    [Senate Hearing 111-710]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 111-710

               CHALLENGES TO WATER AND SECURITY IN SOUTHEAST ASIA

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          SUBCOMMITTEE ON EAST ASIAN
                              AND PACIFIC AFFAIRS

                                     OF THE

                         COMMITTEE ON FOREIGN RELATIONS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 23, 2010

                                   __________

           Printed for the use of the Committee on Foreign Relations

      Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                                   index.html

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                    COMMITTEE ON FOREIGN RELATIONS

                 JOHN F. KERRY, Massachusetts, Chairman
    CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
    RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
    BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
    ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
    BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
    ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
    JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
    JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
    EDWARD E. KAUFMAN, Delaware
    KIRSTEN E. GILLIBRAND, New York
                      David McKean, Staff Director
            Kenneth A. Myers, Jr., Republican Staff Director

                             ------------

             SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS

                      JIM WEBB, Virginia Chairman

    CHRISTOPHER J. DODD, Connecticut     JAMES M. INHOFE, Oklahoma
    RUSSELL D. FEINGOLD, Wisconsin       JOHNNY ISAKSON, Georgia
    BARBARA BOXER, California            JOHN BARRASSO, Wyoming
    ROBERT P. CASEY, Jr., Pennsylvania   ROGER F. WICKER, Mississippi
    KIRSTEN E. GILLIBRAND, New York

                                  (ii)

    ?

                                C O N T E N T S

                                  ----------
                                                                       Page

    Chungyalpa, Dekila, director for the Greater Mekong Program,
      World Wildlife Fund, Washington, DC............................    35
        Prepared statement...........................................    38
    Cronin, Dr. Richard, senior associate, Stimson Center,
      Washington, DC.................................................    16
        Prepared statement...........................................    19
    Imhof, Aviva, campaigns director, International Rivers, Berkeley,
      CA.............................................................    25
        Prepared statement...........................................    29
    Webb, Hon. Jim, U.S. Senator from Virginia, opening statement....     1
    Yun, Joseph, Deputy Assistant Secretary, Bureau of East Asian and
      Pacific Affairs, Department of State, Washington, DC...........     4
        Prepared statement...........................................     7

                                     (iii)

               CHALLENGES TO WATER AND SECURITY IN SOUTHEAST ASIA

                                  ----------

                          THURSDAY, SEPTEMBER 23, 2010

                                   U.S. Senate,
        Subcommittee on East Asian and Pacific Affairs,
                                Committee on Foreign Relations,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 2:28 p.m., in
    room SD-419, Dirksen Senate Office Building, Hon. Jim Webb
    (chairman of the subcommittee) presiding.
        Present: Senator Webb.

