Managing Environmental and Social Impacts of Hydropower in Bhutan Final Report June 15, 2016 Prepared in Collaboration between the Royal Government of Bhutan and the World Bank © 2016 World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org www.worldbank.org/hydro Twitter: @WBG_Energy Email: feedback@worldbank.org All rights reserved This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Contents Acknowledgments vii Executive Summary ix Acronyms and Abbreviations xvi CHAPTER 1 Introduction 1 1.1 Background and objective 1 1.2 Methodology 2 CHAPTER 2 Geographic Context 3 CHAPTER 3 Hydropower Development in Bhutan 7 3.1 Hydropower development plans 7 3.2 Institutions 11 3.3 Policies 16 3.4 Current planning methodology 18 CHAPTER 4 Analysis of Key Issues for Management of Environmental and Social Impacts 21 4.1 Environmental impacts 21 4.2 Social impacts and cultural assets 37 4.3 Impacts of transmission lines 47 4.4 Construction-related environmental and social impacts 53 4.5 Beyond impacts to benefit sharing 55 4.6 Beyond impacts to sustainability 56 CHAPTER 5 Discussion and Conclusions 59 CHAPTER 6 Recommendations 63 6.1 Policy updates 63 6.2 Strategic roadmap for future hydropower projects 64 6.3 Sustainability guidelines for hydropower development 65 6.4 Capacity building for environmental and social clearance process 68 6.5 Baseline data studies essential for environmental and social management 71 iii 6.6 Capacity building for compliance monitoring and audits 73 6.7 Prioritization and way forward 76 Appendix A Existing and Potential Hydropower in Bhutan 79 Appendix B Geographical Analysis of Potential Impacts 81 Potential environmental impacts of hydropower facilities and transmission lines 81 Impacts on aquatic connectivity and river flow 81 Impacts on the protected areas network 82 Potential social impacts of hydropower facilities and transmission lines 83 Impacts on villages and social services infrastructure 83 Impacts on cultural assets 84 Summary 85 Appendix C  apid Institutional Assessment for Environmental R and Social Management of Hydropower 103 National Environment Commission (NEC) 103 Department of Hydropower and Power Systems (DHPS) 109 Druk Green Power Company (DGPC) 113 Gross National Happiness Commission (GNHC) 115 List of meetings held 116 References 117 Appendix D  ummarized Results of Hydropower Sustainability S Protocol Assessment for Mangdechhu HEP 119 The Hydropower Sustainability Assessment Protocol 119 Assessment of Mangdechhu Hydroelectric Project 120 List of Boxes Box 4-1 Upstream Hydropower Planning in the Coatzacoalcos Basin in Mexico 34 Box 4-2 More Strategic Approach to Maintaining Fish Biodiversity 35 Box 4-3 Leveraging the Benefits from Hydropower Development: Experience from Peru 46 Box 4-4 Impacts of Transmission Lines in the Alto Douro Wine Region 48 Box 4-5 Different Approaches to Benefit Sharing 55 List of Figures Figure 2-1 Major rivers of Bhutan 4 Figure 2-2 Topography of Bhutan 4 Figure 2-3 Protected areas of Bhutan 5 Figure 3-1 Cumulative development of hydropower in Bhutan 8 Figure 3-2 Identified project sites with studies in at least reconnaissance phase 9 Figure 3-3 Identified storage projects 10 Figure 3-4 Existing and planned transmission corridors 13 Figure 3-5 Primary stakeholders in the energy sector 13 iv Figure 3-6 Factors and weights used in multi-criteria analysis for new hydropower development 19 Figure 4-1 Protected areas and corridors affected by existing and planned hydropower facilities 24 Figure 4-2 Affected river stretches for planned large hydropower up to 21,191 MW 25 Figure 4-3 Protected areas and corridors affected by existing and planned transmission line network 49 Figure 6-1 Sequencing of main recommendations and relationship to existing RGoB initiatives 77 Figure B-1 Affected river stretches for hydropower facilities, existing and under construction 86 Figure B-2 Affected river stretches for hydropower facilities, up to 10,000 MW Program “Plus” 87 Figure B-3 Affected river stretches for hydropower facilities, up to 21,191 MW 88 Figure B-4 Free-flowing river stretches for hydropower facilities, existing and under construction 89 Figure B-5 Free-flowing river stretches for hydropower facilities, up to 10,000 MW Program Plus 90 Figure B-6 Free-flowing river stretches for hydropower facilities, up to 21,191 MW 91 Figure B-7 Planned storage projects 92 Figure B-8 Protected areas and corridors affected by hydropower facilities, existing and under construction 93 Figure B-9 Protected areas and corridors affected by hydropower facilities, up to 10,000 MW Program Plus 94 Figure B-10 Protected areas and corridors affected by hydropower facilities, up to 21,191 MW 95 Figure B-11 Protected areas and corridors affected by existing transmission lines 96 Figure B-12 Protected areas and corridors affected by transmission lines, existing and under construction 97 Figure B-13 Transmission lines, existing and under construction 98 Figure B-14 Major rivers of Bhutan 99 Figure B-15 Topography of Bhutan 100 Figure B-16 Protected areas of Bhutan 101 Figure B-17 All identified project sites with studies at least at reconnaissance level 102 Figure C-1 Organizational chart for NEC 104 Figure C-2 Organizational chart for DHPS 109 Figure C-3 Organizational chart for DGPC 113 Figure C-4 Organizational chart for GNHC 115 Figure D-1 Sustainability profile 121 List of Tables Table 3-1 Existing and pipeline hydropower projects in Bhutan 8 Table 3-2 Hydropower projects in Bhutan—financing terms 12 v Table 3-3 Key environmental laws, policies, and instruments for hydropower development 16 Table 3-4 Standard weights for the subcriteria used in the MCA 20 Table 4-1 Typical environmental impacts of hydropower plants 22 Table 4-2 River length affected by hydropower project 23 Table 4-3 E-flow prescriptions in the EIA reports for projects 29 Table 4-4 Fish impact mitigation measures in the EIA reports for projects 30 Table 4-5 Afforestation measures in the EIA/EMP reports for select projects 31 Table 4-6 Typical social impacts from hydropower plants 38 Table 4-7 Land acquisition under different projects 38 Table 4-8 Impact on vulnerable groups 39 Table 4-9 Cultural assets affected by hydropower projects 40 Table 4-10 Social impacts to be assessed according to Bhutan guidelines for environmental assessments 43 Table 4-11 Impacts beyond land requirements mentioned in EIAs 43 Table 4-12 Impact of existing and planned transmission lines on protected areas and corridors 49 Table 4-13 Impacts of transmission lines mentioned in EIAs 50 Table 4-14 Mitigation measures included in the EMPs for select transmission line projects 52 Table 4-15 Expected power generation and subsidy allocations 56 Table 6-1 Topics included in the hydropower sustainability assessment protocol 71 Table A-1 Hydropower development scenarios 79 Table B-1 Affected river stretches and reservoir area by scenario 82 Table B-2 Free-flowing river stretches by scenario 82 Table B-3 Impacts of hydropower facilities on protected areas and corridors by scenario 83 Table B-4 Impacts of transmission lines on protected areas and corridors by scenario 83 Table B-5 Impacts of hydropower facilities on villages by scenario 84 Table B-6 Impacts of transmission lines on villages by scenario 84 Table B-7 Impacts of hydropower facilities on schools and health facilities by scenario 85 Table B-8 Impacts of hydropower facilities on cultural assets by scenario 85 Table D-1 Table of significant gaps 121 vi Acknowledgments T his report is the output of Economic and Sector Work (ESW) requested by the Royal Government of Bhutan, under the leadership of the Ministry of Economic Affairs (MoEA), the National Environment Commission (NEC) and the Gross National Happiness Commission (GNHC). Special gratitude is extended to the following officials: XX From the MoEA: Dasho Yeshi Wangdi (Secretary); Sonam P Wangdi (Director General, Department of Hydropower and Power Systems or DHPS); Karma P Dorji (Chief Engineer, DHPS); Karma Tshewang (Chief Engineer, DHPS); Tashi Pem (Executive Engineer, DHPS); Sonam Tshering (Deputy Executive Engineer, DHPS); Sonam Dorji (Engineer, DHPS); Deshen Wangmo (GIS Specialist, DHPS); and Wangmo Wangmo (GIS Specialist, DHPS). XX From the NEC Secretariat (NECS): Dasho Ugyen Tshewang (Secretary); Tenzin Khorlo (Chief Environment Officer); Tenzin Wangmo (Chief Environment Officer); and Tshering Dorji (Sr. Environment Officer). XX From the GNHC: Dasho Sonam Wangchuk (Secretary) and Wangchuk Namgay (Chief Program Officer). The team is especially grateful to the focal points for the study: Kinley Tenzin (Engineer, DHPS); Passang Dorji (Program Coordinator, GNHC); and Tshering Dendup (Assistant Environmental Officer, NECS). Contributions to the study were also provided by Druk Green Power Corporation, the Ministry of Home and Cultural Affairs, the Department of Hydro-Met Services, the Department of Renewable Energy, the Tourism Council of Bhutan, the Ministry of Agriculture and Forests, the National Land Commission, the Bhutan Trust Fund for Environmental Conservation, and WWF Bhutan. We would also like to acknowledge the Mangdechhu Hydroelectric Project Authority, under the leadership of A.K. Mishra (Managing Director) and Chencho Tshering (Joint Managing Director), for its support to the Hydropower Sustainability Assessment for Mangdechhu Hydroelectric Project (MHEP), which provided valuable insights to this work. We thank the team of accredited assessors: Dr. Helen Locher (lead); Dr. Bernt Rydgren; Dr. Jörg Hartmann; and Margaret Trias, who carried out the official assessment. This study was conducted by a World Bank team involving four Global Practices: Energy & Extractives; Water; Environment & Natural Resources; and Social, Urban, Rural & Resilience. The team was led by Rikard Liden (Sr. Hydropower Specialist); Rohit Mittal (Sr. Energy Specialist); and Urvashi Narain (Sr. Environmental Economist), with contributions from Pyush Dogra (Sr. Environmental Specialist); Jun Zeng (Sr. Social Development Specialist); Kimberly Lyon (Water Resources Management Analyst); Stefania Abakerli (Sr. Social Development Specialist); Juan vii Quintero (Consultant); Bandita Sijapati (Consultant); Vaideeswaran Sankaran (Consultant); and Alice Lin (Consultant). The team thanks Julia Bucknall (Practice Manager, South Asia Energy); Jie Tang (Program Leader—Bangladesh, Bhutan, Nepal); and Genevieve Boyreau (Resident Representative, Bhutan/ Sr. Economist) for their overall guidance and support. Constructive feedback was provided by the study’s peer reviewers: William Rex (Global Lead, Hydropower and Dams); Glenn Morgan (Advisor, OPSOR); Chaogang Wang (Sr. Social Development Specialist); Nicolas Sans (Hydropower Specialist); and Sanjay Srivastava (Lead Environmental Specialist). The team also thanks the entire Bhutan Country Office for their support in the course of this work. The Royal Government of Bhutan and the World Bank gratefully acknowledge the financial support provided for this activity by the South Asia Water Initiative (SAWI) and The Asia Sustainable and Alternative Energy Program (ASTAE). The opinions expressed in this report and any errors therein are the sole responsibility of the authors and should not be attributed to the individuals or institutions acknowledged above. viii Executive Summary Background and objective Hydropower and Power Systems (DHPS), the Development of Bhutan’s untapped hydropower National Environmental Commission (NEC), resources has the potential to spur economic and the Gross National Happiness Commission growth, rapidly increase export revenue, (GNHC), has conducted the study. The findings reduce poverty, and bring about sustained of this study are framed in the Bhutanese improvements in human development. The context and focus on recommendations that are Royal Government of Bhutan (RGoB) has, relevant for Bhutan. therefore, embarked on an ambitious plan to develop the renewable hydropower resources in the country. Large hydropower plants Main results and conclusions generating 1,606 MW are already operational, The study has found that the main impacts and new plants with an additional capacity of of hydropower development in Bhutan relate 3,658 MW are under construction and expected to aquatic biodiversity and are cumulative, to be commissioned by 2018/19. Agreements meaning that they are not of immediate concern have been reached on projects involving total but should get priority attention once the additional capacity of 1,520 MW, for which development of hydropower accelerates. In construction is expected to start in 2016/17. the long term, the potential negative impacts Furthermore, projects with a total additional on aquatic biodiversity probably pose the capacity of 7,412 MW are currently being biggest risk for hydropower development discussed with potential developers. According in the country. The geographical analysis to these plans, the RGoB will commission close conducted in this study indicates more rapid to 12,600 MW of new hydropower by the end impacts on river connectivity after the 10,000 of the next decade, becoming by far the highest MW program has been completed, but a lack hydropower producer per capita in the world. of data prevents a full understanding of how the cumulative impacts will increase, and how With its strong emphasis on preserving efficient the mitigation measures will be once the natural and cultural values of Bhutan, hydropower development goes beyond the the government has expressed concern short-term horizon. In addition, as with all large over the country’s capacity to address the infrastructure projects, this study has shown socioenvironmental impacts of the rapid that there will be significant temporary impacts hydropower scale-up that it seeks to undertake. during construction, which, considering the At the request of the RGoB, this study was very rapid and large expansion of hydropower initiated to provide guidance on how to address with many projects planned to be undertaken the potential environmental and social (E&S) in parallel, must be addressed in a countrywide impacts of the currently planned hydropower and coordinated manner. projects as well as the policy framework and institutional capacity needed to successfully On the other hand, the development of manage those impacts. The World Bank, in hydropower will yield significant economic close collaboration with the Department of benefits for Bhutan, spurring E&S benefits, ix Executive Summary Free Flowing River % Affected River Stretch (KM) 80% 1200 75% 1000 Existing & 70% 10,000 MW construction 800 65% program 60% 600 55% 400 50% Full development 200 45% 40% 0 0 5,000 10,000 15,000 20,000 25,000 0 5,000 10,000 15,000 20,000 25,000 Installed Hydropower (MW) Installed Hydropower (MW) Cumulative impacts on river connectivity seem to be slightly synergistic, meaning they may increase in an accelerated manner as more hydropower capacity is installed. The 10,000 MW Program refers to projects that are under construction or have been agreed with potential developers. The full development includes all hydropower projects for which at least prefeasibility or reconnaissance studies are available. if developed in a sustainable manner and if regulatory agencies and key stakeholders. the revenues are well managed. Bhutan has Moreover, it has led to uncoordinated geographic and demographic characteristics processes for the clearance of Environmental that are favorable to hydropower development. Impact Assessments (EIAs) and Environment Most of the planned projects are run-of-river Management Plans (EMPs), and for compliance projects that have small footprints on terrestrial monitoring. areas. Only seven planned potential projects are storage projects and, even in those cases, Because of the lack of institutional capacity, the steep valleys of Bhutan make the areal gaps exist in the present management of extension of the inundated areas relatively small. the environmental impacts of hydropower Furthermore, the stronger the institutional development compared with international good capacity of Bhutan to mitigate negative impacts practice: and to distribute and communicate benefits, the more hydropower can be developed. XX Early planning on a national scale, including strategic assessments of impacts and This study has identified a number of gaps in mitigation measures, has not been done since the management of E&S impacts and ranked 2004 and has not considered cumulative them according to relevance for Bhutan. There is impacts; good awareness of E&S management issues for XX Lack of guidelines for key areas, such as hydropower, but more attention has been given assessment of downstream flows and a code to capacity development related to technical of practice on environmental management aspects rather than E&S aspects: human and for contractors; financial resources are not being channeled toward the E&S aspects to the same extent XX Lack of baseline studies to inform the EIA that they are being channeled toward technical and EMP, especially with data on aquatic capacity development, especially within the biodiversity; government institutions. This has resulted in a XX Weaknesses in the implementation of EIAs lack of manpower, resources, and skills among and in the compliance with EMPs, resulting x Managing Environmental and Social Impacts of Hydropower in Bhutan tic ua e aq acts iv im p lat mu sity Cu diver bio Potential major impacts in Bhutan s flow m rea st s wn p act Do acts n im imp tio ruc nst ura l Co ult o nc cts pes cts pa pa Im dsca di m lan o ho eli Liv Level of gap compared to international good practice Identified potential impacts that are not being fully addressed, compared with international good practice. from inadequate quality assurance and improving technical capacity in parallel, monitoring. public criticism could increase because of E&S management concerns. Failure to meet the This study has also identified a number of gaps rapidly increasing development of hydropower in managing the social impacts of hydropower. with a corresponding increase in capacity to There is a need to update the compensation manage the E&S impacts will lead to more rates for land acquisition (which have not management gaps, and thus, the risk of more been revised since 2009), and to strengthen negative impacts. On the other hand, capacity the EIA process on social aspects, including building in E&S management could also the guidelines to fully assess the impacts of help reduce delays in the development of the hydropower development on livelihoods. In country’s hydropower—entailing cost savings addition, the impacts on cultural assets and and earlier revenue streams that would probably landscapes are often not assessed. While these outweigh, by far, the cost of the capacity gaps may not be directly responsible for major building. impacts, given the country’s favorable geography and associated small terrestrial footprints of In conclusion, despite due awareness and a good hydropower projects, they do indicate a pattern regulatory framework for managing the E&S of insufficient implementation/enforcement impacts of hydropower in Bhutan, challenges of the regulatory framework and prevent remain in the upstream planning and in the Bhutan’s management of the social impacts of implementation of the assessment and mitigation hydropower from fully meeting international of impacts, mainly because of the lack of capacity good practice. among key government institutions to ensure quality and enforce good practices. Addressing If hydropower development proceeds too the capacity constraints, and providing key quickly in Bhutan, with a narrow focus on institutions with the tools, structures, and xi Executive Summary skills necessary for proper E&S management of with this activity is the lack of assessment and hydropower would benefit the sustainability of mitigation of the cumulative impacts on aquatic Bhutan’s natural and cultural values, as well as its biodiversity. The main subactivities to develop hydropower and economic development. the strategic roadmap are: XX Update the 2004 Hydropower Master Plan, Recommendations focusing on critically revising technical Recommendations to improve management solutions and cost estimates for future of the E&S impacts of hydropower have been hydropower sites; guided by the management gaps identified XX Conduct a financial and market study and the relevance of the potential impacts that focused on national and export demand the gaps are associated with in the Bhutanese forecasts for electricity; context. The recommendations not only focus on filling the gaps, but also on improving the XX Conduct countrywide, basin-level E&S efficiency of E&S impact management. The studies focused on cumulative impacts; recommendations below are listed in random XX Conduct an optimization study to balance order and complement each other. the trade-offs at the national level between hydropower development, impacts on Develop a strategic roadmap for the untapped natural and cultural values, and economic hydropower development in Bhutan through development. a consultative process. The output should be a realistic action plan for implementation of Develop sustainability guidelines for hydropower projects, based on the country’s preparation, construction, and operation of macroeconomic and socio-environmental hydropower infrastructure. The output should absorptive capacity. The main gap addressed RECOMMENDED MEASURES ROLES FOR KEY STAKEHOLDERS DHPS DGPC/SPVs —Policy updates —Hydro Policy formulation —Implementation of —Strategic roadmap for future —Upstream planning preparation studies, hydropower projects —Facilitation and QA for permit applications —Improved guidelines for preparation studies and —Supervision of construction hydropower development E&S permits activities —Baseline studies on NEC —Operators biodiversity and cultural —E&S Policy formulation DEO/DA values —E&S permit clearance —E&S compliance monitoring —Capacity building for —E&S compliance clearance process MoAF —Capacity building for GNHC —Implementation of compliance and audits —Coordination of local mitigation measures, such livelihood programs as afforestation programs and biodiversity offsets The recommendations for improved management of the E&S impacts of hydropower are directed toward the specific roles of the key stakeholders involved in the country’s hydropower development: DHPS (Department of Hydropower and Power Systems), NEC (National Environment Commission), GNHC (Gross National Happiness Commission), DGPC/SPVs (Druk Green Power Corporation/Special Purpose Vehicles), DEOs/DA (Dzongkhag Environmental Officers/Dzongkhag Administration), and MoAF (Ministry of Agriculture of Forests). xii Managing Environmental and Social Impacts of Hydropower in Bhutan be a comprehensive set of national guidelines, cultural heritage and landscapes; the impacts on which will help mainstream and ensure the livelihoods (as measured through Social Impact use of uniform practices for hydropower Assessments); grievance redressal mechanisms development across Bhutan. These guidelines (GRMs); community development; and should address the identified lack of assessment communication and disclosure of documents. and mitigation of the cumulative impacts on Essential to the new sustainability guidelines aquatic biodiversity, as well as the current gaps are clear roles and responsibilities for the E&S in EIA guidelines and weaknesses in EIA/ management of hydropower. EMP implementation (e.g., the impacts on downstream flows, livelihoods, and cultural Build capacity to improve the clearance landscapes from hydropower development in process for environmental permits for general, and the specific impacts associated with hydropower development, focusing on construction work). The key gaps in managing regulatory agencies and key stakeholders. the impacts of hydropower most relevant to Adequate and timely preparation will allow Bhutan that should be specifically addressed in for the early identification of E&S impacts the new guidelines are: and for appropriate mitigation measures to be proposed. A predictable regulatory process will XX Cumulative impacts on aquatic biodiversity: save project managers time in the preparation The guidelines should specify how individual of hydropower projects and provide developers projects should assess the likely impacts on with more reliable time estimates. This activity aquatic biodiversity and how they should should mainly address the identified gaps monitor the impacts and effectiveness of in EIA guidelines and weaknesses in EIA/ mitigation measures; EMP implementation. It should focus on the following three subactivities: XX Impacts on downstream flows: The guidelines should specify how individual projects should XX Improving NEC’s regulatory role: Improving determine appropriate downstream flow the organization of NEC, focusing on releases, as well as what individual projects the need to separate regulatory duties should do to enable monitoring of their from the responsibility for conducting compliance with those guidelines; studies; the need for hydropower-specific XX Code of Practice (Environmental subdepartments or staff; and the need to Specifications): The guidelines should bring in more social development expertise. propose environmental specifications for In addition, a comprehensive staff training management during construction, which and skills enhancement program should should be included in the contracts for the be introduced, focused on evaluating main contractors of hydropower projects; preparatory studies for hydropower; XX Cumulative impacts: The guidelines should XX Improving the DHPS’s facilitation and clarify how individual projects should assess preparation roles: Improving the DHPS the cumulative impacts in general. organization, focusing on the two specific roles of the DHPS in the clearance process: In addition, the guidelines will provide an as a quality assurance official and as a opportunity to agree on the appropriate extent facilitator of the process. A comprehensive of requirements for other gaps in management, training program for DHPS staff should even though the associated impacts are be implemented, covering all aspects of relatively modest on a national scale. Among sustainable hydropower development as well these missing elements are the impacts on as procurement and supervision of large xiii Executive Summary consultancies for the preparation of Detailed Ministry of Home and Cultural Affairs Project Reports (DPRs) and E&S Impact (MoHCA), followed by further data Assessments (ESIAs); collection by cultural mapping experts in a variety of formats—graphs, aerial XX Improving coordination and streamlining the photographs, satellite-produced images, clearance process: Improving coordination statistical databases, etc. of hydropower planning and preparation, and streamlining the E&S clearance process The level of detail of the baseline studies for new projects. One possible solution for should take into account the amount of the lack of coordination is to form a cross- resources available. The geographical focus of sectoral committee that meets regularly measurement campaigns should be informed to create a general understanding of the by the locations of hydropower development hydropower process and allow cross-sectoral in the near-term pipeline and should, initially, issues and opportunities to be discussed. prioritize reconnaissance over detail, to get an overview. It is recommended that training and skills enhancement be based on the Hydropower Develop capacity for improving compliance Sustainability Assessment Protocol, which and conduct independent monitoring. provides a balanced set of topics for hydropower The outputs should be improved EMP planning and development. The Protocol implementation and objective documentation should be used as a framework for the training of the impacts, both positive and negative, of program, which can be supplemented with hydropower development in Bhutan. The main topics that are especially important in the subactivities to be undertaken are: Bhutanese context. XX Improving the day-to-day supervision by Conduct targeted baseline studies to fill in Dzongkhag Environmental Officers (DEOs) data gaps and build up national references and NEC: Improving the relevant procedures for key parameters relevant to hydropower. for NEC and DEOs, focusing on the The outputs should be countrywide inventories reporting mechanisms and streamlining the and analyses, which impact assessments can compliance monitoring process. use to identify local impacts and determine their relevance. This activity should mainly XX Developing guidelines for independent surveys: address the identified gaps in assessment of Developing guidelines and templates for at the cumulative impacts on aquatic biodiversity least three major impact evaluations—before and cultural landscape. The following two construction starts, during construction, and comprehensive activities should be prioritized: after commissioning of the project. These surveys, which should be the responsibility of XX Mapping of aquatic biodiversity: Creating a the developers, should focus on the indirect common, georeferenced database drawing impacts (e.g., livelihood parameters for the on existing work (fish assessments have been affected people and biodiversity parameters). carried out by the WWF and NCA), followed XX Creating capacity in the DHPS/Druk Green by a targeted measurement campaign to fill in Power Corporation (DGPC) to carry out the most crucial gaps. internal audits using the new sustainability XX Mapping of cultural values and landscapes: guidelines: The new guidelines should be Finalizing the preliminary, interactive used as the basis for developing internal audit cultural map of Bhutan, prepared by the procedures for E&S aspects. It is important xiv Managing Environmental and Social Impacts of Hydropower in Bhutan to build this audit capacity within the stakeholders involved in Bhutan’s hydropower DHPS and DGPC because they are directly development. It is therefore wise to be practical: involved in hydropower projects under all start with the low-hanging fruits, and aim for a development models in Bhutan. stepwise, gradual increase in capacity to manage the E&S impacts of hydropower. Developing XX Making extended use of an international the necessary tools, such as guidelines and Panel of Experts (PoE): The use of a PoE procedures for internal audits, can be done should become standard practice in the relatively quickly and will automatically foster country’s new hydropower projects. The capacity building of the institutions involved. As primary function of the PoE is not to check resources become available, a broader program compliance but to advise the developer on to build institutional capacity and national improved methods to address the often databases should be developed, to enable more complex and case-specific challenges of strategic plans to be formulated for the future hydropower projects. development of hydropower in the country. Update the Bhutan Hydropower Policy The responsibility for implementing the and the inputs to other relevant sector recommended measures to improve the policies. The DHPS is currently updating E&S management of hydropower lies mainly the Hydropower Policy. The new policy with government institutions: the DHPS, as will define the overall direction for the a facilitator for planning and preparation of recommended strategic roadmap and hydropower projects, and NEC, as the regulator sustainability guidelines, and address them for all stages of hydropower development. in turn. Furthermore, the DHPS should work However, collaboration with other key as an active stakeholder to influence policies stakeholders such as DGPC, GNHC, DEOs/ that other ministries are responsible for, most Dzongkhag administration, the Ministry of importantly regarding the compensation Agriculture and Forests (MoAF), the Tourism levels for land acquisitions. Council of Bhutan (TCB), and MoHCA is crucial. These stakeholders can provide sector Fully implementing the above recommendations knowledge and contribute to the consultative will not be easy and require many resources approach, thereby ensuring broad ownership of and a strong commitment on the part of the key the tools and strategic plans. TOOLS INSTITUTIONAL CAPACITY AND DATA Updated Policy Sustainability Improved STRATEGIC PLANS Guidelines organizations and skills National Strategic Audit and Surveys Roadmap including National baseline assessment of studies cumulative impacts It is recommended that activities be implemented to improve the E&S management of hydropower in a stepwise manner—first creating tools for better management, next building institutional capacity and data, and finally consolidating knowledge and information into strategic plans. xv Acronyms and Abbreviations ADB Asian Development Bank BEA Bhutan Electricity Authority BHPCL Basochhu Hydro Power Corporation Limited BPC Bhutan Power Corporation BWP Bhutan Water Partnership CAT Catchment Area Treatment CDM Clean Development Mechanism CEA Cumulative Environmental Assessment CO2e Carbon Dioxide Equivalent CPSU Central Public Sector Undertaking CSR Corporate Social Responsibility DA Dzongkhag Administration DEO Dzongkhag Environmental Officer DFPS Department of Forests and Park Services DGPC Druk Green Power Corporation DHI Druk Holding and Investments DHMS Department of Hydro-Met Services DHPS Department of Hydropower and Power Systems DPR Detailed Project Report DRE Department of Renewable Energy E&S Environmental and Social EA Environmental Assessment EAAB Environmental Assessment Advisory Board e-flows Environmental Flows EIA Environmental Impact Assessment EMP Environmental Management Plan ESIA Environmental and Social Impact Assessment FAO Food and Agriculture Organization of the United Nations GDP Gross Domestic Product GHG Greenhouse Gas GLOF Glacial Lake Outburst Flood GNH Gross National Happiness GNHC Gross National Happiness Commission GoI Government of India GRM Grievance Redressal Mechanism HEP Hydroelectric Project IG Inter-Governmental IWRM Integrated Water Resources Management JV Joint Venture xvi kWh Kilo Watt Hour MCA Multi-Criteria Analysis MHEP Mangdechhu Hydroelectric Project MHPA Mangdechhu Hydroelectric Project Authority MoAF Ministry of Agriculture and Forests MoEA Ministry of Economic Affairs MoF Ministry of Finance MoHCA Ministry of Home and Cultural Affairs MoLHR Ministry of Labour and Human Resources MoWHS Ministry of Works and Human Settlement Msl Mean Sea Level MW Mega Watt NEC National Environment Commission NECS National Environment Commission Secretariat NHPC National Hydroelectric Power Corporation (India) NHPP Nikachhu Hydropower Project NLC National Land Commission NOC No Objection Certificate NPPF National Pension and Provident Fund O&M Operations and Maintenance OCR Ordinary Capital Resource OD Organizational Development PoE Panel of Experts PPP Public-Private Partnership PSMP Power Sector Master Plan R&R Resettlement and Rehabilitation RAP Resettlement Action Plan RCSC Royal Civil Services Commission RE Renewable Energy RGoB Royal Government of Bhutan RoW Right of Way RSPN Royal Society for the Protection of Nature RZB Raiffeisen Zentralbank Österreich AG SBI State Bank of India SJVN Satluj Jal Vidyut Nigam Ltd. SPV Special Purpose Vehicle T&D Transmission and Distribution TCB Tourism Council of Bhutan THyE Tangsibji Hydro Energy Limited TOR Terms of Reference VEC Valued Ecosystem Components WWF World Wildlife Fund (for Nature) xvii Chapter 1 Introduction 1.1  Background and objective capacity of the national economy. This plan was to include undertaking a comprehensive While Bhutan is predominantly an agriculture- study of the country’s capacity to deal with based society (the agriculture sector employs the macroeconomic and socioenvironmental more than 60 percent of the population), impacts of the hydropower projects planned for tourism and hydropower are the main drivers development in the medium to long term. Based of the economy and principal sources of on this plan, the Royal Government of Bhutan foreign exchange. The development of Bhutan’s (RGoB) will be able to define a long-term untapped hydropower resources has the strategy for the development of hydropower. potential to spur economic growth, rapidly increase export revenue, reduce poverty, and While a separate study on the macroeconomic bring about sustained improvements in human impacts of the construction of hydropower development. Driven by investments in the infrastructure, at the request of RGoB, has already hydropower sector, the country has grown at an been completed,1 this new study, “Managing average rate of 7 percent per year over the last Environmental and Social Impacts of Hydropower decade while poverty has declined. in Bhutan,” aims to look at the following: An acceleration of hydropower development, XX Environmental and social (E&S) impacts of however, creates challenges such as how to hydropower infrastructure planned under maintain macroeconomic stability and how to the 10,000 MW development initiative, and ensure the expansion is environmentally and beyond; socially sustainable. Following deliberation by the Lhengye Zhungtsog (Council of Ministers) in XX Measures necessary for mitigation/ its 60th session, held on December 30, 2014, on minimization of the adverse impacts of “Recommendation on way forward for 10,000 hydropower development as well as advice on MW Hydropower Development,” the Ministry the timing of those measures. of Economic Affairs (MoEA) was asked to prepare a realistic plan for implementation of 1 Bhutan—Public Finance Reforms towards Economic hydropower projects based on the absorptive Self-Reliance, World Bank, Final: November, 2015. Credit to come? 1 Chapter 1 Introduction 1.2 Methodology the Department of Hydropower and Power Systems (DHPS), the National Environment This report summarizes the findings of a Commission (NEC), the Gross National study carried out by the World Bank, with the Happiness Commission (GNHC), and the support of key stakeholders from the RGoB, to Druk Green Power Corporation (DGPC). assess the current and potential E&S impacts The assessment identifies both technical and of hydropower in Bhutan, as well as the policy capacity constraints and opportunities for framework and institutional capacity needed to simplification, role refinement, and training. successfully manage those impacts. It follows a rapid assessment, carried out during the second XX An analysis of the existing policies, half of 2015, to be able to give preliminary guidelines, and practices against international recommendations in time for the 16th Session good practice and experience. This analysis of the National Council, held in November/ was based on interviews, document December 2015. This final report is based on reviews (including ESIAs), and site visits to more extensive data gathering and analyses, and hydropower projects, both operating and provides recommendations for the RGoB on the under construction. next steps to improve the sustainability of its XX An assessment of one hydropower project hydropower development. (the 720 MW Mangdechhu Hydroelectric Project) by third-party accredited assessors, The study is based on the following components: using the Hydropower Sustainability Assessment Protocol. XX A geographical analysis of key potential impacts of hydropower on the natural The study focused on E&S impacts, including environment and communities. This analysis occupational health and safety. Dam safety, was done from the national perspective which is part of the World Bank safeguards, was to provide estimates of potential impacts not considered. associated with four cumulative hydropower development scenarios: (1) existing projects; The findings and recommendations of this (2) projects under construction; (3) a revised final report were presented to a wide group of 10,000 MW program; and (4) other potential stakeholders at a meeting held in Thimphu, sites that are still in the reconnaissance or April 12–13, 2016 and were further refined prefeasibility phase. based on stakeholder input. The team thanks the XX An institutional assessment, based on counterparts for their support and input over interviews with key stakeholders, notably the course of this study. 2 Chapter 2 Geographic Context N estled in the eastern Himalayas, the Over 72 percent of the land is under vegetation Kingdom of Bhutan is a mountainous, cover, and forests are an important natural landlocked country, situated between resource for the country. The Constitution of India and China. Its total area is approximately Bhutan stipulates that the country maintain a 38,394 km2. Drained by the watershed of the “minimum of 60 percent of the total land under Brahmaputra river basin, this small country forest cover for all times to come.” Broadleaf (with a population of about 750,000) has and mixed conifer forests are the major forest considerable hydropower generation potential. types. Almost 60 percent of the plant species From east to west, the main river systems are the found in the eastern Himalayan region are Manas, Punatsangchhu/Sankosh, Wangchhu/ present in Bhutan. Bhutan has about 300 species Raidak, and the Amochhu/Torsa basins. Most of medicinal plants and about 46 species of rivers begin in Bhutan, while the Kurichhu, rhododendrons. Gongri, and Amochhu headwaters are in Tibet. All rivers in Bhutan flow into India (Figure 2-1). A wide range of rare and endangered animals live in Bhutan’s forests, and the country has been Bhutan is a mountainous country (Figure 2-2). classified as one of the last biodiversity hotspots Of the total land area, about 16,610 km2 lies in the world. Some high-altitude species are 3,000 meters above sea level. Altitudes vary the snow leopard and Bengal tiger, which are from 100 meters above mean sea level (msl) in found at altitudes ranging from 3,000 to 4,000 the southern subtropical region to 7,550 msl in meters; the red panda; gorals and langurs; the the Northern alpine region. Glaciers cover about Himalayan black bear; sambars; wild pigs; the 900 km2, and more than 2,500 glacial lakes barking deer; the blue sheep; and the musk deer. have been identified. These glaciers and lakes Tropical forests species include the clouded provide an important buffer for sustained river leopard, the one-horned rhinoceros, elephants, flows during low rainfall years but also comprise water buffaloes, swamp deer, and the golden potential hazards to hydraulic infrastructure langur—a monkey species that is unique to through Glacial Lake Outburst Floods (GLOFs). Bhutan. Credit to come? 3 Chapter 2 Geographic Context Figure 2-1  Major rivers of Bhutan Figure 2-2  Topography of Bhutan 4 Managing Environmental and Social Impacts of Hydropower in Bhutan Bhutan also has a great variety of bird species because the latest survey was conducted only and is recognized as the hub of 221 global during the monsoon season and excluded endemic bird areas. The recorded number of large areas of the country. Most species belong bird species is over 670. Bhutan is also home to the Cyprinid (carp) and Bagrid (catfish) to about 16 bird species that are endangered families. The riverine ichthyofauna comprises worldwide. These include the white-bellied one endemic species (the Khaling torrent heron, the Pallas’s fish eagle and Blyth’s catfish or Parachiloglanis bhutanensis) and kingfisher, to name a few. The Phobjikha valley one exotic species (the brown trout or Salmo in Wangdue Phodrang and Bomdeling in Trashi trutta). The brown trout was first introduced Yangtse are two especially important locations in Bhutan in 1930 and established viable and of the endangered black-necked cranes. self-replenishing stocks in a number of streams and rivers, including Haa, Thimphu, Paro, and The government has designated nearly half of its some tributaries of the Sankosh and Manas land as protected area to help preserve the rich rivers, that is, Mo, Ho, Mangdi, and Chamkhar. biodiversity in its flora and fauna (Figure 2-3). The stocking of brown trout was discontinued in 1983 because it was believed that brown The rivers and lakes of Bhutan have trout was preying on, and competing with, the predominantly cold water and torrential stream indigenous snow trout (Schizothorax progastus). fauna, except in the foothills and plains. The The species list includes at least four threatened most recent study undertaken by the College species, of which the Golden Mahseer (Tor of Natural Resources (CNR), Bhutan, and Saint putitora), is categorized as Endangered on the Louis University, United States, suggests that the IUCN Red list. Tor putitora is also a totally fish fauna comprise at least 93 fish species. It protected species in the Forest and Nature is expected that more species will be identified Conservation Act of Bhutan (1995). Figure 2-3  Protected areas of Bhutan 5 Chapter 3 Hydropower Development in Bhutan 3.1 Hydropower Assuming all of these planned projects will be commissioned by 2026, Bhutan will by then have Development plans added an average of 1,250 MW per year in the The economy of Bhutan is significantly years to come, an impressive accomplishment dependent on the development of its as global development is around 30,000 MW hydropower resources. With large energy per year. With more than 14,000 MW installed demand in neighboring India, the strategy of capacity by the year 2026, Bhutan will be by far the government is to develop its hydropower the largest hydropower producer per capita in resources to earn export revenues in surplus the world. of domestic needs. The RGoB, therefore, aims to develop hydropower projects in an In the long term, the Power System Master Plan accelerated manner to have installed capacity (PSMP), last updated in 2004, estimates the of at least 10,000 MW by 2020. The current overall hydropower potential at 30,000 MW. To plans show that this ambitious goal has resulted date, the RGoB has identified individual projects in significant acceleration of new hydropower with a total projected installed capacity of more construction, but the goal will not be fully than 25,000 MW, of which some 21,000 MW met (Table 3-1). Projects with a total capacity have already been constructed, initiated, or of 1,606 MW2 are already operational, and an studied in more detail (Figure 3-1). A subset of additional 3,658 MW are under construction, projects, the “10,000 MW Program,” envisaged and scheduled to be commissioned by 2018/19. in the Economic Development Policy (2010) and Agreements have been reached on additional the 11th Five-Year Plan (2013–18), includes those capacity of 1,520 MW; these projects are projects that are under construction as well as expected to start construction in 2016/17. Lastly, projects with Detailed Project Reports (DPRs) projects with a total capacity of 7,412 MW finalized, and agreed or under discussion are currently under discussion with potential with potential developers. The complete list of developers (Appendix A). identified projects is presented in Appendix A. 2 Includes only large hydropower projects (>25 MW). Credit to come? 7 Chapter 3 Hydropower Development in Bhutan Table 3-1  Existing and pipeline hydropower projects in Bhutan Project name Construction start Commissioning year Capacity (MW) Commissioned Tala 1997 2006/2007 1,020 Chukha 1974 1986/1988 336 Dagachhu 2009 2015 126 Basochhu 1997 2002/2005 64 Kurichhu 1995 2001/2002 60 Subtotal 1,606 Under construction Punatsangchhu I 2008 2019 1,200 Punatsangchhu II 2010 2018/2019 1,020 Mangdechhu 2010 2018 720 Nikachu 2014 2019 118 Kholongchhu 2015 2022 600 Subtotal 3,658 Near-term pipeline (agreed with India, April 2014) Bunakha 2016/2017 2022/2023 180 Chamkharchhu-I 2016 2025 770 Wangchhu 2016/2017 2024/2025 570 Subtotal 1,520 Source: Ministry of Economic Affairs, Department of Hydropower and Power Systems. Figure 3-1  Cumulative development of hydropower in Bhutan3 Cumulative Hydropower Development (MW) 21,191 14,196 5,264 1,606 Existing + Under + 10,000 MW + Pre-feasibility/ Construction Program Plus Reconnaissance 3 3 The 10,000 MW program is denoted with ‘Plus’ in all figures and tables to clarify that the program used in this study is slightly changed from its original set of projects based on information from DHPS. The program is still widely referred to as the 10,000 MW program. The projects included in the 10,000 MW Program Plus used for analyses in this study are detailed in Appendix 1. 