensation for the destruction of their livelihoods. As well as forcing more than 10,000 people to resettle, the dam has reduced the biodiversity of fish species and the quantity of fish stocks, and the remaining communities risk catching the debilitating disease schistosomiasis, caused by flat worms that multiply rapidly in stagnant reservoir waters.

In early 1995 the Thai Prime Minister's office announced that for the sake of environmental protection, (Thailand) would no longer build dams for power production'. Tragically for the people in neighbouring Laos, the lessons of Pak Mun have not been transferred across the Mekong.

Development agencies and dam building companies are in the early stage of what could be the biggest water management project ever undertaken. But there is another way. The starting point for all developments in the region needs to be with the countless communities who for thousands of years have successfully managed this diverse watershed. Rather than imposing large-scale dams, it is a time for listening and responding so that people are in a position to determine their own development futures.

* Lee Rhiannon and Celia Brooke work at AID/WATCH, a non-government organisation that monitors Australia's overseas aid program, which include projects of AusAID, the World Bank and the Asian Development Bank. The Mekong campaign is a major part of AID/WATCH's work. Find out more about AID/WATCH on the Internet: www.peg.apc.orgl~aidwatch