                  OPENING STATEMENT OF HON. JIM WEBB,
                       U.S. SENATOR FROM VIRGINIA

        Senator Webb. Good afternoon. The hearing will come to
    order.
        And let me begin by apologizing for the delay in the start
    of the hearing. We had a series of votes, the last one having
    just been called, about 2:20. So, we will move with some
    dispatch here to hear the witnesses and have the dialogue that
    the hearing is anticipated to bring.
        Today's hearing will explore the critical intersection of
    the environment, foreign policy, and security in Southeast
    Asia, a nexus that occurs along the Mekong River. Often called
    ``the mother of all rivers,'' the Mekong originates on the
    Tibetan Plateau, flows nearly 3,000 miles down through Burma,
    Thailand, Laos, Cambodia, and Vietnam before emptying through
    the Mekong Delta into the South China Sea. It is the world's
    12th longest river and the center of a nearly 500,000-square-
    mile watershed across the region.
        The Lower Mekong River, in mainland Southeast Asia, is a
    source of water, food, and economic opportunity for more than
    60 million people. In this area, freshwater fisheries provide
    at least $2 billion, and up to $9 billion, annually in income,
    and approximately 80 percent of the animal protein consumed by
    the population.
        Given the vital role of the river in this region,
    scientists, environmentalists, and policymakers have great
    concerns that current designs to construct hydropower dams
    along the Mekong may disrupt the region's balance. This hearing
    will examine the risks of this development, the environmental,
    economic, sovereignty, and security challenges these dams pose
    for the Mekong River, the challenge of managing transboundary
    water resources through multilateral cooperation, and the role
    that the United States can play in promoting this approach.
        Currently, China plans to construct more than 15 dams on
    the main stem of the Upper Mekong River, in Tibet and Yunnan
    provinces. In Yunnan, Chinese authorities are planning a
    cascade of eight large-to-mega-size dams, four of which have
    been completed. The largest of these four, the Xiaowan Dam, is
    the world's highest compound concrete arch dam, taller than the
    Hoover Dam. Its reservoir will hold 15 billion cubic meters of
    water. For comparison, the Three Gorges Dam in China holds 20
    billion cubic meters of water.
        Future dams in the Yunnan cascade will have even larger
    reservoirs, enabling China to regulate the waterflow to suit
    its needs. For their part, Laos, Thailand, Cambodia, and
    Vietnam are planning to construct or finance the construction
    of up to 13 dams on the lower half of the river's main stem.
    Compared to China's Xiaowan Dam, most of these dams will be a
    quarter of the size, in terms of height and hydroelectric
    capacity.
        Additional dams have been planned or constructed along the
    Mekong's tributaries. These dams are intended to generate
    electricity in support of growing regional energy demand. Some
    of the electricity will even be exported, particularly from
    Laos, which has voiced its goal to become the battery of
    Southeast Asia.
        These dams may also be used to store water, increase
    irrigation, and contribute to flood control. However, these
    dams will also affect the river's waterflow, its fish
    population, and wildlife. Low environmental standards, and weak
    enforcement of those standards, may allow these dams to bring
    catastrophic damage to the river's ecosystem. Moreover, the
    uncoordinated construction of these dams may threaten the
    entire region's stability if, as projected, food production
    decreases and countries begin to compete for access to water.
        The economic benefits derived from electricity production
    could be short-lived in this case if tensions over access to
    transboundary water resources flash into greater political
    instability.
        Over the past year, I've traveled to all of the countries
    in mainland Southeast Asia. And during these visits, as well as
    here at home, I've examined water-use practices and plans for
    the river's development. I've engaged numerous American and
    regional diplomats, policymakers, environmental engineers, and
    academics, all of whom convey the importance of the Mekong
    River to Southeast Asia's economic sustainability and to its
    human security.
        In particular, the Tonle Sap Lake in Cambodia, the largest
    body of freshwater in Southeast Asia, plays a critical role in
    the region's food production system. During the wet season,
    when the Mekong's water levels are highest, water flows from
    the river into the lake, filling it up. When water levels drop
    with the dry season, water flows reverse and the lake empties
    back into the river. Nowhere else in the world is the flow
    reversal or river pulse so large.
        The region's fish species and migration patterns depend
    upon this river pulse, with fish migrating upriver as far as
    Yunnan province in China. The volume of fish migration in the
    Mekong is estimated to be 100 times larger than the volume of
    fish migration in the Pacific Northwest.
        Annual floods also naturally restore soil nutrients and
    purge pollutants, facilitating agricultural productivity.
    Consequently, Thailand and Vietnam have become the world's
    leading exporters of rice.
        The Tonle Sap River pulse, the extent of fish migration,
    and the flow of sediments into the delta are all at risk from
    the unchecked construction of hydropower dams along the Mekong
    River mainstream.
        With mounting evidence, experts estimate that existing and
    planned hydropower dams may block the migration of 70 percent
    of the most commercially important fish. Decreasing water
    flows, particularly in the dry season, may contribute to
    saltwater intrusion into the Mekong Delta and threaten
    freshwater rice production.
        In June, I traveled to the delta, to Can Tho, in Vietnam,
    where environmental scientists reported that, over the past 20
    years, seawater has crept 20 kilometers further up into the
    Delta. They expect that this intrusion will worsen as upstream
    hydropower dams further restrict waterflow.
        Given the severity of these risks and their transboundary
    consequences, it's vital to consider ways to address water
    resources management and the development of hydropower dams
    through multilateral cooperation. The Mekong River Commission,
    established in 1995 by Thailand, Laos, Cambodia, and Vietnam,
    is one regional organization attempting this approach.
        In August 2009, I met with the Mekong River Commission in
    Laos and observed the valuable role that it plays in collecting
    data on the river, forecasting the impact of hydropower
    development, and catalyzing a regional approach to water
    management.
        I'm concerned, however, that the effectiveness of this
    organization is limited by two major factors. First is the lack
    of membership by two Upper Mekong countries, China and Burma.
    In fact, China is one of the few countries in the world that
    does not recognize riparian water rights of downstream nations.
    Yet, it is the gatekeeper for the Mekong River and all of the
    water that flows downstream from the Tibetan Plateau.
        Without China's meaningful participation in regional river
    management and consideration of downstream nations, the Lower
    Mekong countries are vulnerable to China's control over water
    flows. This concern should include China's potential ability to
    hold back the river at its source.
        Second, the commission lacks the power to prevent
    environmental and economic harms that may occur when parties
    fail to account for regional impacts in the development of
    hydropower. It also lacks the power to hold nations liable for
    environmental or economic damage resulting from these
    developments.
        Southeast Asia is in need of a methodology, either
    political or economic, or both, that can raise environmental
    standards, mitigate the negative impacts of water use and
    development, and ultimately hold countries responsible for
    their actions.
        With U.S. participation, the Asian Development Bank's
    financing of infrastructure projects presents one opportunity
    to influence regional environmental practices. The ADB is the
    only regional organization to which all Mekong countries
    belong. And it has played a significant role in funding the
    development of hydropower and electricity transmission systems
    throughout the region.
        Presently, this committee is developing legislation to
    authorize the U.S. capital contribution to the Asian
    Development Bank. This bill also provides an opportunity to
    revisit the role that the ADB plays in Southeast Asia,
    particularly in financing infrastructure projects and in
    improving environmental standards. To this end, I've been
    working, with input from several organizations, including the
    World Wildlife Fund, the Nature Conservancy, International
    Rivers, and the Stimson Center, to develop language that would
    raise the environmental standards for hydropower dam or
    electricity transmission projects financed by the ADB.
        This language, if adopted, would instruct the U.S.
    executive director at the Bank to vote against financing a
    project if the Treasury decides not to certify to Congress that
    the process adheres to internationally recognized environmental
    standards, and that it protects the rights of individuals
    affected by the project, and reflects a multilateral approach
    to development along the Mekong River.
        I've shared the language under consideration with our
    nongovernment witnesses, and I would be interested in hearing
    any thoughts that they might have on that, and any other policy
    suggestions, as the hearing goes forward today. And I will look
    forward to working with Chairman Kerry and the committee to
    include some form of this language in the ADB authorization.
        United States attention to the health and well-being of the
    Mekong River in Southeast Asia can be a vital factor in
    facilitating a positive multilateral solution to the risks
    facing the region. Additionally, we can encourage other
    countries to adopt long-term approaches toward developing the
    Mekong River that would balance each nation's economic
    development with the protection of the environment and the
    overall security of more than 60 million people.
        I'm pleased to welcome two panels today to help us examine
    the challenges facing Southeast Asia's environment, economy,
    and security, and how the United States can facilitate better
    multilateral management of the Mekong River and the region's
    environment.
        Our first panel, I would like to welcome Deputy Assistant
    Secretary of State Joseph Yun. This is the first occasion that
    Deputy Assistant Secretary Yun has had to appear formally
    before the subcommittee, but we've had several meetings, and I
    have enjoyed, very much, working with Secretary Yun to this
    point.
        And I'd like, again, to congratulate you on your recent
    promotion.
        Previously, Deputy Assistant Secretary Yun served as the
    Director of the Office of Maritime Southeast Asia in the State
    Department. He is a career member of the Senior Foreign Service
    class of minister counselor. His overseas assignments have been
    in South Korea, Thailand, France, Indonesia, and Hong Kong.
        So, welcome, Secretary Yun. And please proceed.