8 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure 3-2  Identified project sites with studies in at least reconnaissance phase The hydropower sites together cover all the projects with a power density above 4 W/m2 major river basins in Bhutan (Figure 3-2). eligible. The majority of sites, especially the projects under the 10,000 MW Program, are located in Hydropower projects in Bhutan are being the southern part of the country while those implemented under three different models: under prefeasibility and reconnaissance studies (referred to as “Selected Potential Sites” in the XX The Inter-Governmental (IG) model: For the maps) are spread across the country, including development of the country’s hydropower areas that lie more to the north. resources, the RGoB has signed a strategic bilateral assistance cooperation agreement with Most of the planned projects in Bhutan are the Government of India (GoI). Under this run-of-river projects. Only seven projects are model, the GoI is responsible for mobilizing envisaged as storage projects (Figure 3-3). Even funding and implementing the project until the when developed as storage projects (defined as time of commissioning. The project’s ownership having regulating capacity), the steep valleys is at that time transferred to the RGoB, with a of Bhutan make the areal extension of the certain amount of debt to be repaid to the GoI. inundated areas relatively small. The power The GoI buys all the electricity generated in density (= relation between installed capacity surplus of domestic consumption, at a price and inundated area) for all planned storage determined on a cost-plus basis, guaranteeing projects in Bhutan is higher than 20 W/m2. By the Bhutanese government a net return of 15 way of comparison, the Clean Development percent above debt repayment and the project’s Mechanism (CDM) mechanism considers all operating cost. RGoB has developed the 60 MW 9 Chapter 3 Hydropower Development in Bhutan Figure 3-3  Identified storage projects Note: HEP = Hydroelectric project. Kurichhu, 336 MW Chukha, and 1,020 MW and a loan4 of 49.0 percent while the rest of the Tala hydropower projects in the past under this financing was arranged by the RGoB. arrangement. All three projects were supported XX The Joint-Venture (JV) model: This is the financially through a 60 percent grant and model that was recently agreed by the RGoB a 40 percent loan from the GoI. The terms and GoI, under which four projects with of the loans are usually a 10 percent interest rate and a 12- to 15-year repayment period. 4 A Subsidiary Loan Agreement was signed between Hydropower debt is directly serviced by DGPC, the Ministry of Finance (MoF) and the then Basochhu the government holding of publicly owned Hydro Power Corporation Limited (BHPCL) hydropower projects through the Ministry of to transfer the loan availed by the MoF for the construction of the project to BHPCL. In accordance Finance (MoF). In the case of the 1,200 MW with the agreement, BHPCL is required to pay the Punatsangchhu I, 1,020 MW Punatsangchhu MoF a consolidated annual fixed interest rate of II and 720 MW Mangdechhu projects, the 6 percent on the loan amount and outstanding from financing arrangements were different, with time to time. BHPCL shall repay the principal amount of the loan in 20 years, in equal annual installments the GoI providing financing with less grant in the case of Upper stage, while BHPCL shall pay the portions (Table 3-2). The 64 MW Basochhu MoF, RGoB the principal loan amount in thirty equal hydropower project was developed by the consecutive semi-annual repayments in the case of the Lower stage of the project. The loan is denominated RGoB, using a similar model, but with support in Ngultrum and any foreign exchange fluctuation from the government of Austria. The Austrian risk of the original loan between the Borrower and government provided a grant of 37.3 percent Lender shall be borne by the MoF, RGoB. 10 Managing Environmental and Social Impacts of Hydropower in Bhutan a total capacity of 2,120 MW have already Table 3-2 lists the development models and been identified and for which a framework financing terms for the existing projects and agreement has been signed. This includes the for projects that currently have agreements in 600 MW Kholongchhu project,5 the 180 MW place. As indicated above, the three projects Bunakha project, the 570 MW Wangchhu with general agreements—Wangchhu, Bunakha, project, and the 770 MW Chamkharchhu-I and Chamkharchhu-I—are planned to be project. Both Kholongchhu and Wangchhu developed as JVs between DGPC and Indian have been allotted to Satluj Jal Vidyut Nigam partners Satluj Jal Vidyut Nigam Ltd. (SJVN), Ltd (SJVN), while the National Hydroelectric THDC, and NHPC, respectively. The projects Power Corporation (NHPC) and THDC under discussion, Sankosh, Kuri-Gongri and India have been allotted Chamkharchhu-I Amochhu, are envisaged as IG projects. and Bunakha, respectively. Under this model, the projects are being developed As India is the main market for the hydropower and commissioned under a Joint venture generated in Bhutan, a comprehensive of DGPC6 of Bhutan and India’s Central transmission network is required to transmit Public Sector Undertakings (CPSUs) under power from Bhutan to India. The expected a 50/50 percent ownership structure, with power grid is shown in Figure 3-4. 70 percent of the project costs being raised as debt by the JVs from the market. The CPSUs will contribute their equity share from internal 3.2 Institutions resources, while grants will be provided by the The main stakeholders in the energy sector GoI to finance Bhutanese equity participation are shown in Figure 3-5. The principal RGoB in these projects. Surplus power from these administrator for hydropower development is projects will be exported to India. the Ministry of Economic Affairs (MoEA). XX The Public-Private Partnership (PPP) model: Under the MoEA, the Department of So far, two PPP projects have been developed Hydropower and Power Systems (DHPS) with the support of the Asian Development overlooks the hydropower sector. The DHPS is Bank (ADB) and the government of Austria. responsible for the planning and development This includes the 126 MW Dagachhu and of large hydropower infrastructure (>25 MW), 118 MW Nikachhu (under implementation) including transmission lines. Some of the hydropower projects. The Nikachhu project main functions of the department are to will be built and managed by Tangsibji Hydro govern and facilitate the optimal use of water Energy Limited (THyE), a special purpose resources for the development of hydropower; company owned by DGPC. DGPC intends to ensure that hydropower exports generate sell 26 percent of THyE to a foreign private maximum revenue for the nation; and provide company. The funding comes from ADB (in an enabling environment for participation the form of grant, loan, and equity), DGPC, of public and private sector actors in the and other investors. THyE has already signed development of hydropower resources. a 25-year power purchase agreement with the Power Trading Corporation of India, India’s Besides the institutions directly involved in the largest power trading company. energy sector, the GNHC, the National Land Commission (NLC), and the Ministry of Home 5 Shareholders’ agreement between DGPC and SJVN and Cultural Affairs (MoHCA) are important signed in September 2014, and JV registered in June stakeholders in the development of hydropower. 2015. 6 The government holding for publicly owned hydropower projects. 11 Chapter 3 Hydropower Development in Bhutan Table 3-2  Hydropower projects in Bhutan—financing terms Project name Development Financing arrangements (capacity) model Grant Loan Equity Tala IG 60% by the GoI 40% by GoI (at a simple — (1,020 MW) interest rate of 9% per year and repayable in 12 equated annual installments) Chukha IG 60% by the GoI 40% by GoI (at an interest rate — (336 MW) of 5% per year and repayable over a period of 15 years in 30 installments) Dagachhu PPP ADB; RZB, Austria; National DGPC (59%), Tata Power (126 MW) Pension and Provident Fund or Company Limited of India NPPF of Bhutan (26%) and the NPPF of Bhutan (15%) Basochhu Austrian 37.3% 49% by Austrian Government 13.7% (by RGoB) (64 MW) government Kurichhu IG 60% by the GoI 40% by GoI (at a simple — (60 MW) interest rate of 10.75% and repayable over a period of 12 years) Punatsangchhu I IG 40% by the GoI 60% by GoI (at an interest — (1,200 MW) rate of 10% per year and repayable in 12 equated annual installments) Punatsangchhu II IG 30% by the GoI 70% by GoI (at an interest of — (1,020 MW) 10% per year and repayable in 30 equated semi-annual installments) Mangdechhu IG 30% by the GoI 70% by GoI (at an interest of — (720 MW) 10% per year and repayable in 30 equated semi-annual installments) Nikachhu PPP US$ 25.25 65% loan: US$70 million from 35% equity: US$50.50 (118 MW) million by ADB ADB’s ordinary capital resource million, of which 50% is to part finance (OCR) with 3% interest, and provided as a grant and equity another US$25.25 million loan the rest as a loan from from the Asian Development ADB. The remaining Fund with 1% interest during equity share would be the grace period of eight funded by DGPC years; INR 2.5 billion from State Bank of India (SBI) and INR 1.03 billion from EXIM Bank Kholongchhu JV 15% by the GoI 70% from commercial sources 30% (both JV partners (600 MW) (with SJVN) (to fund equity bring in 50% equity). portion of JV Equity share of JV partner partner from from Bhutan funded by Bhutan) grant from the GoI Source: DHPS and Internet. 12 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure 3-4  Existing and planned transmission corridors Figure 3-5  Primary stakeholders in the energy sector Ministries Regulatory Authorities Power Companies Ministry of Economic Affairs Druk Green Power National Environment • Dept. of Renewable Cor poration–large Commission Energy hydropower • Dept. of Hydropower & Power Systems • Dept. of Hydro-Met Bhutan Power Services Bhutan Electricity Cor poration–small • Dept. of Geology & Authority hydro, T&D, retail Mines (coal) • Dept. of Trade (impor t of oil production) Ministr y of Agriculture and Forests • Dept. of Forests and Park Services (biomass) 13 Chapter 3 Hydropower Development in Bhutan The Department of Renewable Energy (DRE), same. It is also responsible for granting under the MoEA, aims to promote all forms of environmental clearances. In accordance with available and viable renewable energy resources the environmental clearance regulations, the and technologies, other than large hydropower, NEC Secretariat may appoint an Environmental while actively embracing energy conservation Assessment Advisory Board to provide technical and efficiency measures. The department is advice on the environmental assessment and the responsible for the development of all renewable environmental terms of reference (TOR) for a energy (RE) systems under 25 MW (including project. hydropower). For hydropower projects, project proponents The Department of Hydro-Met Services are required to submit an application form (DHMS), also under the MoEA, is responsible for environmental clearance with relevant for hydrological and meteorological data No Objection Certificates (NOC) during gathering and serves as the technical agency the planning and design of the projects. On responsible for providing early warning of submission of the requisite documents, NEC hydrometeorological hazards. The objective of determines if an environmental assessment the department is to observe and understand (EA) is required and a TOR is finalized. Based weather, climate, and hydrology to provide on the EA, clearance may or may not be issued. appropriate meteorological, hydrological, flood, The proponent is required to annually submit glaciers, and related services in the country. monitoring reports to NEC. The Ministry of Agriculture and Forests Other agencies from which NOCs may be (MoAF) is responsible for forestry, agriculture, required include the Department of Roads (if and animal husbandry in the country. With the project requires access from highways and 69 percent of the population living in rural areas feeder roads), the Department of Energy (if and largely dependent on agriculture, one of the the project requires the relocation of a power ministry’s main objectives is the enhancement of transmission line), the Department of Culture rural livelihoods through improved agricultural (if the project is located within 50 m of a cultural productivity, development of agribusinesses or religious site), and the Nature Conservation and increased access to markets. The Ministry, Division, Department of Forests and Park through the Department of Forests and Park Services (DFPS) (if the project lies within the Services, is responsible for the conservation and boundaries of a Protected Area). sustainable use of forest resources, including the management of all watersheds in the The Bhutan Electricity Authority (BEA) was country. The National Centre of Aquaculture, initially established as a functional autonomous Department of Livestock, under the MoAF, runs agency in accordance with section 7 of the fish conservation programs that are supported Electricity Act of Bhutan, 2001, to restructure by hydropower projects through their EMP. and regulate the electricity supply industry, to allow private sector participation in that The National Environment Commission industry, based on the policy approved by the (NEC) is an independent body responsible RGoB, and to empower the government to for all matters relating to the environment. It create companies for carrying out all or any develops, reviews, and revises environmental of the purpose of the Act. The BEA, however, policies, plans and programs, and is responsible was granted full autonomy by the government for formulating environment-related Laws/ from January 2010. The Authority consists of Acts and monitoring enforcement of the four Commission members and a Chairman, 14 Managing Environmental and Social Impacts of Hydropower in Bhutan appointed by the Minister. The BEA’s main after tax from the existing hydropower plants functions are economic and technical regulation for this purpose. of power sector entities, including tariff setting XX The Bhutan Power Corporation was and licensing. established as a public utility in July 2002 with the mandate of distributing electricity The two major power companies in Bhutan are throughout the country and providing the Druk Green Power Corporation (DGPC), transmission access for generating stations which owns and manages the large hydropower for domestic supply as well as export. plants, and the Bhutan Power Corporation (BPC), which owns and operates power plants The Gross National Happiness Commission under 25 MW, operates the transmission and (GNHC) is the government’s central planning distribution systems, and retails electricity to agency; it identifies and recommends priorities; customers. manages the allocation of resources; sets targets; and coordinates, monitors, and evaluates XX Druk Green Power Corporation is a holding policies and programs. The Commission is company that is responsible for harnessing responsible for operationalizing Gross National and sustaining Bhutan’s RE resources. Druk Happiness by mainstreaming its elements Green was incorporated on January 1, into the country’s plans and programs. More 2008, with the vision to “promote, develop specifically, it is responsible for ensuring that and manage renewable energy projects, national happiness is mainstreamed into the particularly hydropower, in an efficient, planning, policy making, and implementation responsible and sustainable manner, and to process by evaluating their relevance to the maximize wealth and revenue of the nation.” framework of: It controls the four major hydroelectric projects (HEPs)—Chukha HEP, Basochhu XX Developing a dynamic economy as the HEP, Kurichhu HEP, and Tala HEP. It is foundation for a vibrant democracy; by far the largest wholly owned corporate entity (with almost 1,800 employees) of XX Harmonious Living: in harmony with Druk Holding and Investments (DHI),7 tradition and nature; the commercial arm of the RGoB. While XX Effective and good governance; and Druk Green operates and maintains huge hydropower assets, its other key mandate is XX Our people: investing in the nation’s greatest to promote and develop new hydropower asset. stations. It retains 10 percent of the profit The GNHC is overseeing and coordinating local livelihood programs implemented by 7 DHI is the commercial arm of the RGoB, established hydropower projects with the government’s in 2007, “to hold and manage the existing and future overall development programs on the investments of the Royal Government for the long Dzongkhag level. term benefit of the people of Bhutan.” DHI, the largest and only government-owned holding company in Bhutan, has shares in 18 different companies The National Land Commission (NLC) was operating in the manufacturing, energy, natural established pursuant to Land Act 2007. The resources, financial, communication, aviation, Land Act 2007 was enacted during the 87th trading, and real estate sectors. Of the 18 companies, Session of the National Assembly by revising DHI holds 100 percent of shares in eight companies, which includes the two companies in the power the Land Act 1979. The NLC is an autonomous sector, namely, BPC and DGPC. The Ministry of agency with 11 Commission members. The Finance is the sole shareholder of DHI. 15 Chapter 3 Hydropower Development in Bhutan Department of Survey and Land Records has embarked on a program to map all cultural become, by default, the NLC Secretariat with assets of Bhutan. A cultural heritage bill has all its functional divisions. The Department been drafted that lays out provisions for was formally separated from the Ministry of the developer in the case of infrastructure Agriculture on August 15, 2007. The NLC development. This act is under revision, but the delivers land governance services and provides timing of its approval is still uncertain. reliable land information for the nation’s well- being. Its mission includes: (i) to manage, regulate, and administer the ownership and use 3.3 Policies of land; (ii) to guarantee the security of land Bhutan’s development planning framework is tenure; and (iii) to ensure easy access to reliable guided by the development philosophy of Gross land information. National Happiness (GNH), based on four pillars: sustainable and equitable socioeconomic The Ministry of Home and Cultural Affairs development, preservation and promotion (MHCA) aims to preserve, promote, develop, of culture, conservation and sustainable and protect the culture and heritage of the utilization and management of the environment, country. This ministry houses the Department and promotion of good governance. The of Culture, which is charged with inventorying foundational legislation and policy context of and documenting cultural heritage; framing hydropower development in Bhutan provide legislation and its management for conservation substantial focus on E&S issues (Table 3-3). and protection of cultural heritage; and promoting cultural tourism. The MoHCA has Table 3-3  Key environmental laws, policies, and instruments for hydropower development Laws/policies Relevant issues/provisions Development Policies Electricity Act (2001) Provides the institutional framework for the governance of the electricity sector in Bhutan. Bhutan Sustainable Provides the framework and guidelines for accelerated hydropower development in the Hydropower country. The policy allows the RGoB to develop hydropower projects with public, private, or Development Policy public-private participation and in collaboration with governments of development partner (2008) countries. It contains a provision for a Renewable Energy Development Fund to support preparatory activities as well as environmental services; a minimum of 12 percent of electricity generated to be provided free of cost as Royalty Energy; a minimum of 1 percent of royalty energy in cash to be made available annually for Integrated Sustainable Water Resources Management; foreign companies are allowed to bring in expatriate personnel in areas where there is a shortage of Bhutanese with requisite skills but are required to provide employment to one member of each of the displaced families. Project Developer to make provisions for mitigation of adverse impacts in accordance with EIA report through EMP. Economic Development Guided by the overarching philosophy of Gross National. Specifically relating to the energy Policy (2010) sector—15 percent of total power generation to be provided as free “royalty energy;” develop strategic plan for capacity building of Bhutanese in construction of hydropower projects; subsidies for in-country training and employment of Bhutanese. Foreign Direct Investment Supports private sector participation in the development of medium and large hydropower Policy (2010) projects and other RE projects, and provides incentives for foreign entities to invest in Bhutan’s energy sector. Bhutan Renewable Energy Provides the RGoB’s objectives for developing the RE sector and provides the policy (RE) Policy (2012, draft) framework to address key issues relating to the promotion of RE and public and private sector participation in the development of RE projects. 16 Managing Environmental and Social Impacts of Hydropower in Bhutan Laws/policies Relevant issues/provisions Social Policies Land Act (2007) National Land Commission responsible for policies and programs, acquisition of registered land and its allotment; compensation for land acquisition will be fair and can include substitute land or cash; acquisition of land occupied by religious monuments will be avoided; location of substitute land will be in order of preference of same village, Gewog, Dzongkhag. Land owner will have no preference over location of substitute land provided by the government; land valuation done by a Property Assessment and Valuation Agency under the MoF; compensation to be provided for immovable property on acquired land. Social Safeguards Manual Provides standardized guidelines relating to social safeguard measures, procedures, and of DGPC principles to ensure that hydropower projects are “developed in a socially responsible manner and according to sound internationally accepted practices.” Environmental Policies National Environment Fundamental right of citizens to a safe and healthy environment and government’s duty to Protection Act (2007) protect environmental well-being; polluter pays principle; right to information and access to justice; principle of sovereign rights of the state; principle of payment for environmental services; responsibility of National Environment Commission or competent authorities to independently regulate and promote sustainable development. Water Act of Bhutan The RGoB as the public trustee of the nation’s water resources; right to access safe, (2011) affordable, and sufficient water for basic human needs; polluter and user pays principle; formulation of a “National Integrated Water Resources Management Plan;” minimum environmental flow requirements for watercourses; water use priorities—drinking and sanitation, agriculture, energy, industry, tourism and recreation, and for other uses. Forest and Nature Forest management, prohibitions and concessions in government-reserved forests, forestry Conservation Act (1995) leases, social and community forestry, transport and trade of forestry produce, protected areas, wildlife conservation, soil and water conservation. Any developmental activity within a protected area needs to carry out an Environmental Impact Assessment. Biodiversity Act (2003) Formulated in line with the provisions of the Convention on Biological Diversity taking into account the biological resources of the country. It ensures the national sovereignty of the country over genetic resources in accordance with relevant national and international law. Forest and Nature Describes regulations related to government reserved forests, protected area management, Conservation Rules (2006) wildlife conservation, enforcement, and penalties. The Water Regulation For the effective enforcement of the objectives and purposes of the Water Act of Bhutan of Bhutan (2014) 2011. Lists functions of competent authorities; EIA to determine environmental flows (e-flows); otherwise, at a minimum, it should be 30 percent of lean season flow; no development activities are allowed within a buffer zone of one hundred feet of any water body without an environmental clearance; dams to have fish passages or other measures to allow fish movement. Environmental and Social Impact Assessment Environmental Assessment Establishes procedures for assessment of policies, plans, and projects on the environment; Act (2000) environmental clearance by the National Environment Commission (NEC) or a competent authority required and mandatory; public consultation made mandatory; provisions included for noncompliance, including penalties. Regulation for the NEC and/or “competent authority” given the responsibility for issuing environmental Environmental Clearance clearance; public consultations mandatory. of Projects (2002) EA Guideline for Includes specific guidelines for assisting practitioners in conducting an environmental Hydropower (2012) assessment of a hydropower project and accordingly develop mitigation measures, including recommended outline and content for EMPs, Resettlement and Rehabilitation (R&R) Plans, Compensatory Afforestation Plans, Environmental Flow Assessment, Dam Break Analysis and Disaster Management Plan, and Biodiversity Conservation & Wildlife Management Plan, among others. 17 Chapter 3 Hydropower Development in Bhutan 3.4  Current planning through a consultative process involving members of the Bhutan Water Partnership methodology (BWP) and government institutions, including The hydropower projects currently under the Department of Energy (predecessor to development and the pipeline of new projects DHPS and DRE), NEC, and BPC. are the result of an evolving planning process by the RGoB. An important basis for this process Environmental studies were conducted was the Update of the Power System Master Plan independently of the technical studies, both (PSMP) of 2004, which in turn was an update of for the potential hydropower projects and the the 1993 master plan. The PSMP (2004) updated development of the transmission line system information on all potential projects identified in Bhutan. The potential hydropower projects in the 1993 study, ranked these, and proposed were subjected to an Initial Environmental the development of seven priority projects Examination, which was used as input to a for the period 2003–22. The projects under Multi-Criteria Analysis (MCA) to rank the construction today—Punatsangchhu I and II, projects. In the final ranking, however, the and Mangdechhu—were on this list, as well as stakeholders emphasized that “selection of the three of the projects included in the 10,000 MW Projects for further development will be governed Program (Kholongchhu, Chamkharchhu-I, and to some extent by political consideration and also Amochhu). the preferences of the buyer,” and that economic merit would carry strong weight. A fundamental presumption for the master plan was to develop hydropower in Bhutan Subsequent to the 2004 master plan, the RGoB for export to India, since India’s power market adopted the approach of the MCA as the main is vast compared to the domestic market. It tool for prioritizing projects for further study is recognized that hydropower projects in and development. While the basic principles Bhutan face competition from Indian and for the MCA were taken from the 2004 study’s Nepalese hydropower projects, as the latter approach, the methodology was further have similar topographical and hydrological customized to the Bhutanese context. As an advantages. The cost of Bhutanese hydropower example, a new criterion, “Balanced Regional projects must, therefore, be competitive. It was Development,” was introduced to take into also acknowledged, however, that Bhutan’s account the increased interest from remote comparative advantage in hydropower lies in regions/districts to develop hydropower in its ability to create an institutional framework their area to distribute the increased business and investment environment that would enable opportunities more evenly across the country. export-oriented projects to be implemented The adoption of this criterion has resulted in more easily than in India and Nepal. prioritization of hydropower development in the eastern part of Bhutan over further development The master plan was developed on par with in the Wangchhu River. The latter might have international standards, with technical studies been preferable from a technical and economical conducted by Norconsult of Norway and point of view because it would have been with the Norwegian Water Resources and possible to operate projects in cascade and use Energy Directorate as technical adviser. It existing transmission corridors of the Chukha was developed as part of an integrated Water and Tala projects. Resources Management Plan for Bhutan 18 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure 3-6  Factors and weights used in multi-criteria analysis for new hydropower development Balanced regional Main criteria Technical Economic Social Environmental development Hydrological Economic merit Improved access Intrusion into Population to be quality to socio-economic protected areas benefited benefits Main Social Balanced Regional Technical Economic Environment Development Criteria Geological risk Transmission line Access to reliable Loss of primary Existing planned cost & adequate Improved access to power forest Intrusion into hydropower projects Hydrological Population to be benefited Economic merit quality supply socio-economic benefits protected areas in the Dzongkhag Sub-criteria Dam cost risk Financeability Employment Dewatering Poverty level Transmission Access to reliable & Loss of primary Existing/Planned hydropower Geological risk benefits impacts Projects in the Dzongkhag line cost adequate power supply forest GLOF risk Rehabilitation & Access road Dewatering Literacy rate Dam cost risk Financeability Employment benefits Poverty level Sub- resettlement impacts erosion Criteria Rehabilitation & Access road Site GLOFaccessibility risk Tourism Fish migration Literacy erosion Health rate coverage Resettlement Transmission line Site remoteness Site accessibility Tourism Fish migration Health coverage risk Transmission Reservoir line risk Site remoteness sedimentation Reservoir sedimentation Technical (40%) Techno-Economic (55%) Economic (60%) Social (50%) Ranked Order (100%) Socio-Economic (30%) Environmental (50%) Balanced Regional Balanced Regional Development (15%) Development (100%) Source: DHPS. Note: GLOF = Glacial Lake Outburst Flood. The factors and weights the DHPS currently The score for each of the main criteria uses in the MCA are shown in Figure 3-6. is computed as the weighted sum of the Minutes from DHPS meetings show that the subcriteria. Table 3-4 shows the standard individual weights are critically reviewed, weights recently used for the subcriteria. The discussed, and set for each analysis of a new set large number of criteria shows that the RGoB of projects. Typically, 3–4 projects are studied is well aware of the complexity of hydropower and compared through the MCA, and the development and the many variables that need best scoring projects are proposed for further to be taken into account. The disadvantage of study (prefeasibility and subsequent DPR, if using so many criteria is the dilution of the prefeasibility study confirms viability). possibility for any single criterion, one that may be critical, to affect the overall score. 19 Chapter 3 Hydropower Development in Bhutan Table 3-4  Standard weights for the subcriteria used in the MCA Criteria & weights Criteria Sub-criteria Weights Weights Weights 1 Technical 1.1  Hydrological quality  22% 1.2  Geological risk  25% 1.3  Dam cost risk  15% 1.4  GLOF risk   6% 1.5  Site accessibility  14% 1.6  Transmission line risk  14% 1.7  Reservoir sedimentation   4% Sub-total: 100%   40% 2 Economic 2.1  Economic merit  65% 1.6  Transmission line cost  20% 2.2 Financeability  15% Sub-total: 100%   60%              Total Technical & Economic 100% 100% 3 Social 3.1  Improved access to socio-economic benefits  35% 3.2  Access to reliable & adequate power supply  10% 3.3  Employment benefits  25% 3.4  R & R  20% 3.5 Tourism  10% Sub-total: 100%   50% 4 Environmental 4.1  Intrusion into protected areas  40% 4.2  Loss of primary forest  35% 4.3  Dewatering impacts  10% 4.4  Access road erosion  10% 4.5  Fish migration   5% Sub-total: 100%   50%              Total Social & Environmental 100%  30% 5 Development 5.1  Balanced regional development 100% 100%  15% Total Overall: 100% Source: DHPS. Note: MCA = Multi-Criteria Analysis; GLOF = Glacier Lake Outburst Flood; R&R = Resettlement and Rehabilitation. 20 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts T 4.1  Environmental impacts he purpose of this chapter is to identify the most relevant E&S impacts of current Relevance and planned hydropower development in Bhutan. It aims to (i) assess how Bhutan is Conservation and sustainable utilization and doing so far in managing these impacts and management of the environment is one of the (ii) identify the key issues for improvement of four pillars of Bhutan’s unique development policies, institutions, and practices. philosophy based on the promotion of gross national happiness. The Constitution of Bhutan This chapter is the result of an assessment of mandates that the country maintain at least RGoB’s policies, processes, and experience 60 percent of its land area under forest cover, in the management of E&S impacts, based when in fact forests cover over 70 percent of on desk reviews, extensive interviews with the total land in the country, a testament to the stakeholders, and field visits to a number of importance placed on this natural asset. Bhutan’s hydropower facilities currently in operation pristine environment also contributes to the and under construction. It also takes into country’s economic growth. Forests support account the findings of (i) the geographical rural livelihoods. Rural households rely on analysis of planned hydropower development forests for subsistence goods, including fuel in the country, which provides an assessment wood, nonwood forest products, construction of the potential environmental, social, and timber, etc. Tourism is the second biggest cultural footprint (Appendix B); (ii) a rapid sector in the economy after hydropower, and institutional assessment of the key organizations Bhutan’s relatively untouched nature is one of involved in hydropower development in Bhutan the reasons international tourists like visiting (Appendix C); and (iii) the Hydropower the country. Recreational fishing is offered Sustainability Assessment of the Mangdechhu by many tour operators along with visits to Hydroelectric Project (Appendix D). Bhutan’s iconic cultural sites located in, often untouched, landscapes. Managing the impacts of hydropower on the environment is, therefore, essential. Credit to come? 21 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts A diverse range of adverse environmental Though facilities with reservoirs can positively impacts can result from hydropower affect certain fish species (and fisheries) development. Impacts vary depending on by increasing the area of available aquatic the project’s type, size, and sensitivity of the habitat, the net impacts are often negative for project site. Typical environmental impacts of several reasons: (i) the dam blocks upriver hydropower projects are presented in Table 4-1. fish migrations, while downriver passage While some impacts occur only during through turbines or over spillways is often construction, the most important impacts are unsuccessful; (ii) many river-adapted fish and usually due to the long-term existence and other aquatic species cannot survive in artificial operation of the dam and reservoir, and intake lakes; (iii) changes in downriver flow patterns and generation facilities. Other significant adversely affect many species; and (iv) water impacts on the environment can result from quality deterioration in or below reservoirs ancillary works such as access roads, power (usually low oxygen levels; sometimes gas super- transmission lines, and quarries and borrow pits. saturation) can kill fish and damage aquatic habitats. Freshwater mollusks, crustaceans, and Major downriver hydrological changes brought other benthic organisms are even more sensitive about by hydropower facilities can destroy to these changes than most fish species, because riparian ecosystems dependent on periodic of their limited mobility. natural flooding, and exacerbate water pollution during low flow periods. Reduced sediment Hydropower plants can also affect biodiversity and nutrient loads downriver can similarly through habitat fragmentation or the increase river-edge erosion and damage the destruction of habitats altogether. Such impacts biological and economic productivity of rivers. can be direct, because of the footprint of Induced desiccation of rivers below dams (when hydropower schemes, including the ancillary the water is diverted to another portion of the infrastructure (access roads, residential complex, river or to a different river) can also reduce nonresidential complex, contractor facility and water supplies for agriculture and other human workshops, and disposal sites), or indirect, as activities. a consequence of opening up adjacent areas Table 4-1  Typical environmental impacts of hydropower plants Hydropower plant type Main negative environmental impacts Run-of-river Relatively small terrestrial footprints and impacts on surrounding environments. However, potentially large impact on aquatic biodiversity due to affected river connectivity, especially when constructed in cascades. Barrier for fish migration and sediment transport. If constructed as a diversion scheme, reduced water flow between intake and tailrace affects river and riparian ecology. Even if powerhouse is located at the toe of the dam, potential impacts on downstream river ecology due to rapid changes in runoff during ramp-up and ramp-down. Influx of construction workers has local environmental impacts. Habitat fragmentation due to new access roads and other ancillary structures. Reservoir (storage) Large alteration of natural environment by impoundment resulting in impacts on both terrestrial and aquatic ecosystems and biodiversity. Barrier for fish migration and sediment transport. Significant modification of volume and seasonal patterns of downstream river flows. Large impacts on river ecology at immediate stretch downstream of dam during ramp-up and ramp-down. Changes in water temperature and quality, and related GHG emissions. Large influx of construction workers has local environmental impacts. Habitat fragmentation due to reservoir, access roads, and other ancillary structures. 