Nam Theun 2 – How are the resettled people doing overall?

The NT2 project required the damming of the Nam Theun river and the creation of a reservoir that has flooded large areas of the Nakai plateau, leading to the physical relocation of 17 villages by April 2008.  However, this physical relocation was just the first step in the resettlement process. The key challenge now is to ensure that the 6,200 people who were resettled because of the reservoir develop new and better livelihoods—and do so in a sustainable fashion—meeting the high-level commitments made in the project’s Concession Agreement (CA) (787 kb pdf).

The project has invested in strong socioeconomic monitoring systems to track progress in meeting the CA commitments, although it’s far too early to judge whether the objectives have been achieved and livelihoods are sustainable. This series of blogs uses some of that evidence to give insights into how the resettlers are doing so far and the challenges they still face in improving their livelihoods. By presenting this information a bit at a time we hope to slowly build up a comprehensive picture of the resettlement process, with all its complexities, complications and surprises...

In the next blog I’m going to go into some detail about the specific tools and methodologies used to collect and analyze information on these households. Understanding these details is essential for understanding the results. But I also know that people are itching to get a broad-brush answer to the question “how are the resettled people doing overall?” So, in this post I’ll present what I believe to be the most reliable indicator of how the households are doing at this stage of the project—household consumption. Although we’re going to be looking at income and other measures of household situations, consumption is usually used as a broad indicator of overall household well-being. Median consumption, which is consumption of the “middle” household, is presented, to control for outlying values. 
 
Lao PDR has three main seasons. The households on Nakai practice rainfed agriculture, so most of their produce grows during the rainy season, from the end of May to the start of October. They harvest in late October. The weather becomes cooler between October and February, followed by a hot, dry season from March to May. Some households, with irrigated lowland plots, harvest at the end of this season. The resettled households do not currently cultivate a dry season harvest—although this may be possible with new varieties and irrigation. This means that consumption is likely to be low during the summer months (May-September), before rising after the harvest.

Household consumption is the most reliable indicator of how the households are doing at this stage of the project. (WB photo)

The LSMS survey was carried out in different seasons, which makes it difficult to compare levels across time—future rounds will be carried out at the same time of year. However, what we can say for now is that in all rounds median consumption was well above the rural poverty line. In simple language, this means that well over half of the households are already above the poverty line. This is an encouraging sign at such an early stage of the project, and considering the enormous changes that these households are adapting to, and the conditions they lived in before NT2. Consumption was not measured in the 1998 baseline survey, but according to data from the 2005 Census, combined with national survey data, poverty levels in the villages just before resettlement began were between 36% and 66%. For Nakai district as a whole they averaged 55%, compared to a national average of 34%.

However, it is clear that challenges remain. During the resettlement process, a group of households were identified by the Resettlement Management Unit as needing extra support to improve their livelihoods- support that they continue to receive. These “vulnerable” households were identified based on a variety of indicators, including:

• Having little available adult labour (i.e. very old or very young members, female-headed households with young children to care for)
• Suffering from chronic illnesses
• Being members of historically disadvantaged ethnic minorities, who come from very different traditional livelihood systems and may be unable to speak the mainstream Lao language.

A female headed household with young children to care for is considered a "vulnerable" household: Single Headed family in Ban Phonpanpek - Nakai (WB photo)

Experiences in other projects show that households with these characteristics often find it difficult to restore livelihoods after resettlement. To ensure these households don’t get left behind, the NT2 project has committed to improving incomes for all households. This means it is particularly important to monitor these households, so we’ve presented their consumption separately in the chart. 

Despite the support, these households are still lagging behind the non-vulnerable. Although this is perhaps unsurprising given their characteristics, providing extra attention to enable all of these households to improve their livelihoods remains the most important challenge facing the project. (However, even in this group the “middle” household is significantly above the rural poverty line, meaning that well over half of the vulnerable households have escaped poverty.)

In upcoming posts I’ll be presenting some data on incomes and broader indicators of welfare. However, I’ll continue to refer to consumption per person as the main indicator of overall household well-being.  Why? There are several reasons for this, many of which apply particularly to contexts like Nakai. A few of these are:

• Incomes fluctuate a lot by season, but households use borrowing and saving to “smooth” consumption, so it is usually considered a more reliable measure of “permanent income”. However, in reality many households are unable to borrow as much as they’d like, so we are likely to see some seasonal fluctuations, as discussed above.
• Because consumption is more stable over time than income, we can use a shorter recall period, which means the information tends to be more accurate. The recall period in the LSMS survey is a week for most food items, whereas for most income components households are asked about the last year.
• A lot of income is non-monetary- households grow food and consume it themselves rather than selling it. Households often forget about this income when asked, and even when it is reported, it is difficult to value. Consumption of own produce is easier to recall and value using market prices. 
• The national rural poverty line, which is the relevant income target for the resettled households (because the poverty line is adjusted upwards over time, it is now higher than the nominal target of 1.4 million kip), was designed to be related to consumption, not to income.  
• There is a conceptual link with household “welfare” (whereas, for example, a household with very high income may not be considered very well-off if they have to use most of that income to pay off large debts)