    STATEMENT OF JOSEPH YUN, DEPUTY ASSISTANT SECRETARY, BUREAU OF
         EAST ASIAN AND PACIFIC AFFAIRS, DEPARTMENT OF STATE,
                             WASHINGTON, DC

        Mr. Yun. Thank you very much, Chairman. And thank you for
    inviting me here today to discuss the importance of the Mekong
    River to the sustainable development and security of the Mekong
    Basin and key aspects of our engagement strategy on these
    issues with the Southeast Asia region.
        With your permission, I would like to make brief remarks
    and submit a longer statement for the record.
        Senator Webb. Your longer statement will be entered into
    the record at this time. And please proceed with any other
    comments you'd like to make.
        Mr. Yun. In her remarks on World Water Day this year,
    Secretary Clinton stated that, ``Water represents one of the
    great diplomatic and development opportunities of our time.''
    By 2025, nearly two-thirds of the world population will be
    living under water-stressed conditions. Water scarcity and poor
    water quality will increase disease risks, undermine economic
    growth, limit food production, and become an increasing threat
    to peace and security.
        The Lower Mekong region of Cambodia, Laos, Thailand, and
    Vietnam is one of Asia's most vulnerable areas to the impacts
    of climate change because of large numbers of people living in
    flood plains and low-lying coastal areas and because the people
    and economies of the region depend strongly on agriculture and
    ecosystem services. The region's extraordinary biodiversity is
    also at risk from human activities and both the direct and
    indirect impacts of climate change.
        The Mekong is one of the most complex river systems in the
    world. It is the longest river in Southeast Asia, stretching
    over 2,700 miles, through six countries, nearly twice the
    length of the Colorado. Its watershed supports millions of
    people, providing over $2 billion in revenue from wild
    fisheries alone.
        Within the lower basin are ecologically unique features
    that play crucial roles in regulating the flows of the Mekong.
    The Tonle Sap Lake, Cambodia's most important fishery, and,
    below that, the wide reach of the Vietnam Delta, which produces
    about 52 percent of Vietnam's rice and most of its aquaculture,
    fish, and shrimp exports.
        The people of the Mekong River Basin depend heavily on the
    river. Irrigated agriculture and fishing engage 85 percent of
    the workforce within the basin. And for most farmers, the river
    is critical to their survival.
        Poverty is still an enormous challenge in the region, and
    those who are dependent on the natural base of the Mekong are,
    of course, the first to suffer from any environmental damages
    and changes.
        It is also important to note that the region holds great
    capacity for growth and economic opportunity. For example,
    United States exports to Vietnam have tripled in the last 3
    years, with two-way trade reaching nearly $16 billion in 2009.
    And the region has proved to be very resilient during the
    recent economic downturn.
        Economic growth results in growing energy needs, and the
    countries of the Mekong are increasingly turning to hydropower
    as a solution. Construction of dams on the Mekong River,
    however, may pose immediate and long-term threats to the food
    security and livelihood of the millions of people in the Lower
    Mekong Basin.
        The impetus behind the Mekong dam projects is the creation
    of a regional electrical grid which will facilitate the
    development of the Mekong Basin. In the future, the Mekong and
    its tributaries could support an elaborate interlocking
    electric power generation, supplying Laos, northern Thailand,
    parts of Cambodia, and much of Yunnan province in China. The
    economic stakes for dam construction are high, and the states
    of the Mekong Basin are eager for developmental benefits they
    can obtain.
        On the upper stem of the Mekong, China's eight-dam cascade
    in Yunnan province, four of which are completed, will most
    certainly disrupt some of the river's natural function, as well
    as give China some degree of control over the timing and amount
    of water flows. During the dry season, the flows from China
    account for 40 percent of water supply in the Mekong system.
    During the wet months, the share is about 16 percent.
        In the Lower Mekong, hydropower development plans have been
    plagued by weak oversight of required environmental and social
    impact assessments. The greatest downstream ecological impact
    of regional infrastructure development will be felt at
    Cambodia's Tonle Sap Great Lake and Vietnam's Mekong River
    Delta.
        Upstream mainstem dams may degrade the Tonle Sap, affecting
    fish migration and population. The Mekong Delta of Vietnam may
    also suffer major consequences, including the loss of vital
    silt replenishment, resulting in increased saltwater intrusion
    and decreased rice production.
        The Mekong River system is already beginning to show signs
    of strain brought about by its multiple competing uses.
    Although much attention is focused on the impact of future
    dams, immediate environmental threats also exist through
    overuse and pollution from industry, wastewater, and
    agriculture. Effectively managing transboundary water is an
    enormous challenge, particularly for the regions--for the
    nations in the region with different levels of economic
    development and past animosities.
        Facing these difficulties, the Mekong River Commission has
    provided a framework for addressing transboundary water
    resources in the region. It has steered regional and watershed
    development since 1995, emphasizing avenues for cooperation,
    strategic planning, and continued dialogue. Although not a
    regulatory agency, the Mekong River Commission builds knowledge
    and technical capacity for member states of Cambodia, Laos,
    Thailand, and Vietnam through providing assistance and
    recommendations.
        These problems are not easy, but cooperative solutions are
    possible. While the United States has a long history of
    engagement with the countries of Southeast Asia on a bilateral
    basis, there is an increasing awareness of the growing number
    of issues that transcend national boundaries. The countries of
    the Lower Mekong region share a variety of common interests and
    concerns. With those concerns in mind, Secretary Clinton
    launched the Lower Mekong Initiative in 2009 to help facilitate
    regional cooperation on the issues of environment, education,
    health, and infrastructure. This initiative seeks to coordinate
    effective responses to challenges, that are inherently regional
    in nature, through working-level visits, training workshops,
    conferences, and scientific and technological exchanges.
        In concert with other technical agencies of the U.S.
    Government, USAID, and the State Department are making
    significant investments in order to further improve our
    regional programming. USAID programs incorporate U.S. expertise
    into a regional plan to address some of the key water and
    development challenges these countries face. They also foster
    cooperation among the countries in the region to work together
    for a common purpose. U.S. leadership and increased attention
    may have had an impact on other regional players. Recently,
    China agreed to share more of its operational data with the
    Mekong River Commission and has allowed the visit by the
    Commission officials to China's Yunnan province to look at two
    of its four dams. Japan has also increased its involvement in
    the region, pledging $5 billion in assistance at the Japan
    Mekong summit in October 2009.
        The administration recognizes the critical need to work
    closely with the countries in Southeast Asia to foster the
    rational use and sustainable development of the river resources
    before lasting environmental harm has been done and before the
    security of the region is jeopardized by improper planning on
    this important waterway. We hope to advance cooperation and
    expertise by continuing to expand the Lower Mekong Initiative
    by developing technical assistance programs mobilizing a whole-
    of-government approach. We are encouraged by the progress that
    has been achieved in such a short time and, with our Mekong
    partners, are pursuing activities that can bring the greatest
    gain for the region.
        Thank you for giving me this opportunity to testify today.
    And I'm very happy to answer any questions you may have.
        [The prepared statement of Mr. Yun follows:]