22 Managing Environmental and Social Impacts of Hydropower in Bhutan through access roads built for construction the absolute impact on protected areas from purposes. Vegetation removal often leads to the hydropower facilities, measured by area affected, loss of plants, which have their own biological is still estimated to be minimal. That said, the value but also provide food and cover for many lack of baseline data on terrestrial biodiversity birds and animals. Opening up of remote areas makes it difficult to say conclusively what the can also lead to an increase in poaching. impact will be, even if it is likely to be relatively small. Current impacts in Bhutan The extent to which the impacts described Of much greater concern is the impact on above are likely to materialize in Bhutan aquatic connectivity and ecosystems. With depends on many factors. The most important the existing installed hydropower capacity in one, and the one that can limit the significance Bhutan, approximately 90 percent of the river of impacts, is the fact that the majority of network is free-flowing (see Table 4-2 and projects are run-of-river projects with very small Appendix B for more details). If all the projects inundation areas. Moreover, given the vast and that are being studied at the prefeasibility well-established network of protected areas and and reconnaissance phase are developed, the biological corridors, any terrestrial footprint free-flowing river network could be reduced of current and planned hydropower plants is to 50 percent of the total system. The length of likely to be a small fraction of the area under river for which the flow regime will be altered protection. Conversely, these facilities are likely dramatically, that is, the length of the reservoir to have a greater impact on aquatic ecosystems together with the stretch of river between and aquatic life by way of changes in river the intake structure and the outlet, will also flows and river fragmentation. Geographical increase significantly (Table 4-2 and Figure 4-2). analysis of the likely environmental footprint of Currently, this affected river stretch stands at hydropower projects in Bhutan lends support 68.6 km but, as the projects under construction to these conclusions. The analysis shows that come online, this figure will more than double. existing projects and those for which advanced With the introduction of the remaining projects preparation is underway affect only a limited in the 10,000 MW Program, this fragmentation area covered by protected areas and biological will increase by a factor of seven. corridors. Encroachment into protected areas and corridors becomes a bigger concern for Fragmentation of river ecosystems can affect the projects in the longer-term pipeline, that is, both physical variables, such as flow regime and those in the prefeasibility and reconnaissance water quality, and the productivity and species phase, some of which are inside or very close to composition of different rivers. Because there protected areas. As seen in Figure 4-1, however, is little baseline information on fish species Table 4-2  River length affected by hydropower project + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Plus Program reconnaissance Installed capacity (MW) 1,606 5,264 14,196 21,191 Affected river stretch (km) 68.6 162.4 501.2 953.9 Free-flowing river stretch (km) 1,931 1,652 1,495 1,099 Free-flowing river (%) 89 76 69 50 Source: Bank analysis Note: HEP = Hydroelectric project. 23 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Figure 4-1  Protected areas and corridors affected by existing and planned hydropower facilities Note: HEP = Hydroelectric project. diversity in Bhutan, it is difficult to fully assess in the state; and (iii) the “principle of payment the potential impacts of river fragmentation for environmental services,” where the person on aquatic biodiversity. At present, Bhutan has using or extracting natural resources has to around 93 species but this number is expected pay for ecosystem/environmental services. to increase to 100 as more taxa are identified. For projects that may have a negative impact Moreover, the first fish species endemic to on the environment, the Environmental Bhutan was recently discovered (Parachiloglanis Assessment Act (2000) requires that bhutanensis). Moreover, very little is known environmental clearances be obtained from about the ecology of migratory species, that is, various competent authorities, including the their migratory triggers and habitat preferences. Ministry of Agriculture and Forests for removal of vegetation, the Department of Geology and The National Environment Protection Act, Mines for quarries, and the Department of 2007 focuses on the “principle of 3 Rs” in order Roads for road construction and widening. to forestall or limit environmental impact. The procedures for obtaining clearances These principles are: (i) the “polluter pays from different authorities are rigorous and principle” for protecting against and mitigating well-defined, with each clearance specifying adverse impacts; (ii) the ”sovereign rights conditions for approval that must be complied principle,” sovereign rights over renewable and with, and provisions for periodic renewal nonrenewable natural resources being vested and monitoring by the respective regulatory 24 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure 4-2  Affected river stretches for planned large hydropower up to 21,191 MW Note: HEP = Hydroelectric project. authorities. These requirements for obtaining For hydropower development in Bhutan, clearances are also detailed in the Regulation for also separate guidelines (Environmental the Environmental Clearance of Projects (2002). Assessment Guideline for Power Transmission Line Guideline (2012) and Environmental Current management practices in Bhutan Assessment Guideline for Hydropower Rules and Regulations: Bhutan’s rules and Development (2012)) were published. regulations for addressing and managing the environmental impacts of hydropower are In addition to these broad regulations related comprehensive and robust. The Constitution of to the environment, the regulatory framework Bhutan has designated every Bhutanese citizen also comprises specific rules and regulations as a trustee of the Kingdom’s natural resources related to water use, biodiversity, fisheries, and and environment. Accordingly, a series of laws forestry. The Water Act of Bhutan, 2011, follows and policies have been enacted to ensure the the “polluter/user pays principle” while also protection, conservation, and sustainability of requiring a number of measures to be adopted, the natural environment. including formulation of a “National Integrated Water Resources Management Plan” and a As will be discussed in greater length in the next “River Basin Management Plan” for each river section, the Environmental Impact Assessment basin. It stipulates water use priorities—drinking is legislated under the Environmental water and sanitation and agriculture being Assessment Act (2000) and regulated by NEC. prioritized over use in energy production. It 25 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts also vests the responsibility for implementation studies, an Environmental Impact Assessment of the Act in the Bhutan Electricity Authority (EIA) and Environment Management Plan for hydropower generation and in NEC for (EMP) are used to assess the potential impacts abstraction and use of water and for monitoring on the environment and to prescribe mitigation the overall compliance. The Water Regulation of measures, respectively. Bhutan, 2014 requires the EIAs to recommend the prescribed environmental flows for a In 2012, to guide the preparation of E&S hydropower project.8 If the minimum flow is impact assessment studies for hydropower not recommended by the EIA, then the Water development, guidelines (Environmental Regulations prescribes a default minimum Assessment—Guidelines for Hydropower and of 30 percent of the lean flow. The Water Environmental Assessment—Guidelines for Regulations also require dams in Bhutan to have Power Transmission Line Projects) were issued.9 fish passages or other measures to allow fish The guidelines include measures to identify, movement. assess, and mitigate environmental impacts from hydropower development, as well as These rules and regulations provide adequate provide a framework for the preparation of basis for protecting and managing Bhutan’s good assessment reports. Six key steps are natural and human environment. The current recommended: (i) screening; (ii) scoping; legislative framework has a few gaps, however, (iii) baseline data generation; (iv) impact and these are elaborated below. assessment; (v) measures for mitigation of impacts; and (vi) Environmental Management Early Planning: As seen in Chapter 3, the Plan. The highlights of these guidelines are the RGoB currently uses MCA for inclusion of following: projects in the master plan with weightage points for the four thematic areas (technical, XX The concept of screening and scoping to economic, social, and environment) considered identify key issues to be included in the in hydropower development. Positive and assessments; negative environmental impacts are assessed XX The need for consultations with affected during the planning process, and their merits communities; and disadvantages are considered in the ranking process. Important environmental impacts, XX The need to assess impacts downstream and such as intrusion into protected areas, loss of on ecological flows; primary forest, erosion, and fish migration, are XX The need to assess impacts on cultural considered in the MCA. However, greater weight heritage; is assigned to technical and economic criteria, which often outweigh single environmental XX The need to manage construction impacts. factors in the planning decisions. Although the guidelines are comprehensive, Impact Assessment: In accordance with the they are unclear in a few areas. For instance, no Environment Assessment Act (2000), and as guidance is given on assessment of cumulative is standard practice globally, once a particular impacts, which is especially important when hydropower plant has been selected for further hydropower projects are built in cascades; Nor do the guidelines include a requirement for developers to prepare compliance frameworks 8 Prior to the Water Act of 2011, which required the NEC to set the minimum environmental flows for watercourses, environmental flows were set at 10 9 Guidelines also exist for social assessments; they are percent of the lean season flow. discussed in Section 4.2. 26 Managing Environmental and Social Impacts of Hydropower in Bhutan for mitigation measures, especially important These observed weaknesses in the EIA reports during the construction phase. were corroborated by the independent review underpinning the Hydropower Sustainability Furthermore, the quality of these guidelines Assessment of the Mangdechhu Hydroelectric is not always reflected in the practice of Project (appendix D). This assessment also environmental impact assessments in Bhutan, found weaknesses in the EIA report, namely: which are often also inconsistent across projects. The ways in which environment XX Lack of information on the methodologies or issues have been addressed in the NHPP and criteria used to determine the impacts of the MHEP projects are very different, for example. project; While this is expected because NHPP is being XX No formal assessment of the significance supported by the ADB, and thus involves of the potential impacts and no scoping different requirements, the varying quality of of cumulative impacts or transboundary the reports does indicate that the assessments issues (the Mangdechhu River flows into are not always done in accordance with the the Manas River, which crosses over into specifications of the regulations and the India downstream from the project site). By provisions of the guidelines. contrast, the Nikachhu Hydropower Project ESIA includes a brief section on cumulative An assessment of EIAs for a number of impacts and a series of matrices summarizing hydropower projects in the country10 found the potential impacts and their significance; following common shortcomings: XX Only a qualitative description of the potential XX Lack of baseline data to properly assess the impacts associated with construction is given, impacts on natural habitats, especially aquatic not a detailed evaluation; ecosystems; XX Lack of use of local expertise for the XX A descriptive approach and an overemphasis individual field studies. on construction impacts, with a lack of assessment of the impacts of some ancillary The narrowness of EIA scope and infrastructures such as roads, and little underutilization of local expertise have discussion of the possible impacts on resulted in some issues being ignored or culturally significant sites; quickly dismissed, which has sometimes led to management challenges during project XX Lack of detailed mitigation measures or implementation. In the case of MHEP, issues site-specific management plans: in the case such as dust, waste, and blasting had not been of many issues, it is only “recommended” or sufficiently covered by the EIA or subsequent suggested that they be looked at; EMP. Consequently, the project authority had to XX Lack of a systematic approach to assessing come up with solutions as problems arose rather the impact on environmental flows, with than putting in place adequate management different projects doing so in different plans ahead of time. Similarly, the late timing of ways (setting a percentage of lean EIAs in some instances has reduced the scope flows, maintaining a minimum depth to avoid and minimize negative impacts. In downstream, etc.). the case of MHEP, the EIA/EMP was finalized in 2011, after the DPR, which was completed XX Lack of comprehensive compliance in 2008, meaning that the final design of the frameworks. project could not be informed by the findings of the EIA. The weaknesses in the environmental 10 Nikachhu, Punatsangchhu-I, Chamkharchhu I, 27 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts assessment reports are further exacerbated by carried out scientifically, taking into account the lack of an effective compliance framework not just the ecological requirements but also during implementation. Monitoring of E&S social and cultural requirements. Four different provisions as outlined in the mitigation plans methods are suggested: such as the EMPs also seems to be weak and is not done on a regular basis.11 XX Hydrology based: Sets flow on assumption that maintaining some percentage of the Another noted departure from international natural flow will keep the river wet and fulfill good practice is that the EIAs and EMPs are all requirements; not always disclosed to the public in Bhutan. XX Hydraulic rating: Measures changes in the The Environmental Assessment Act, 200012 river flow, based on a single cross-section requires that once the environmental clearance (perimeter, depth, velocity) to assess changes has been obtained, project-related information, in the habitat affected by it; including a project description, measures for mitigating adverse impacts, and the rationale XX Habitat simulation: Employs multiple cross- for authorizing the project, be made available to sections to the hydraulic model rating to the public.13 However, the existing regulations simulate the conditions in a given stretch of and guidelines are largely silent on the modality the river; for disclosure (that is, medium, location, XX Holistic methodologies: Employs a language). Further, while NEC is tasked with the multidisciplinary approach to provide a responsibility to disclose EIAs and EMPs and to consensus view. The team could include do so online, lack of manpower has been cited as hydrologists, biologists, geo-morphologists, a constraint limiting these disclosures. water quality specialists, and socio- economists. Mitigation Measures: The impact of river fragmentation on aquatic fauna and habitats So far, however, this approach has not been will be strongly influenced by the level at which applied in Bhutan. Most EIAs take a simple the residual or minimum environmental flow hydrological approach or, as in one case, define is set. These impacts could in principle be the environmental flow based on a required reduced, especially during the dry season, if depth of the river downstream and a water residual flows are set at a level that is compatible velocity “suitable” for fish (Table 4-3). Supported with maintaining the integrity of the aquatic by the Austrian government, NEC is in the environment downstream. process of developing revised regulations and guidelines for estimating environmental flows The Environmental Assessment Guidelines for hydropower projects. This guidance will for Hydropower Projects establish a multilayer detail the methodologies and tools to apply in approach for estimating environmental flows, the multilayer approach described above. following international good practices. The Guidelines recommend that calculations be Another concern is the lack of systems to verify whether projects are making environmental 11 NEC was not able to provide the team any monitoring releases according to levels prescribed in reports, for example. 12 Likewise, the National Environment Protection Act, EIAs or the default minimum. The lack of 2007, also establishes the right of be informed about data risks creating distrust regarding whether the state of the environment and all activities that environmental flow releases will, in fact, be could affect the environment. followed. 13 See Chapter IV, Article 28, of the Environmental Assessment Act, 2000. 28 Managing Environmental and Social Impacts of Hydropower in Bhutan Table 4-3  E-flow prescriptions in the EIA reports for projects Project Environmental flows Chamkharchhu-I EIA: minimum environmental flow is required. EMP: methodologies for e-flows are explained. Building Block methodology is adopted defining minimum flows for 4 seasons: • Season 1 (Monsoon): 20% average flow • Season 2:(Average Flow): 15% • Season 3 (Low Season): 10% • Season 4 (Average Flow): 15% State Discharge relationships are used to calculate minimum flows for estimating depth of flows. A minimum depth of 0.5 m is assumed without reference to any source. Punatsangchhu-I River will have limited flows downstream the dam; there will be no impacts on downstream users, however. For sustenance of riverine fisheries, a minimum flow of 2.5 m3/s was estimated: • A rule-of-thumb of minimum depth of 0.5 m required for Himalayan fish (not justified, no source is mentioned.) • 40 m wide river stretch. Nikachhu Restates the approach required in EIA Guidelines. Relies on downstream tributaries to complement flows. Proposes 10% of average lean flow of 90% dependable year. Flow regulation is also an important aspect through fish nurseries), rather than maintaining when the power plant functions as a peaking fish connectivity (Table 4-4). Artificial seed plant. The sudden stop and start of flow through production in hatcheries to stock river stretches the turbines creates a very rapid change of flows downstream and upstream of the proposed dam that can be harmful for biodiversity downstream is probably the most recommended mitigation of the tailrace. Peaking can also create landslides action for fish impacts. However, the restocking and affect riparian ecology at the reservoir, as programs are recommended without prior the level rapidly decreases during peak power assessment of the impacts (positive or negative) production hours. The use of a minimum time on biodiversity or identification of a need for for ramping up and ramping down to create a this restocking. smooth transition is important to avoid negative impacts on biodiversity. There are exceptions, including an ongoing aquatic biodiversity assessment program for Regardless of ecological flow regulations, the Mangdechhu River, focused on monitoring dams are an impassable barrier for migratory benthic fauna and its response to the MHEP fish, potentially depleting populations past project construction and later operation. Beyond critical thresholds, eventually affecting the the direct impacts of the project, the MHEP also biodiversity of the river. Consequently, and as supports an activity with the National Centre already mentioned, the Water Regulation of for Aquaculture on the conservation of Golden Bhutan (2014) stipulates that dams shall have Mahseer, including breeding and reintroduction fish passages or other measures to allow fish of fish in the river. The Kurichhu dam (85 m movement. high) does includes a fish passage. This pool and weir passage is based on a traditional model At present, the practice in Bhutan has been and consists of 98 baffles placed 2 meters apart, to recommend mitigation measures for the with submerged orifices and centrally located impacts on fish based on quantity (stocking notches. In addition to questions on the fit of 29 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-4  Fish impact mitigation measures in the EIA reports for projects Project Fish impacts Chamkharchhu-I Dam will hinder migration, especially of Schizothorax spp. Dam is 108 m high; hence, fish ladders are not feasible. Artificial fish production in hatchery to stock upstream and downstream of dam. Fish hatchery to be managed by Department of Livestock. Punatsangchhu-I Dam will hinder fish movement, especially for mahseer. Dam is 63 m high; therefore, fish ladder is not very effective. Proposed mitigation: artificial stocking of Schizothorax progastus of upstream and downstream segments. Flow through fish farm is proposed. Nikachhu Presence of introduced brown trout (Salmo tuta). Fish habitat downstream of dam is not affected. No fish migration because of waterfalls. Reservoir will provide opportunity for stocking with snow trout. No fish program is proposed. the physical characteristics of this structure impacts of hydropower are NEC, the DHPS, (25 cm orifices) with the target fish species and the Dzongkhag Environmental Officers (large Mahseer fish), there is no monitoring of (DEOs) (Appendix C). In addition, the project the efficiency or efficacy of the passage in terms developer (so far, this has been either DGPC of the maintenance of healthy fish populations or a Special Purpose Vehicle) and operator upstream or downstream of the dam. (DGPC) have essential roles. The DHPS is responsible for early planning and supports the Finally, catchment management plans, which developers in the environmental assessment and include compensatory afforestation, are permit process. NEC and DEO, as regulatory identified as a priority issue related to water bodies, give clearances and check compliance. use and conservation needs specific to the The developer and operator are responsible for watershed in a number of EIA reports. There executing the EIA and EMP, in part, through the are provisions, at least in the NHPP, to prepare owner’s engineer and contractors. a Catchment Management Plan as part of the EMP. It is not clear from the EMP, however, The Environmental Assessment Act (2000) which authority would be responsible for requires that Environmental Clearances (ECs) implementing and monitoring the development be obtained for projects that may have adverse of such catchment management plans. The impacts on the environment. The EC process Ministry of Agriculture and Forests (MoAF), in Bhutan consists of a series of clearances to be which is responsible in Bhutan for ensuring obtained from the various competent authorities sustainable watershed management through such as, but not limited to, the National Land catchment protection and conservation work, Commission Secretariat (NLCS), which has not been involved in such measures in provides clearances for land acquisition, and the hydropower projects.14 Ministry of Agriculture and Forests (MoAF), which provides clearances for works involving Institutions and capacity: The key institutions removal of vegetation. The clearance process responsible for managing the environmental concludes with the release of the umbrella environmental clearance (EC) from NEC, once 14 Meeting with Department of Agriculture, MoAF, all other clearances are obtained, including EIA October 8, 2015. clearance. In line with the requirements of the 30 Managing Environmental and Social Impacts of Hydropower in Bhutan Table 4-5  Afforestation measures in the EIA/EMP reports for select projects Project Compensatory afforestation Chamkharchhu-I • Compensatory afforestation in area twice the size of the forest area affected by the project; • Afforestation in low- and medium-eroded subwatersheds in the catchment area; • Afforestation to be carried out by the Department of Forests in areas near the project; • Compensatory afforestation to be implemented along with other soil conservation measures and fencing. Punatsangchhu-I • Compensatory forestation for total forest loss through submergence, construction of other appurtenance, temporary facility and disposal area, and alignment of transmission line; • Afforestation to be carried out in degraded forest patches in and around project area amounting to double the amount of forest land affected; • Indigenous species for afforestation to be selected by the Department of Forests and paid for by the project authorities. Nikachhu • Specifies timing for cutting trees (i.e., during dry season before most animals begin to breed and before the monsoon, which causes additional damage and muddy runoff in the forest); • Compensation planting of trees in area that is twice the size of the area cleared, while allowing for up to 40 percent damage or mortality; • Monitoring and replacement of saplings to ensure high survival rate for afforestation; • Tree planting not only to be carried out in the project work areas, but also in other barren areas, locations that would support upper catchment protection, and tourist destinations; • Appropriateness of tree species to be determined in consultation with the Department of Forests. Regulation for the Environmental Clearance Obtaining project clearances is a well-defined, of Projects, 2012, once the detailed designs are rigorous process that identifies the competent finalized, the EIA is prepared by the project authorities who are responsible for compliance proponent, and submitted for clearance to NEC. oversight throughout the life of the project. Each clearance includes conditions for approval that In the case of the Mangdechhu Hydroelectric the project must comply with. In Bhutan, each Project, the following levels of clearances person affected by land acquisition is required were required before the overall or “umbrella” to provide a Notice of Consent and only then Environmental Clearance (EC) was issued: is a clearance for land acquisition issued by NLCS. As described previously, NEC has issued XX Notice of Consent from families affected by guidelines for EIAs to facilitate the clearance land acquisition (153 households); process. XX Clearances for land acquisition from the The capacity of government institutions is NLCS; constrained, which results in delays, despite XX Clearances for road development and the clarity of the process. This is especially widening from Department of Roads (DoR); the case for NEC, which has few staff15 and limited resources to issue environmental XX Clearances for quarries from Department of clearances, carry out baseline studies, and do Geology and Mines (DGM); XX Clearances for works involving removal of 15 The Environmental Services Division of NEC, vegetation from the Ministry of Agriculture responsible for all infrastructure projects including and Forests (MoAF); roads and the large number of hydropower projects, is severely understaffed (it has about four employees). XX Clearances from the Dzongkhag Staff is in charge of reviewing all EIAs and granting Administration Trongsa (DAT). environmental clearance. 31 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts regular monitoring. The present mechanism compliance requirements, the same staff are, for reviewing EIA reports includes the reports to a large extent, involved in studies such as being sent to other department reviewers for those pertaining to e-flows. This is further comments. Pursuing these reviewers has been constraining the time that staff can devote to a difficult task, forcing the NEC staff, at times, their core regulatory functions. to decide without the benefit of subject matter expertise from other disciplines. Under the The DHPS also faces constraints since, Regulation for the Environmental Clearance at present, it has no staff dedicated to the of Projects (2002), there is also a provision for departments responsible for E&S management. establishing the Environmental Assessment A common pool of staff manages E&S issues as Advisory Board (EAAB), but this mechanism a part of their other responsibilities. However, has not been used. Typically, the EC validity some capacity building has been formally for a hydropower project is only two years. If undertaken to support these staff. there are technical or financial challenges that delay the project, it is likely that the EC will On the other hand, the capacity of developers need to be obtained once more even before and operators for environmental management project commencement. If there are changes is generally good. DGPC has an Environmental or modifications to a project, the NECS must Unit under the Projects Department, which conduct a site visit, which is often a source was established to coordinate the preparation of delays because of their limited manpower. of prefeasibility, feasibility, technical, and The EIA review process could definitely be DPR studies for pipeline projects. This strengthened and streamlined. Environmental Unit has six officers, all of them science graduates. It supports the EIA studies On the compliance side, it is the role of the for projects currently being developed by NECS’s Compliance Monitoring Division to DGPC and also the existing hydropower plants ensure compliance with the provisions of the under operation. Projects developed through laws, regulations, and conditions of the EC. The the IG approach all have SPVs, which have environmental departments of the hydropower environmental units in their organizations. The authorities are required to send monthly MHPA, which is developing the Mangdechhu reports, and a complete compliance report on Hydroelectric Project, has an environmental an annual basis. Regular compliance monitoring unit with 10 staff. There is also an exchange throughout the project life, including site visits, program involving DGPC staff and staff from is typically done by the DEOs, regulators who the projects currently being developed. Two report to the Dzongkhag Administration (DA) officers in the DGPC Environmental Unit and not to the NECS. This can, at times, be a have been seconded to the Mangdechhu and source of conflict given different priorities of the Nikachhu projects to gain field experience. NECS and the DEOs. The DEOs purportedly are also constrained in their capacity, especially Key issues to carry out field visits, in those situations The absence of strategic early planning has where NEC has devolved responsibility; this has been marked as one of the main gaps in the created a backlog of requests and hinders the current environmental impact management compliance monitoring process. practices in Bhutan. The current MCA approach used for planning of new hydropower, Another challenge is that NEC is functioning based mainly on local factors, tends to limit both as a regulator and a policy formulation the possibility to consider regional or national and planning agency. Despite the current perspectives. To reach the level of international lack of manpower for meeting clearance and good practice, the project-by-project planning 32 Managing Environmental and Social Impacts of Hydropower in Bhutan approach for hydropower in Bhutan needs to be particular project on an environmental resource enhanced by a strategic, long-term approach that may be insignificant when assessed in isolation, includes basin-level planning and assessment of but significant when evaluated in the context cumulative impacts. Basin-scale environmental of the combined effect of all past, present, and assessments and planning can reduce the scope reasonably foreseeable future activities that may of the assessments and planning needed at the have or have had an impact on the resources project level. Such strategic upstream plans can in question. Therefore, the assessment of ensure that project proposals are set within a cumulative effects is now considered desirable policy framework that has already been subject in environmental assessment practice in many to environmental scrutiny, reducing the scope countries. of the environmental issues that need to be assessed and addressed at the level of individual The key potential environmental impact project EIAs. related to hydropower development in Bhutan is with regards to aquatic biodiversity. The Many tools are becoming available for upstream geographical analysis shows that the terrestrial planning of hydropower development. footprint of hydropower in Bhutan is likely Hydropower-by-Design is an approach that to be small. The majority of hydropower looks at an entire river basin and the impacts a projects are run-of-river and even the proposed dam will have both upstream and downstream. storage projects have relatively small reservoirs It focuses on more balanced development because of the extreme topography of Bhutan, scenarios that allow for energy production while characterized by very deep valleys. Most maintaining vital river functions. It aims to planned hydropower projects, and especially avoid developing the potentially most damaging the ones in the short-term pipeline, have hydropower dam sites and instead develop almost no impact on protected areas. While sites that will have lower impacts; minimize new transmission lines will cross protected impacts and restore key river functions through areas, they are planned to be built parallel better design and operation of individual to already built-out corridors (see Section dams; and offset those impacts that cannot be 4.3 on transmission lines). Nevertheless, the avoided, minimized, or restored by investing geographical analysis shows that by causing in compensation measures such as protection river fragmentation and altering flow regimes, and management of nearby rivers that provide hydropower development will have an impact similar benefits. Box 4-1 gives an example of on aquatic biodiversity. early hydropower planning in the Coatzacoalcos basin in Mexico. Basin-level planning and cumulative impact assessment should focus on how best to In a similar vein, cumulative environmental maintain aquatic biodiversity while growing impacts on the river ecology may become more the hydropower sector. The impacts of significant in the future and will need to be fragmentation on aquatic ecosystems can be understood. No major environmental impacts mitigated and compensated more effectively at have been reported for the existing hydropower the basin level. When a number of projects are projects, which are all run-of-river. However, planned within the same river system, proposing with numerous hydropower projects planned hatcheries and fish-stocking programs for each across multiple basins, the cumulative and project may not be the best way to achieve the synergistic environmental impacts may become desired outcome of maintaining healthy fish significant. Project-level EIAs fail to assess the populations. By assessing the cumulative effects potential cumulative effects on environmental on fish populations, a national fish program resources. For instance, the impact of a can be designed instead to mitigate the impacts. 33 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Box 4-1  Upstream Hydropower Planning in the Coatzacoalcos Basin in Mexico The biologically and socially diverse Coatzacoalcos river basin of Mexico is part of the government of Mexico’s hydropower expansion plan. The basin is rich in biodiversity—having a wide variety of species and ecosystems of ecological interest, including threatened, endangered, and endemic species such as the jaguar (Panthera onca). The Chimalpas forest is of great genetic value in Mexico and Mesoamerica, and it is estimated that one hectare of undisturbed tropical vegetation in the Chimalpas has about 900 flora species and over 200 fauna species. To minimize impacts on the environment and protect the cultural interests, a pilot Hydropower by Design (HbD) strategy in the basin was applied through a partnership between the Federal Commission of Electricity (CFE) and The Nature Conservancy. This entailed evaluating each project based on its technical, environmental, and social feasibility. Early strategic planning process to identify projects that are environmentally, socially, and economically sound was based on the concept of Hydropower by Design (HbD). The analysis involved eight steps: XX Identifying the hydroelectric potential of the basin; XX Geographical analysis of the watershed; Establishing a working group; XX Multi-criteria analysis to determine the viability XX Establishing a geographic information system; of the projects; XX Selecting criteria and metrics that facilitate XX Fragmentation or connectivity analysis; evaluation of projects, scenario creation, and XX Developing the sustainability portfolio. decision making A total of 28 projects were identified in the basin and different scenarios were generated. These projects all have (i) a capacity greater than 1 MW and (ii) up to more than 100 MW for (iii) a total maximum potential of 511 MW. Through the application of the HbD methodology, only 5 projects (172 MW) were identified that met all three criteria—environmentally, socially, and economically sound—inverting the impact on the basin from 70 percent of river flows fragmented to 70 percent of river flows unfragmented, thereby greatly reducing the threat to the surrounding Chimalpas rainforest and other areas. Experience from this approach demonstrates that comprehensive watershed planning at an early stage can offer sustainable options for potential investment in hydropower projects. Comprehensive watershed planning can facilitate complying with international commitments on climate change and biodiversity, and meeting targets for power generation. Interagency collaboration is necessary for developing environmentally sound and viable proposals. Through smart planning at the river basin scale, a country or region can have both major hydroelectric infrastructure development and preserve E&S values derived from rivers. Potential projects. Unfragmented flows are shown Proposed portfolio. Unfragmented flows are shown in green. in green. Source: World Bank. Modified from Barajas, N., V. Aguilar, V. Morales, D. Vázquez , P. Petry, E. Bastida, J. Bezaury-Creel, O. Calahorra, J. Capitaine,  J. P. García, F. Inguanzo, M. Heiner, H. Jiménez, E. Martin, J. Opperman, H. Rodríguez, L. Sotomayor, R. Tharme, J. F. Torres, J. Touval y L. Vázquez. 2014. Planeación temprana para el desarrollo de proyectos hidroeléctricos sustentables: marco metodológico y caso piloto en la cuenca del Río Coatzacoalcos, México. Comisión Federal de Electricidad, Comisión Nacional para el Conocimiento y Uso de la Biodiversidad y The Nature Conservancy. México. 34 Managing Environmental and Social Impacts of Hydropower in Bhutan A more strategic approach aimed at maintaining might very well yield a more cost-effective the highest level of connectivity while also approach to managing river fragmentation achieving the highest level of power generation (Box 4-2 gives an example of a strategic Box 4-2  More Strategic Approach to Maintaining Fish Biodiversity The impact of hydropower on fish habitats and migration of fish has proven to be an elusive issue in many countries, despite considerable investments in hatcheries and fish-stocking programs on a project-by-project basis. In many cases, however, this method has failed to achieve the desired outcomes of maintaining healthy fish populations and fish biodiversity in the watersheds. While fish stocking resolves issues related to fish numbers, it does not resolve the more significant problem of maintaining fish biodiversity in a given river ecosystem. In addition, fish hatcheries, while maintaining the presence of a number of “individuals” in a segment of the river, often focus on a single species, mainly one with some human consumption or recreational potential. This selective stocking does not provide for a balanced ecosystem. Offsets, in particular aquatic offsets for hydropower projects, are gaining traction worldwide. These are measures taken to compensate for any residual significant, adverse impacts that cannot be avoided, minimized and/or restored, in order to avoid a net loss or net gain of biodiversity. These can be positive management interventions such as restoration of degraded habitat or protecting areas with imminent or projected loss of biodiversity. Compensatory measures are primarily meant to provide value equivalent to that which has been damaged at the same location and, secondarily, provide other environmental value to another place. Any compensatory measure should be connected with the negative impact that has been identified and the affected party ought to benefit from the measure. Dams on the Reventazón River in Costa Rica and the Chaglla Hydroelectric Project in Peru have implemented measures to protect an entire river as an offset. The Reventazón Hydropower Project in Costa Rica plans to implement a protected river corridor with no barriers to connectivity in a river system that is ecologically similar to that of the Reventazón. This is to compensate for the residual impacts of the project on the river, compounded by the cumulative impacts of upstream projects and other river uses. Nine major rivers flowing into the Caribbean were evaluated for their characteristics, and the Parismina River, which is currently undammed, was chosen. By sacrificing only 5 MW of 10,000 MW, Costa Rica was able to allow for a free-flowing river and thereby meet both hydropower development and biodiversity conservation goals. Source: World Bank. Modified from Integrated Environments, Ltd. Propuesta de Proyecto de Compensacion de Bodiversidad: Proyecto Hidroelectrico, Reventazon. Instituto Costaricense de Electricidad, ICE. 2013. (Proposal for a Biodiversity Compensation Project: Reventazon Hydroelectric Project). 35 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts approach to maintaining fish biodiversity). maintain aquatic biodiversity while growing In this manner, individual projects can address the hydropower sector.  The impacts of mitigation measures through ecological flows in fragmentation on aquatic ecosystems can be the immediate downstream stretches of the dam mitigated and compensated more effectively at without having to assess overall connectivity the basin level. When a number of projects are issues in the EIA. Such an approach can greatly planned within the same river system, proposing simplify the EIA process while guaranteeing the hatcheries and fish-stocking programs for each long-term preservation of fish biodiversity and project may not be the best way to achieve the migratory functions in Bhutan. desired outcome of maintaining healthy fish populations.  By assessing the cumulative effects It should be pointed out that the effects on on fish populations, a national fish program can aquatic biodiversity are not fully understood, be designed instead to mitigate the impacts. A mainly because there are few baseline studies. more strategic approach aimed at maintaining Moreover, the effectiveness of existing mitigation the highest level of connectivity while also measures, such as environmental flow releases, achieving the highest level of power generation hatchery programs, and fish passages is, to a large might very well yield a more cost-effective extent, unknown because aquatic biodiversity is approach to managing river fragmentation not being monitored. Better assessments of the (Box 4-2 gives an example of a strategic impacts on aquatic biodiversity and formulation, approach to maintaining fish biodiversity). In implementation, and monitoring of robust this manner, individual projects can address mitigation plans will be important. mitigation measures through ecological flows in the immediate downstream stretches of the dam The key potential environmental impact without having to assess overall connectivity related to hydropower development in issues in the EIA. Such an approach can greatly Bhutan has to do with aquatic biodiversity. simplify the EIA process while guaranteeing the The geographical analysis shows that the long-term preservation of fish biodiversity and terrestrial footprint of hydropower in Bhutan is migratory functions in Bhutan. likely to be small. The majority of hydropower projects are run-of-river and even the proposed It should be pointed out that the effects on storage projects have relatively small reservoirs aquatic biodiversity are not fully understood, because of the extreme topography of Bhutan, mainly because there are few baseline studies. characterized by very deep valleys. Most Moreover, the effectiveness of existing planned hydropower projects, and especially mitigation measures, such as environmental the ones in the short-term pipeline, have flow releases, hatchery programs, and fish almost no impact on protected areas. While passages is, to a large extent, unknown new transmission lines will cross protected because aquatic biodiversity is not being areas, they are planned to be built parallel to monitored.  