1. Hydropower Power in Myanmar – Advice to Government
1.12. Community Benefit Sharing and Benefit Creation in Hydropower Projects in Myanmar
Local benefit sharing and benefit creation in hydropower projects are the systematic efforts by proponents to sustainably benefit local communities affected by hydropower projects and to ensure there is ongoing benefit creation.
Based on discussions with MOEE, it is understood that the current policy is to have a 2% of profits given to the community as benefit sharing from a hydropower project.
Benefit sharing is sustainable approach for implementing hydropower projects. Benefit sharing should provide equitable development, sustainability, and smooth project implementation for hydropower development. Benefit sharing aims to distribute the benefits of hydropower equitably to river basin residents and across the economy more broadly. Benefit sharing stems from the principle that people who are affected by hydropower projects should be amongst the first to receive benefits form the project, not being the last.
For benefit sharing mechanisms to work, the key enabling conditions are government policies, the legal and regulatory framework, corporate social responsibility strategies of development companies, and the capacity of local communities. There are currently no specific benefit sharing policies and/or framework in Myanmar.
Stakeholder engagement is essential in initiating and designing benefit sharing programs.
Monetary benefit sharing and non-monetary mechanisms are commonly used in benefit sharing in hydropower projects. Monetary benefit sharing means sharing part of the monetary flows generated by the operation of the hydropower projects with local communities. Commonly used monetary benefit sharing mechanisms include but are not limited to:
a. direct payments/revenue sharing including through royalties, taxes, fees and negotiated payments;
b. preferential electricity rates;
c. payments for environmental or ecosystem services;
d. a community development fund/program;
e. employment and supply chain opportunities; and f. equity sharing.
Non-monetary benefit sharing refers to the approaches adopted by the proponent for ensuring that local communities benefit from construction and operation of a hydropower project in non-monetary terms. A hydropower project can share benefits with local communities in non-monetary terms, such as improved infrastructure, support for health and education programs, improved access to fisheries and forests, and legal title to land. Examples of non-monetary benefit sharing mechanisms include but are not limited to:
a. modifying project design and operation;
b. watershed management;
c. associated infrastructure and public service investment; and d. employment creation.
To ensure that local communities share the social and economic benefits of hydropower projects, benefit sharing arrangements need to be carefully planned and designed as part of the project. A well-designed benefit sharing program should have clear objectives; carefully define the target population; include benefit sharing mechanisms; and identify responsible agencies, as well as implementation arrangements. Generally, the design of a benefit sharing program needs to be consistent with other studies and assessments undertaken as the ESIA; livelihood action plan and a resettlement action plan. It normally includes the following steps:
a. understanding the impacts of a hydropower project on local communities, particularly affected people;
b. analyse the legal and regulatory framework and local development context, although it is noted that there is no specific framework currently in Myanmar;
c. undertake broad and ongoing consultations with all relevant stakeholders;
d. designing the objectives of benefit sharing and benefit creation programs;
e. determining the beneficiaries of benefit sharing programs;
f. designing the types and mechanisms of benefit sharing;
g. explore benefit sharing arrangements through multiple entry points; and h. establishing the implementation arrangements of benefit sharing programs.
As a long-term arrangement, benefit sharing and benefit creation can facilitate local development and as such, benefit creation. If it established effectively, benefit sharing arrangements can respond to unexpected environmental and social in the operation of a hydropower project to ensure local communities receive adequate benefits. Arrangements for the equitable sharing of benefits can offer scope for local communities and all other stakeholders to avoid conflicts and focus on creating synergies to maximise local development opportunities.
There are a number of international frameworks on benefit sharing. For example, the World Bank’s Indigenous People (OP 4.10) requires that the borrower includes arrangements to share equitably in the benefits when a project involves the commercial development of natural resources on land or territories that Indigenous Peoples traditionally owned. The policy on Involuntary Resettlement (OP 4.12) requires that resettlement activities should be conceived and executed as sustainable development programs, providing sufficient investment resources to enable the persons displaced by the project to share in project benefits”
when involuntary resettlement is unavoidable. The Environmental Assessment (OP 4.01) requires that ESIA
takes into account the natural environment and social aspects, and explores opportunities for environmental enhancement.
It is critical when developing a benefit sharing arrangement that there is a clear distinction between benefit sharing and compensation and mitigation costs. Compensation, whether in the form of monetary value or replacement in-kind, is due to all affected peoples who have suffered losses to their houses, assets and sources of income and livelihoods. Mitigation costs are due to protect the environment by reducing the impact or rehabilitating the assets after the project has been completed. Benefit sharing by contrast recognises that the previous natural resources of an area (the water flow and hydropower potential) have been taken for economic benefit and that the people living in the area have a right to share in that benefit.
Benefits may be shared in both monetary and non-monetary forms. Monetary forms may be derived from taxes and revenues, or contributions to, long-term regional development fund, an environmental fund or to a community development fund. It may take the form of additional long-term compensation for project-affected populations, or some form of partnership between the developers and the local communities. Another monetary mechanism would grant an equity share of the project to local communities, who would thus have a degree of ownership in the project and receive dividends on the profit. Also communities may benefit from preferential low rates of the electricity they consume.