    Prepared Statement of Joseph Yun, Deputy Assistant Secretary, Bureau of
      East Asian and Pacific Affairs, Department of State, Washington, DC

        Chairman Webb and members of the subcommittee, thank you for
    inviting me here today to discuss the importance of the Mekong River to
    the sustainable development and security of the Mekong Basin and key
    aspects of our engagement strategy on these issues with the Southeast
    Asia region.
                   the global water and sanitation challenge
        In her March 22, 2010, World Water Day Speech, Secretary Clinton
    stated that ``water represents one of the great diplomatic and
    development opportunities of our time.'' She noted that, ``It's not
    every day you find an issue where effective diplomacy and development
    will allow you to save millions of lives, feed the hungry, empower
    women, advance our national security interests, protect the
    environment, and demonstrate to billions of people that the United
    States cares, cares about you and your welfare. Water is that issue.''
        By 2025, nearly two-thirds of the world's population will be living
    under water-stressed conditions, including roughly 1.8 billion people
    who will face absolute water scarcity (a level that threatens economic
    development as well as human health and well-being). Water scarcity and
    poor water quality will increase disease risks, undermine economic
    growth, limit food production, and become an increasing threat to peace
    and security.
        More than 260 watersheds worldwide are shared by two or more
    countries. As water becomes scarce, tensions over shared resources are
    likely to rise--both within countries and among countries. Promoting
    joint management and using water to build trust and cooperation in
    conflict-prone regions are important tools in reducing the risks of
    future conflicts.
        The effects of climate change will only exacerbate these
    challenges. Perhaps the most profound effects of climate change will be
    the shrinking of glaciers and rivers. Water availability will change as
    will the likelihood of extreme floods and droughts. These extreme
    events can affect more people than all other natural disasters
    combined.
        The Greater Mekong subregion is one of Asia's areas most vulnerable
    to the impacts of climate change because of the large numbers of people
    living in floodplains and low-lying coastal areas and because the
    people and economies of the region depend strongly on agriculture and
    ecosystem services. The region's extraordinary biodiversity is also at
    risk from both the direct and indirect impacts of climate change.
        As we know from our own experiences with the wetlands and marshes
    of large river systems such as the Mississippi, the management of these
    systems can have far-ranging societal and ecological impacts.
    Sustainable river management in the face of climate change is of great
    concern to us, as well as for those living in large watersheds around
    the world.
        To help strengthen U.S. engagement in Southeast Asia, Secretary
    Clinton announced the Lower Mekong Initiative (LMI) in July 2009 on the
    margins of the ASEAN Post-Ministerial Meeting. The LMI aims to engage
    Cambodia, Laos, Thailand, and Vietnam by helping build regional
    capacity in the areas of environment, health, education, and
    infrastructure in order to facilitate multilateral cooperation among
    the four countries on issues of mutual concern, such as the common
    challenge of effective water resource management
        Also in response to this challenge, Secretary Clinton has asked
    Under Secretary for Global Affairs Maria Otero and U.S. Agency for
    International Development Administrator, Rajiv Shah, to identify
    specific steps we can take to strengthen the United States capacity to
    respond to watershed management and climate change. We are also
    establishing a joint steering group under the leadership of Bureau of
    Oceans, Environment, and Science Assistant Secretary Kerri-Ann Jones.