Better assessments of the impacts already built-out corridors (see Section 4.3 on aquatic biodiversity and formulation, on transmission lines). Nevertheless, the implementation, and monitoring of robust geographical analysis shows that by causing mitigation plans will be important. river fragmentation and altering flow regimes, hydropower development will have an impact The need to strengthen the capacity of NEC on aquatic biodiversity. and nodal agencies is considered key to addressing the weaknesses in implementation Basin-level planning and cumulative impact of environmental assessments for hydropower assessment should focus on how best to development in Bhutan. The parallel 36 Managing Environmental and Social Impacts of Hydropower in Bhutan identification of constrained institutional are very limited in Bhutan, especially outside capacities with key organizations involved in the the protected areas. Scientific literature on environmental management of hydropower in native fish species in Bhutan reports a poor Bhutan, and weaknesses in the implementation state of knowledge on diversity. Lack of baseline of EIAs and in the review process, despite a data was reported by NEC as one of the main generally good regulatory framework, is not a challenges in conducting environmental impact coincidence. A stronger and more streamlined assessments. Similarly, no data are available on quality assurance and clearance process is likely the effects of existing hydropower facilities on to improve the varying quality of environmental biodiversity. assessments. Quality assurance by DHPS and the developers needs to be enhanced to produce good-quality EIAs and EMPs, including 4.2  Social impacts and compliance frameworks. NEC, in its regulatory cultural assets function, needs to build capacity to identify Relevance gaps in the preparation studies and suggested mitigation measures. Developing a roster of The major social impacts of hydropower experts to provide sectoral expertise and review development (Table 4-6) are impacts on the EIAs in a timely manner; implementing livelihoods caused by transformation of land an online management system for providing use in the project area and the displacement environmental clearances and compliance of people. Global experience has shown that monitoring; and providing indicative times resettlement is immensely disruptive to the for environmental clearances are all ways in communities affected and can cause long-term which the process could be streamlined. Finally, impacts on livelihood and well-being. Therefore, improved coordination with other ministries is mitigation measures should be developed to required, among others, coordination with the ensure that the livelihoods and living standards MoAF on catchment area management, and of those affected are maintained, and if possible, with the Department of Fisheries on aquatic improved relative to preproject conditions. biodiversity, to ensure that the right thematic experts are consulted and sectoral plans are In Bhutan, the natural features—steep valleys aligned. and deep gorges—render direct impacts on people and property relatively limited compared A related capacity issue for the management with many other countries. The geographical of environmental impacts of hydropower in areas where hydropower projects are located are Bhutan is the lack of baseline data and the often sparsely inhabited, and most hydropower consequent lack of capacity of the regulatory projects are run-of-river projects with very agencies and other stakeholders to assess and small inundation areas. Besides loss of land and monitor the long-term impacts on natural livelihoods, the impacts on physical cultural values. Analysis of long-term trends in resources are important, given that they are biodiversity requires good baseline data and sources of valuable scientific and historical regular monitoring. Though a number of efforts information; they are assets for economic are underway,16 comprehensive baseline data and social development and form an integral part of a people’s cultural identity. Again, the risk of impacts on cultural heritage is low due 16 The National Centre for Riverine and Lake Fisheries to hydropower’s relatively small footprint in is undertaking a Fish-Fauna Assessment; and WWF is Bhutan. However, these impacts, albeit minimal, conducting an assessment of Golden Masheer in the Manas river basin, mapping its migratory route using need to be well managed in order to maintain satellite telemetry. 37 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-6  Typical social impacts from hydropower plants Hydropower plant type Main negative social impacts Run-of-river Has relatively small footprints and impacts on surrounding environments and communities; need for relocation of individuals and communities is limited, and impact on farmlands is small. If constructed as a diversion scheme, water flow is reduced between intake and tailrace, affecting the livelihood of water-dependent communities. Influx of construction workers has social, economic, cultural and health impacts. Reservoir (storage) Alteration of human environment by impoundment resulting in potentially significant impacts on human settlements, livelihoods and well-being, as well as population displacement and resettlement; landscape changes and loss of physical and cultural heritage and assets; Potential conflicts with host communities, due to land use change, and impacts on agroproduction, particularly downstream. Large influx of construction workers likely to cause social, health, economic, and cultural problems at the local community level. Potentially limited access because the reservoir acts as a barrier to land transport. the livelihoods of affected households and the are located in sparsely populated areas. country’s high cultural values. Landscape changes have also been limited, with areas affected by projects normally being Current impacts in Bhutan in the order of only a few hundred hectares The displacement impacts of hydropower per project (Table 4-7). Furthermore, projects projects to date have been minimal because mostly acquire government reserve forestland, project footprints have been small and projects and only a limited amount of private land (see Table 4-7  Land acquisition under different projects Chamkharchhu-I Nikachhu Mangdechhu Punatsangchhu-I Total land requirement (ha) 697.46 101.5 325.15 542.28 Government reserve forest land (ha) 689.76 100.07 296.68 424.38a Total private land (ha) 7.70 1.43 b 28.47 c 117.9d (% total land acquired) (1.10) (1.41) (8.75) (21.74) Kamzhing (dry land) (ha) 7.70 1.69 5.2 — Chhuzhing (wet/irrigated land) (ha) NA NA 3.23 — Tseri (jhum) (ha) NA NA 6.23 — Pangzhing (grass fallow land) (ha) NA NA 3.81 — Tshoesa (vegetable garden) (ha) NA NA 0.07 — House and land (physical relocation) 0 0 0 5 households Only land 34 households 17 households +1 49 households 24 households community private school Note: a. The EIA for Punatsangchhu-I does not specify exactly the amount of government land that will be acquired. However, given that the total area of land needed is 542.28 ha and 117.9 of it is private land, it is assumed that the remainder will be government reserve forest. b. The EIA for Nikachhu specifically mentions that this land requirement is for project roads and dam colony.  c. At the time of the EIA preparation, data and information collected through the survey and Trongsa Dzong government officials, revealed that while the total private land within the project area is 28.47 ha, the area of private land whose owners could be identified was only 18.54 ha. d. The EIA for Punatsangchhu-I provides a breakdown of the different types of land to be acquired from the affected geogs. However, the information is not consistent (e.g., Gasetsho Gom geog, only about 3.35 acres of chuzhing (paddy field) and about 0.75 acres of kamzhing (dry land) are likely to be affected; in Daga geog, temporary acquisition of kamzhing (dry land), but disaggregated information for the different land types is not provided for Daga). The scale of government land to be used for the project is not specified either. 38 Managing Environmental and Social Impacts of Hydropower in Bhutan Table 4-8  Impact on vulnerable groups Project Identified vulnerable groups Chamkharchhu-I Women and children living in the project area are targeted for measures to enhance the living standards. Punatsangchhu-I 5 of the 29 project-affected households that need to be resettled are considered vulnerable because they would be losing their houses in addition to land. Nikachhu 3 of the 17 households are considered vulnerable because they are poor, female-headed, or include someone with a disability. Table 4-7 for private land as a percentage of total women, children, the elderly, unemployed land acquired). Even then, concerns have been youths, indigenous peoples, social minorities, expressed about the availability of sufficient land the disabled, and the very poor are considered that maintains similar livelihood opportunities vulnerable. The EIA reports reviewed employ for resettled and other affected people given the different definitions of vulnerable groups, and large hydropower development pipeline. Much the assessment of impacts on the “vulnerable of the land in the country is dedicated to forests, groups” are not detailed, resulting in mitigation and areas suitable for agriculture, which provide measures that are also weak (Table 4-8). For livelihood for a majority of Bhutan’s population, instance, the EIA for MHEP refers to the are limited. presence of “15–20 households” belonging to the Monpa community in the project areas, but the Besides those directly affected by loss of private assessment does not contain specific details on lands due to acquisition, others may be affected how these households would be affected by the indirectly by the building of access roads, project and neither does the EMP include any especially in the areas that are not connected provisions to mitigate possible risks or impacts.17 to the existing road network. People are also affected by the construction of ancillary No major impacts on cultural heritage from the structures such as residential and nonresidential existing hydropower plants have been reported structures; construction facilities and contractor in the EIAs. This may, in part, be explained by establishments; and muck disposal sites. The the lack of clear demarcations of heritage sites. extent of these impacts is not always known Only impacts on national monuments tend to because their assessment varies across EIA be considered, and thus, those sites that are not reports. Similarly, hydropower projects may nationally recognized but might be of value to also affect the livelihood of households and local communities are not always taken into communities in the villages beyond those whose account. The EIA for Nikachhu mentions that land was by the project. For example, while the there are no impacts on physical and cultural Mangdechhu Hydroelectric Project acquired resources since the nearest cultural resource mostly government land and very little private is 6 km away in Chendebji, possibly having land, the communities in Trongsa Dzongkhag disregarded the many places, sites, and objects who had been using the government land as that do have historical, cultural, and local grazing land saw their livelihoods negatively significance. In fact, during public consultations, affected. impacts on sites of cultural significance have It is also important to take into account the potential impacts on vulnerable groups. In the case of Bhutan, there is no overarching 17 See “Socioeconomic and Cultural Status,” Chapter 10 definition of vulnerable groups but, in general, of the ESIA. 39 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-9  Cultural assets affected by hydropower projectsa + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed capacity (MW) 1,606 5,264 14,196 21,191 Affected historical sites (#) 7 10 21 38 Source: Bank Analysis. Note: a. See Appendix B for more details. been reported, but not necessarily captured in additional structures of cultural significance the EIA.18 that had not been previously considered in the EIA. Similarly, the project has made significant This is not to say that projects ignore the investments in the preservation and restoration significance of nearby cultural sites and their of certain cultural sites, including seismic potential impacts on them. In the Mangdechhu monitoring at the Trongsa Dzong, renovation project, for example, discussions held among of the Dzong, redevelopment of traditional the project authority, Dzongkhag officials, archery grounds, and lighting projects for the and project-affected communities, identified Kuengarabten Nunnery and Dandung temple. The lack of any comprehensive assessment 18 For example, during a publication consultation of these issues as well as opportunities in the meeting held at Thajong ORC for the EIA, however, especially considering that in Chamkharchhu-I HEP, the following was reported, this society cultural heritage is a key aspect of “Public expressed their concern that Nimshong Rock national identity, limits the ability of projects Quarry (CHR-2) may need to be reviewed for its inclusion in the DPR as they strongly believe that to avoid or at least minimize their impacts on local deities known to them as ‘Aulegphog sen’ resides physical and nonphysical cultural heritage. in the tree. . . . It is said that all the proposed quarry area is abode and therefore under his dominance. A geographical analysis of the mapped Till date nobody dares to fell a tree or disturbs its sanctity as they feared dreadful eventuality.” During historical sites shows some major sites— another consultation for the Chamkharchhu project, such as monuments, Dzongs, museums, and it was mentioned, “A chorten—Hopong Chorten— monasteries—lie within the impact area of the that is seen just above the proposed area is said to be built by their forefathers to subdue and bring its projects (Table 4-9). However, the number of nuisance under control.” Despite these concerns affected historical sites is small compared with raised during public consultations, the EIA report the 1,776 sites in total that are currently listed in for Chamkharchhu-I mentions that the proposed the national database (Appendix B). project will not affect any cultural/heritage sites. The only considerations mentioned in the EIA relate to possible impacts on visual aesthetics in the Current management practices in Bhutan project area during construction phase as a result Effective management of social issues requires of clearing, site work, and heavy equipment and that: (i) impacts be identified and assessed early vehicles on the road. Yet it is expected these impacts will be restricted to the construction period of the in the project cycle; (ii) plans be developed and project and mitigated through measures such as implemented to avoid, minimize, mitigate, or rejuvenation and landscaping of temporary project compensate for the potential adverse impacts; sites, muck disposal sites, etc. Further, the EIA report also mentions that the reservoir will be a positive and (iii) affected people be informed and visual feature, with some potential for recreation consulted during project preparation and for tourists, thus contributing to preservation of implementation. natural and cultural heritage. (WAPCOS Limited, “Comprehensive Environmental Impact Assessment Study for Chamkharchhu-I Hydro Electric Project, Rules and Regulations: In Bhutan, the rules Bhutan.” Volume 1, EIA Report, January 2016.) and regulations for managing the social impacts 40 Managing Environmental and Social Impacts of Hydropower in Bhutan of hydropower projects are clear, well-defined, that compensation be paid for any standing and quite robust. As mentioned above, the crops, trees, fruit trees, stone walls, huts, and Environmental Assessment Act (2000) requires houses. Because of the lack of compensation that an Environmental (and Social) Impact for the loss of production potential or support Assessment (EIA) be conducted for hydropower for land preparation, and limited availability of projects, which in turn is regulated by NEC. land of equal quality, some of those provided Obtaining ECs for social impacts entails with land-for-land compensation have suffered a clearances from various competent authorities, loss, according to the Hydropower Sustainability including the NLC for land acquisition. Assessment of Mangdechhu. Likewise, a Notice of Consent is required from the household/individual affected by land Almost all the laws and policies relating acquisition before the NLC can issue clearance to hydropower development (and other to proceed with land acquisition. development activities) make reference to cultural heritage and recommend actions Additionally, the Land Act (2007) governs land to preserve it. For instance, the Land Act acquisition, which is administered by the Land (2007) prohibits acquisition of land occupied Acquisition Committee of the Dzongkhag. by religious monuments. A lack of clear According to the Act, when land is required for demarcations of heritage sites, however, makes a project, preference is to be given to land-for- it hard to fully assess the impact of hydropower land compensation, but the affected household projects on cultural heritage. Cognizant of this, can choose between land or cash compensation. the NLC has undertaken a project to map all the However, when very small parcels of land heritage sites of Bhutan, including the creation (<0.01 acre, or <0.004 ha) need to be acquired, of buffer zones to limit the development impacts the affected household is compensated with on the sites. cash alone. Compensation rates for land are determined by the Property Assessment and Public consultations are mandatory under the Valuation Agency (PAVA), but paid by the Environmental Assessment Act (2000), the relevant agency acquiring the land, facilitated Regulation for the Environmental Clearance by the Land Acquisition Committee of the of Projects (2001), the National Environment relevant Dzongkhag. While the PAVA rates are Protection Act (2007), and required by the supposed to be updated periodically, the current EIA guidelines for hydropower projects.20 rates were set back in 2009. As also pointed out Consultations, however, rely heavily on local in the Hydropower Sustainability Assessment authorities, thus limiting the space for citizen for Mangdechhu, these rates are considered and civil society engagement.21 Moreover, the low given that the market value of land19 has current regulations do not have any specific increased significantly since 2009. At present, requirements on the nature, mechanism, and Bhutan does not have any provisions to pay for land preparation of substituted land but requires 20 The Regulation for the Environmental Clearance of Projects (2001) requires public consultation once the initial environmental screening is completed, as well 19 In Bhutan, like in many other developing countries, as issuance of public notice on the availability of the there is no set methodology for the determination of Environmental Assessment Report. market price, which is made even more difficult by 21 For instance, Article 31.1 (d) of the Regulation for the the fact that the exact transaction price of land sale Environmental Clearance of Projects (2001) mentions: is not always reported fully. However, discussions The local authorities shall help concerned people express with community members in Mangdechhu and with their views to the applicant. The local authorities may officials from the National Land Commission indicate represent the community in negotiations with the that the price of land is at least 50 percent higher than applicant and shall do their best to ensure that the the PAVA rates. applicant has paid adequate attention to local concerns. 41 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts mode of consultation, resulting in procedures focus on improved livelihood, such as better that seem to differ significantly across projects. socioenvironmental benefits, employment The Environmental Assessment Act (2000)22 benefits, access to power, and tourism further requires that once the environmental possibilities. Resettlement and rehabilitation clearance has been obtained, project-related is only one of five social factors considered. In information—including project description, addition, a separate main criterion, representing measures for mitigating adverse impacts, and 15 percent of the total score, is dedicated to rationale for authorizing the project—be made Balanced Regional Development, which favors available to the public.23 However, the existing distributing the hydropower to regions currently regulations and guidelines are largely silent on less developed. The MCA process reaffirms the modality for disclosure (that is, medium, the notion that the negative social impacts of location, language). hydropower in Bhutan are small because of the projects’ small footprints and highlights the Finally, the current practice in hydropower assumed positive impacts of large industrial projects is to put in place two grievance development such as hydropower. redressal mechanisms (GRMs) for community members or groups to raise issues and receive Impact Assessments: The guidelines for feedback. One mechanism relies on the standard environmental assessment of hydropower government system for communication with projects envisage two types of social impact: communities, while the other mechanism (i) effects on land environment, and involves a direct line of communication with (ii) socioeconomic effects. Among these, a few the project staff. In Bhutan, the latter is ad hoc, are meant to be considered, including changes in since most projects do not have a formalized land use, impacts of land acquisition, impacts on grievance mechanism for project-affected the local economy, the influx of laborers and its communities. In the case of the government impact on local resources, impacts on vulnerable mechanism, the line of communication goes groups, and impacts on holy places and tourism from an individual or group at community level (Table 4-10). through the Gup, the elected representative at the Gewog level, to the Dzongkhag While covering the most important impacts, administration, which in turn contacts the the EA Guidelines do not provide very clear relevant project authorities. The response from guidance on the methodologies to be used for the project is then relayed to the community evaluating and predicting social impacts, nor members/individuals through the above do they provide criteria for defining impacts channel. and area of impact, at least not to the same extent that they do for environmental impacts. Early Planning: Similar to environmental Furthermore, where guidance is provided impacts, social aspects are considered in the on suggested methodologies, an assessment MCA for inclusion of hydropower projects in of EIA reports reviewed indicates that the the pipeline (see Chapter 3). The social impacts recommended methodologies are often not followed. Additionally, the Guidelines fail to systematically address other key areas of 22 Likewise, the National Environment Protection Act concern such as vulnerable groups living in the (2007) establishes the right to be informed about the project area, livelihood impacts downstream, state of the environment and all activities that could impact on cultural assets, effects on social and potentially affect the environment. 23 See Chapter IV, Article 28, of the Environmental cultural cohesion, and opportunities for positive Assessment Act (2000). benefits to be derived from the power scheme. 42 Managing Environmental and Social Impacts of Hydropower in Bhutan Table 4-10  Social impacts to be assessed according to Bhutan guidelines for environmental assessments Land environment • Changes in land use/cover and drainage pattern; • Immigration of laborers; • Changes in land quality including effects of waste disposal; • Impact of workforce on local resources; • Impact of induced infrastructure development. Socioeconomic aspects • Impact of land acquisition; • Impact on local economy; • Impact on human health; • Impact due to increase in traffic; • Impact on vulnerable groups; • Impact on holy places and tourism. Table 4-11  Impacts beyond land requirements mentioned in EIAs Project Identified impacts beyond land requirements Chamkharchhu HEP-I Negative impacts: Dust, labor influx. Positive impacts: Income-generation opportunities (e.g., small service businesses, such as restaurants and small shops); access to electricity, access to health facilities through project hospital, and job opportunities thanks to increased access to electricity. Mangdechhu Negative impacts: Influx of migrant workers, interactions of workers with host communities, increased traffic, noise pollution, deterioration of village forests because of fuelwood use in camps. Positive impacts: possibilities for cash-generating activities; sale of farm products; improved flow of money, which boosts the local economy; improved roads; improved education and health facilities; new jobs. Nikachhu Negative impacts: Impact on visual aesthetics during construction, social and cultural instability, health risks and safety risks. Positive impacts: Opportunities for employment and businesses, new access roads. Punatsangchhu-I Negative impacts: displacement of families from their lands, homesteads, and economic activity; intermixing of native Bhutanese population with expatriate labor force, potentially giving rise to conflicts. Positive impacts: Availability of jobs for the locals, increased scope for nonproject activities for the locals, availability of electricity. While EIAs assess the immediate impacts of 82 km of new roads is 245.55 ha.24 By contrast, land acquisition on livelihoods, assessments of the resettlement impacts specified for Nikachhu the impacts of ancillary structures vary across relate to the land requirements for the project the EIA reports (Table 4-11). For example, the as well as ancillary structures.25 Downstream EIA for Chamkharchhu I only assessed the impacts associated with the 46.32 ha of land 24 WAPCOS Limited, “Comprehensive Environmental required for reservoir submergence, while the Impact Assessment Study for Chamkharchhu-I Hydro Electric Project, Bhutan.” Volume 1, EIA Report, total area required for various other project January 2016. components like dam structure, powerhouse, 25 Druk Green Power Corporation Limited and and other equipment is 697.46 ha, and for about Tangsibji Hydro Energy Limited (THyE). 2014. Environmental and Social Impact Assessment Report (ESIA) for Nikachhu Hydropower Project, Volume IV: Main Report (Part 1). 43 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts impacts of power projects are limited largely households was minimal.26 On the other hand, to environmental issues (e.g., flow regulation, consultations on the NHPP were carried out at riverine ecology, hydrological ecology) and very two levels—nationally and locally. Local-level little, if any, consideration is given to livelihood consultations involved the Dzongkhag officials, impacts. Geog authorities, and one representative from each of the households in the Geog. Available While all the EIA reports reviewed mention documentation on the consultations does not both the positive and negative impacts of the indicate how the issues raised during these respective projects beyond land acquisition consultations were taken into consideration (employment and other livelihood opportunities during the project design and implementation. related to the project, noise pollution, influx To cite an example, in Chamkharchhu-I, local of laborers, waste water disposal, etc.), specific communities had raised concerns about the details about the scope and scale of these impact of muck disposal on irrigation channels, impacts/benefits are not always provided. but neither the EIA nor the EMP have explicitly Additionally, reports reviewed do not always addressed this concern. provide details on the methodologies adopted for gathering baseline information nor the Communications and consultations are also criteria used to determine the impacts of the required during project implementation. The project. Moreover, in the absence of any clear Hydropower Sustainability Assessment for guidance on the definition of vulnerable groups, Mangdechhu mentions regular feedback and different projects have used this term differently actions in response to community concerns and, accordingly, measures for minimizing risks are well-integrated, in a timely manner, leading and maximizing project benefits also vary. to general community support for the project. A few complaints—such as poor drainage Such weaknesses in the EIA reports, from construction camps, dust pollution, and corroborated by the independent review that inadequate support provisions following land used the Hydropower Sustainability Assessment acquisition—have been voiced, but the project is Protocol, make it difficult to ascertain whether seeking ways to address them. the current findings suggesting that hydropower projects do not have a significant social impact Because the existing regulations and guidelines are the result of weaknesses in the EIA reports are largely silent on the modality for disclosure, or merely reflect the true absence of major social the ESIA as well as EMPs are generally all impacts. written in English, which presumably makes these documents inaccessible to the general Public Consultations: Every project’s EIA public. While most of the hydropower projects report has a section on public consultations, maintain an official public website, these sites including summaries of the issues raised during provide varying degrees of information on consultations. However, as current regulations the project, the tender information, and other do not have any specific requirements on the aspects. nature, mechanism, and mode of consultation, procedures adopted seem to differ significantly 26 Two rounds of public consultations were held in across projects. For instance, consultations September 2014. While approximately 50 percent on the MHEP were held primarily with the of the participants in the first consultation were local community members, the second round of local government authorities in Trongsa, consultations did not include any local members nor and the participation of project-affected project-affected families (though there were local government representatives and local authorities); see “Environment Impact Assessment” for Mangdechhu Hydropower Project, Chapter 11. 44 Managing Environmental and Social Impacts of Hydropower in Bhutan Recognizing the importance of having a project- agriculture; water resources; cultural aspects; specific GRM, some projects like the NHPP business opportunities; and public health. have also created a separate Grievance Redress What is more, community members attest to Committee, comprising representatives from a high level of satisfaction with the benefits the THyE and DA, to receive and address promised and delivered. However, for all complaints, and assigned a Grievance Redress projects except Nikachhu, the EMP’s section on Focal Person at the project office. Thus far, with socioeconomic impacts and development deal the exception of a few complaints about the dust mainly with the impacts of land acquisition generated, vehicle traffic, the impact of blasting and the compensation for this, while the on housing, public safety, poor sanitation project’s wider contribution to development is affecting water quality around labor camps, and negotiated with the GNHC and the DA, and not improper management of waste disposal—issues included upfront in the EIAs, EMPs, or other that seem to be common across projects—there management plans. is widespread support for the hydropower projects and no major ongoing opposition Construction and operation of hydropower motivated by project-related issues affecting the facilities also have the potential to leverage communities. However, it cannot be determined supply chains for long-term community from the current review if this reflects genuine development and support local area support for the project or merely underscores the development, including the creation of job current GRM system is not very effective. opportunities for local communities (see Box 4-3 as an example of measures adopted for Mitigation Measures: As mentioned above, the Chaglla Hydroelectric Project in Peru to the direct impacts of hydropower development promote supply chains). The sector in Bhutan on local communities, at least in terms of has yet to absorb local manpower, despite being relocation and resettlement of people, have been beneficial to economic growth and poverty minimal, if not completely absent. Despite this, reduction in other ways. As already identified the existing hydropower projects have taken a by the 11th Five-Year Plan, many of the new number of measures to provide direct livelihood construction jobs have gone to foreign workers support programs beyond compensation. (over 22,000 foreign laborers in the hydropower construction sector). The Hydropower However, these livelihood support programs Development Policy (2008) has provisions for have been conceived and implemented local employment and training opportunities differently across projects. For instance, in to foster technology transfer and enhancement accordance with the Hydropower Development of skills among Bhutanese workers,27 but the Policy, Punatsangchhu-I Hydroelectric Project extent to which these provisions are being Authority as well as NHPP have earmarked implemented is unclear. For instance, in the 10,000 units of free power for every acre of land that was acquired. Beyond this, the NHPP is 27 Specific provisions in the Hydropower Policy include: also supporting a Community Development foreign companies allowed to bring in expatriate Plan that is being implemented by Geogs. Based personnel in areas where there is a shortage of on local demands and needs, specific activities Bhutanese with requisite skills; developers required to provide employment to one member of each of in the plan include black topping of farm road, the families displaced as a result of land acquisition; three agriculture market outlets, and skills developer to submit a Human Resources Plan for development. implementation and O&M phase to the Ministry of Labour and Human Resources (MoLHR); at least 75 percent of the employees need to be Bhutanese For the MHEP, the benefits to project- during O&M phase; developer to implement a affected communities span across support for training program endorsed by MoLHR. 45 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Box 4-3  Leveraging the Benefits from Hydropower Development: Experience from Peru The 456 MW Chaglla HEP on the Huallaga River in Peru is financed by equity contributions from Odebrecht and loans from a number of development and commercial banks, including the Inter-American Development Bank (IDB), the Banco Nacional de Desenvolvimento Econômico e Social (BNDES), and COFIDE (a Development Finance Corporation). The local population in the Huánuco region of northern Peru, between the Andes and the Amazon where the project is located, had high levels of illiteracy and poverty, and maintained traditional forms of livelihoods. To support local communities, Odebrecht Peru first conducted a study to understand the socioeconomic profile of the project area and subsequently carried out an awareness campaign to convey the basics of construction work in hydropower projects, targeted at the general public. Fliers, radio broadcasts, theater groups, illustrated booklets, and the like, were used to encourage local communities to apply for the Creer (“Believe”) Peru program, an innovative professional training program aimed at improving the skills and employability of local communities in civil construction. The program included a basic module to prepare community members for construction work at the jobsite, and a technical module in areas related to civil construction, including carpentry, electrical work, masonry, welding, etc. Once certified, many of the participants were hired for Odebrecht construction projects, and the skills they acquired were universal, thus opening up employment opportunities for them long after the construction phase of the Chaglla project had been completed. Source: International Hydropower Association Additionally, to support the local supply chain development, Odebrecht also introduced a Business Network Program. The objective of the program was to bring together farmers from the region and local merchants to allow local communities to benefit from the project’s preferred procurement of goods, services, and agricultural products from inside the project ‘s influence zone. A review of local supplier capacities for supplying vegetables, coffee, dairy products, fish, and the like, was conducted. Next, the project identified 18 agricultural producer cooperatives and proceeded to support them with an agricultural technical assistance program and the establishment of an agrobusiness network. Source: World Bank. ESIA for NHPP, a provision has been created Institutions and Capacity: The regulatory for the contractor to reserve 30 employment responsibilities for managing the social impacts positions for local community members, out of hydropower lie with NEC. The capacity of an expected total of 2,000 workers for the constraints due to limited manpower and project.28 Environmental and Social Impact Assessment Report 28 Druk Green Power Corporation Limited and (ESIA) for Nikachhu Hydropower Project, Volume IV: Tangsibji Hydro Energy Limited (THyE). 2014. Main Report (Part 1), p. 220. 46 Managing Environmental and Social Impacts of Hydropower in Bhutan resources at NEC (Appendix C) are, therefore, to oversee social issues related to hydropower affecting the quality assurance for assessment development has to be enhanced. and mitigation of social impacts. During the stakeholder interviews, one of the reasons given Additionally, the compensation rates for land for the inadequate attention given to social acquisition should be updated. As mentioned issues in hydropower projects was insufficient in the application of the Protocol reported for capacity in the current institutional setup. The MHEP (Appendix D), current rates are low, general capacity constraint is exacerbated by considering that the market value of land has NEC not having dedicated personnel with increased significantly since 2009, when the expertise in social development. The GNHC rates were last set. Moreover, compensation has more staff focused on social development for land acquisition should be supplemented and is responsible for addressing social with support for preparation of the new land and development issues in the respective provided as compensation. Dzongkhags. However, since the GNHC’s role is to facilitate the participatory planning process Clearer guidelines on consultation procedures for all sectors, it leaves them with very little time and modes of information disclosure are also to oversee hydropower projects. Within project needed. The current regulations do not have any authorities, generally there is a designated specific requirements on the nature, mechanism, environmental specialist but none to fulfill the and mode of consultation, and consequently, social management role. the procedures adopted seem to differ significantly across projects. Similarly, existing Key issues regulations and guidelines are largely silent on In summary, though Bhutan’s natural the modality for disclosure (that is, medium, features—especially its steep valleys and deep location, and language), which also adversely gorges—render the direct impacts on people affects compliance. The existing practice of and property relatively limited compared with relying on local government for grievance many other countries, the assessment of current redressal is insufficient to address the possible management practices has identified a number volume of complaints arising from hydropower of gaps that need to be addressed to effectively development. There is a need for project-specific manage the social impacts. In particular, GRMs, such as the one established for NHPP, the EIA process on social aspects, including which involves representatives from the THyE the guidelines to fully assess the impacts of and DA, including a Grievance Redress Focal hydropower development on livelihoods, needs to Person at the project office. be strengthened. This is especially important in view of the strong focus in the planning process on improving livelihoods, primarily through 4.3  Impacts of transmission enhanced socioeconomic benefits and balanced lines geographical development. As noted, while all Relevance the EIA reports reviewed mention both the positive and negative impacts of the respective Many of the issues associated with transmission projects beyond land acquisition, specific details lines are similar to those found in road projects. on the scope and scale of these impacts and These include fragmentation of habitats when benefits are not always provided. There is a the Right of Way (RoW) traverses forested need, therefore, to strengthen the EIA guidelines areas, and the impact of access roads on related to social assessments. Similarly, the soil erosion, hydrology, and water balances. capacity of the regulatory bodies, including NEC, Restrictions on land use, especially in the 47 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts RoW of transmission lines, devaluation of either directly, for instance, by affecting surrounding property due to the presence of river flows used for rafting, or indirectly, by transmission lines, and increased deforestation undermining the scenic value of landscapes that resulting from the provision of access to remote embed cultural and natural sites or trekking areas, are also major issues related to the paths. The scenic and cultural values of the construction of transmission lines. Transmission Douro Valley in Portugal have been at the center lines can also spark forest fires, and another of a controversy about hydropower development important and usually highly controversial and the necessary transmission line network, effect of transmission lines is bird mortality. and maintaining the valley’s UNESCO Global Electrocutions are nowadays rare though, Heritage Site status (Box 4-4). as modern transmission lines have greater insulator lengths and distances between metal Current impacts in Bhutan structures and conductors. The National Transmission Grid Master Plan for Bhutan was prepared by the Central Additionally, the cumulative impacts from Electricity Authority of the government of hydropower projects and their complementary India for evacuation of surplus power from the infrastructure such as transmission lines can 10,000 MW of joint RGoB-GoI hydropower have a significant impact on tourism areas— projects approved in June 2012. A geographical Box 4-4  Impacts of Transmission Lines in the Alto Douro Wine Region Traditional landholders have been producing wine in the Alto Douro region for some 2,000 years. Since the 18th century, the region’s main product, port wine, has been world-famous for its quality. This long tradition of viticulture has produced a cultural landscape of outstanding beauty that reflects its technological, social, and economic evolution. The Alto Douro region was placed on the World Heritage List in 2001, as a Cultural Landscape, encompassing 24,600 hectares and a buffer zone of 225,400 hectares.    