Report: Hydropower growth in Lower Mekong threatens supply chain

Subel Rai Bhandari for RFA
Report: Hydropower growth in Lower Mekong threatens supply chain A dam is located on the Mekong River.
Adam Oswell via WWF

Hydropower development in the Lower Mekong Basin threatens to jeopardize crucial regional supply chains and make several multi-billion-dollar industries more vulnerable, the World Wildlife Fund (WWF) said in a new report.

The continued expansion of hydropower is threatening the integrity of essential supply chains, including energy production, fisheries and aquaculture, rice production, sand mining, and the manufacturing of textiles and electronics, warned the report released on Monday.

The report focused on Cambodia, Thailand, Laos and Vietnam in the Lower Mekong region, which relies on the Mekong River for its industries and supply chains.

Economic growth in the Mekong basin, one of the world’s most biodiverse river basins, has surged because of major infrastructure projects. Laos has two operational hydropower dams and is developing seven more, while Cambodia is planning two dams. 

By 2030, there could be over 130 dams on the Lower Mekong and its tributaries, according to data provider Open Development Mekong, while many researchers have warned that this rapid development is disrupting the river’s water flow, sediment and nutrient distribution.

“The Mekong’s health is inextricably linked to multiple domestic and global supply chains, countless livelihoods and the food security of more than 50 million people,” said Lan Mercado, WWF Asia-Pacific’s regional director. 

“With continued hydropower development in the region causing some of the most severe threats to the resilience of societies and economies – and the very existence of the Mekong delta – we must pivot towards a more sustainable and balanced approach.”

Hydropower in the Lower Mekong offers clean energy and potential economic gains of U.S. $33 billion, but endangers the river’s ecology, biodiversity and the economies it supports, including habitat fragmentation, pollution, and community displacement, WWF said.

Dams in the Mekong threaten the water systems by blocking fish migration, trapping sediment and nutrients, leading to erosion, lower water levels, and saltwater intrusion. This disrupts fish reproduction, potentially reducing species diversity and abundance.

Predictions suggest a 30% to 40% decline in fish populations in the Mekong area, while economic repercussions are severe for fisheries and aquaculture – sectors heavily reliant on these systems – with projected losses possibly topping $21 billion, the report said.

Hydropower dams pose risks to textile and electronics factories by causing freshwater scarcity and more frequent, severe floods, particularly in areas including the Mekong Delta, according to the report.

Socio-economic risks include harming river-based livelihoods, rising rural joblessness and migration, food scarcity for farmers and stricter regulations, it warned.

Different risks

Saline intrusion poses a threat to rice crop yields in Thailand and Vietnam, which in turn generates economic risks for farmers who rely on these crops for their income, the report said.

It said Cambodia faced the highest risks for fisheries, aquaculture, and textiles, with a potential loss of $3 billion to $5 billion in annual GDP caused by fish production losses. These losses amount to 11% to 18% of the country’s GDP.

Specifically, Cambodia’s Tonle Sap Lake is projected to suffer a drastic decrease in fish yields, ranging from 40% to 57% by 2030. It is also vulnerable to illicit and excessive fishing, habitat contraction from deforestation, water contamination and climate change impacts.

Hydropower projects in the basin may lead to a 3.7% drop in Cambodia’s rice production due to sediment changes, affecting supply chains and potentially causing a yearly loss of 430,000 metric tons of rice, valued at $ 1.1 billion, the report said.

Rice fields flood during the rainy season in Vinh Dai commune, Vietnam. [Courtesy WWF Vietnam]

In Vietnam, there are high risks for agriculture, textiles, electronics and energy sectors, with significant financial losses projected for fisheries and aquaculture. It has been the world’s third-largest exporter of aquatic products since 2014, earning $8.5 billion from exports in 2020. 

Hydropower projects may cut Vietnam’s rice output by 2.3% because of sediment changes, disrupting supply chains. Sand mining and construction could incur risks and costs from dam sediment blockage.

Vietnam’s electronics sector, making up 41% of 2021 exports and a key employer, faces risks from water scarcity and hydropower-related flooding.

In Laos, the report found that the energy sector faced high risks because of the reliance on hydroelectricity, with possible dry-season power shortages and escalating domestic debts. WWF said capture fisheries and aquaculture were also highly vulnerable.

Thailand’s investments in hydropower and overseas projects impacted regional industries with potential reputational risks, with vulnerabilities in its rice production sector, the report added.

Singapore relies on the Mekong region for essential resources like energy and food due to domestic scarcity. Currently, the threats associated with rice and energy supplies are moderate, but there could be long-term reputation and market risks, according to the report.

Hydroelectricity aids in meeting decarbonization and climate change goals, but it raises significant social and environmental concerns in the Mekong region, WWF said. It urged governments and business investors “to question the decision to pursue further high-impact hydropower development in the region, considering the substantial risks involved.”


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