Hydropower, Economic Growth and Inequality in Cambodia

Cambodia imports all of its petroleum products, which are the main source of energy for power generation in the industrial, transport, residential and commercial sectors. With such a high dependence on oil, the price of electricity in Cambodia is the highest in the Southeast Asian region. As such, the massive demand for electrical power and infrastructure demand is unaffordable for the Cambodian Government. In light of these circumstances, the Royal Government has decided to encourage and create necessary conditions to attract private sector investment in the power industry. Through this condition, all potential hydropower projects are being developed with the support of investment from foreign companies, particularly Chinese companies.

Amongst the range of energy sources utilised to faciliate economic growth, hydroelectricity is a cheap and sustainable energy source. In the long term, the improvement of power supply and reduction of power price could be significant because of its benefits for economic growth and employment through absorbing the Foreign Direct Investment. Moreover, unemployment in Cambodia can potentially be reduced by increasing of foreign direct investment in Cambodia. Lower electricity prices can encourage the growth of small and medium enterprise in Cambodia, which contribute substantially to economic growth and poverty reduction in Cambodia.

That said, however, there are about 90,000 people of ethnic minority backgrounds living in the middle Se San Basin in Cambodia and Vietnam down-stream from the Yali Falls Dam, who engage in subsistence farming as their main occupation (Halcrow, 1998). The Se San River supports a rich variety of plant and animal life, which provide local people with water for drinking, washing and irrigation as well as other  resources particularly for Cambodian side, where livelihoods almost totally rely on access to natural resources from aquatic and terrestrial ecosystems. The previous livelihood systems might not be able to be sustained for these effected people. Moreover, these impacts have been serious for indigenous people living along the Se San River. In the case of Yali Falls, flood waves as a result of the initial operational tests of this project have resulted in a loss of lives, property, livestock and crops. The villagers have also stopped fishing due to the reduced fish population in the river. Before the dam was constructed, they could get between 2 to 20 kg of fish per day from this river for domestic consumption and sale (about 2 USD per kg).  The dam has made them lose their income from fish and increase their spending to buy meat for domestic consumption. As such, the impact of hydropower dam should be minimized in order to reduce the inequality between the downstream and upstream community. The government and developers of hydropower projects should provide more support to the affected communities in recovering their livelihood from the resettlement.

Research conducted under the ASEAN-Canada Junior Fellowship will analyze the costs and benefits of hydropower in terms of economic, social and environmental circumstances in Cambodia, Vietnam and Laos. The research focuses on analyzing the improvement of hydropower dams on affected communities and contributes to the economic development in region with less inequality.

This blog post has been written by Kesa Ly. Kesa is a Research and Development Advisor at Life With Dignity and Research Fellow at M-POWER, and a Junior Fellow for 2012 under the ASEAN-Canada Research Partnership. For more information on the ASEAN-Canada Research Partnership, please click here.