                      THE COMPLEXITY OF THE MEKONG SYSTEM

        Hydrologically, the Mekong River is one of the most complex river
    systems in the world. It is the longest river in Southeast Asia,
    stretching 2,703 miles through six countries, nearly twice the length
    of the Colorado River. Its watershed supports between 65 and 80 million
    people, providing over $2 billion in revenue from wild fisheries alone.
        The large flows of the Mekong--nearly as large as those of the
    Mississippi--vary widely according to available precipitation. The
    basin has a wet season and a dry season. During the wet season, only
    about 16 percent of the flows come from China. During the dry season
    months, this share rises to 40 percent. Due to the complexity and
    extent of the Mekong system, drought and flood events rarely affect the
    entire reach equally.
        Within the Lower Basin are ecologically unique features that play
    crucial roles in regulating the flows of the Mekong: the Tonle Sap
    Lake, Cambodia's most important fishery, and, below that, the wide
    reach of the Delta, which produces about 52 percent of Vietnam's rice
    and most of its aquaculture fish and shrimp exports.
        Located in the Cambodian floodplain, the Tonle Sap Lake is filled
    by the monsoon rains. When it overflows, it can temporarily reverse the
    flow of the Mekong. The surge in water storage in the lake is enormous,
    increasing from 1-2 million acrefeet in the dry season, to 40-60
    million acre-feet in the wet season, enough to cover the State of New
    Jersey in 10 feet of water.
        The injection of nutrient-rich sediments also creates one of the
    world's most productive ecosystems and the world's largest freshwater
    fishery. Through this natural action of seasonal storage, the Tonle Sap
    Lake regulates the flows of the Mekong, moderates flood events,
    provides crucial flows during dry months, and prevents the incursion of
    seawater within the Delta.
        The Mekong Delta supports about half of Vietnam's total production
    of rice and provides food security for its population. Vietnam is one
    of the world's richest agricultural regions, the second-largest
    exporter of rice worldwide, and the world's seventh-largest consumer of
    rice. The Mekong River and its tributaries are crucial to rice
    production in Vietnam. A total of 12 provinces constitute the Mekong
    Delta, containing 17 million people, 80 percent of whom are engaged in
    rice cultivation. According to the United Nations Development Program
    in Vietnam and Vietnam's Ministry of Agriculture and Rural Development,
    the rice industry is under serious threat due to the 2010 heat wave,
    climate change, and upstream Mekong River development.

                    STRONG RIPARIAN DEPENDENCE ON THE MEKONG

        The inhabitants of the Mekong River Basin depend heavily on the
    river. Irrigated agriculture and fishing engage 85 percent of the
    workforce within the Basin, and for most farmers the river is critical
    to their survival. Many farmers rely on fishing to supplement their
    incomes and provide nourishment. In every Mekong country fish are the
    most important source of animal protein; for many, the principal source
    of protein in their diet. Poverty still challenges the region, and
    those who are heavily dependent on the natural resource of the Mekong
    are the first to suffer from any environmental changes.
        It is important to note that, while the region is still home to
    over 20 million people living in poverty, it also holds great capacity
    for growth and economic opportunity. For example, U.S. exports to
    Vietnam have tripled in the last 3 years, with two-way trade reaching
    nearly $16 billion in 2009. Regional economic growth in 2009 was 6
    percent; proving the region's economy to be very resilient during the
    recent economic downturn.

                                HYDROPOWER PLANS

        One result of increased development is that the countries of the
    Mekong Basin are increasingly turning to hydropower as a solution to
    their growing energy needs. Construction of dams on the Mekong River
    may pose immediate and long-term threats to the food security and
    livelihoods of tens of millions of people in the Lower Mekong Basin.
    However, awareness of these threats is rising rapidly due to the
    confluence of an extended drought this year and a concerted push by
    interested parties, including the United States through the Lower
    Mekong Initiative, to highlight the possible adverse affects of dam
    construction.
        The impetus behind the Mekong dam projects is the creation of a
    regional electrical grid that will facilitate the development of the
    Mekong Basin. In the future, the Mekong and its tributaries could
    support an elaborate, interlocking electric power generation grid
    supplying Laos, northern Thailand, parts of Cambodia, and much of
    Yunnan province in China. The economic stakes for dam construction are
    high, and the states of the Mekong Basin are eager for the
    developmental benefits they can obtain.
        All dams have an impact on the flow and natural ecology of rivers
    and streams, but in certain cases the developmental and environmental
    tradeoffs in terms of electric power and navigation can be justified.
    In the case of the 11 mainstream dams planned by Cambodia, Laos, and
    Thailand on the lower half of the river, disruption of the food
    security of 60 million people who depend on the river could be among
    the serious consequences resulting from damming the Mekong River. A
    single misplaced dam on the lower Mekong could block the path of
    migratory fish species that supply up to 80 percent of animal protein
    in the local diet. A reduction in freshwater flows caused by poorly
    designed dams could also increase the salinity of the river water, thus
    adversely affecting the rice crop.
        The ambitious plans for investment in infrastructure should be
    grounded in a comprehensive analysis of where these investments would
    provide the highest return and what their hydrological impact would be.
    In the Lower Mekong region there is generally little analysis of soil
    and water quality, or other constraints to food production, when river
    modification is being considered. Often hydropower development plans
    have been plagued by weak oversight of required environmental and
    social impact assessments.
        On the upper stem of the Mekong, China's eight-dam cascade in
    Yunnan province, four of which are completed, will certainly disrupt
    some of the river's natural functions as well as give China some degree
    of control over the timing and amount of river flows. But the greatest
    downstream ecological impact may be caused by downstream infrastructure
    development and would be felt in Cambodia's Tonle Sap Great Lake and
    Vietnam's Mekong River Delta. Mainstem dams, including two planned by
    Cambodia itself, may degrade the Tonle Sap, and the Delta may also
    suffer major consequences due to the loss of vital silt replenishment.
        Hydropower remains a valuable energy resource, so long as the cost-
    benefit tradeoffs are fully understood and responsibly addressed. Many
    development projects must weigh the tradeoffs between the opportunities
    presented by new economic infrastructure--such as roads, bridges, and
    dams--and the full impacts to ecology and local livelihoods. The sale
    of electricity generated by dams provides a source of foreign revenue
    for countries with few existing alternative options for economic
    growth, but this may be unsustainable and comes with potentially
    significant environmental and social costs.

