Forced displacement, destroyed livelihoods
The Nam Theun 2 Hydropower project poses enormous social, environmental and economic risks to the people of Laos. The project will negatively affect approximately 1 in 50 Laotians. As reservoir flooding begins, programs to restore villagers' livelihoods are in jeopardy and promises to affected people have been broken.

Roughly 6,200 indigenous people living on the Nakai Plateau have been displaced to make way for the Nam Theun 2 dam and its reservoir. While new houses, roads, and electricity are welcome, major concerns remain about villagers being able to feed their families and earn income in their new sites. Villagers have received small plots of poor quality land on which rice cannot be cultivated. They will be forced to grow vegetables to sell in a market that has not yet been identified. They have been promised bountiful fish in the new reservoir, but the company is belatedly clearing only a fraction of the vegetation from the area. If this vegetation is left to rot, it will kill the fish and affect water quality downstream.

Nam Theun 2 will also affect more than 120,000 villagers living along the Xe Bang Fai, the Mekong tributary into which Nam Theun’s waters will be diverted once the dam is operational. Xe Bang Fai villagers can expect more frequent flooding, devastated fisheries, and flooded riverbank gardens. Solid plans to compensate Xe Bang Fai villagers and replace these critical sources of food and income have yet to materialize, and the funding available is insufficient to ensure that all affected villagers' livelihoods are restored. Villagers have expressed concerns about the pilot livelihood program, including the insufficient compensation paid for lost fisheries and the lack of markets for dry season vegetables.

Nam Theun 2 will have significant impacts on biodiversity. The project is located in and adjacent to one of the largest remaining tropical forests in mainland Southeast Asia. The massive reservoir will inundate the habitat of 60 species of birds and mammals and disrupt migration routes. The area is home to a large variety of rare and endangered plant and animal species, including one of the last remaining populations of wild elephants in Laos. The project will have adverse impacts on fisheries on the Theun River and the Xe Bang Fai.

The World Commission on Dams found that women and ethnic minorities were disproportionately affected by dam projects. As women are often responsible for ensuring the sustainable livelihoods of their families, impacts on these livelihoods through destruction of fisheries, flooding of agricultural land and forests, and displacement often result in women bearing a disproportionate share of the costs. It is women who are often left with the burden of caring for their families, finding alternative land and water sources and alternative livelihoods when these are taken away through the development of destructive dam projects.

Faulty "development" justification
Nam Theun 2’s “development” justification hinges on the Lao government using revenues from the project to help the poor and ensuring that affected people’s livelihoods are improved or restored. This claim was the basis for World Bank and ADB support for Nam Theun 2. As evidenced by some of the problems to date, including the failure to provide replacement land to villagers affected by NT2's construction, the World Bank and the ADB have no real enforcement powers to ensure that Lao the government and NTPC keep their promises.

According to World Bank governance indicators, Laos rates far below most low-income countries on civil and political rights and control of corruption. The World Bank’s revenue management proposal for Nam Theun 2 provides no assurances that these constraints will be overcome. Revenue allocation, monitoring and reporting will be primarily left to the Lao Finance Ministry and the fledgling State Audit Organization. The revenue management arrangements specifically reject the use of an independent oversight body or external independent auditing of Nam Theun 2 revenues.