Nam Theun 2 – how are resettled people doing? (a note on epistemology, or what we can and can’t learn using socioeconomic data)

On the Nakai plateau, a large proportion of income is non-monetary. If we fail to account for this income, we grossly underestimate the living standards of most households. (WB photo)

In my last blog I presented an initial look at how the resettled households are doing overall. But now that I’ve hopefully satisfied some of your curiosity on the big picture, I’d like to go back and talk in a little more detail about the data that I’m using here, and what it can tell us.

Economics is often (and sometimes fairly!), maligned for its reliance on assumptions. But the reality is that it is impossible to even start analyzing a situation like that on Nakai without making some assumptions about how progress can be measured, and using data which is inevitably a simplification of a complex, multi-faceted reality. Even though we are working with the best data available, the honest thing to do is to be upfront and honest about what we can, and cannot, know about how people are doing, with socioeconomic data in general, and the Nakai Living Standards Measurement Study (LSMS) in particular.

In Lao I often find that up-to-date information on socioeconomic indicators is pretty limited. So when we do get hold of some reliable socioeconomic data, I’m constantly amazed by how many new things we can learn about the lives of the households it covers, the conditions they live in, the way they earn a living, the challenges they face, and how these factors vary across space, time and between different groups.

Livelihood poster used to introduce NT2 resettled villagers to the notion of alternative income generation activities (NTPC/GoL courtesy photo-2004)

The wealth of data collected in the LSMS covers many aspects of the lives of the resettled households, giving us a broad picture of their livelihoods and living standards—helping to answer the central question posed by William about how the resettled people are doing. We’ve already had a look at household consumption. Other topics we can analyze using the survey, on which we’ll be presenting results over the next few weeks, include:

• Progress with the main livelihood pillars: fishing, agriculture and livestock, forestry and off-farm income sources
• Trends in total incomes
• Some insights into potential “sustainability” of progress, drawing on information on consumption, incomes, assets and debt
• Non-economic indicators including housing, access to facilities and services, education and health
• The households’ own perceptions of their living standards and the changes that have taken place since resettlement (subjective well-being)

On the other hand, with any quantitative data analysis it is important to be very clear about the characteristics of the data and the constraints and limitations they imply for analysis.  In today’s blog I want to lay out a few of the most important challenges before proceeding with the initial results in next week’s blog:

• First, it’s far too early to be talking about sustainability of livelihoods, or whether or not the project will meet the socioeconomic targets set out in the concession agreement (due to be measured around 2013), although we can begin to get a picture of progress so far.
• Second, livelihoods on Nakai are complex and complicated. This means that lots of different pieces of data need to be viewed together to give a complete picture of how the households are doing.
• Third, household incomes are only one aspect of well-being, and don’t necessarily tell us much about sustainability. To get a fuller picture of how the households are doing we need to look at other indicators. Some of these will be economic and quantitative: we already looked at household consumption, and we’ll also be analyzing debt and assets. Others will be non-economic: health, education, and the household’s own perceptions of their living standards and the changes that are going on around them.
• Fourth, there’s been a big investment in the survey process and the quality and integrity of the data, but any socioeconomic monitoring process is subject to various sources of error and bias. Income in particular is very difficult to measure. One of the major problems is that people generally find it difficult to remember how much income their earned, or how much they consumed. How accurate their memories are depends partly on the time period we’re asking them about. If we ask someone how much they earned last week they might remember quite well, but if we ask them how much they earned over the whole year, they usually, but not always, tend to underestimate. On the other hand, I talked in my last post about how, in a place like Nakai where most people farm, incomes and consumption vary a lot by season. In the middle of the dry season, May-June, household consumption and income would be expected to be a lot lower than just after the harvest in October. This means that, for example, we probably want to ask about the last season’s harvest, even if we know the households won’t be able to recall it with 100% accuracy.
• Finally, on the Nakai plateau, a large proportion of income is non-monetary. Households eat rice they’ve grown, forest products they’ve collected, and fish they’ve caught, without money ever changing hands. If we fail to account for this income, we grossly underestimate the living standards of most households, who depend on farming and fishing, and make households with off-farm jobs look disproportionately well-off compared to their neighbors. But how do we value this income? What prices do we use? Prices might be available for rice and fish, but what about non-timber forest products (NTFPs) that are known to form an important part of the Lao diet?

As you can see there is plenty of complexity and twists and turns involved in trying to answer a very simple question: how are the resettled people doing? Next week I‘ll start unveiling some more of the preliminary results, while trying to be very humble and realistic about exactly how much these results can tell us.

About the NT2 project and socioeconomic monitoring systems 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). 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.