                              SYSTEM UNDER STRESS

        The Mekong River system is already beginning to show signs of
    strain brought about by multiple competing uses. Although much
    attention has focused on the impact of future dams, more immediate
    environmental threats exist through overuse and pollution from
    industry, wastewater, and agriculture.
        Maintaining water quality in the Mekong is key to sustaining the
    health and productivity of the populations dependent on it. High
    salinity levels are prevalent in the Delta, mostly during the dry
    months as diminished flows of the Mekong are unable to push back
    against seawater incursions. Moreover, agricultural runoff, municipal
    wastewater, industrial effluent, and sulphate-rich soils have resulted
    in elevated levels of acidity and eutrophication of the Lower Mekong
    watershed.
        The Lower Mekong countries have recently started to address the
    issue of water pollution, but the region is plagued by lagging
    enforcement and monitoring. Upstream sources of water pollution, as
    well as domestic wastewater continue to degrade the health of the
    river. Certain municipalities, for example, discharge the majority of
    their untreated sewage directly into the river.
        While the state of the Mekong environmental system is threatened by
    existing pollution and future development, the few completed monitoring
    studies have found that the effect of pollution on Mekong fisheries has
    been limited thus far. While the current impact of development along
    the Mekong is also limited, future threats to fisheries, water quality,
    and human health are most likely to come from human interference in the
    form of dams, increased transportation, additional habitat destruction
    from land-use changes, and continued water pollution.
        The State Department has provided some small grants to a network of
    universities in the region to study the levels of pollution in the
    river. This effort has enhanced collaboration among research
    institutions within the four nations in the Mekong Basin. More studies
    are needed to fully understand development's effects on the Mekong's
    fragile biodiversity and to strengthen nascent research partnerships.
        Beyond the impact of human activities in the watershed affecting
    the Mekong River Basin, climate change will undoubtedly add to the list
    of challenges. Changing rainfall patterns, glacial melting, and greater
    hydrological variability may increase the likelihood of floods and
    droughts. Given an average elevation of around five feet, sea-level
    rise poses a grave threat to the Vietnam Delta.

                       LOCAL POLITICS AND WATER POLITICS

        Shared water issues among the Mekong countries are managed through
    a series of overlapping legal and institutional arrangements, such as
    navigation agreements. Effectively managing transboundary water is a
    significant challenge, particularly for riparian nations with different
    levels of economic development and past animosities. Facing these
    difficulties, the Mekong River Commission has steered regional
    watershed development since 1995, emphasizing avenues for cooperation,
    strategic planning, and continued dialogue.
        Under the 1995 Mekong Agreement signed by the Governments of
    Cambodia, Laos, Thailand, and Vietnam, the Mekong River Commission
    (MRC) has provided a framework for addressing transboundary water
    resources in the region. Its structure has allowed for needed
    flexibility and resiliency as hydrologic and economic realities shift.
    Major foreign donors to the MRC include Germany, Australia, Sweden, and
    Denmark.
        Since 1995, the MRC has widened its scope. While remaining a forum
    for cooperative discussions, it has moved from large-scale basin
    planning to include small-scale resource development and the
    establishment of a knowledge base in lower basin hydrology. Although
    not a regulatory agency, the Mekong River Commission builds knowledge
    and technical capacity for member states through providing assistance
    and recommendations.
        In the future, the MRC will be forced to address difficult issues
    of water allocation and basin management. Hydropower development and
    analysis of water flows during the dry season must be discussed to
    craft adequate cooperative solutions. Responses to floods or droughts
    require strengthened communication between riparian countries. These
    problems are not easy, but cooperative solutions are possible.
        In response to these challenges, Secretary Clinton launched the
    Lower Mekong Initiative (LMI) in 2009 to help address regional issues,
    with a particular focus on the environment, health, education, and
    infrastructure. The LMI seeks to facilitate effective, coordinated
    responses to challenges that are inherently regional in nature through
    working level visits, training workshops, conferences, and scientific
    and technological exchanges.
        U.S. leadership and increased attention on the LMI has had an
    impact on how other regional players view these issues. Recently, China
    agreed to share more of its operational data with the Mekong River
    Commission and has allowed a visit by Mekong River Commission officials
    to China's Yunnan province to look at two of the four dams. Japan has
    also increased its involvement in the region, pledging $5 billion in
    assistance at the Japan-Mekong summit last October.