A useful collection of information about benefit sharing is contained within the:
a. International Energy Agency (2000), Hydropower and the Environment;
b. World Commission on Dams (2000);
c. Mekong River Commission’s Knowledge Base on Benefit Sharing (2011); and d. World Bank Guide on Benefit Sharing in Hydropower Projects (2012)
There are several different approaches to share benefits with project affected communities and residents of river basins where hydropower projects are located depending on the Government’s preference. The IFC is supporting the Government of Myanmar with the development of specific Benefit Sharing and Community Governance Guidelines for Hydropower Projects in the country.
Terms of Reference for the Preparation of an
Environmental and Social Impact Assessment for Hydropower Projects in
Myanmar
The Terms of Reference for the Preparation of an Environmental and Social Impact Assessment Guidelines for Hydropower Projects in Myanmar has been developed for the Ministry of Natural Resources and Environmental Conservation and the Ministry of Electricity and Energy under the International Finance Corporation’s (IFC) Hydro Advisory Program which receives support from the Australian Department of Foreign Affairs and Trade. The Guidelines have been prepared by Peter Wulf of ESIA Consult Pty Limited.
Executive Summary
Myanmar is a resource rich nation with world-renowned biodiversity and abundant natural resources. In recent years, Myanmar has slowly increased its development in hydropower projects to provide power for not only its own people, but for other countries in East and South East Asia. It is expected that there will be significant investment over the medium term due to the recent opening up of the country to foreign investment, the current high level of interest in the hydropower sector, and rising national power demand.
However, some of the current and proposed projects are seen as somewhat controversial, including from an environmental and social perspective.
The environmental and social management frameworks in Myanmar are very new. Commencing in 2012, Myanmar has been developing a legal framework for considering the environmental and social impacts of projects. The Environmental Conservation Law was passed in 2012. In December 2015, the Environmental Impact Assessment Procedure 2015 were approved by the Government of Myanmar (Notification No.
616/2015 - 29 December 2015). The Environmental Impact Assessment Procedure 2015 establish the requirements and procedures for environmental impact assessment, the review, approval and monitoring of projects under the Environmental Conservation Law 2012. The Environmental Impact Assessment Procedure 2015 sets out specific requirements for project screening, the preparation of Initial Environmental Examination (IEE) and Environmental Impact Assessment (EIA – also known as an Environmental and Social Impact Assessment (ESIA)), the appeal process, Environmental Management Plan (EMP – also defined as an Environmental and Social Management Plan (ESMP)), environmental considerations in project approval, monitoring, strategic environmental assessment, and administrative punishment. The Environmental Impact Assessment Procedure 2015 also contains annexes on the categorisation of Economic Activities for Assessment Purposes; charts illustrating steps in the various project assessment processes, and penalties and administrative punishment.
The National Environmental Quality (Emission) Guidelines (29 December 2015) was issued by the Government of Myanmar to provide performance parameters for the regulation and control of air emissions, noise, vibration, and liquid discharges from various sources in order to prevent pollution and thereby protect human and ecosystem health. These Guidelines were primarily based on the World Bank Group’s Environmental Health and Safety (EHS) General Guidelines 2007 that provide technical guidance on good international industry pollution prevention practice for application in developing countries. Other related laws and regulations include the Environmental Conservation Rules 2014, the Myanmar National Water Policy 2015 and the Conservation of Water Resources and River Law 2006.
This document, the Terms of Reference for the preparation of an Environmental and Social Impact Assessment Guidelines for Hydropower Projects in the Myanmar (ESIA Terms of Reference) has been developed based on the need to assess the environmental and social Impact of hydropower projects in Myanmar for the Department of Environmental Conservation within the Ministry of Natural Resources and Environmental Conservation (MONREC). The ESIA Terms of Reference has been developed under the International Finance Corporation’s (IFC) Hydro Advisory Program which receives support from the Australian Department of Foreign Affairs and Trade (DFAT). The ESIA Terms of Reference have been developed consistent with the IFC’s Performance Standards and Good International Industry Practice.
The ESIA Terms of Reference have been developed for large scale hydropower projects that include for example, dam storage, resettlement and other impacts. Depending on the location, size and nature of a hydropower project will depend on the level of compliance with this full Terms of Reference.
The ESIA Terms of Reference were developed in consultation with the Government of Myanmar including significant consultation and workshopping with MONREC, the Ministry of Electricity and Energy (MOEE), businesses, development partners, hydropower project proponents and relevant stakeholders including regional and non-government organisations.
For the purposes of understanding and consistency, an Environmental and Social Impact Assessment (ESIA) is the international definition for a joint environmental impact assessment and social impact assessment. An EIA/EIS is a project specific environment impact assessment required by Myanmar law. The Environmental Impact Assessment Procedure 2015 also refers to an IEE which is essentially a lower level ESIA mainly based on a desk top assessment with limited field work.