In 2008, a National Plan for the concession of 10 hydroelectric projects (HEPs) with high potential was approved. The first project, the Foz Tua Hydroelectric Project, was approved in 2009. Even though the dam and reservoir themselves are sited outside the boundaries of the heritage site, the transmission lines would traverse the site; other lines have already been built. The EIA had a short reference to the transmission lines (stating that they would not affect important bird areas). Opponents of the Foz Tua project (wine growers, NGOs, tourism associations) lodged a complaint against this project with the International Council of Monuments (ICOMOS). In 2012, the World Heritage Committee approved a decision urging the government of Portugal to stop the works. The Committee’s main argument was that the direct impact on the World Heritage site would primarily be a consequence of the proposed transmission lines—the resulting physical loss of part of the landscape would change the way people would experience the landscape, as those lines would affect the pattern, context, and setting of this World Heritage site. Source: World Bank. 48 Managing Environmental and Social Impacts of Hydropower in Bhutan analysis of the footprint of existing and planned corridors. Moreover, parallel lines have been transmission lines on protected areas and planned to minimize impacts. biological corridors is presented in Table 4-12 and Figure 4-3. Transmission lines largely avoid The EIAs for transmission lines reviewed for this protected areas and instead traverse biological study identified the following major issues: loss of private land, the influx of migrant workers, possible conflicts with local communities, and Table 4-12  Impact of existing and planned other construction-related effects such as an transmission lines on protected areas increase in traffic and noise pollution, and and corridorsa impacts on forests due to the use of fuelwood Existing + Transmission in workers’ camps. Others adverse effects— Indicator transmission network under those resulting from land acquisition, the risk (cumulative) network construction of electrocution, exposure to electromagnetic Transmission lines 120.03 201.34 fields, and the impact on the country’s through protected cultural heritage—were considered minimal areas network (km) (Table 4-13). Affected protected 4.27 9.58 areas network (km2) Affected protected 0.02 0.04 The EIAs do not include a comprehensive areas network (%) analysis of the impacts of transmission lines Source: Bank analysis. on biodiversity, habitats (fragmentation), land Note: a. See Appendix B for more details. use (restrictions, especially related to the RoW Figure 4-3  Protected areas and corridors affected by existing and planned transmission line network 49 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-13  Impacts of transmission lines mentioned in EIAs Transmission line Impacts identified/discussed 132 kV D/C power • 21.5 km of RoW currently under different uses, including GRF, biological corridor transmission line connecting Jomotshakha Wildlife Sanctuary and Royal Manas national park, and private from Phuntshothang owned agricultural land; to Motanga under • No impact on individual houses, religious sites, water supply sources, and other Samdrupjongkhar infrastructure; Dzongkhag • 8 landowners will lose their land for tower construction, and RoW will pass over land of 4 households, including an orange orchard, agricultural land, and fallow land; • Influx of foreign workers during construction could lead to social instability, increased pressure on local resources (e.g., housing, infrastructure services, fossil fuel consumption), loss of vegetation, and spread of communicable diseases; safety concerns regarding work sites; • Risk of electrocution and other accidents during construction and maintenance works, risk of fire by flashover, risk of birds being electrocuted of birds; aesthetic impact. 400 kV double circuit • 66 km of RoW with total estimated land area of 837.76 acres and tower bases requiring power transmission line 24.15 acres of land, of which 3 acres (12.4%) is privately held; 20 households affected by for Punatsangchhu II construction of tower bases and 90 households by the RoW in 3 Dzongkhags; • Restricted use of land and loss of crops; • Transmission line will not traverse any religious, cultural heritage, or archeologically important sites ; • Construction-related impacts including disturbances to flora and fauna, traffic hazards, noise pollution, occupational safety, and waste disposal; • Impacts of electromagnetic fields during operation. of transmission lines), landscape, and property National Park and the Thrumshingla National values. Furthermore, other important and Park. Consultations with different stakeholders, usually highly controversial adverse effects— including BPC, the NLC, and the DHPS also such as the possibility of sparking forest fires, indicated an increasing concern over issues of and bird mortality due to collisions with man- land acquisition, particularly in the RoW of made structures located on their flight paths— transmission lines, but the EIAs only discuss are not adequately discussed in the EIAs either. land issues in the context of land area required for the construction of tower pads. The RoW Despite the limited identification of E&S aspect is particularly important given concerns impacts of transmission lines in the EIAs, there about property devaluation in areas surrounding are indications that those impacts could actually transmission lines. be significant. For example, the transmission line to be built for MHEP will have a total length Conflicts involving transmission lines and of 80 km, a 52 meters wide RoW, and pass scenic areas have already emerged in Bhutan. through approximately 55 km of government- For instance, two transmission lines were owned forest land and 22 km of protected area. removed because they were blocking a scenic The transmission line is expected to affect view for the Dochula pass and the Jomolhari the Royal Manas National Park and the Jigme trek. The analysis in some EIAs classifies these Singye Wangchuck National Park, as well as a impacts as “temporary and after few years the biological corridor connecting Royal Manas tower will be hardly visible due to vegetation and the Phipsoo Wildlife Sanctuary and the cover (low height bushes) throughout the RoW.” corridor connecting the Jigme Singye Wangchuk 50 Managing Environmental and Social Impacts of Hydropower in Bhutan Current management practices Notwithstanding these measures, the current In Bhutan, BPC is responsible for the regulatory framework for transmission lines transmission and distribution of electricity, and does not require a scientific assessment of the Bhutan Electricity Authority (BEA) is the impacts on landscape in or near potential designated electricity regulator. BPS has been tourism areas (trekking paths, for instance), entrusted with the preparation of EIAs and has property values in surrounding areas, habitat been using its in-house resources to conduct the (fragmentation), and biodiversity. Mitigation E&S impact assessments of transmission lines. plans mainly focus on minimizing the felling Similarly, BPC implements its EMP through its of trees, especially of valuable species, and contractors. replanting the protected species affected; avoiding electrocution; and mitigating Besides the E&S rules and regulations, Bhutan construction-related impacts. By contrast, has endorsed a separate Environmental measures to lower the risk of forest fires, Assessment Guide for Transmission Lines compensate for usage rights along the RoW (2012). The EIA guideline for transmission lines of transmission lines, and reduce the aesthetic mentions the same procedures for assessing impacts require strengthening. those impacts as it does for hydropower Key issues projects, namely, screening to determine whether an EIA is required, scoping to The existing regulations and practices for establish the E&S priorities, developing the managing the E&S impacts of transmission lines ToR, generating baseline data, conducting are strong in Bhutan and, in several instances, an impact assessment, defining measures to follow international good practices. The likely mitigate the impacts identified, and preparing impact of transmission lines is also considered an Environmental Management Plan. The EIA to be minimal due to the country’s mountainous guideline for transmission lines further specifies topography (requiring minimal clearing of some impacts that must be addressed—those ground vegetation) and the possibility of related to land acquisition; slope destabilization construction-related impacts being abated over due to construction works; aesthetic impacts; time through natural regeneration. However, in fugitive emissions; impacts on biodiversity, the absence of studies and monitoring reports and surface and ground water resources; risks on the broader impacts of transmission lines, and hazards associated with transmission lines; it is difficult to determine the effectiveness of potential exposure to electromagnetic fields; and the existing guidelines and specific mitigation potential occupational health and safety issues. measures mentioned in the EIAs/EMPs. Issues of noncompliance have already been noted in Based on the impacts identified, the relation to the construction of transmission Environmental Mitigation and Management line for MHEP, where two access roads Plans for transmission lines reviewed also were constructed without obtaining prior included a detailed set of mitigation measures environmental clearances. There is, thus, a need (Table 4-14). BPC and NEC considered the to develop sufficient and appropriate capacity at initial draft EIA for Mangdechhu inadequate the BPC and NEC for effective implementation and demanded it be revised. This shows that of the mitigation measures developed and for Bhutan gives serious consideration and scrutiny monitoring compliance with existing rules and to the E&S impacts of transmission lines. regulations. Similarly, a transmission line for Mangdechhu was rerouted to avoid a landslip risk area. 51 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-14  Mitigation measures included in the EMPs for select transmission line projects Transmission line Key mitigation measures included in the EMP 132 KV D/C Power • Cash compensation for private land acquired for tower footing, temporary use of land for Transmission Line construction of labor camps restored and revegetated, and direct damage to fruit trees and from Phuntshothang standing crops compensated during project implementation; to Motanga under • Medical checkups of laborers; minimal conflicts with local communities and minimal pressure Samdrupjongkhar on local resources expected; Dzongkhag • Visual impacts addressed in the long term through increase in vegetation cover throughout the RoW; • Occupational health and safety issues addressed by abiding with the Regulation on Occupational Health, Safety and Welfare (2012); contractors to provide personal protective equipment (helmets, safety goggles, safety harness, etc. ) to workers; • Reduce the impact of electromagnetic fields by avoiding settlements and sensitive receptors while selecting the RoW alignment; • Sporadic clearing of trees in the RoW with the option for trimming wherever possible, and mandatory planting of twice the number of trees felled during construction; • Awareness campaigns to inform workers about forest rules and regulations; • Installation of visibility-enhancement objects such as marker balls, jumper wires on all electrical equipment, bird diverters or deterrents (e.g., silhouettes of predators) to repel birds so as to avoid their electrocution. 400 kV Double • Free and fair compensation to landowners in accordance with the provisions of the Land Act of Circuit Power Bhutan; Transmission Line for • Replacement value for crops/plantation and other assets; Punatsangchhu-II • Identify contracting/employment opportunities for people whose land will be affected; • Include provisions in contract (with the contractors) to ensure that construction workers do not cause disturbances, otherwise adversely affect nearby households or cause them any inconveniences; Bhutan’s regulations on occupational health and safety are observed; • Map all cultural sites in a location before construction begins and ensure that those cultural and heritage sites are not affected; • Avoid mature trees while clearing vegetation and communicate your intention to cut trees to the respective Forestry Division and other authorities, prior to doing so; • Minimize safety risks to the general public by putting up construction and warning signs, sensitizing local communities to potential risks and hazards, and placing anticlimbing devices on all faces of towers. • Install visibility-enhancement objects (marker balls, bird deterrents, diverters) to avoid avian collision; • Reduce exposure to electromagnetic fields by maintaining EMF levels below the reference levels developed by the International Commission on Non-Ionizing Radiation Protection; • Develop transmission line disaster management plan prior to commissioning of transmission line. Note: EMP = Environmental Management Plan; RoW = Right of Way. In addition, more guidance is needed on easement between BPC and the landowner— how to conduct a comprehensive assessment where the usage rights over the strip of land of transmission lines that also considers the that falls under the RoW of the power line are impacts on landscapes, the value of surrounding paid to the landowner by the BPC, while the property, cultural heritage, biodiversity, and landowner maintains ownership of that parcel or the livelihoods of local communities. Given strip of land. the increasing concerns over devaluation of property close to transmission lines, Bhutan Furthermore, the Tourism Council of Bhutan should also consider introducing provisions for (TCB) does not appear to actively participate 52 Managing Environmental and Social Impacts of Hydropower in Bhutan in the EIA clearance process. If it did, this (from underground excavation) and other could help avoid undesirable impacts before waste. To ensure environmentally sustainable transmission lines are built rather than require development of hydropower, it is important the relocation of lines. Addressing both the to prevent muck and eroded material from need to strengthen impact assessment at the being indiscriminately deposited on hill slopes, landscape level and the need for improved damaging forests and ultimately adding to the coordination with TCB would help improve the silt load. Because of the large planned expansion management of these impacts. of hydropower in a short period of time, with many projects to be constructed simultaneously over the next 10 years, proper management of 4.4 Construction-related temporary impacts is crucial. environmental and social As hydropower development rapidly expands impacts in Bhutan, it will also be critical that the project Relevance developers and contractors put in place stringent Impacts during the construction phase can be measures to ensure safe construction practices, both temporary and permanent, and relate to particularly given the specific hazardous the installation of infrastructure, earthworks and working conditions inherent in the construction spoil management, vegetation clearance, traffic, of large infrastructure (involving underground and the relevant discharges from these activities. works and/or working at heights). Appropriate The presence of large workforces in remote sewage treatment and management approaches areas increases pressure on fragile ecosystems should be designed and implemented, taking by boosting demand for timber for cooking, into account the geology of the region. illegal hunting, and poaching. Camps can also cause pollution when disposing of wastewater Current impacts and management and solid wastes. The influx of workers can lead practices in Bhutan to the spread of communicable diseases and The management of construction impacts is affect the social dynamics of local communities. perhaps the issue receiving the most attention in Therefore, steps must be taken to ensure that EIAs. However, most of the proposed mitigation (i) the quality of the workers’ camps is compliant measures are of a generic nature, with little with national laws and regulations, and or no tailoring to specific project sites. The (ii) workers have all the amenities and facilities lack of a systematic approach to construction they need to perform their job fully, without management issues, further exacerbated by putting pressure on local communities. inadequate compliance frameworks, has resulted in impacts on the environment and neighboring Bhutan is a small country with a limited road communities. The Hydropower Sustainability network and a small population. A hydropower Assessment of MHEP also identified the issue: project involves substantial transportation of the impacts from ancillary infrastructure, goods and the influx of thousands of foreign including dust, noise, and other risks from laborers, and thus can have a large impact on access roads, were not assessed. The lack of a small town or village during construction, site-specific E&S management plans makes it usually lasting 5–7 years. Bhutan’s steep difficult to monitor these impacts as well as mountainous slopes also pose challenges compliance with the EMP. for infrastructure construction—mainly the risk of erosion and landslides, and the Similar conclusions can be drawn for the limited space available for disposal of muck social impacts of construction work. In 53 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Chamkharchhu-I, it is expected that about workers at such construction sites typically go 800 workers and technical staff will be working beyond the typical camp management issues. in the project area for approximately nine years. To give just one example, the carrying capacity Discussions on the effects of such an influx of of Trongsa Town has reached the point of workers, as mentioned in the EIA, are limited visitor saturation as a result of the Mangdechhu to problems of sewage disposal, solid waste hydropower project: incoming visitors have a management, indiscriminate fishing, and health hard time finding accommodation, in spite of risks. Accordingly, the mitigation measures the area having six hotels.31 Even though the proposed include the development of a waste MHEP is constructing its own accommodation disposal plan, the setting up of appropriate facilities, the nearby construction of the NHPP units for the treatment of domestic sewage has led to an even greater influx of workers, before its disposal into the river,29 and free fuel which can significantly affect other sectors such provision to the laborers. The EIAs for other as tourism as well. projects follow suit in that the impacts from the influx of laborers are recognized but details on Key issues the scope, nature, and extent of those impacts Codes of Practice, and health and safety are discussed only in very general terms, and performance standards for good engineering the mitigation measures suggested are also during construction should be developed very general.30 The impacts of a big influx of to minimize the impacts of construction and workers’ camps. The development of Codes of Practice for E&S health and safety 29 Though the EMP mentions a waste disposal plant would simplify the EIAs for future projects and a wastewater treatment facility, the EIA report also points out that “due to perennial nature of by concentrating studies on the most relevant river Chamkharchhu, it maintains sufficient flow issues rather than on impacts that can be throughout the year which is sufficient to dilute the managed through good engineering practices. treated sewage from residential colonies. Therefore, as mentioned earlier, no adverse impacts on water Most EIAs so far include mitigation measures quality are anticipated due to discharge of sewage from for the management of construction, mainly laborer camps or project colonies.” WAPCOS Limited, labor camp management (controlling dust, “Comprehensive Environmental Impact Assessment noise, muck disposal, etc.). Most of these Study for Chamkharchhu-I Hydro Electric Project, Bhutan.” Volume 1, EIA Report, January 2016. mitigation measures are identical across EIAs. WAPCOS Limited, “Comprehensive Environmental Therefore, the adoption of a comprehensive set Impact Assessment Study for Chamkharchhu-I Hydro of environmental specifications for construction Electric Project, Bhutan.” Volume II, EMP Report, in Bhutan’s hydropower would greatly simplify January 2016. 30 For example, the EIA for Punatsangchhu-I reads: “It the EIAs by eliminating the need to repeat these is felt that construction activities would be invariably measures in each EIA. EIAs could instead focus undertaken by expatriate Contractors, most likely from on issues such as the impacts on biodiversity India. Construction activities, it is predicated would be semi-mechanized. It is anticipated that most of the and landscape, as well as cumulative impacts labor force, would be from India. A number of marginal (in the case of cascade development). Moreover, activities and jobs would also be available to the the Codes of Practice mentioned above local Bhutanese during construction phase. Marginal jobs such as those of unskilled labor, drivers, cooks, peripheral shops, peons and messengers etc. would open with the local Bhutanese. . . . It is however, felt, that up for the locals. However, such opportunities would there may not be much cultural friction as interaction be limited. As it is evident from the experience of Tala would be limited.” hydroelectric project, it is predicted that the expatriate 31 Druk Green Power Corporation Limited and contractors will provide living space, kitchens, lavatory Tangsibji Hydro Energy Limited (THyE). 2014. facilities etc. for the project labor force. Besides, the Environmental and Social Impact Assessment Report workload would be tremendous, and that the labor (ESIA) for Nikachhu Hydropower Project, Volume IV: force would seldom find time and energy to interact Main Report (Part 1). 54 Managing Environmental and Social Impacts of Hydropower in Bhutan Box 4-5  Different Approaches to Benefit Sharing Project design and operations: Benefits through flexible infrastructure and integrated resources management, for example, multipurpose hydropower projects with different features such as flood control, irrigation, water supply, and water quality improvements can help provide a range of benefits to local populations, beyond access to electricity. Ancillary investments: Physical infrastructure such as roads, bridges, and other project-related facilities; by investing in social infrastructure (e.g., schools, health facilities; community programs aimed at job creation, livestock production, income-generating activities, capacity building and training; and watershed protection investments, such as catchment treatment, erosion management, afforestation), among others, hydropower projects can provide support to local development, beyond providing compensation for the losses. Direct payments/transfers: Legally binding transfers (e.g., royalties, taxes, development funds, preferential rates, and revenue sharing) are also increasingly being used to share project benefits with local communities. For instance, in the case of Nepal, the Chilime Hydropower Project allocated 10 percent equity to residents of the Rasuwa District. Two commercial banks provided on-the-spot loans (80% required capital). While the project was expecting to sell 960,000 shares to the project-affected population, it was oversubscribed 1.6 times. Policies, institutions, and regulatory framework: Legally binding mechanisms (laws, acts, concessions, treaties) for distributing benefits can take various forms. For example, in Colombia, the legal framework requires financing of development initiatives with contributions from hydropower companies. In particular, Law 56 (1981) and Law 99 (1993) requires taxes, fees, and transfers from power generation companies be spent on local and regional administrations. should include preparation of site-specific energy” free of cost from the total electricity Environmental and Social Management Plans generated. The volume of royalty energy is prior to the initiation of any construction set at 15 percent of the electricity output from activity at any site. DGPC-operated, export-oriented hydropower projects. The royalty energy is provided to BPC at a discounted price of Nu 0.30/kWh 4.5  Beyond impacts (compared with the average export price of Nu to benefit sharing 1.8/kWh) for supplying domestic consumers.32 The provision of royalty energy supports RGoB Relevance in prioritizing rural electrification as a means Benefit sharing refers to a framework for of equitably distributing the benefits of Bhutan’s governments and developers to maximize and hydropower resources, especially in support of distribute benefits across stakeholders, beyond the Master Plan for Rural Electrification that compensating the affected households for the aims to achieve 100 percent electrification by negative impacts of hydropower development 2020.33 on their livelihoods and well-being. Benefit- sharing arrangements do not only accelerate In 2013, the RGoB decided to use the full annual the achievement of poverty reduction goals, average royalty energy volume of 1,049 GWh, but also help create social acceptance for large amounting to Nu 1,458 million valued at the infrastructure projects that could otherwise be approved domestic generation tariff of Nu 1.39/ socially disruptive (see Box 4-5 for different kWh, to provide subsidies to low-voltage and types of benefit-sharing arrangements). 32 Any energy purchase above 15 percent of the power Current management practices in Bhutan output of DGPC has to be purchased by BPC at Nu Benefit-sharing mechanisms in Bhutan 1.2/kWh. 33 Asian Development Bank, “Bhutan: Energy Sector,” are provisioned through the Hydropower Evaluation Study, Reference No. SAP BHU 2010–21, Policy and include measures such as “royalty August 2010. 55 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts Table 4-15  Expected power generation and subsidy allocations 2013/14 2014/15 2015/16 Expected volume of royalty energy (GWh) 1,043 1,048 1,057 Average volume of royalty energy (13/14–15/16) 1,049 Allocation of subsidies (Nu, millions)   Low-voltage customers 1,271.704 1,271.704 1,271.704   Medium-voltage customers 186.296 186.296 186.296   High-voltage customers 0 0 0  Total 1,458 1,458 1,458 Source: Bhutan Electricity Authority, “Druk Green Power Corporation Limited Tariff Review Report,” October 2013. medium-voltage consumers.34 The expected Key issues royalty energy volume, based on the expected The current benefit-sharing arrangements have power generated by DGPC, and the total a clear potential to contribute to economic subsidy allocation to various customer groups development and poverty reduction in the are presented in Table 4-15. country. Since these financial benefits are mainly accruing to the public sector, there is no need There is also a provision for a Renewable Energy for additional benefit-sharing arrangements. Development Fund, which can be important for What is critical is that the revenues from initiating development projects for the benefit hydropower be used for broader economic gains of local affected communities. In accordance and diversification; thus, national and local area with the Hydropower Policy, part of the up-front development plans should be better aligned to premium deposited by the developer is to be strengthen benefit-sharing mechanisms and allocated to the Renewable Energy Development generate even greater support for hydropower Fund to be used for project development development. Similarly, clarity on the scope and activities. The latter can include preparation of implementation modalities of the Renewable project profiles and reports, site investigation Energy Development Fund, being considered by and studies, processing of clearances, and the Department of Renewable Energy, will also acquisition of land, but also promotion of enhance the management of E&S outcomes of projects, including payments for environment hydropower development in Bhutan. services such as upstream catchment protection, and renewable energy initiatives. Lastly, revenues from the hydropower sector go into 4.6  Beyond impacts the general coffers of the government and help support economic development and poverty to sustainability reduction programs. Thus, while the sector Relevance has not supported specific benefit-sharing Bhutan is highly vulnerable to the adverse arrangements targeted at affected communities, impacts of climate change due to the fragile it has definitely provided extensive benefits to mountainous ecosystem. Climate change the country. and hydropower are inextricably linked. Hydropower as a clean, renewable source of energy has the potential to contribute to climate change mitigation. Alteration to river flow 34 Bhutan Electricity Authority, “Druk Green Power patterns induced by climate change can affect Corporation Limited Tariff Review Report,” October 2013. Available at http://www.bea.gov.bt/wp-content/ hydropower generation. The likely impacts of uploads/2013/11/DGPC-tariff-review-report-2013.pdf climate change on future hydropower generation 56 Managing Environmental and Social Impacts of Hydropower in Bhutan were assessed in 2009.35 Though only a few shoreline erosion (caused by fluctuating water global climate model projections were used, the level). Sediment management also relates to study indicated only modest impacts up to 2050 the need to maintain transport of sediment, since a possible reduction in precipitation would including nutrients, for downstream areas. likely be compensated by increased melt from glaciers. Beyond 2050, there is a risk that river Current impacts and management flow and power production may significantly practices in Bhutan decline because of diminishing glaciers, which Current climate change impacts on potential would no longer make up for the decrease in hydropower generation are likely to be small precipitation. and, according to the 2009 study, will remain modest up to 2050. From an economic point Bhutan’s location, climate, and topography of view, the hydropower projects are, thus, make the country prone to a range of not vulnerable as the projects are normally hydrometeorological hazards, including GLOFs, paid off in about 15 years, and generate a very flash floods, and landslides, which can affect good economic return for the country for the hydropower facilities. Since 2002, a number of period up to 2050. Even with reduced power flash floods and landslides have occurred in the production after 2050, the plants are likely country.36 In particular, natural dam formation to provide significant surplus because of the and dam bursts that could release huge volumes relatively low O&M costs of hydropower. The of water pose a major risk to hydropower 2009 study, however, showed that impacts might plants. Again, climate change is an important be different for different river basins, especially factor that may increase the hazard of extreme beyond 2050. The 2004 Hydropower Master hydrometeorological events. Plan did not assess how climate change may affect the different hydropower projects in the The efficiency and sustainability of hydropower future. It is relatively simple to conduct such a plants can be impaired by excessive sediment sensitivity analysis to test the potential future in the water. When abrasive sediment particles, vulnerabilities of the different proposed projects in high concentrations, are transported into the and doing so could improve the sustained flow passage of the power generation units, they production in the long term—by choosing the can severely damage the equipment, reducing projects with the lowest risk of being negatively the availability of the plant. Sediment inflow can affected by climate change. also reduce the capacity of reservoirs, which in turn leads to depletion of peaking capacity and The Department of Hydro-Met Services adverse effects on the intake weir that controls (DHMS), under the MOEA, is responsible sediment entry. Climate change can further for hydrological and meteorological data increase erosion and sedimentation. Indirect gathering. It also serves as the technical agency land disturbances due to changed river flows responsible for providing early warning of caused by climate change can add to the erosion hydrometeorological hazards and has an that results from direct land disturbance—due operational GLOF early warning system in the to road and construction works or to reservoir Punakha-Wangdi valley. The recent World Bank report concluded that despite the frequency of natural disasters and the climatic risks Bhutan 35 Climate change impacts on the flow regimes of rivers faces, the information basis for assessing in Bhutan and possible consequences for hydropower such risks is currently weak and needs to be development, Norwegian Water Resources and Energy Directorate (NVE), 2011. strengthened. It further concluded that the 36 Modernizing Weather, Water, and Climate Services: A DHMS needs significant institutional capacity Road Map for Bhutan, World Bank Group, May 2015. 57 Chapter 4 Analysis of Key Issues for Management of Environmental and Social Impacts strengthening to provide essential services for appears to be limited coordination between planning and disaster management. DHPS and DFPS to implement watershed management and protection measures to Abrasion of underwater equipment due to reduce the inflow of sediment. EIAs and EMPs excessive sediment in the water has been of hydropower projects typically include identified as a problem in the Chukha, Tala, Catchment Management Plans to manage the Basochu L/S, and Basochu U/S hydropower impacts on water flows; these plans can also plants, that is, in four of the country’s six address sediment issues. However, there is a lack existing plants.37 The designs of existing of clarity on the institutional responsibility for desilting chambers, which are predominantly supporting and monitoring the development of the hopper type, have been found to be of such plans. The provision of the 1 percent inadequate in dealing with the inflow of royalty energy for integrated catchment area sediment (leading to heavy sediment deposits). management will help support activities to The government has plans to modify the design reduce sediment, provided investments are of planned desilting chambers to manage this targeted at activities and locations for this problem better in the future. In addition, DGPC specific purpose. has taken measures to improve the O&M of the turbine runners affected by abrasion at existing Key issues plants, to minimize the losses due to reduced Disaster management, climate change efficiency and the costs of replacement. A management, and sediment management subsidiary employing 85 Bhutanese workers has are not directly related to managing the E&S been established in Jigmeling, in collaboration impacts of hydropower. However, they are with an international turbine manufacturer, to examples of cross-sectoral planning and repair and recover turbine runners. environmental management that are essential for the sustainability of hydropower in Bhutan. Upstream sediment management has also been The lack of coordination between ministries and suggested as a way to reduce sediment inflow departments that are important for hydropower into the facilities, though at present, there development, and the limited capacity of these, are key in making hydropower more efficient 37 Visit of Sediment Management Specialist at Druk and resilient, thus generating sustained revenues Green (www.drukgreen.bt). for the RGoB. 58 Chapter 5 Discussion and Conclusions T here are many reasons to develop are otherwise limited. Local districts in hydropower in Bhutan. The RGoB Bhutan have therefore actively sought to have is well aware of the importance of hydropower projects developed in their area hydropower for its economic growth. Revenues to create potential for local development and from hydropower, from the 1,606 MW prosperity. The GoI, keen on clean and cheap developed at Chukha, Tala, Kurichhu, Basochhu, power, has rapidly increased its demand for and Dagachhu, are already a significant source hydropower from Bhutan. India’s large parastatal of funding for the state. Hydropower contributes hydropower companies, such as SJVN, THDC, significantly to the country’s GDP, and since and NHPC, see Bhutan’s hydropower potential Bhutan is still running a fiscal deficit,38 any as an opportunity to increase their market decrease in revenues from hydropower means share in a difficult regional market. The interest a reduction in the resources available for from India in Bhutanese hydropower comes other sectors covered by the national budget. with associated bilateral aid, access to Indian Any delay in development of its remaining commercial financing, and transfer of technical hydropower potential is therefore seen as a expertise that generates benefits for Bhutan delay in balancing the budget and becoming beyond future revenues from hydropower. independent of donor support, as well as a delay in building prosperity and improving the The RGoB therefore focuses on using the livelihoods of the Bhutanese people. country’s immense water resources and the potential energy generated as efficiently Ongoing construction of new hydropower as possible. It seeks to develop the most (Mangdechhu, Punatsangchhu-I, and economically promising sites, that is, those with Punatsangchhu-II) has boosted GDP growth a strong interest from the buyer, as these will through an inflow of capital and foreign generate the highest returns for Bhutan in the workers. It has provided local businesses with future. opportunities in remote areas, where prospects The pressure to quickly scale up hydropower 38 Bhutan Development update, The World Bank, April has led to significant technical capacity 2015. development in Bhutan. Hydropower Credit to come? 59 Chapter 5 Discussion and Conclusions development is seen as synonymous with facility in southern Bhutan to provide hard industrial development and its planning is situated coating for runners. within the MoEA. The national hydropower utility, DGPC, which operates the hydropower There is good awareness of the E&S plants, is fully owned by the MoF via DHI. management issues of hydropower, but regulators and other government agencies Today, DGPC is the largest company under do not benefit from capacity development DHI, with close to 1,800 employees. It retains in the same way that those dedicated to 10 percent of the profit after tax from the hydropower do. The RGoB is well aware of operations of existing hydropower plants, which the E&S challenges associated with developing it has used to build its capacity and to explore hydropower. The legal framework provides a and develop new hydropower projects through good basis for E&S management of hydropower. the PPP and JV models. The operational staff E&S values are included in the MCA conducted at the Chukha and Tala plants, mainly Indian by the DHPS for new hydropower development, in the beginning, have now been replaced with although they have been accorded a lower Bhutanese employees. Bhutanese managers weight than the technical and economic aspects. and workers are gradually transferring their experience gained from developing and In Bhutan, the regulations for managing the operating existing hydropower plants to the new E&S impacts of hydropower projects are hydropower projects under preparation and clear, well-defined, and quite robust. The development, as well as to the new staff entering Environmental Assessment Act (2000) requires the industry. that an Environmental (and Social) Impact Assessment be conducted for hydropower Development and operational challenges have projects, which in turn is regulated by NEC. created the need for international knowledge However, more attention has been given to transfer to Bhutan. Preparation, construction, the technical aspects of capacity development and operation of hydropower in Bhutan have than to E&S aspects. Human and financial benefited greatly from expertise from Indian resources are not channeled toward the latter states that have deep experience in developing to the extent that they are for technical capacity hydropower and similar hydrological and development, especially within the government geological challenges (e.g., Himachal Pradesh). institutions. The number of staff at NEC is Indian expertise and policies from its federal small, and no department is fully dedicated to regulatory bodies and institutes—for instance, hydropower development, despite hydropower’s for dam safety inspections—are transferred large role in Bhutan’s industrial development. to Bhutan. Increasingly, global expertise is Baseline data on environmental variables remain brought in to support complex matters, such very scarce, especially for biodiversity. Local as tunneling, sediment management, and and international expertise is underutilized seismic hazards.39 International companies for complex E&S issues. The advisory board are increasingly sought for the role of owner’s envisaged by the environmental policy, to engineer during preparation and supervision be established for the provision of expert of new project developments. National facilities advisory services during the EIA process, is for servicing electromechanical equipment not normally created. International experts on at all existing hydropower plants have been E&S management, while part of the developer’s introduced. As an example, DGPC set up a preparation consultant teams, are not typically working with and transferring knowledge to the 39 Verbal information from DGPC and MHPA, October regulatory institutions. 2015. 60 Managing Environmental and Social Impacts of Hydropower in Bhutan Cross-sectoral linkages are not strongly proper baseline studies, which would help emphasized. The knowledge and awareness determine whether the impacts on biodiversity of hydropower development plans in sister are severely negative and, if so, in what ways and ministries, such as the Ministry of Agriculture where exactly. and Forests, and the Ministry of Roads, seem low. This results in missed opportunities to This study has further indicated weaknesses in focus parallel infrastructure development and the implementation of the ESIA and in avoiding land management programs that would benefit temporary impacts during construction. hydropower development. Similar to the case The independent assessment that used the of regulatory agencies, resources or knowledge Hydropower Sustainability Assessment Protocol do not seem to be channeled to sister ministries for the Mangdechhu Hydroelectric Project, for for capacity development of these ministries to example, highlighted deficiencies in the way support hydropower-smart activities. downstream flows had been assessed in the EIA, and in the way labor and working conditions, Because of the lack of capacity, there are gaps waste, and dust management had been identified in the present management of E&S impacts and were being managed. Codes of Practice for of hydropower development compared health and safety are lacking in the contracts for with international good practice. This study the main contractors. The institutional assessment indicates that the key potential environmental found a lack of coordination and unclear impacts related to hydropower in Bhutan, reporting between the Dzongkhag and NEC for mainly linked to aquatic biodiversity, are compliance monitoring during construction. cumulative and may be synergistic. They are, This study also identified a number of gaps in thus, typically not easy to detect in an EIA managing the social impacts of hydropower. The focusing on only one hydropower project, compensation rates for land acquisition have to and may not be seen in time until a threshold be updated; rates have not been updated since has passed. The current MCA approach 2009. In addition, there is a need to strengthen limits the possibility for considering national the ESIA process on social aspects, including perspectives and cumulative impacts. Though the guidelines to fully assess the impacts of not an immediate problem for the near-term hydropower development on livelihoods. pipeline, the project-by-project development approach may eventually push impacts from Though these specific examples are not the hydropower development beyond the point source of major impacts, they indicate a pattern where the river systems and the natural and of insufficient implementation of the regulatory cultural values of Bhutan—essential for other framework and demonstrate how these sectors to grow—are seriously affected. Lack shortcomings prevent Bhutan’s management of of capacity and resources is partly at fault. E&S impacts of hydropower from fully meeting The time has not been taken to update the international good practice. The institutional hydropower master plan on the national level, analysis shows that the lack of manpower and taking into account cumulative impacts, nor resources for key E&S departments in the to assess possible mitigation measures on the government institutions is a major reason for river basin or regional scale. Such approaches, not assuring quality and full compliance with for conservation of biodiversity as an example, the regulations. As hydropower development would likely be more efficient than project- in Bhutan accelerates, this lack of capacity will based mitigation measures. Lack of resources become more acute, risking the emergence of and manpower has made it difficult to conduct additional management issues. 