           U.S. POLICY REGARDING TRANSBOUNDARY WATER SECURITY ISSUES

        The unfortunate reality is that there will always be disputes over
    water. Our involvement includes emphasis on building solutions that
    consider the environment and climate change, health, education,
    infrastructure, and economic growth. Through our support of
    multinational solutions, we hope to foster an environment that will
    preempt instability and minimize the potential for violent conflict. In
    analyzing the potential for conflict, we look at factors that are
    driving tensions, as well as factors that can defuse tensions.
        In the Mekong region we see only a few factors with the potential
    to contribute to conflict. Those factors are unilateral development of
    upstream infrastructure, bilateral development of downstream
    infrastructure, changing environmental conditions, and historical
    tensions in relations between Mekong countries. These instigating
    factors are to a large extent countered by some important mitigating
    factors. First, the Mekong countries recognize that they need to act in
    concert in the stewardship of the Basin. The Asian Development Bank
    (ADB) and other donors are helping to foster this collaboration. In
    addition, the MRC is a regional institution which has recently made
    significant strides and includes representation and support from each
    of the Basin countries. While much needs to be done to ensure the
    institution can effectively advance sound water resources management
    across the Basin, it provides a solid foundation for regional
    assessment, planning, and discussion. In our view, the MRC's existence
    greatly minimizes the likelihood of violent conflict among the Mekong
    states.
        While the United States has a long history of engagement with the
    countries of Southeast Asia on a bilateral basis, there is an
    increasing awareness of the growing number of issues that transcend
    national boundaries. The countries of the Lower Mekong region share a
    variety of common concerns, including transboundary water management,
    infectious diseases, and vulnerability to climate change. Our Lower
    Mekong Initiative seeks to support a common regional understanding of
    these issues and to facilitate an effective, coordinated response.
        In order to build regional capacity and cooperation, the State
    Department is working with other U.S. Government partners to develop
    innovative programs under the auspices of the LMI. ``Forecast Mekong,''
    a computerized decisionmaking tool the U.S. Geological Survey is
    developing with State Department support, will provide policymakers in
    the Mekong countries with the information they need to make good
    decisions on managing the Mekong waterways, including predicted effects
    of hydropower dams on water flow. This information will be made
    available on the Internet so that scientists and researchers, based in
    the region and around the world, can also access the data and the
    analysis capability. Also created under the auspices of the LMI is a
    ``sister-river partnership'' between the Mekong River Commission and
    the Mississippi River Commission that will help to build the capacity
    of the Mekong River Commission and to support its efforts to
    incorporate water-related concerns into regional decisionmaking.
        USAID is also working to strengthen the capacity of the Lower
    Mekong countries to assess the environmental impacts of hydropower
    development at both the project and basin levels. Through the Asia
    Development Bank (ADB) and Greater Mekong Sub-Region Initiative, USAID
    will support partnerships between the countries to conduct Strategic
    Environmental Assessments for hydropower projects. In addition, USAID,
    in partnership with ADB, MRC, and the Worldwide Fund for Nature, has
    developed a sustainable hydropower development assessment tool, which
    will soon be piloted in various sub-basins within the watershed.
        The United States has an important role to play here. We can inform
    regional policy and decisionmaking, build local capacity, and promote
    sustainable development by sharing advanced science and technology
    capabilities. Our goal in this area is not to determine the outcome of
    these discussions, but to give policymakers the tools they need to make
    informed decisions about development of the river.
        Finally, in concert with other technical agencies of the U.S.
    Government, USAID, and the State Department are making significant
    investments in the health, environment, and education sectors. In
    addition to existing bilateral activities, we are further developing
    our regional programming as well. I would like to highlight the
    Secretary's announcement of $3 million from USAID for the study of
    climate change impacts on the Mekong Basin. Let me share a rough sketch
    of what we hope to accomplish with this money.
        USAID will support the development of a regional adaptation
    strategy across the Lower Mekong. It will engage local institutions and
    conduct studies to assess vulnerabilities of the ecosystem as well as
    hold dialogues with a variety of stakeholders to gain support for a
    regional approach. Further into the program, we look to implement pilot
    projects and build platforms for sharing of information. Through an
    integrated and regional approach we will be able to build local and
    national government capacity for long-term planning founded on sound
    science and advanced technology.
        These programs incorporate U.S. expertise into a regional plan to
    address some of the key water and development challenges these
    countries face. They also foster cooperation among the countries in the
    region to work together for a common purpose.

        Conclusion

        The administration recognizes the critical need to work closely
    with the countries in Southeast Asia to foster the rational use and
    sustainable development of Mekong River resources before irreparable
    environmental harm has been done and before the security of the region
    is jeopardized by improper planning and exploitation of this important
    waterway. Mekong countries, including to some extent China, have
    realized the importance of united action by establishing the Mekong
    River Commission. We hope to advance cooperation and expertise by
    creating the Lower Mekong Initiative and developing technical
    assistance programs.
        Building upon existing programs, we have mobilized a whole-of-
    government approach to our engagement in the Lower Mekong Initiative.
    We are sensitive to the needs and priorities of our Mekong partners and
    are pursuing activities that can bring the greatest gains for the
    region. We are encouraged by the progress that has been achieved in
    such a short time and look forward to planning the Third Lower Mekong
    Ministerial Meeting to continue the discussion to protect the Mekong
    River.
        Thank you for extending this opportunity to me to testify today on
    this pressing and vitally important issue. I am happy to respond to any
    questions you may have.