61 Chapter 5 Discussion and Conclusions If hydropower development proceeds too in NEC and the relevant ministries, to evaluate quickly in Bhutan, with a narrow focus on and give clearances, are bottlenecks that are improving technical capacity along the way, partly to blame for the long lead times. The public criticism could increase due to E&S lack of manpower and resources further limits management concerns. The focus on rapid the government institutions’ ability to interact development of hydropower, both on the part more frequently with developers, something of Bhutan and India, has created pressure to that would reduce uncertainty and increase find and prepare new sites quickly. This will understanding of the process. require increased involvement from the already strained institutions involved in environmental Considering this study’s objectives—to assess clearances and compliance monitoring. Failure the E&S impacts of hydropower development to meet this rapidly increasing demand for planned under the 10,000 MW initiative and institutional capacities will increase the risk beyond, and identify necessary measures for the of management shortcomings, and thus mitigation of impacts—the main conclusions negative impacts, which may stir national and are: international criticism. XX The key impacts of hydropower development Bhutan will be able to develop more hydropower in Bhutan relate mainly to aquatic biodiversity if it can demonstrate its capacity to mitigate and are cumulative, meaning that they are negative E&S impacts and, through robust not immediately of concern but need to get regulatory functions and transparency, more attention as development accelerates. ensure that long-term impacts are taken into In addition, as with all large infrastructure consideration. Similarly, duly communicating projects, there are temporary impacts during to the public the benefits and positive impacts, construction, which, considering the very both on a national and local scale, affirmed rapid and large expansion of hydropower with through monitoring and evaluation, will many parallel projects, must be addressed in a enhance acceptance of the unavoidable negative countrywide and coordinated manner. impacts. The importance of creating trust and XX Despite general awareness and a good positive sentiments around hydropower is regulatory framework for managing the E&S especially important in Bhutan, where ambitious impacts of hydropower in Bhutan, challenges goals for sustainability have been set and great remain in early planning and implementation emphasis is placed on natural and cultural of the assessment and mitigation of impacts, values and the happiness of its people. mainly due to the lack of capacity among key government institutions to assure quality and Capacity building in E&S management enforce good practices. Addressing the capacity can reduce delays in the development of constraints, and providing the necessary tools, hydropower in Bhutan, resulting in cost structures, and skills to the key institutions savings and earlier revenue streams that for E&S management of hydropower would would probably amply far outweigh the cost of benefit both the sustainability of natural and the capacity building. Hydropower developers cultural values in Bhutan, and the hydropower in Bhutan cite long lead times and uncertainty and economic development of the country. around the process to obtain environmental clearances, both during preparation and Recommendations to duly address these key implementation, as major concerns. This study’s impacts and management shortcomings are institutional analysis indicated that the lack of provided in the next chapter. capacity in DHPS, to facilitate the process, and 62 Chapter 6 Recommendations B hutan has the opportunity to develop specific roles of the key stakeholders involved in hydropower sustainably. Bhutan is hydropower development in Bhutan and not just blessed with ample hydropower potential meant to fill those gaps, but also to improve the and has the opportunity to develop hydropower efficiency of the management of E&S impacts. well and reap the tremendous benefits, while The recommendations focus on providing the protecting its core natural and cultural values. key stakeholders with the tools and capacity to Compared with many other countries, the improve and expand the management of the physical resettlement required is relatively E&S impacts of hydropower. small. The natural features of Bhutan enables run-of-river or storage projects with relatively The recommendations are general in nature. small environmental footprints in relation to the Thus, it is important to specify whom these installed capacity. activities are relevant for, which specific issues they address, and how they can be implemented. Management of the E&S impacts of hydropower The following sections go through each of the has already come a long way in Bhutan. The recommendations and describe how they could Hydropower Sustainability Assessment of be implemented. The recommendations are the Mangdechhu Hydroelectric Project by listed in random order and complement each independent assessors showed that, in most other, meaning that the ultimate outcomes will areas, performance is at the level of international be enhanced if the recommended measures are good practice or better. Both the Protocol implemented in parallel. assessment and the analysis conducted in this study, however, also indicate areas where E&S management can be improved. Some of these 6.1  Policy updates relate to potential impacts that are especially Following the recommendations from the 16th relevant for the Bhutanese context. Session of the National Council, the DHPS is currently in the process of updating the To address these management gaps, a number Hydropower Policy for Bhutan. The 2008 of recommendations have been made. These Bhutan Sustainable Hydropower Development recommendations are directed toward the Credit to come? 63 Chapter 6 Recommendations Policy is partly outdated and needs to be by the DHPS, will set the overall direction for revised. The new policy should give the overall the roadmap and in turn be influenced by it. framework for the accelerated development of hydropower in Bhutan, and outline the roles The main reason for developing a strategic and responsibilities of the various institutions roadmap is to address the principal potential involved as well as their modus operandi. impacts that could over time cause irreversible harm to aquatic biodiversity and other possible Regarding E&S management of hydropower cumulative impacts. The strategic roadmap development, it is recommended that the should go beyond the master planning DHPS use the main findings of this report to procedures followed in the past, and reflect a inform the policy framework. The new policy holistic approach involving all relevant sectors. should highlight the key identified potential The roadmap’s final destination should be a E&S impacts relevant for Bhutan, and stipulate realistic action plan for the implementation of in broad terms how and by whom, these hydropower projects, based on the country’s impacts will be addressed. It is essential that the (macro-economic and socioenvironmental) policy revisions address the current resource absorptive capacity. By including E&S impact imbalance between the capacity development assessments for different future hydropower and implementation of technical and E&S development scenarios, such a roadmap will be management of hydropower. able to address the potential cumulative impacts, especially those related to river connectivity. The DHPS, being part of the MoEA and an active stakeholder, should also work to influence Another reason to develop a strategic roadmap policies that are essential for hydropower is that it will reduce the requirements regarding development but the responsibility of other the aspects to be covered under the ESIA ministries. For E&S management, this study for individual hydropower projects. As the has highlighted the importance of updating strategic roadmap should address the need the current compensation levels for land for a Cumulative Impacts Assessment and acquisitions stipulated by the 2007 Land Act. Strategic Environmental Assessments, it will no longer be necessary to conduct these for every new hydropower project. On the other hand, 6.2  Strategic roadmap for cumulative impacts should be included in every future hydropower projects ESIA (see Section 6.3 on guidelines), so that the data contained in the national roadmap may be In parallel with the development of the updated or complemented, but their scope will immediate pipeline, it is essential to revisit be considerably less and the information can just the principles for planning and development be added to the ESIA (no separate document of the remaining hydropower potential and to required). develop a strategic roadmap. Moreover, such a strategic roadmap for remaining hydropower The responsibility for developing the roadmap development in Bhutan is best developed for hydropower development in Bhutan should through a consultative process. The ultimate lie with the DHPS and the MoEA, as the goal is to find the optimal way to meet domestic ministry entrusted with overseeing and planning power requirements and maximize revenues hydropower development. The reason the from export while preserving the country’s DHPS needs to lead this process is that power environmental, social, and cultural resources. demand and available technical solutions are the The hydropower policy, currently being revised drivers of the roadmap on which hydropower 64 Managing Environmental and Social Impacts of Hydropower in Bhutan development can be based. Collaboration with start immediately, since these activities lie on other key stakeholders such as the NEC, GNHC, the critical path. E&S studies should ideally the MoAF, the TCB, and the MHCA is, however, await the results of baseline studies and the crucial. These institutions are responsible for mapping of key biodiversity and cultural assets much of the input for the strategic roadmap, (see Section 6.5 on baseline studies), but also such as the mapping of protected areas, and lie on the critical path. The optimization study data on biodiversity and cultural values. relies on input from the other subactivities. Moreover, the roadmap should be developed in The estimated total time needed to develop the coordination with the sectoral plans for water strategic roadmap is at least two years. (IWRM), agriculture, forestry, and tourism. The optimization of trade-offs between hydropower production and protection of environmental, 6.3  Sustainability guidelines for social, and cultural values also requires a hydropower development transparent and consultative approach to ensure To support the Hydropower Policy and broad ownership of the strategic roadmap. facilitate its implementation and enforcement, the country should develop guidelines to Capacity building and awareness of the ensure sustainability during preparation, importance of early planning for hydropower construction and operation of hydropower. are essential for the successful implementation Those guidelines should encompass more than of the roadmap. In addition, all the stakeholders E&S aspects alone, since sustainable hydropower involved should understand the need for requires that technical, financial, and economic incorporating E&S aspects, especially the aspects also be considered. Unfortunately, cumulative impacts, in the planning process. when financial and technical challenges arise in a project, the E&S aspects are often de- The main subactivities to arrive at the strategic emphasized until those major challenges are roadmap are: solved. This tendency strengthens the case for taking a broader look at sustainability, one XX Update the 2004 Hydropower Master Plan, that features clearly defined E&S management focusing on critically revising technical guidelines. Similar to the strategic roadmap, solutions and cost estimates for hydropower the hydropower policy will provide the overall sites; direction for the sustainability guidelines and XX Conduct a financial and market study refer to them as well. focused on domestic and export demand forecasts for electricity; The main reason for developing comprehensive national guidelines is to mainstream and XX Conduct countrywide, basin-level E&S ensure one set of practices for hydropower studies on the cumulative impacts; development. Otherwise, different developers XX Conduct an optimization study to balance could end up applying multiple approaches the trade-offs at the national level between and standards to different projects. The hydropower development, impacts on guidelines should provide more details than the natural and cultural values, and economic Hydropower Policy, and thus be less susceptible development. to diverse interpretation by developers. Clear guidelines would also make the implementation Timewise, the update of the technical master of permit and compliance processes more plan and the financial and market studies should efficient. 65 Chapter 6 Recommendations It is assumed the E&S sections of the MW Program has been implemented. The sustainability guidelines will, to a large extent, guidance will be informed by international use the existing guidelines contained in the good practices and the ongoing studies on 2012 EA Guidelines for Hydropower and e-flows conducted by NEC. Transmission Lines. However, the development XX Code of Practices (Environmental of sustainability guidelines will provide an Specifications): The guidelines should opportunity to improve the existing guidelines, instruct and propose environmental based on the findings of this study. It is specifications for management during important to place the emphasis on guiding the construction (e.g., labor camp management, implementation of the ESIA and on monitoring occupational health and safety, dust, muck and compliance of mitigation measures. disposal, etc.), which should be included in the bidding documents and contracts for the The key management gaps related to the most main contractors of hydropower projects. relevant impacts of hydropower in Bhutan The adoption of a comprehensive set of that have been identified in this study and it is environmental specifications for construction recommended be specifically addressed in the for the hydropower sector, including new guidelines are: international good practices, will mitigate many of the construction-related impacts XX Impacts on aquatic biodiversity: The currently felt, and can greatly simplify the guidelines should specify how individual EIA procedure by eliminating the need to projects should assess the likely impacts on repeat these measures in each project. aquatic biodiversity and how they should monitor of the impacts and effectiveness of XX Cumulative impacts: The guidelines should mitigation measures. Special attention for clarify how individual projects should assess aquatic biodiversity is essential considering cumulative impacts. Considering the rapid that the free-flowing rivers in Bhutan will and countrywide expansion of hydropower decrease by 69 percent compared with natural in Bhutan, the assessment of cumulative conditions once the 10,000 MW Program impacts must be mainstreamed in all ESIAs. Plus has been implemented. It is essential The assessment of impacts in the ESIA that assessments and mitigation measures should always be conducted taking into focus on preserving overall biodiversity. consideration the future hydropower cascade Stocking of individual fish species should be or road network, and mitigation measures done in the context of the overall biodiversity should be designed for each individual preservation and be coordinated with project to stem as much as possible the national stocking programs. potential future cumulative impacts of the whole system. Areas especially important XX Environmental flows: The guidelines for Bhutan are the potential impacts on should clarify how individual projects migratory fish and the risk of opening up should determine minimum downstream access to protected areas. The assessment flow releases and how they should meet of cumulative impacts on valued ecosystem requirements for monitor its implementation. components should therefore always be The compensatory flow releases are essential integrated with the ESIA. However, the need to preserve the diverted river stretches of for separate cumulative impact assessments run-of-river hydropower in Bhutan. This will only be required if the project has not is especially important since the affected been studied in the context of the national stretches will rapidly increase from today’s master plan or roadmap. 70 km to more than 500 km once the 10,000 66 Managing Environmental and Social Impacts of Hydropower in Bhutan In addition, the development of sustainability developer. In accordance with international guidelines is an opportunity to address other best practices, these procedures could be gaps compared to international good practice in changed to give more responsibility to the E&S management, even though the associated developer and enhance transparency in the impacts are relatively modest on the national process. Doing so would decrease the burden scale. The process to develop the guidelines on the local authorities and make the GRM will provide an opportunity, through cross- more efficient. sectoral discussions, to agree on the level of XX Community development and benefit- requirements appropriate for the Bhutanese sharing programs: Local community context. The process will also justify and development programs are already part of document chosen differences from international the EMPs for hydropower projects in Bhutan, proven best practice. The following are the and the RGoB is using the revenues from management areas identified in this study hydropower to distribute benefits to the where improvement is possible but further society through the state budget. However, consultations are required: informed by international best practices, more robust and uniform guidance for local XX Cultural heritage and landscapes: The livelihood and benefit-sharing programs for potential impact on physical cultural heritage project-affected people could be considered. of hydropower development is likely small in The main reasons for such guidance would Bhutan due to its small footprint. However, be to enable the same level of benefits for all the significant emphasis on cultural values projects, and reduce potential not-in-my- in Bhutan and the link to tourism may be a backyard phenomena. reason to introduce requirements to assess and mitigate potentially broader impacts on XX Disclosure of documents and community the cultural landscape. These requirements consultations: The current practice in would apply to the hydropower projects as Bhutan is not to publicly disclose key well as the associated transmission lines. documents, such as the EIA and the EMP. In accordance with international best practices, XX Focus on livelihoods in Social Impact it may be prudent to include disclosure Assessment: The Social Impact Assessment requirements in the sustainability guidelines. for hydropower has mainly focused on the Disclosure of documents and community people affected by land acquisition, typically consultations related to assessment and only a few. Because the livelihoods of a management of E&S impacts of hydropower larger number of people, including “camp lower the risk of speculation, which can followers,” may be affected (positively generate negative criticism. or negatively) it could be prudent to develop guidelines to increase the focus on XX Compliance framework: There is currently livelihoods in the Social Impact Assessment. a lack of clarity regarding the reporting that This could open up opportunities to boost the hydropower developers need to do on the job creation and improve livelihoods after the clearance conditions or other aspects during construction period. project construction. The guidelines should clarify the compliance elements that the XX GRMs: Because of traditionally strong developers need to provide regular reporting community engagements and trust, the on (to the DHPS and NEC) and disclose GRMs are mainly managed through the local on their website for the benefit of other governmental authorities and not directly stakeholders. through the affected people and the project 67 Chapter 6 Recommendations XX Catchment Area Treatment Plans: The as a basis for the new guidelines. Following Hydropower Policy already stipulates the the mapping and direction set by the new provision of 1 percent royalty energy for Hydropower Policy, a first set of guidelines integrated catchment area management. should be developed by the DHPS, with support The guidelines should clarify the roles and from international and local experts. These responsibilities for implementing these guidelines should serve as input to a consultative plans and guide investments toward those process in which other key stakeholders activities and locations that are most relevant can have their say. The development of the for sustainable hydropower generation such guidelines should start as soon as possible and as erosion control and riverine sediment will probably take 6–12 months to complete. reduction. An essential component of the new 6.4  Capacity building for sustainability guidelines should be clearly environmental and social demarcated roles and responsibilities for the E&S management of hydropower. The clearance process guidelines should complement the new Capacity development for regulatory agencies Hydropower Policy by clearly specifying and key stakeholders should be extended, the various roles and responsibilities in this and cross-sectoral coordination should be context and by focusing on their efficient initiated in the management of the E&S implementation. The responsibilities and impacts of hydropower. Capacity building procedures for the monitoring of impacts during should focus on improving the clearance process and after construction should receive special for E&S permits for hydropower development. attention, and be vested with the developer to a This includes not just the regulatory approval larger degree than is currently the case. procedure, but the whole process of quality assurance of the preparation and application The responsibility for developing the documentation, and ensuring coordination sustainability guidelines should lie with the among all key stakeholders involved. DHPS since the guidelines will cover technical as well as E&S aspects. Similar to the strategic Targeting capacity building targeted at the E&S roadmap, collaboration with other institutions clearance process has multiple benefits. A strong will be crucial. For the sections dealing with regulatory process will force the developer to E&S issues, the DHPS will need to work conduct high-quality preparation to avoid the closely with NEC, the GNHC, the MoAF, and risk of being required to do additional studies, the MoHCA. The interaction with NEC on which could result in delays in the project methodologies developed for downstream schedule. High-quality preparation means that flow determination and the MoAF on fish and E&S impacts will be identified at an early stage, fauna monitoring practices will be particularly will be well understood, and thus allow for important. Collaboration with DGPC will also appropriate avoidance or mitigation measures be necessary to ensure that the guidelines are to be proposed and implemented. A strong and implementable. predictable regulatory process saves time in the preparation of hydropower projects and makes it No specific subactivities are recommended easier for the developer (reliable time estimates) for developing the sustainability guidelines. to coordinate the permit approval process with However, a first step should be to map the other preparatory activities. existing policies, guidelines, and strategies 68 Managing Environmental and Social Impacts of Hydropower in Bhutan The key players in the E&S clearance process aspects of hydropower, something that has are NEC, the DHPS, and DGPC, although not been a NEC priority area to date. No Objection Certificates and clearances are XX Improving DHPS’s facilitation and required from a host of institutions. NEC, as preparation roles the regulatory body, is ultimately responsible for providing the clearance. DGPC, which is • Similar to NEC, an organizational audit increasingly developing its own projects under should be conducted to improve the PPP or JV models, will be responsible for the structure of DHPS so key staff can be preparation studies for many of the hydropower made available to manage the E&S impacts projects in the near-term pipeline. The DHPS of hydropower. The audit should focus on is a key institute—a spider at the center of two specific DHPS roles in the clearance the net—a facilitator for coordinating the process: as a quality assurer and facilitator various steps involving government inputs and of the process. responsible for the preparation of new projects • Also similar to NEC, a comprehensive under the IG model. training program for DHPS staff should be implemented around international The subactivities of the capacity-building good practices for the E&S aspects of program for improved clearance processes hydropower. The facilitator role requires should focus on three major roles and create an a broad understanding of all aspects of overarching, cross-sectoral function: sustainable hydropower development. The DHPS staff should therefore also be XX Improving NEC’s regulatory role trained in procuring and supervising large • An organizational audit should be consultancies for the preparation of DPRs conducted to improve the structure of and ESIAs. NEC so some of its staff can be made XX Improving DGPC’s (or the project available to assume the regulatory developer’s) capacity to prepare ESIAs and responsibilities. Key aspects are the clearance applications need to separate regulatory duties from “supportive” duties (that is, conducting • A training program should be studies), the need for hydropower-specific implemented, with NEC and the DHPS subdepartments or staff, and the need in the role of trainers to the largest extent to bring in more social development possible, that focuses on raising the expertise. understanding and knowledge within DGPC of the E&S clearance process of a • A comprehensive training and skills hydropower project. enhancement program focused on evaluating preparatory studies for XX Improving coordination and streamlining hydropower should be implemented. the clearance process Among other things, this program should • Led by NEC and the DHPS, an analysis aim to enhance knowledge to with the should be conducted with the aim of level of international practices, especially improving coordination of hydropower in areas important for Bhutan such as planning and preparation, and biodiversity and cumulative impacts. streamlining the E&S clearance process Special attention should also be given to for new projects. One way to improve building up basic knowledge in the social 69 Chapter 6 Recommendations coordination is the creation of a cross- for planning and development of hydropower sectoral committee that would meet projects. Considering the constraints of NEC, it regularly to enhance understanding of is desirable to share the burden currently resting the hydropower process and allow cross- on the regulatory agency and broaden capacity. sectoral issues and opportunities to be While the regulatory agency must maintain discussed. decision-making authority, other government departments could provide support—by • In the wake of such an agreement, the contributing expertise or conducting baseline coordination mechanisms outlined above studies. The participation of a cross-sectoral should be implemented as soon as possible committee, to be established taking into to agree on a new, streamlined process account the results of the analysis led by DHPS for clearance, and to provide a forum for and NEC, and to be informed by the new feedback on the development of a strategic Hydropower Policy. Guidance should also be roadmap, sustainability guidelines, and derived from the sustainability guidelines, still baseline studies. to be developed. Besides the DHPS, NEC, the GNHC, and DGPC, other stakeholders likely to Capacity building, that is, training and become part of such a committee are the BPC, skills enhancement, should be based on BEA, MoAF, MoWHS, NLC, MOHCA, and the Hydropower Sustainability Assessment TCB. Protocol, which provides a balanced set of topics for hydropower planning, development, NEC and the DHPS should assume joint and operations (Table 6-1), agreed by an responsibility for the capacity building international, multistakeholder forum that for clearance processes. Though capacity- includes the hydropower industry, civil society development programs must be customized organizations, and financing institutions. For for each of the institutions involved, it would each topic, there is a description of requirements be beneficial if the same service provider for reaching international good practices and undertakes the design and implementation of internationally proven best practices. The the training and skills enhancement. This will Protocol should be used as a framework for ensure that the level and focus of training are the the training, which can be supplemented with same for all key stakeholders. The DHPS should topics that are especially important in the be responsible for the design and setting up of Bhutanese context. The capacity building and a coordinating body among key stakeholders training should be further coordinated with the because such a group would cover aspects going development of sustainability guidelines, which beyond E&S management of hydropower. will be customized for Bhutan, as well as the baseline studies. It is anticipated that training Capacity building is not a one-time exercise; and skills enhancement will target two different rather, it is a gradual process that takes time. It levels—a broader group of stakeholders seeking is therefore anticipated that a capacity-building general knowledge on the E&S aspects of program will run over the course of at least one hydropower, and a few dedicated staff requiring year. Given that the organizational changes to be in-depth knowledge and hands-on training. made within the key institutes will take time, the program may even have to be extended beyond The cross-sectoral function should focus on one year. coordination and sharing of responsibilities 70 Managing Environmental and Social Impacts of Hydropower in Bhutan Table 6‑1  Topics included in the hydropower sustainability assessment protocol Topics toward which sustainability is assessed P I O Communications and consultation X X X Governance X X X Demonstrated need and strategic fit X Siting and design X Environmental and social impact assessment and management X X X Integrated project management X X X Hydrological resource X X Asset reliability and efficiency X Infrastructure safety X X X Financial viability X X X Project benefits X X X Economic viability X Procurement X X Project affected communities and livelihoods X X X Resettlement X X X Indigenous peoples X X X Labor and working conditions X X Cultural heritage X X X Public health X X X Biodiversity and invasive species X X X Erosion and sedimentation X X X Water quality X X X Waste, noise and air quality X Reservoir planning / preparation and filling / management X X X Downstream flow regimes X X X Note: P = Preparation, I = Implementation, and O = Operation. 6.5  Baseline data studies key potential impact of hydropower. A similar argument can be made for hydropower’s essential for environmental potential impact on cultural landscapes, which and social management is mainly based on the traditionally high values Targeted baseline studies to fill data gaps the Bhutanese people assign to architecture, the and build up national references for future natural environment, community, and people’s monitoring and evaluation are crucial for lifestyles. However, since no countrywide improved management of E&S impacts of mapping of cultural landscapes is available, hydropower in Bhutan. The potential impacts it is unknown to what degree the planned on aquatic biodiversity are mainly based on hydropower will actually affect these values. In the relatively large geographical influence both examples, countrywide inventories and of the rivers in Bhutan. The actual impacts analyses are needed to generate the basic data to are mostly unknown, which is why harm to be used by ESIAs to identify local impacts and aquatic biodiversity has been identified as the determine their relevance. 71 Chapter 6 Recommendations Key areas that requires national baseline studies • The first monitoring campaign should be in Bhutan are the mapping of biodiversity and followed up with regular campaigns to cultural values. Information on these two areas gradually expand the database. The focus is especially important as input for the strategic of these subsequent campaigns will to a roadmap, the sustainability guidelines, and the large degree be determined by the results capacity building for hydropower development. of the earlier work. Considering the vast amount of work the XX Mapping of cultural values and landscapes creation of nationwide, detailed inventories and documentation would require, such studies • As a first step, the preliminary interactive must be conducted in a stepwise manner, cultural map of Bhutan prepared by starting with gathering the most crucial data and the MOHCA should be finalized and information. made available to the public. This map is an analysis of Bhutan’s people, assets, XX Mapping of biodiversity landscapes, and ways of life, and aims to serve as information for the development • As a first step, a common georeferenced and implementation of national strategies. database should be created, based on The cultural map should to the extent existing work. Protected areas in Bhutan possible be completed using existing are already relatively well mapped for information. To this end, a cross-sectoral terrestrial biodiversity. Fish assessments team should be established to provide have been carried out by WWF and advice and input. NCA40 (National Centre for Riverine and Lake Fisheries). These data should be • As a second step, with the support of put together in a common database and cultural mapping experts, further data subsequently analyzed to try and draw should be collected and presented in conclusions applicable to the national a variety of formats—graphs, aerial level. photographs, satellite-produced images, statistical databases, etc. Using • Based on the analysis of work already these various information sources, a conducted, a single-season monitoring comprehensive view of the country’s campaign should be designed and cultural resources could be stored and implemented first to fill major data the documented data further refined. As gaps. The focus of this campaign should cultural mapping requires communities lie on gathering key information to to identify and document local cultural complement available data most relevant resources, to secure community inputs in for hydropower development in the near an effective manner, various media should pipeline. It is recommended that this be used in this context, including websites, campaign target aquatic biodiversity, press releases, radio broadcasts, and an given hydropower’s large effect on river e-community survey. connectivity in Bhutan. It is acknowledged that mapping studies can widely range in scope—from very general to 40 The National Centre for Riverine and Lake Fisheries (under the Department for Livestock and Forestry) is highly detailed. The level of detail is likely currently compiling a database of fish species found to be influenced by available resources. It is in Bhutan’s rivers, as part of a three-year Fish Fauna recommended that the choice of geographic Assessment Project that started in 2013, with funds locations for measurement campaigns be based from the Bhutan Trust Fund for Environmental Conservation (http://www.bbs.bt). on the locations of hydropower development 72 Managing Environmental and Social Impacts of Hydropower in Bhutan projects in the near-term pipeline and initially should lie with MOHCA. Given its long prioritize reconnaissance over detail to get experience in Bhutan and specialized knowledge an overall picture of the impacts on aquatic of biodiversity preservation, the WWF is also biodiversity, which can guide future mapping an important resource to support the baseline activities in the future. studies. Besides the mapping studies, two other areas are Conducting baseline studies and subsequently relevant to hydropower’s potential impact on monitoring data are continuous, never-ending aquatic biodiversity and deserved closer study: activities, since there will always be a need for additional, more detailed data and ongoing XX Studies on environmental flows: NEC updating of existing data. At the same time, has already initiated studies on “e-flows,” reliable data are crucially important for the which will provide essential input to the hydropower development planned for the strategic roadmap, sustainability guidelines, next few years, so there is an urgency to start and capacity building for hydropower collecting relevant data as soon as possible. development in Bhutan. It is essential that More specifically, in the next 12 to 18 months, these studies, focused on methodology, be a common GIS database should be created finalized soon to give timely input to the for data gathered through past activities and parallel activities. complementary data monitoring should be started or baseline data studies conducted. • Studies on the efficiency of biodiversity offsets: Artificial fish production in hatcheries to stock upstream and downstream of dams has been suggested 6.6  Capacity building for for many of the hydropower projects compliance monitoring built or still under construction. Because and audits of hydropower’s significant impact on In addition to capacity building for the river connectivity in Bhutan, a thorough clearance process, which is aimed at understanding of the efficiency and the preparation phase, it is essential to effect on the overall ecosystem of this develop capacity for improving compliance mitigation measure is needed to guide the with agreed mitigation measures during development of (i) the strategic roadmap construction and operation. Furthermore, and (ii) the sustainability guidelines for monitoring makes it possible to learn from development of future hydropower. It is the results and change mitigation measures recommended that existing evaluation accordingly to be more effective. While the programs for sites where fish hatcheries capacity building for compliance should build are already in place be supported with on the programs developed for the clearance further studies. process, it should focus on developing partially new structures and guidelines for monitoring NEC, as the main environmental institution and documentation, and less on skills in Bhutan, should act as coordinator for the enhancements. baseline studies on E&S impacts of hydropower. However, the respective relevant agencies should The development of a strong monitoring be responsible for conducting the individual capacity for E&S impacts of hydropower has studies. For instance, responsibility for the a dual purpose: (i) to ensure that impacts mapping of fish should lie with the MoAF, while are mitigated in accordance with the agreed the mapping of cultural values and landscapes 73 Chapter 6 Recommendations EMP; and (ii) to enable the documentation the two institutions and the reporting of impacts, both positive and negative, of mechanisms. Once the roles are defined, the hydropower development. The latter has an assessment of staff capacity should be gained increasing prominence in hydropower conducted to assess capability to fulfil development worldwide as civil society has these roles. increased its interest in the sector. Hydropower • The EMP and clearance process followed developers often ignore the need for thorough during construction and operation should documentation of impacts, despite the fact be critically reviewed to assess possibilities that the owner’s engineering team usually has to streamline the compliance monitoring extensive relevant knowledge. In some cases, process. The focus should lie on the developers have been unable to corroborate, possibility of enhancing and extending the with data, the alleged (reported) effects and hydropower developer’s self-monitoring effectiveness of the mitigation measures. Failure and documentation preparation to provide “proof ” leaves room for speculation capabilities to decrease the burden on the and criticism of the project. regulatory authorities. Specifically, the self-monitoring should be designed to In Bhutan, it is especially important to monitor proactively identify and alert to potential and document the positive socioeconomic risks that require involvement of NEC benefits of hydropower. The development of or a DEO. If such a system were in place hydropower is supposed to bring large revenues and duly functioning, the need for regular to the country. Through the MCA currently visits by regulatory authorities would be used to steer HEPs to less developed areas, the reduced. potential benefits for local communities are emphasized in the planning process. Against • Following the above analyses, key staff of this background, it is vital to document these NEC and DEO should receive training benefits to build proof that the positive impacts to strengthen their skills and roles in are by far larger than the potential negative compliance monitoring. impacts. XX Create structures and guidelines for independent surveys: Introduction of It is recommended that the capacity building for independent monitoring mechanisms, compliance monitoring and audits mainly target such as third-party inspections for key E&S four areas: parameters for hydropower projects to build knowledge and understanding of the impacts XX Improving the system for day-to-day of hydropower development in Bhutan. supervision by DEOs and NEC: The lack of manpower and resources for checking • It is recommended that guidelines and compliance with the EMP and providing templates for at least three major surveys clearances during construction have been or impact evaluations be developed: identified as gaps for managing E&S impacts baseline (before construction starts), of hydropower. mid-term (during construction) and completion (after commissioning). These • An organizational audit should be surveys, which are the responsibility of conducted to improve the organization the developers, should mainly focus on of NEC and the DEO for their regulatory indirect impacts—measured by livelihood responsibilities to ensure compliance parameters such as health, income, of the EMP. Key questions that need to assets, and school attendance for affected be looked at are the respective roles of 74 Managing Environmental and Social Impacts of Hydropower in Bhutan households—and biodiversity parameters, • It is recommended that the capacity for indicating the presence of key aquatic carrying out internal audits be built within and terrestrial species, etc. The surveys the DHPS and DGPC, which are directly should be conducted by independent involved in hydropower projects under institutions, for instance, universities, and all models (IG, JV, and PPP) in Bhutan. be public documents. Such surveys are A small group consisting of four or five very powerful tools to inform the public key staff from the E&S divisions of these of the actual impacts of hydropower in organizations should be trained to conduct Bhutan, and to guide improvements in internal assessments. Training should E&S management for future hydropower include at least one audit exercise of a projects. hydropower project under preparation or construction. • The major surveys can potentially further be augmented by exploring possibilities for XX Extended use of International Panel of regular monitoring in between the time of Experts: International and national experts the three milestone surveys. Possible ways are already used for advisory services could be through community monitoring during preparation and implementation of or by utilizing new technology through hydropower projects in Bhutan on an ad real-time monitoring utilizing internet. hoc and needs basis. It is recommended that the use of a Panel of Experts (PoE) become XX Create capacity for internal audits by standard for new hydropower projects in DHPS/DGPC using the new sustainability Bhutan. Developers should have the panel in guidelines: Adaptive management is only place before starting construction (in some efficient if there is a mechanism in place cases, having a PoE even during preparation to identify gaps. Internal audits that use is suggested). The function of the PoE is not a structured methodology and standard primarily to check compliance but rather to template could be used in this context. advise the developer on methods to solve the The internal audits are also a powerful often complex and case-specific challenges communication tool to show compliance encountered in hydropower projects. with regulations and good practices, similar to the independent surveys. Internal audits of • The PoE should be involve national and E&S management are especially useful during international experts, assigned on a part- construction, when large technical challenges time basis, and have the resources to make often take center stage, but can also be used regular site visits. The team should work in the preparation stage to assess compliance in close collaboration with developers, with good practices. NEC, and other relevant government organizations to bring in international • It is recommended that the procedures experience and take advantage of lessons developed for the internationally learned from previous and parallel projects recognized Hydropower Sustainability developed in Bhutan. Assessment Protocol be used as the basis for developing internal audit routines for The above subactivities involve capacity E&S aspects. Similar to the Protocol, clear building and development of new guidelines requirements for good practices reflecting and procedures. The development of these new the new sustainability guidelines can be structures and guidelines will largely rely on the set, and a structured methodology can institutional capacity of the key stakeholders; it be developed to assess whether these is therefore recommended that the latter process requirements have been met. 75 Chapter 6 Recommendations be made part of the capacity-building package. step-by-step, starting with the creation of tools The above subactivities are also closely linked for better management, institutional capacity to the capacity building to improve clearance building, data collection, and consolidation processes and thus could be implemented of knowledge and information into strategic together. plans (Figure 6-1). Updating the Hydropower Policy, informed by the findings of this study, The responsibility for capacity building for and developing guidelines for preparation and compliance monitoring and audits should implementation of hydropower projects through lie with each respective organization. It is a consultative process, can be done relatively recommended that the capacity-building quickly and will increase awareness of the need components for improved clearances and for improved management. The development compliance monitoring be launched as one of routines and guidelines for conducting package, primarily targeting the DHPS and independent surveys and internal audits related NEC; however, the specific subactivities should to the E&S management by DHPS, should also be directed at the relevant organization. The be relatively easy to fast-track to put pressure capacity-building program should run over the on hydropower developers to adopt the new course of at least one year. guidelines. Developing these tools will start the much- 6.7  Prioritization and way needed capacity building, while a more forward permanent institutional development, demanding organizational changes and new The key stakeholders in Bhutan have already funding mechanisms, will obviously take started the process of improving sustainable longer. Nevertheless, capacity building should management of hydropower. The DHPS has start as soon as possible, aimed at increasing started updating the 2004 Master Plan; NEC knowledge and skills, and a more efficient use has initiated detailed studies to estimate of the available resources. Similarly, the creation environmental flow in the rivers of Bhutan; of national databases should start with making DGPC has developed a Social Safeguards existing data available through GIS databases Manual to promote the development of accessible on the Internet, and gradually hydropower projects in a socially responsible supplementing these with new data, as resources manner and according to sound internationally become available. accepted practices. Although these first steps have been taken, implementing the above Although strategic plans are needed as soon as recommendations remains a huge task that possible to guide the next batch of hydropower will require large resources and a strong focus. projects to be developed, comprehensive, Bhutan has a large government sector and there nationwide plans require a large amount of is little room for expansion in the short term. input data and knowledge of the aquatic and Competition for state budget funds is strong, terrestrial systems of Bhutan. These plans given the many basic development needs Bhutan will therefore have to wait until the necessary still has. It is therefore wise to be practical: capacity has been built and baseline data have start with the low-hanging fruits, and aim for a been compiled. The current initiative to update stepwise, gradual increase in capacity to manage the technical master plan should be seen as an the E&S impacts of hydropower. opportunity to in parallel build up the minimum input data necessary for conducting basin- Activities to improve the E&S management of scale assessments of the cumulative impacts of hydropower in Bhutan should be implemented hydropower on the country’s major rivers. 76 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure 6‑1  Sequencing of main recommendations and relationship to existing RGoB initiatives 2016 2017 2018 Activity Jan–Jun Jul–Dec Jan–Jun Jul–Dec Jan–Jun Jul–Dec Existing initiatives by RGoB Fish diversity assessment (NCA-MoAF) Development of methods to determine environmental flows (NEC) Update of the Hydropower Policy (DHPS) Update of the 2004 Hydropower Master Plan (DHPS) Suggested recommendations by this study Sustainability Guidelines for Hydropower Development Capacity building • Awareness and knowledge enhancement • Creating capacity for internal audits by DHPS and developers • Creating templates and capacity for independent surveys • Institutional changes and enhancement for regulatory roles Baseline studies of data essential for environmentally and social management • Mapping of aquatic biodiversity • Mapping of cultural values and landscapes Strategic Roadmap for Future Hydropower Projects • Financial and market study • Countrywide studies focusing on cumulative impacts • Optimization study to draw up roadmap for remaining hydropower potential Update of Fish Diversity the 2004 Update of the Assessment Hydropower Hydropower (NCA-MoAF) Master Plan Policy (DHPS) (DHPS) Sustainability Mapping of Guidelines for Aquatic Hydropower Biodiversity Development Organization Institutional Study to Draw up Changes and Roadmap for Enhanced Remaining Hydro Regulatory Potential Roles 77 Appendix A Existing and Potential Hydropower in Bhutan Table A‑1  Hydropower development scenarios Status Project name Installed capacity (MW) Existing 1,606 Basochhu L/S 40 Basochhu U/S 24 Chukha 336 Dagachhu 126 Kurichhu 60 Tala 1,020 Under construction 3,658 Mangdechhu 720 Nikachhu (Tangsibji) 118 Punatsangchhu I 1,200 Punatsangchhu II 1,020 Kholongchhu (600 MW) 600 10,000 MW Program Plus 8,932 Amochhu 540 Bunakha 180 Chamkhar-I 770 Kuri-Gongri 2,640 Sankosh Main 2,500 Sankosh Lift 60 Wangchhu 570 Under DPR Dorjilung (Rotpashong) 1,230 Under DPR Nyera Amari-I 125 Under DPR Nyera Amari-II 317 Credit to come? 79 Appendix A Existing and Potential Hydropower in Bhutan Status Project name Installed capacity (MW) Selected potential sites 6,995 Prefeasibility Aiechhu 83 Under DPR Chamkhar-II 590 Prefeasibility Chamkhar-IV 364 Prefeasibility Dagachhu-II 140 Prefeasibility Dangchhu 170 Prefeasibility Gamri-I 45 Prefeasibility Gamri-II 85 Reconnaissance study Gamri-V 91 Prefeasibility Jomori 107 Reconnaissance study Kholongchhu (94 MW) 94 Prefeasibility Khomachhu 363 Prefeasibility Manas 2,800 Reconnaissance study Mochhu-I 660 Reconnaissance study Mochhu-II 450 Reconnaissance study Pachhu 77 Reconnaissance study Parochhu 114 Reconnaissance study Piping 55 Reconnaissance study Puna-III 600 Prefeasibility dropped Shongarchhu 107 Balance HEP 3,999 No detailed studies Amochhu-I 747 No detailed studies Amochhu-II 500 No detailed studies Bomdeling 130 No detailed studies Burgongchhu I 69 No detailed studies Burgongchhu II 70 No detailed studies Chamkharchhu-III 1,247 No detailed studies Chamkharchhu-V 97 No detailed studies Cherchhu 45 No detailed studies Cherichhu 76 No detailed studies Darachhu-I 79 No detailed studies Gamri-III 80 No detailed studies Gayzamchhu 53 No detailed studies Gobari 43 No detailed studies Gumthang 108 No detailed studies Krissachhu 32 No detailed studies Phochhu 132 No detailed studies Rimjigang 46 No detailed studies Samchhu 71 No detailed studies Shergarchhu 27 No detailed studies Sherichhu 36 No detailed studies Sichhu 78 No detailed studies Thampochhu 95 No detailed studies Thimphuchhu 57 No detailed studies Yemkhari 81 Grand total 25,190 80 Appendix B Geographical Analysis of Potential Impacts T o support the analysis of potential connectivity, in turn, affects the ability of rivers E&S impacts associated with scaling to perform their ecosystem functions such as up hydropower investments in the sediment and nutrient transport. Fragmentation future, a geographical analysis was carried of the river also reduces the self-cleansing out to highlight the key potential issues from ability of the river to recover from and dilute the the national perspective. It was based on impact of surrounding sediment and pollution four scenarios of cumulative hydropower runoff from the catchment, leading to a decline development: (i) existing projects; (ii) projects in water quality. Increased fragmentation of under construction; (iii) a revised 10,000 MW the river and potential changes in water quality program; and (iv) other potential sites in the may also affect fish and other aquatic species reconnaissance or prefeasibility stage. The in the river. Changes in river conditions—from detailed project listings for the scenarios are fast-flowing, turbulent conditions, to slower, provided in Appendix A. shallower flow in some stretches—may result in some species accustomed to or requiring specific water characteristics giving way to Potential environmental opportunistic species that are more adapted to impacts of hydropower facilities the conditions further downstream. and transmission lines Affected River Stretches.41 The total affected Impacts on aquatic connectivity river stretch includes the length of the reservoir and river flow (if applicable) and the dewatered stretch, Hydropower development, particularly with that is, the length of river between the intake cascading plants on a single river, can affect structure and the outlet. For the purpose of this a river system by changing its water quantity, analysis, only major rivers are included. The water quality, and water connectivity, and by causing river fragmentation. As regulating 41 Data on the hydropower facilities are from the Department of Hydropower and Power Systems. Data structures are added to the river system, on boundaries and geological features are from the the length of the river that remains free- Department of Forests & Park Services, and the U.S. flowing decreases over time. This decline in Geological Survey. Credit to come? 81 Appendix B Geographical Analysis of Potential Impacts Table B‑1  Affected river stretches and reservoir area by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Affected River Stretch (km) 68.6 162.4 501.2 953.9 Reservoir Area (sq. km) 1.45 4.3 34.3 39.6 Table B‑2  Free-flowing river stretches by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Free-Flowing River Stretch (km) 1,931 1,652 1,495 1,099 Free-Flowing River (%) 89 76 69 50 Total Length of Major River (km) 2,168 affected river stretch is intended to convey the in other territories. For projects with reservoirs, length of river for which the flow regime will be the free-flowing river stretch ends where the dramatically altered due to water diversion for most upstream reservoir begins. With the power generation or due to storage. Currently, current installed capacity of 1,606 MW from this affected river stretch stands at 68.6 km major hydropower projects, the vast majority but, as the projects under construction come of Bhutan’s rivers are free-flowing for long online, this figure is expected to more than stretches. As more projects come online, double. With the introduction of the remaining including those that are at the prefeasibility projects in the revised 10,000 MW Program, this or reconnaissance phase, this indicator will fragmentation will actually increase by a factor probably decline to half, that is, 50 percent of the seven (Table B-1, Figures B-1, B-2 and B-3). major river network (Table B-2, Figures B-4, B-5 and B-6). Free-Flowing River Stretches (Major Rivers).42 This refers to the total length of major river Impacts on the protected areas network stretches above the furthest upstream dams Hydropower plants can also affect biodiversity on each river. It is intended to convey the total through the destruction of habitats. Such length of major rivers that are unregulated, and impacts can be direct, because of the footprint thus retain most or all of the key characteristics of hydropower schemes, including ancillary that support ecosystems, including connectivity infrastructure (access roads, residential and a natural flow regime. For the purpose complex, nonresidential complex, contractor of this analysis, the length of river stretch is facility and workshops, disposal sites), or calculated only within the national boundaries indirect, as a consequence of opening up of of Bhutan and does not account for any the adjacent areas through access roads built regulation provided by infrastructure upstream for construction purposes. Vegetation removal often leads to the loss of plants, which have their 42 Data on the hydropower facilities are from the inherent biological value but also provide food Department of Hydropower and Power Systems. Data and cover for many birds and animals. Opening on boundaries and geological features are from the Department of Forests & Park Services, and the U.S. up of remote areas can also lead to an increase Geological Survey. in poaching. 82 Managing Environmental and Social Impacts of Hydropower in Bhutan Table B‑3  Impacts of hydropower facilities on protected areas and corridors by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Affected Protected Areas Network (sq. km) 14.72 24.43 35.31 178.03 Affected Protected Areas Network (%) 0.06 0.10 0.14 0.73 Total Protected Areas Network (sq. km) 24,354.1 Table B‑4  Impacts of transmission lines on protected areas and corridors by scenario Existing + Transmission network Indicator (cumulative) transmission network under construction Transmission Lines through Protected Areas Network (km) 120.03 201.34 Affected Protected Areas Network (km ) 2 4.27 9.58 Affected Protected Areas Network (%) 0.02 0.04 Total Protected Areas Network (km2) 24,354.1 Impacts of Hydropower Facilities on Protected infrastructure (excluding transmission lines) is Areas and Buffer Zones.43 The intention very small (Figures B-8, B-9 and B-10). of this analysis is to define an area around each hydropower project within which the Impacts of Transmission Lines on Protected aforementioned impacts may occur. While the Areas and Buffer Zones.44 The aim of this impact area around a project is highly site- analysis is similar to the above, but confined to specific and dependent on a number of factors, the potential impacts of transmission lines on this analysis seeks to estimate a reasonable area the protected areas network. The affected area is that can be extended to the four scenarios of in this analysis defined by Bhutan’s official RoW hydropower development being examined. For clearances on either side of the transmission this purpose, a 2 km radius is marked around lines for different voltages: 400 kV (26 m); the dam/intake structure of each project, 220 kV (20 m); 132 kV (13.5 m) and 66 kV and potential overlaps with protected areas (8 m) (Table B-4, Figures B-11, B12 and B-13). and buffer zones are highlighted. As seen in Table B-3, the extent of the protected areas network affected is five times larger when Potential social impacts projects in the prefeasibility/reconnaissance of hydropower facilities phase come online compared with development of projects planned under the revised 10,000 and transmission lines MW Program. In absolute terms, however, the Impacts on villages and social extent of the protected areas network likely to be services infrastructure affected by hydropower facilities and ancillary The biggest social impacts of hydropower development are associated with the 43 Data on the hydropower facilities come from the Department of Hydropower and Power Systems. 44 Data on the transmission lines come from the Data on boundaries and geological features are from Bhutan Power Corporation. Data on boundaries the Department of Forests & Park Services, and the and geological features come from the Department U.S. Geological Survey. Data on the protected areas of Forests & Park Services, and the U.S. Geological network come from the Department of Forests & Park Survey. Data on the protected areas network come Services. from the Department of Forests & Park Services. 83 Appendix B Geographical Analysis of Potential Impacts Table B‑5  Impacts of hydropower facilities on villages by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Affected Structures (#) 320 892 2,148 3,310 Affected Villages (#) 21 82 146 212 Table B‑6  Impacts of transmission lines on villages by scenario Existing + Transmission network Indicator (cumulative) transmission network under construction Affected Structures (#) 520 191 Affected Villages (#) 587 221 transformation of land use in the project reasonable area that can be extended to the four area and the displacement of people. Global scenarios of hydropower development being experience has shown that resettlement is examined. immensely disruptive to the communities affected and can have long-term effects on Impacts of Transmission Lines on Villages and livelihood and well-being. In Bhutan, the Structures. The number of affected structures displacement impacts of hydropower projects refers to those that fall within the official so far seem to have been minimal because Right-of-Way clearances of transmission lines project footprints have been small and mainly of different voltages (Table B-6). The number of in uninhabited areas. Another factor is the affected villages refers to the number of unique preference given to acquire government land, villages that those structures belong to. particularly reserved forests, over private land, and the provision of land-for-land compensation Impacts of Hydropower Facilities on Health to the project-affected communities. Landscape Facilities and Schools.46 As above, the number changes have also been limited—project- of affected schools and health facilities refers to affected areas normally encompassing only a few those that fall within a 2 km buffer around the square kilometers per project. dam/intake structure (Table B-7). Impacts of Hydropower Facilities on Villages Impacts on cultural assets and Structures.45 The number of affected Physical cultural resources are important as structures refers to those that fall within a sources of valuable scientific and historical 2 km buffer around the dam/intake structure information, as assets for economic and social (Table B-5). The number of affected villages development, and as integral parts of a people’s refers to the number of unique villages that cultural identity and practices. No major those structures belong to. While the impact impacts from existing hydropower plants on area around a project is highly site-specific cultural heritage were brought to the World and depends on a number of factors, including Bank team’s attention during the preliminary access roads, camps, and other ancillary infrastructure, this analysis seeks to estimate a 46 These data come are from a mapping project being undertaken by the MoHCA. The underlying sources are the National Statistics Bureau, Division for 45 Data on settlements, health clinics and schools is from Conservation of Heritage Sites, the National Land the National Statistical Bureau. Commission, and the Ministry of Agriculture. 84 Managing Environmental and Social Impacts of Hydropower in Bhutan Table B‑7  Impacts of hydropower facilities on schools and health facilities by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Affected Schools (#) 4 5 11 22 Affected Health Facilities (#) 3 5 10 17 Mapped Schools (#) 863 Mapped Health Facilities (#) 536 Table B‑8  Impacts of hydropower facilities on cultural assets by scenario + Under + 10,000 MW + Prefeasibility/ Indicator (cumulative) Existing construction Program Plus reconnaissance Installed Capacity (MW) 1,606 5,264 14,196 21,191 Affected Historical Sites (#) 7 10 21 38 Affected Historical Sites (%) 0.4 0.56 1.2 2.1 Mapped Historical Sites (#) 1776 assessment, neither are potential impacts on historical sites such as monuments, Dzongs, and cultural heritage mentioned in the ESIAs for museums are included. ongoing projects. On the other hand, local media did report potential impacts on religious Summary sites for some of the planned projects in the Based on the geographical analysis, it is near-term pipeline. clear that the impacts from new hydropower development and additions to the transmission Impacts of Hydropower Facilities on Major network compound for aquatic and terrestrial Historical Sites.47 The aim of this analysis is to ecosystems and communities. While the examine the potential impact of hydropower increase in impacts appears proportional to the facilities and their ancillary infrastructure on amount of new energy generated by the projects important cultural facilities, using a 2 km radius for some indicators (e.g., affected river stretches buffer around the dam/intake structure of each and free-flowing river stretches), some impacts project (Table B-8). As Bhutan’s religious and show a disproportionate increase from one cultural heritage is very diverse and complex, scenario to another. For example, a 50 percent it cannot easily be captured by spatial analysis. increase in installed capacity from those sites in Thus, for the purpose of this study, only the prefeasibility/reconnaissance phase increases encroachment in protected areas by over 47 See above. 400 percent. 85 86 Appendix B Figure B‑1  Affected river stretches for hydropower facilities, existing and under construction Geographical Analysis of Potential Impacts Figure B‑2  Affected river stretches for hydropower facilities, up to 10,000 MW Program “Plus” 87 Managing Environmental and Social Impacts of Hydropower in Bhutan 88 Appendix B Figure B‑3  Affected river stretches for hydropower facilities, up to 21,191 MW Geographical Analysis of Potential Impacts Figure B‑4  Free-flowing river stretches for hydropower facilities, existing and under construction 89 Managing Environmental and Social Impacts of Hydropower in Bhutan 90 Appendix B Figure B‑5  Free-flowing river stretches for hydropower facilities, up to 10,000 MW Program Plus Geographical Analysis of Potential Impacts Figure B‑6  Free-flowing river stretches for hydropower facilities, up to 21,191 MW 91 Managing Environmental and Social Impacts of Hydropower in Bhutan Appendix B Geographical Analysis of Potential Impacts Figure B‑7  Planned storage projects 92 Figure B‑8  Protected areas and corridors affected by hydropower facilities, existing and under construction 93 Managing Environmental and Social Impacts of Hydropower in Bhutan 94 Appendix B Figure B‑9  Protected areas and corridors affected by hydropower facilities, up to 10,000 MW Program Plus Geographical Analysis of Potential Impacts Figure B‑10  Protected areas and corridors affected by hydropower facilities, up to 21,191 MW 95 Managing Environmental and Social Impacts of Hydropower in Bhutan 96 Appendix B Figure B‑11  Protected areas and corridors affected by existing transmission lines Geographical Analysis of Potential Impacts Figure B‑12  Protected areas and corridors affected by transmission lines, existing and under construction 97 Managing Environmental and Social Impacts of Hydropower in Bhutan 98 Appendix B Figure B‑13  Transmission lines, existing and under construction Geographical Analysis of Potential Impacts Managing Environmental and Social Impacts of Hydropower in Bhutan Figure B‑14  Major rivers of Bhutan 99 Appendix B Geographical Analysis of Potential Impacts Figure B‑15  Topography of Bhutan 100 Managing Environmental and Social Impacts of Hydropower in Bhutan Figure B‑16  Protected areas of Bhutan 101 102 Appendix B Figure B‑17  All identified project sites with studies at least at reconnaissance level Geographical Analysis of Potential Impacts Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower A targeted institutional assessment of the and includes the following Divisions: main organizations involved in E&S Administration and Finance, Policy and management of hydropower has been Programming Services, Legal Services, conducted. The scope of the study was restricted Human Resource Services, Environment to the following institutions relevant to Services, Compliance Monitoring, Water managing E&S issues in the hydropower sector: Resources, Climate Change, and ICT Services. (i) the National Environment Commission Each Dzongkhags is assigned a Dzongkhag (NEC); (b) the Gross National Happiness Environmental Officer (DEO), who falls under Commission (GNHC); (c) the Department of the respective DAs. Hydropower and Power Systems (DHPS); and (d) the Druk Green Power Corporation (DGPC) The Environmental Services and Compliance Limited. The methodology used incorporated Monitoring Divisions are the divisions directly both secondary research and primary meetings. involved with the hydropower sector, and that Secondary information, such as policies and is why these two divisions are the focus of this regulations, was collected through the Internet institutional assessment. The Water Resources and through conversations with people. The Division is presently anchoring an IWRM primary meetings were held with the above study, which involves the hydropower sector institutions in the periods Feb 13–17, 2016, and indirectly. This study lies beyond the purview of Mar 7–11, 2016, in Thimphu, Bhutan. this study. It should be pointed out that DEOs are also involved in compliance monitoring of hydropower projects if the latter are located in National Environment their own Dzongkhag. As this study focused on Commission (NEC) the NEC Secretariat, the role of the DEOs was not explicitly discussed. Existing situation NEC includes the members of the Commission Both the Environmental Services Division and the Secretariat. It is headed by a Secretary and the Compliance Monitoring Division Credit to come? 103 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower Figure C‑1  Organizational chart for NEC National Environment Commission Advisor to Commission Secretary Environment Compliance Water Resources Climate Dzongkhag Services Services Monitoring Coordination Change Environment Division Division Division Division Officers Admin & Accounts Environment Water Resources Vulnerability Infrastructure Research Coordination Assessment & & Forestry & Report Administration Section Adaptation Section Industries Environment Water Quality Accounts Mitigation & Mining Quality Monitoring Monitoring Section Policy & & Standards Section Programming Service Environment Atmospheric Information Quality & Ozone Unit & Outreach Standard Section Legal Services ICT Services HR Services are staffed with a Head and four officers. All Once the environmental clearance has been these officers have a sciences background. granted, the NECS has to ensure compliance Each division has one senior officer, while the with the provisions of the Act, Regulations, staff are Assistant Environmental Officers. and conditions of the environmental clearance. Everyone agrees that the staff strength of these The NEC Compliance Monitoring Division two Divisions lies below what the hydropower ensures compliance with the clearance sector requires. What makes matters even worse conditions. Discussions revealed that the is that these two divisions also have to cater respective hydropower authorities—their to all the other economic sectors, for instance, Environmental Departments—generally send industry, infrastructure (roads) and mining. monthly reports (on compliance and daily Consequently, the shortage of staff is a major environmental quality) and a comprehensive concern. annual compliance. When NEC monitors compliance onsite, the above reports are used as In accordance with the Environmental Act the basis for monitoring. It was concluded that (2000), NECS is responsible for providing the hydropower authorities have a well-staffed environmental clearance to all hydropower Environment Department, for example, in projects. In line with the requirements of the Punatsangchhu II, the department has a staff of Regulation for the Environmental Clearance about 45. As a result, the quality of compliance of Projects (2012), under the Act, the project monitoring is likely to be relatively strong, proponent prepares the EIA following the provided the Hydropower Authorities’ staff are procedures outlined. The NECS also issued an well-qualified. EA Guideline for the Hydropower Sector, one of six sector guidelines produced. These are RCSC’s ongoing organizational intended to guide the project proponent on the development (OD) study of the NEC process of obtaining environmental clearance Discussions revealed that the Royal Civil for their projects. NEC’s Environmental Services Services Commission (RCSC) is currently Division grants Environmental Clearance for the engaged in an OD study across as many as 67 various EIAs of the hydropower projects. agencies within the RGoB. The purpose of these 104 Managing Environmental and Social Impacts of Hydropower in Bhutan OD studies is to align the agency’s work with its safe to assume that a lack of funds or budgetary mandates. NEC was one of the agencies covered constraints was one of the reasons. under this study. A Task Force was established within NEC to collect, collate, and deliberate on Possible areas for strengthening organizational issues. identified Separating the “regulator” from “policy- One of the main conclusions of the study was making”: Ideally, the institution responsible that NEC was functioning both as a regulator for policy formulation and coordination should and as a policy formulation and planning be different from the regulator. However, in agency. Being called a Commission, its primary the case of Bhutan, given its small population role was obviously intended to be policy and limited geography, separating the NEC formulation and planning. Therefore, very into two institutions may not be required. On recently, it was proposed that NEC’s regulatory the other hand, creating separate units for role along with that of the Department of Forests policy formulation and coordination and for be transferred to a separate regulatory authority. the regulatory function, within NEC, could This proposal was put to the Cabinet. The be an option. Currently there is a lack of Cabinet did not accept the proposal because it manpower to provide clearance and compliance was considered inconsistent with the legislative services. Nevertheless, the officials involved in inclusion, for example, NEPA and the Forest clearance and compliance are to a large extent Acts. Transferring NEC’s regulatory role to also the ones conducting studies such as those another, different institution would require the pertaining to e-flows. This has led to the staff Forest Act to be amended first, and that is not being overloaded, and potentially less focused readily done. In view of the Cabinet’s decision, on their core regulatory function. It is therefore RCSC is now deliberating with the NECS on vitally important to somehow separate NEC’s the best way to proceed with the organizational policy formulating function from its regulatory strengthening without dividing the current function: the staff assigned to each function NECS into two separate organizations. should not be shared with the other function. Further, the risk of a conflict of interest seems to Collaborating with DHPS on policy, planning, be inherent in the organizational arrangements and coordination: All policies related to the of the DEOs. While the DEOs are regulators, hydropower sector have a direct bearing on the they report to the Dzongkhag administration environmental conditions and the volume of and not to the NECS. Given this dual hydropower that can be generated. Therefore, responsibility, the NECS does not have control all policies should to the extent possible be over the day-to-day activities of the DEOs, even developed jointly between the DHPS and NEC. though the DEOs’ role is to regulate. The RCSC For instance, the subject of e-flows is important is presently deliberating with the NECS in an for the environment but also important for attempt to resolve the DEOs’ potential conflict generating hydropower. As the policies to be of interests. developed will defining a compromise path, both the policy units of DHPS and NEC should The establishment of regional NEC offices has be involved. Policies need to be formulated on, been considered, motivated by the desire to among other things, IWRM, catchment area improve the efficiency and effectiveness of the treatment, sediment management, and use NEC in dealing with clearances and compliance. of fish ladders. It is preferable to establish the While the discussions on this point did not practice of working together on policy, planning, reveal why this step had not been taken, it is and coordination. 105 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower Building social development expertise in divisions should have a mixed background— the NEC: The EIA process in the case of with a civil engineering, environmental sciences, hydropower projects involves addressing and social sciences component. Given the baseline data, potential impacts, and mitigation possible constraints to identifying and hiring measures pertaining to social development suitable staff for these positions, the seconding issues. The latter include specific concerns of of staff already working in the hydropower project-affected persons, such as compensation sector to NEC could be an option. In this way, for land lost in accordance with National Land the backlog could be cleared, something that is Commission (NLC) norms for resettlement and urgently needed. livelihood/income restoration. In reviewing and deciding on an application for environmental Institutionalizing the practice of sharing staff clearance, staff capable of dealing with social for clearance and compliance purposes: In the development issues is required. In addition, to hydropower sector, the lessons from compliance monitor compliance, social development staff monitoring have to be considered and capacity is required. Presently, NEC is regulating appropriately addressed in the clearance process. social development in hydropower projects Given this need, it is important that the staffs without having any expertise in specific areas be constantly rotated between the clearance such as land compensation and resettlement, In and compliance functions. If a separate unit is fact, addressing such specific social development created to deal specifically with hydropower, issues goes beyond NEC’s regulatory mandate. that unit’s staff could work together to provide Thus, NEC’s capacity to deal with social clearances and monitor compliance. development should be strengthened by either recruiting staff with the relevant background Enhancing Bhutan’s environmental baseline and/or increasing collaboration with other information: Environmental baseline data are government organizations that cover social required for conducting studies relevant to the development issues. EIA. It is generally accepted that the quality of data on flora, fauna, and ecosystems in Bhutan Having dedicated staff for the hydropower is weak, and needs to be improved substantially. sector: There is a strong case for increasing the Doing a countrywide environmental baseline number of dedicated staff for the hydropower study would be expensive and time-consuming. sector to be able to perform the clearance and While such a countrywide study should compliance functions efficiently and timely. As be planned for the medium term, NEC to the clearance function, at least two dedicated should for the time being collect and collate staff are needed to work on the five projects that environmental baseline data in a structured are already in various stages of construction and and systematic manner from various sources. the pipeline projects. At least two dedicated staff This should all be done with the help of various are likewise needed for the compliance function, NGOs and research organizations such as more specifically, to address the projects already the World Wildlife Fund for Nature (WWF) under operation and those under construction Bhutan Program and the Royal Society for for which clearance has already been obtained. the Protection of Nature (RSPN). In addition, These dedicated staff should be responsible for reliable environmental data collected as part of clearance and compliance matters related to past EIA studies should likewise be collated and both power generation and power transmission used in current and future EIA studies. projects in the hydropower sector. To enhance effectiveness in the clearance and compliance Establishing the EAAB: The Regulation functions, the dedicated staff in the respective for the Environmental Clearance of Projects 106 Managing Environmental and Social Impacts of Hydropower in Bhutan (2002) includes a provision for establishing transparency, help the project proponent/ the Environmental Assessment Advisory hydropower authority with their planning, Board (EAAB). The Regulation addresses the and reduce unrealistic expectations. It would composition of the Board, whose members may also establish a benchmark that would allow serve in their official or individual capacity. to determine the extent of delays in providing Rules and procedures for the EAAB’s activities clearance, and identify the cause causes for should also be developed and adopted. It is these delays. believed that EIA reports should be presented XX While the project proponent should strive to the EAAB following their in-depth technical to submit a single environmental clearance review by the Environmental Services Division. application, it should be possible to make Environmental clearances should only be changes to the activities specified in the granted On the Board’s recommendation,. original application, as these are inevitable The current procedures and practices on in the context of hydropower projects. environmental clearance should be changed to Special provisions could include permission reflect the EAAB’s extended role. This Board to consider an expected clearance, after should also serve as a forum for raising and submission of the EIA application, also addressing issues regarding the overall EA applicable to certain types of changes procedure itself. NEC recently (July 2015) subsequently made to the planned activities. introduced an application fee—Nu 1,000 per The purpose of such special provisions would MW—for processing an EIA report for the be to reduce the time needed for obtaining hydropower sector. These fees could be used to environmental clearances, as these can lead develop a roster of experts to support the Board, to implementation delays and financial and pay them a suitable honorarium to ensure a problems. sincere effort in the review process on their part. XX When it comes to changes/modifications Streamlining and improving the to a project that has already secured environmental clearance process: Discussions environmental clearance, discussions with the DHPS and DGPC revealed that the revealed anything currently being done project proponent and the relevant hydropower during a site/field visit by NECS staff, could authority spend considerable time and effort also be done by a DEOs. However, in this in obtaining environmental clearance. Several context, the fact that requiring NECS staff measures could be considered to streamline the to make these visits causes significant delays process: (given current staff constraints) was again highlighted. These one-day visits could XX It would be useful for NEC to develop easily be made by the relevant DEO. Current a guidance document that outlines the procedures have to be slightly changed to indicative timeline for the various stages of make it easier to introduce changes in the the environmental clearance process in a flow planned activities for projects that have chart, based on an ideal case. The timeline already obtained clearance. for each individual process stage—preparing XX Hydropower projects are complex in terms the EIA document, conducting consultations of their technical, financial, and operational at the Gewog level, obtaining clearance from requirements. Once the detailed designs the Department of Forest & Parks, obtaining have been finalized, the EIA is prepared, clearance from the DA, and finally obtaining submitted, and finally a clearance application NEC clearance—should be included. Such submitted. Once clearance is obtained, a guidance document would enhance 107 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower project delays are very likely due to financial Considering that NEC has a significant staff and operational issues. If the NEC clearance shortage, mapping the DEOs to the DA has is valid for two years, the environmental further reduced the manpower available clearance may have to be obtained a second for environmental regulation. Thus, DEOs time, even when the detailed design itself has should be instructed to report directly not changed at all. Moreover, the unavoidable to NEC, even though they are based in bureaucratic delays have to be reckoned with. Dzongkhags. In view of these factors, it may be advisable XX Discussions revealed that the DEOs receive to give environmental clearances a 5-year about 25 clearance requests per week for validity when required for hydropower sectors in which NEC has devolved clearance. projects. It is virtually impossible for DEOs to visit XX Discussions revealed that the plan had each of the sites, as required by the Act and been to turn the environmental clearance regulations. This is particularly difficult process into an online process but this has because many sites have to be visited on not yet been done. The intention is to have foot. As a result, there is a huge backlog a Web-based process for submitting the EIA of clearances, leaving the DEOs no time documents as part of the environmental to monitor the compliance of hydropower clearance application. Besides facilitating the projects. application process, the online procedure XX Discussions revealed that the Act contains would give information on the current provisions for conducting environmental status of an application and allow lists of the audits. However, these provisions have hydropower projects for which clearance has not been enforced. NEC should consider been granted/denied to be generated. Once mandating an environmental audit, prior the clearance process has been established to the closure of the project construction online, this could be extended to include activities, to be conducted by an independent, compliance monitoring as well. To this third party, in accordance with a guideline end, the relevant parties would be asked to that NEC should develop. Following the upload specific information on the respective audit, the project proponent should address hydropower projects. the nonconformances identified and produce a corrective action report. When submitting Improving the environmental compliance the final compliance report to NEC, the process: Discussions revealed that the inclusion of an audit report along with an compliance process is not streamlined and audit follow-up report should be mandatory. that reporting paths are unclear. The following potential improvements have been identified: XX The BEA has an Environmental Officer who is also involved in monitoring compliance XX DEOs are involved in and/or support with the environmental provisions of the the monitoring of hydropower projects’ Electricity Act, which is linked to the national compliance. However, the DEOs environmental acts and regulations. The administratively report to the DA and compliance role of this Environmental not to NEC. Even though their activities Officer needs to be integrated with that of pertain largely to those of a regulator, they NEC. This is important to ensure that NEC are mapped to the DA, which implements and BEA don’t give conflicting directions development activities. Therefore, the related to compliance to the project needs of the DA rather than those of the proponent or Hydropower Authority. NECS drive their day-to-day priorities. 108 Managing Environmental and Social Impacts of Hydropower in Bhutan Department of Hydropower With the creation of a new unit in the revised structure, staffing for it has been proposed and Power Systems (DHPS) under the current five-year plan. This includes Existing situation one engineer and one environmental engineer/ Within the DHPS, environmental issues are officer. While this has been agreed in principle, addressed by the Climate Change and CDM Cell the staff has yet to be appointed. Discussions (under the Planning & Coordination Division) revealed that separate TORs for this new unit and the Socio-Environmental Section (under have not yet been developed. the Hydropower Development Division). Social issues are only addressed only by the Socio- Based on discussions, the role of the DHPS is Environmental Section. Discussions revealed understood to be the following: that it has recently been decided to revise the organizational structure so that all E&S issues XX To obtain approval from the RGoB for will in future be dealt with by one unit under the various hydropower projects being the Hydropower Development Division. This planned. Considering that about 76 projects decision has yet to be implemented. are presently in the pipeline or under consideration for development, this will Presently, there is no separate staff earmarked to remain a prominent role for the DHPS. either the Climate Change and CDM Cell, or the XX To provide facilitation support to consultants Socio-Environmental Section. A pool of staff are who produce DPRs for hydropower managing the E&S issues as a part of the other projects. As part of the DPR preparation, issues. Very limited formal training and capacity EA studies are also prepared. These include building has been done. Only one staff member EIA documents—EMP, social assessments, has had training, on Social Impact Assessments. and Resettlement Action Plan (RAP). The Staff members have been managing their E&S DHPS provided such facilitation support activities through self-training and on-the-job to the Punatsangchhu-I and Kholongchhu training. Figure C‑2  Organizational chart for DHPS Department of Hydropower & Power Systems (DHPS) Planning & Coordination Hydropower Development Transmission & Power Division (PCD) Division (HDD) System Division (TPSD) Programme System Design Coordination Socio- & Planning Planning & Survey & Section Environment Section Design Section Investigation Section Section Bid & Contract Management Basin-I Cell Power Trading Section (West) Geo-Technical Cell Basin-II Cell Climate Change Survey & (Central) & CDM Cell Mapping Cell Basin-III Cell Data Section (East) 109 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower hydropower projects all the way to obtaining Identified possible areas NEC clearance. for strengthening XX To organize a stakeholder discussion on Focusing more on policy formulation, the draft EIA with all the relevant line planning and coordination: E&S unit of DHPS departments in order to collect inputs prior should focus more on management at the policy to its finalization. level. The subject of sustainable hydropower— the DHPS mission—requires much greater XX To coordinate and liaise with the other line integration on optimal water resource use, departments, for example, the Department conservation of forests, preservation of river of Forests & National Parks and the eco-systems, community health and other Department of Culture and Department of infrastructure development. Developing an Roads, to obtain their no-objection, which integrated approach requires a policy framework is a requirement for the NECS to provide that includes considerations from many other environmental clearance. line departments, for example, the Ministry XX To liaise with the NECS until the formation of Agriculture & Forests and Ministry of of the independent Hydropower Authority on Works and Human Settlements. As the DHPS matters related to obtaining environmental mandate is solely on hydropower, greater clearance from NEC. depth on policy formulation, planning and coordination is achievable here than with the XX To hand over the roles and responsibilities NEC, which has a mandate across all economic of managing E&S issues pertaining to the sectors. Further, the E&S unit of DHPS should project to the Hydropower Authority once it also look at developing guidelines that help has been established. For instance, in the case in policy coordination and implementation. of the Punatsangchhu-II and Mangdechhu For instance, establishing a guideline on EHS Hydroelectric Power Projects, the DHPS during hydropower construction or resettlement handed over the responsibility to the guideline for hydropower projects will lead to respective Hydropower Authorities once they easing and streamlining the preparation of the had been established. EIA documents, as well as implementation. XX To support the Hydropower Authority on any Having such guidelines and / or codes will issues that may arise, for instance, disputes establish how hydropower projects are to be regarding compensation, and that require implemented and operated within Bhutan. resolution at higher levels within the RGoB. Leading/co-owning all hydropower studies: XX To advise on E&S issues in the context of The Socio-Environmental Section of the DHPS policy formulation and coordination as and should be actively involved and engaged in all when required. studies and initiatives pertaining to hydropower. XX To coordinate all activities pertaining to The Unit should be co-owners of these studies registering hydropower projects under the and not limit itself to providing inputs to studies CDM mechanism and also follow up on anchored in other agencies, for instance, the obtaining carbon credits for the RGoB. ongoing e-flows study being done by NEC with Austrian aid and the integrated water At present, there is a Terms of Reference for the resources management being done by NEC as DHPS role as a whole, but not specifically on its a part of activities under the Water Act. The role in managing E&S issues. former determines how much power can be 110 Managing Environmental and Social Impacts of Hydropower in Bhutan produced, whereas the latter is highly relevant To build the capacity in a short time frame, for catchment area treatment, which is linked to the E&S Unit should consider a multipronged sediment flows that could have a direct bearing approach: (i) exposure visits to other on the power generation. Greater involvement— hydropower authorities that are recognized to to the extent of co-owning—in all hydropower managing their E&S issues effectively and also studies should become the norm. their national/provincial governments; (ii) in- house training by external resource persons on Building capacity of the Socio-Environmental different E&S aspects that should be considered Section: The Socio-Environmental Section in policy formulation; and (iii) seconding staff to of the DHPS should strengthen its technical the various Hydropower Authorities of projects capacity to be able to review E&S documents. that are under construction or operational. Such a technical review would provide value added to the DPR Consultants, who are Developing multidisciplinary expertise responsible for preparing the E&S documents. in the Socio-Environmental Section: The DPR Consultants may have the required At the DHPS, the Socio-Environmental technical E&S expertise but not necessarily Section will require expertise from different the local knowledge. Such added expertise disciplines, as promoting hydropower requires through the Socio-Environmental Section multidisciplinary skills. While the Socio- would help improve the quality of the project Environmental Section will definitely need documentation prepared by consultants. representation from civil and environmental The current quality of E&S documentation engineers, staff with background in the physical is generally regarded as weak. The lack of sciences, social sciences, and safety management capacity in the DHPS to contribute to the E&S will be required. The engineers will be documentation will be addressed. Subsequently, responsible for integrating the environmental the DHPS may itself engage DPR consultants. requirements in the contract documents Building this technical capacity will aid in the and ensuring these are implemented; the selection of suitable DPR consultants. environmental scientists will be overseeing the monitoring of environmental parameters, The Socio-Environmental Section of the evaluating environmental impacts, and DHPS should develop its capacity to conduct ensuring appropriate management; and the the strategic environmental assessment of the safety manager will assume responsibility for Hydropower Master Plan with support and overseeing construction safety, and, more guidance of the NECS. In the medium term, importantly, developing and overseeing the the Socio-Environmental Section of the DHPS implementation of emergency preparedness should develop a mechanism to collect data and plans for all hydropower projects. Based on the store them in a database of key environmental latter initiative, a national plan for emergency parameters, for example, environmental preparedness of all hydropower projects will be flows and sediment levels, of each of its developed, and specific guidelines on emergency hydropower projects on a periodic basis. These preparedness/disaster management for the environmental parameters are particularly hydropower sector should be developed. important because they have a direct bearing on the hydropower generation in each individual In the short term, a team of four, including project and in Bhutan as a whole. the Head, is recommended. One of the staff 111 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower should have a civil/environmental engineering Unit. For a start, one relatively small project— background (to liaise with the engineering the 118 MW Tangsibji Hydro Energy Limited functions), one a physical sciences background (THyE) project at Nikachhu—has been given (to coordinate with NEC and work on to DGPC for facilitating the DPR preparation environmental parameter monitoring), one and E&S studies. As DGPC’s capacity is built, a social sciences background (to address there should be no duplication of E&S activities resettlement and livelihood restoration, and to between DGPC and the DHPS. liaise with the GNHC, Dzongkhag, and Gewog administrations), and one a safety management Strengthening the departmental stakeholder background (to address construction worker consultations on the draft EIA report: safety, community safety and emergency Discussions with the DHPS and NEC revealed preparedness in a structured manner across all that the prevailing procedure for collecting hydropower projects). inputs/views/perspectives from stakeholder departments on the draft EIA report need to be For the 11th Five-Year Plan, the DHPS has strengthened. The DHPS should task particular obtained approval for one Engineer and one individuals from these line departments with environmental engineer/officer to be positioned reviewing draft EIA reports and providing in the Socio-Environmental Section. As this is constructive feedback/inputs in this context. below the requirement suggested, it is important Particular individuals should be given sufficient to request to augment this capacity at the very time for these reviews and the reviews should be earliest. Based on the experience of using completed prior to a consultant’s presentation the capacity of this initial team, decisions on of the EIA report in question. By identifying growing this team should be considered. Terms particular individuals and giving them adequate of Reference for the Socio-Environmental time for review, the procedure for involving Section in the DHPS should be developed other stakeholder departments is bound to and used for reference/guide for planning its become more effective. activities. Integrating major E&S issues in the periodic Renaming the Socio-Environmental Section: progress reporting: The periodic progress With the staff positions in place (in accordance reports received from various Hydropower with the 11th 5-year Plan), it would be Authorities refer largely to the technical and appropriate to christen it as the E&S Section, financial progress. This progress reporting which is a mere variation of its existing name. needs to be extended to include the E&S issues This would make the nomenclature in line with as well. Doing so will assist in proactively generally accepted practices in the hydropower identifying E&S risks that could be attended sector internationally. before these issues turn into major problems. The Hydropower Authorities are also required Handing over the project-level day-to-day to send annual compliance reports to NEC; facilitation to DGPC: Discussions revealed during construction, these reports even have to that DGPC had been established to coordinate be submitted monthly. It is not clear whether all aspects of project planning, design, and these reports are ever forwarded for review to preparation. Currently, it is the DHPS that the DHPS. The Socio-Environmental Section facilitated the DPR preparation. All of the above should review these progress reports and ensure project-level facilitation activities are likely to their submission to NEC, thereby allowing gradually be transferred to DGPC, which has proactive oversight of possible E&S risks and already established its own Environmental opportunities. 112 Managing Environmental and Social Impacts of Hydropower in Bhutan Druk Green Power Company currently reviewing and updating the EIA for the Nyera Amari Hydropower. (DGPC) Existing situation As to staffing, the Environmental Unit has six The responsibility for managing E&S issues officers. They are all science graduates and rests with the Projects Department. There is relatively young. Two of the six officers have an Environmental Unit under the Projects been temporarily sent away to do a Master’s Department. This Environmental Unit program on water resources management with reports to the Head, Druk Green Consultancy, support from AusAid; two officers have been which has been established to coordinate the seconded in power projects in Mangdechhu preparation of prefeasibility, feasibility, technical, and Nikachhu to gain field experience; and the and DPR studies for projects in the pipeline. The remaining two officers are working on the EIA capacity of Druk Green Consultancy is being studies in support of the DPR preparation, and developed further to provide consulting services providing support to the hydropower plants that in the hydropower sector in projects outside of are under O&M—renewing their environmental Bhutan. The Environmental Unit coordinates clearances or dealing with other incidental the E&S studies pertaining to the DPRs issues. These four hydropower projects have prepared by DGPC/Druk Green Consultancy. no environmental units, and environmental However, it is envisaged that the Environmental management is the responsibility of this Unit will eventually be able to conduct the EIA particular Environmental Unit. studies by itself, requiring only limited external expert support. At present, the Environmental All of these initiatives to develop in-house Unit does have the capacity to review the EIA capacity to manage E&S issues for hydropower studies done by DPR Consultants. In fact, it is projects in Bhutan and offer capacity as a Figure C‑3  Organizational chart for DGPC Board of Directors Managing Director Company Secretary Internal Audit & Legal Unit Projects Operation & Maintenance Finance & Investment Human Resource & Corporate Affairs Department Department Department Administration Department Department Basochhu Hydropower Plant Chhukha Hydropower Plant Kurichhu Hydropower Plant Tala Hydropower Plant 113 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower consulting service for overseas projects is a best- DGPC is also in the process of putting together in-class approach and a good practice. systems to manage E&S issues. For a start, a Social Safeguards Manual has been produced Based on discussions, it is understood that the to streamline the processes to manage social role of DGPC in managing E&S issues includes safeguard issues. the following: Possible areas for strengthening XX To provide technical support for and identified guidance on the preparation of DPRs for Building capacity in DGPC’s Environmental hydropower projects by consultants. As part Unit: At present, all the staff members of of the DPR preparation, EA studies also have the Environmental Unit have an educational to be conducted. This preparation includes background in physical sciences. While this is gathering all EIA documents (including the important for facilitating or conducting EIAs, EMP, social assessments, and the RAP); the unit also needs staff with a background in civil engineering, safety management, and social XX To gradually build the required E&S capacity sciences . For instance, social assessments will to conduct EA studies; have to be done as part of the EIA preparation, XX To liaise with the NECS on matters related and these are best done with the support of to obtaining environmental clearance from someone with a social sciences background. To NEC; be able to integrate the EMP requirements in the bid and contract documents, a civil engineering XX To hand over the roles and responsibilities background would be desirable. Also, as worker of managing project-related E&S issues and community safety during construction is an to the Hydropower Authority once it has important, safety engineering expertise will also been established. In the case of the 118 MW be useful to have within the core Environmental Tangsibji Hydro Energy Limited (THyE) Unit of DGPC. project at Nikachhu, this handover was done by the book; Discussions revealed that the current team XX To forward the various hydropower projects of six staff members is sufficient for the being facilitated by DGPC to the DHPS for current workload of the Environmental approval from the RGoB for; Unit. But additional staff to be hired should include individuals with a civil engineering, XX To support NEC in ensuring the hydropower safety engineering, and also social sciences projects, which are currently under DGPC background. Ideally, the staff with a civil control for O&M, are compliant; engineering background is seconded from XX To provide support on other environmental another DGPC department, as this would management issues during O&M such as promote coordination. e-flows, sediment issues, landslides, and monitoring catchment area treatment Strengthening procedures for integrating initiatives, as and when these need to be EMP requirements in contract documents: addressed; DGPC is involved in either developing the DPR and associated documents or facilitating the XX To develop awareness modules/video clips consultants’ preparation of the same. Therefore, about good management practices in the it is uniquely placed to ensure that one of the O&M phase. EIA outputs, that is, the EMP, is fully integrated with the bid/contract documents. As is well 114 Managing Environmental and Social Impacts of Hydropower in Bhutan known, the contractor will only implement with the RGoB’s development activities have to the provisions of the contract. If the EMP be ensured. When there is merit to involving requirements are not duly represented in the the GNHC, the funds are routed through bid/contract document, chance are that these the GNHC. For instance, compensatory will not be implemented. In view of this, DGPC afforestation has to be arranged done through should strengthen its procedures to ensure that the Department of Forests and be included as the EMP is duly incorporated into construction part of its overall afforestation initiatives. In bids/contracts. such initiatives, the Hydropower Authority indicates to the GNHC, the Dzongkhags, and Renaming the Environmental Unit as the Gewogs what these funds should be allocated E&S Unit: Presently, although the unit manages to. The GNHC ensures there is no duplication environmental and social issues, it is called of the budget for the same local development the Environmental Unit. To more accurately activities and releases these funds to the DA, reflect the nature of its activities, it would be which in turn arranges to use these funds in the appropriate to rename it the E&S Unit (of identified Gewogs and the villages therein. DGPC). These funds are released in a manner similar to the budgetary allocation for development Gross National Happiness programs or schemes to be implemented in the Commission (GNHC) Dzongkhags and Gewogs. Existing situation Decisions on social infrastructure projects GNHC has a limited role in managing E&S such as expanding schools and hospitals are issues pertaining to hydropower projects. made by the Hydropower Authorities, in direct From the EMP (including the RAP), certain consultation with the pertinent DA. Being funds earmarked for local development are well-staffed and autonomous, the former given to the GNHC whenever convergence Figure C‑4  Organizational chart for GNHC Secretary Sustainable Development Secretariat Perspective Planning Monitoring Local Research & Development Development Secretariat Planning Division & Coordination Evaluation Coordination Division Services Division Division Division Macroeconomic Infrastructure Plan Research & Bilateral Admin & Finance Analysis Section Coordination Policy Analysis Section Services Section Section Section Social Sector Multilateral Capacity HR Services Perspective Section Evaluation Section Planning Building Section Section Private Sector Section Financial & Enterprise ICT Services Institutes Development Section Program Services Cross-sector Section Library Services 115 Appendix C Rapid Institutional Assessment for Environmental and Social Management of Hydropower are uniquely placed to execute such projects the local community has benefited from a effectively and efficiently, without required the specific hydropower project and in what stage. involvement of other RGoB agencies. Comparison of the socioeconomic data collected at different stages of the project should help Possible areas for strengthening ascertain the impacts on local development. identified Strengthening GNHC capacity, if required: Presently there are only a few hydropower List of meetings held projects and the fund allocations channeled Department of Hydropower & Power Systems, through the EMP (including the RAP) are Ministry of Economic Affairs, Ms. Tashi Pem, not substantial. Discussions revealed that the Executive Engineer, Hydropower Development existing capacity of the GNHC would suffice Division; Mr. Sangay Dorji for now. However, if the number of hydropower projects were to increase, then the GNHC’s National Environment Commission, capacity to manage these funds for local Mr. Tenzin Khorlo, Chief, Environmental development should commensurately increase. Services Division; Ms. Tshering Choden, In particular, the GNHC may have to consider Environmental Services Division, NEC creating a separate division for streamlining Secretariat; Ms. Choki Wangmo the use of local development funds allocated Druk Green Power Corporation Ltd., through the EMP (including the RAP). Mr. Kuenga Namgay, Executive Director, Operations & Maintenance; Mr. Dorji P. Building the capacity of the Dzongkhag and Phuntshok, Director (Projects); Mr. Chador Gewog: At the Dzongkhag level, building the Tenzin, Head, Green Consultancy; Ms. Sonam capacity of the DEOs and other development Pelden, Assistant Manager; Tandin Tshering, officers should be built in a structured and Assistant Manager systematic manner. This capacity building should include training on the local Bhutan Electricity Authority (BEA), Mr. Nima development activities to be funded; moreover, Tshering C., Chief, Licensing & Technical at the gewog level, the administrative officers Division have to be trained to implement the local Bhutan Power Corporation Ltd. Mr. Gem development activities relevant to their Gewog. Tshering, Managing Director; Mr. Sonam Palden, Head, Environmental Division Institutionalizing the holding of socioeconomic surveys before, during, and WWF Bhutan Program, Ms. Sonam Choden, after the construction phase of a HEP at Program Manager, Living Himalayas Network the Dzongkhag, Gewog, and village levels. Initiative; Mr. Phurba Lendup, Species and Discussions revealed that no socioeconomic Water Program surveys had been done yet before, during, Gross National Happiness Commission, and after the establishment of a hydropower Mr. Passang Dorji project. The GNHC needs to address this gap: procedures/protocols for conducting a Royal Civil Service Commission, Mr. Lhundup socioeconomic baseline survey before, during, Wangchu, Commissioner and after the project should be developed. Royal Society for Protection of Nature, Moreover, these surveys should be held Mr. Kinga Wangdi, Program Officer periodically to determine to what extent 116 Managing Environmental and Social Impacts of Hydropower in Bhutan References Websites Legislations & regulations RGoB National Environment Commission, www.nec.gov.bt RGOB NEC Hydropower Guidelines (2012) RGoB Gross National Happiness Commission, RGOB National Environmental Protection Act www.gnhc.gov.bt (2007) Drug Green Power Corporation (DGPC) RGoB Environmental Act (2000) Limited, www.drukgreen.bt RGoB NEC Regulation for the Environmental RGoB Ministry of Economic Affairs, Clearance of Projects (2002) Department of Hydropower & Power systems, RGoB Electricity Act of Bhutan (2001) http://www.moea.gov.bt/departments/ department.php?id=6 Other documents DHPS Organizational Development Manpower of Department Revised Social Safeguard Manual DGPC Safety Manual (2011) 117 Appendix D Summarized Results of Hydropower Sustainability Protocol Assessment for Mangdechhu HEP The Hydropower Sustainability performance with the on-site assessment itself taking place over a matter of weeks.” It is carried Assessment Protocol out by a team of Accredited Assessors, who visit The Hydropower Sustainability Assessment the project site, review relevant documents, Protocol is “a framework for assessing the conduct interviews with stakeholders, and sustainability of hydropower projects with a prepare a final assessment report. consistent, globally applicable methodology. Its objective is to improve environmental, “For each topic, two sets of scoring criteria are social, and technical aspects of hydropower used: basic good practice (score of 3) and proven development and gain more public acceptance best practice (score of 5). A project must attain of hydropower.” basic good practice on a particular topic before it can be scored against proven best practice for “The Protocol is a series of assessment manuals that topic. In order to achieve a score of 3 on a corresponding to four different stages in topic, a project must satisfy all of the scoring the hydropower project cycle: Early Stage; statements with no significant gaps. . . . The Preparation; Implementation (including significance of a gap is determined based on the construction); and Operation. It contains severity of the risk that it poses to the project definitions of good practice and best practice and whether or not plans are in place and there for over 20 sustainability topics that combine is sufficient time to address the gap before it can environmental, social, technical, and economic/ have a major impact on the overall project.”48 financial perspectives. Not all topics, however, are relevant to every stage of the project cycle.” “The Protocol is not a certification scheme for 48 Liden, Rikard; Lyon, Kimberly. 2014. The Hydropower Sustainability Assessment Protocol for Use by World sustainable hydropower, nor is it a replacement Bank Clients: Lessons Learned and Recommendations. for assessments of E&S impacts. Rather, the Water Partnership Program (WPP) Water papers. Protocol assessment is a snapshot of project Washington, DC: World Bank Group. Credit to come? 119 Appendix D Summarized Results of Hydropower Sustainability Protocol Assessment for Mangdechhu HEP Assessment of Mangdechhu emphasis is very strongly on E&S issues in most topics, a holistic view of the project is Hydroelectric Project important to put these issues in context and to This summary presents an Official understand competing pressures and trade-offs. Assessment conducted in accordance with The assessment focuses on the sustainability the Implementation Tool of the Hydropower performance of the MHEP specifically but, Sustainability Assessment Protocol (the for several Protocol topics, the governance “Protocol”). The assessment was conducted for framework including policies and legislation the 720 MW Mangdechhu Hydroelectric Power that apply more broadly comes under scrutiny Project, under construction on the Mangdechhu as they influence the findings for the MHEP. River in central Bhutan. The Mangdechhu River This means that significant gaps are in some is a tributary of the Manas River, which in turn cases assigned that arise from causes beyond the is a tributary of the Brahmaputra River in India. direct control of the project itself. The project developer is the Mangdechhu Two topics are considered Not Relevant for Hydroelectric Power Authority (MHPA), the MHEP: topic I-10 Resettlement, because established in 2010 as a special purpose vehicle no households were physically displaced; and for the development of the Mangdechhu topic I-11 Indigenous Peoples, because the Hydroelectric Project (MHEP), in accordance only ethnic minority in the project area is well with an inter-governmental agreement between away from, and not affected by, the project. the Royal Government of Bhutan (RGoB) and All other 18 topics were fully assessed onsite the Government of India (GoI). The GoI is in the period January 11–18, 2016, and the providing 30 percent of the project costs as a findings are presented in this report. Findings grant, and 70 percent as a loan repayable in in relation to the transmission line are included, 30 installments over a 15-year period following but limited to those that could be based on a few project commissioning. The initial estimate interviews and a review of the transmission line of project cost was Nu 28,963 million (~USD Environmental Impact Assessment. 432 million) at 2008 price levels, revised to Nu 40,206 million (~USD 600 million) at 2014 Triangulation of evidence—visual, verbal, and price levels. documentary—is an important requirement for the evidence collection and analysis processes. Project construction commenced in early 2011 To this end, particular attention was paid to and commissioning is planned for January– interviews with project-affected communities, March 2018. The project at the time of this local authorities, and regulatory agencies. assessment was 60–70 percent complete, and is Follow-up evidence was requested by, and being delivered through eleven major contract provided to, the assessors in the weeks following packages: four for civil and hydromechanical the assessment. The draft final report was works; five for electromechanical works; and provided to MHPA in March 2016. two relating to the transmission line and substation. The MHPA presently has 469 staff, Based on the evidence at the time of the onsite and 3,554 persons are employed for the assessment, the project generally demonstrates hydropower project by the major contractors. very competent standards in its sustainability management. The majority of topics scored The Protocol’s Implementation tool contains (12 out of 18 topics) performed at or better 20 topics that canvas issues relevant to than the basic good practice level (a score of governance, finance, technical, social, and 3 or better out of a possible score of 5 for an environmental considerations. While the 120 Managing Environmental and Social Impacts of Hydropower in Bhutan individual topic). It needs to be emphasized Management; I-9 Project-Affected Communities that meeting the basic good practice provisions and Livelihoods; I-12 Labor and Working of the Protocol is a highly commendable Conditions; I-13 Cultural Heritage; I-18 Waste, performance, and that proven best practice is Noise, and Air Quality; and I-20 Downstream quite difficult to achieve on a topic. Flow Regimes. Eight topics exceeded the basic good practice The spider diagram (Figure D-1) summarizes level, with either no or only one significant the MHEP assessment in numbers, followed by a gap against the proven best practice scoring table showing the significant issues that have been statements: I-2 Governance; I-4 Integrated identified (Table D-1). Project Management; I-5 Infrastructure Safety; I-7 Project Benefits; I-14 Public Health; Table D-1 categorizes gaps according to the six I-15 Biodiversity and Invasive Species; I-16 types of criteria that form a common structure Erosion and Sedimentation; and I-19 Reservoir across the Protocol topics—Assessment, Preparation and Filling. Management, Stakeholder Engagement, Stakeholder Support, Conformance/ Four topics met the basic good practice level Compliance, and Outcomes—although not reflecting strong and responsible performance. every topic includes all of these criteria. The These topics do not exceed the level of criteria are in the form of scoring statements basic good practice because of two or more uniquely tailored to each topic. The table shows significant gaps against the proven best practice that some gaps apply to more than one criterion scoring statements: I-1 Communications in a topic, or to more than one topic. and Consultation; I-6 Financial Viability; I-8 Procurement; and I-17 Water Quality. A closer look at the table shows that for those topics not meeting basic good practice, the Six topics did not meet the basic good practice gaps primarily relate to the scoring statements level: I-3 Environmental and Social Issues regarding the Assessment or Outcomes criteria. Figure D‑1  Sustainability profile I-1 Communications and Consultation I-20 Downstream Flow Regimes 5 I-2 Governance I-19 Reservoir Preparation I-3 Environmental and Social Issues and Filling 4 Management I-18 Waste, Noise and Air Quality 3 I-4 Integrated Project Management 2 I-17 Water Quality I-5 Infrastructure Safety 1 I-16 Erosion and I-6 Financial Viability Sedimentation 0 I-15 Biodiversity and Invasive Species I-7 Project Benefits I-14 Public Health I-8 Procurement I-13 Cultural Heritage I-9 Project-Affected Communities and Livelihoods I-12 Labour and Working Conditions I-10 Resettlement I-11 Indigenous Peoples 121 Appendix D Summarized Results of Hydropower Sustainability Protocol Assessment for Mangdechhu HEP Table D‑1  Table of significant gaps Level 3: Significant gaps Level 5: Significant gaps against proven best Criterion against basic good practice practice Assessment I-3 E&S Management: Weaknesses in the I-1 Communications & Consultation: Limited planning EIA and a lack of scoping of cumulative of project communications approaches for the wider impacts. body of stakeholders with an interest but no direct involvement in the project. I-12 Labor & Working Conditions: No systematic and comprehensive tracking, I-2 Governance: Opportunities exist to improve compilation, and analysis of the causes and governance processes—clarifying applicability of new consequences of safety-related injuries, legislation, high-level reporting on agreed sustainability accidents, and near-misses for workers, and indicators (e.g., environment, safety, labor, compliance, measures that should be taken to avoid local capacity development), and maintenance of a recurrence. compliance register. I-13 Cultural Heritage: Absence of cultural I-5 Infrastructure Safety: Limitations in the analysis and heritage assessment in the EIA as well as monitoring of road safety risks. lack of documented assessment elsewhere. I-6 Financial Viability: Limitations and inconsistencies in I-18 Waste, Noise, and Air Quality: Not financial scenario testing, analyses of financial risk, and all relevant waste, noise, and air quality sensitivity analyses. issues were identified in the EIA and EMP or I-7 Project Benefits: Unclear assessment of project subsequently during implementation, nor benefit opportunities and risks in the context of regional are they being systematically monitored and development plans and objectives, and evaluation of addressed through mitigation measures. measures to support sustained outcomes. I-20 Downstream Flows: There is no full I-15 Biodiversity: Biodiversity monitoring is on an issue- assessment of the impacts of the changed by-issue basis with a narrow scope and some gaps. flow regime on the ecosystem and social I-17 Water Quality: The water quality monitoring values in all downstream river stretches. program could be more systematically designed to ensure risks to the receiving environment are identified and analyzed. Management I-3 E&S Management: No public disclosure I-6 Financial Viability: Social and environmental plans of the EIA and EMP. and commitments as reflected in financial management plans do not have well-considered financial contingency I-18 Waste, Noise, & Air Quality: measures. Management of dust has been reactive, with limited effectiveness due in part to I-8 Procurement: Sustainability criteria (e.g., relating to a lack of identification of and adequate environmental, social, labor, safety, and/or human rights) planning for this issue at the project outset are not included in prequalification criteria for the major (*I-18 Assessment). works packages. I-20 Downstream Flows: The minimum I-15 Biodiversity: Biodiversity management processes will downstream flow commitment has not not anticipate and respond to emerging risks because of been publicly disclosed (*I-3 Management). insufficient knowledge (*I-15 Assessment). I-17 Water Quality: Water quality management processes do not anticipate and respond to emerging issues with discharges to the receiving environment (*I-17 Assessment). Stakeholder I-1 Communications & Consultation: Limited inclusivity of Engagement engagement processes with directly affected community stakeholders and limitations to feedback on how issues raised have been taken into consideration, based on documented meeting records. I-2 Governance: No clear process linking what is of high interest to diverse groups of stakeholders with what is publicly reported in sustainability areas (*I-1 Assessment). 122 Managing Environmental and Social Impacts of Hydropower in Bhutan Level 3: Significant gaps Level 5: Significant gaps against proven best Criterion against basic good practice practice Stakeholder Support Conformance/ I-4 Integrated Project Management: There have been a Compliance number of nonconformances with specifications in the DPR, and noncompliances with contract provisions. I-6 Financial Viability: Nonconformances in financial processes have been identified through the joint audit process. I-8 Procurement: Nonconformances in procurement processes have been identified through the joint audit process. I-16 Erosion & Sedimentation: Some problems with contractors dumping excavated materials inappropriately. I-17 Water Quality: Noncompliances regarding water quality impacts. Outcomes I-9 Project-Affected Communities: I-2 Governance: There are some unresolved governance The provisions of the Land Act (2007) issues at this point in time, relating to clarifying for acquisition of private land do not applicability of updated legislation and resolving constitute fair compensation for economic nonconformances from the joint government audits displacement. (*I-2 Assessment). I-12 Labor & Working Conditions: There are I-5 Infrastructure Safety: Public safety risks relating to constraints on workers’ rights to freedom roads are not fully avoided, minimized, and mitigated of association and collective bargaining, (*I-5 Assessment). which are inconsistent with internationally I-7 Project Benefits: There are uncertainties about the recognized labor rights. long-term sustainability of outcomes for project benefits I-20 Downstream Flows: Absence of (*I-7 Assessment). clear objectives guiding evaluation and I-15 Biodiversity: Negative biodiversity impacts cannot be determination of downstream flow regimes demonstrated to be avoided, minimized, mitigated, and (*I-20 Assessment). compensated based on the level of knowledge (*I-15 Assessment). I-16 Erosion & Sedimentation: There have been problems regarding disposal of excavated materials, leading to increased sediment runoff from some point sources (*I-16 Conformance/Compliance). I-17 Water Quality: Not all water quality impacts are mitigated (*I-17 Conformance/Compliance). Note: DPR = Detailed Project Report; E&S = Environmental and Social; EIA = Environmental Impact Assessment; EMP = Environmental Management Plan.  *Gaps that have been counted under a different sustainability criterion. 123 Appendix D Summarized Results of Hydropower Sustainability Protocol Assessment for Mangdechhu HEP A number of these basic good practice gaps because of timing considerations may influence reflect shortcomings in the EIA conducted for future hydropower projects more than the the MHEP, not only in its scope and content, MHEP. but also in the processes relating to public disclosure. Two significant gaps against the Gaps identified at the level of proven best Outcomes criterion at the level of basic good practice are spread relatively evenly across practice are due to wider government policies all of the criteria and reflect a number of that are not aligned with current international opportunities that could be considered to standards—those relating to land acquisition lift MHEP’s sustainability profile. These compensation and international labor rights. considerations may be applicable specifically In most cases, it would only be possible to at the project level or more broadly for future address these basic good practice gaps through hydropower projects in Bhutan. more systematic government responses, which 124