        Senator Webb. Thank you very much, Secretary Yun.
        I would like to ask you a few questions here. First of all,
    speaking of the Lower Mekong Initiative, you mentioned that the
    United States is contributing $3 million to a program examining
    the impact of climate change on water resources and food
    security. In fact, I was reminded of this contribution several
    times when I was in Vietnam in July. I am, at the same time,
    kind of curious about how much is being invested in areas where
    we can get a more immediate improvement.
        In page 5 of your testimony, you mention a number of items
    that are similar to the areas that I have been attempting to
    get some attention to: the notion of the difficulty of upriver
    dams, which is a main purpose of this hearing, which affect
    riverflow downstream, much among other issues; the impact of
    growing population on pollution in the rivers; the lack of
    pollution standards--in fact, during my Vietnam trip, I was
    told that only 30 percent of the wastewater being put back into
    the river has been treated; and also, the increasing
    industrialization along the river, and the emissions that come
    from those facilities. What are we doing, in terms of the Lower
    Mekong Initiative, to assist in resolving those problems?
        Mr. Yun. Thank you. We have, this year, in FY 2010--we will
    spend--this is our assistance to four Lower Mekong region--$219
    million in assistance. I mean, that includes every assistance
    we have. A large part of that is--the biggest share of that
    goes to Vietnam. And I think that comes--to Vietnam--comes to
    about $90 million. And then next we have Cambodia, at about $72
    million. And then, of course, smaller sums for Laos and
    Thailand.
        Within that amount, the biggest amount is spent on public
    health programs. And I would emphasize two types of public
    health programs. One, we've done a lot in terms of PEPFAR, the
    HIV/AIDS program. And second one is the emerging and infectious
    diseases. And I think that's the area we'll be looking, in the
    future, to expand on. That's the area--we've recently had a
    conference among Lower Mekong countries, and that's the area
    we'll be looking to expand.
        Let me just say a word about Lower Mekong Initiative.
    This----
        Senator Webb. Mr. Secretary, if I may.
        Mr. Yun. Yes.
        Senator Webb. How much of that money is being spent on the
    Mekong River?
        Mr. Yun. It is very small. It is a program that has just
    gotten underway last year. And as you know, our budget cycle
    typically takes 2 years. And we are now making the budget for
    FY12. In the meantime, we want to get whatever resources we
    can. And right now, as you mentioned, $2 to $3 million is
    devoted. And mostly, that will be for technical exchanges--
    doing conferences, bring experts over, and so on.
        Senator Webb. But, that money--let's get our facts straight
    here--that money, according to testimony, is principally being
    spent to examine the impact of climate change. Is that correct?
        Mr. Yun. It's not only for climate change. We have also
    some money which will do--I don't know whether we've briefed
    you on Forecast Mekong, for example. That's a program, with the
    U.S. Geological Survey, in which we are trying to do a
    simulation model of water levels in Mekong. And so, some of
    that money was spent on that. And so, at the moment, I would
    say the budget for LMI is pretty much ad hoc. And we need
    devoted money. And this is what we are trying to work at.
        We've had two LMI ministerials over the past 12 months, and
    we're going to have another one at the end of October. And
    before committing money to it, we would like to have some
    structure. And let me just describe to you the kind of
    structure we want to have.
        We want to have full working groups within LMI: education,
    public health, environment and climate change, and, last, on
    infrastructure. Within this working group, we would have
    projects. And so, the simple answer to your question is, money
    issues, we believe, should come after there has been some
    serious work done--what kind of project is necessary. So,
    that's where we are.
        Senator Webb. So, if we're defining the objectives that
    could best be met with the relatively small amount of money
    that we have, in addressing the issues of the Mekong River
    itself, and you had $3 million, would you put it in climate
    change, or would you put it in wastewater treatment, or--what
    would you do?
        Mr. Yun. It's kind of too small to put it any ways, but we
    want to use that money to get the working groups going, to have
    good degree of consultations and studies done so that we know,
    when the bigger money that we will be asking for--we'll know
    what to do with that.
        Senator Webb. Let me just----
        Mr. Yun. We think of this as a long-term commitment, and we
    want to come back to--you know, to Congress, over and over
    again, and seek devoted funding. That's what we aim to do.
        Senator Webb. But, at the same time, my observation is
    that, having visited Can Tho and discussed these issues with
    people down there, when they're getting a certain amount of
    money for climate change, which is rather hard to get your arms
    around, and they have issues of pollution standards, effluence
    into the river, those sorts of things, let me encourage you to
    include those in your objectives.
        Mr. Yun. Thank you. We will.
        Senator Webb. And, if I may, I have just another question
    on the Lower Mekong Initiative. Are you planning discussions to
    engage countries, bilaterally and multilaterally, on the risks
    that are associated with these hydropower projects?
        Mr. Yun. Most of our engagement on Mekong sites, so far,
    has happened with the Mekong River Commission. We, again, do
    give a little bit of assistance to Mekong River Commission. And
    we also work with a couple of large donor countries--Australia
    and Denmark, principally. And most of our engagement has been
    on that front.
        We also have talked with Chinese, on occasions, on water
    usage in general, and also on Southeast Asia. So, we do engage
    China as well as Mekong River Commission.
        Senator Webb. As you know, China, which has about 20
    percent of the Mekong River's water resources, is not a member
    of the Mekong River Commission. It also, as I mentioned in my
    opening statement, does not recognize downstream riparian water
    rights. And I was really gratified to see, recently, just over
    the past month or so, after we, in our country, began
    discussing this issue a little more openly, that China has been
    willing to share some data on the construction in Yunnan. And
    the dam projects in Tibet still remain a mystery. But, what do
    you think they need to do in order to demonstrate that they're
    acting responsibly, in terms of their obligations in the
    region?
        Mr. Yun. I think they need to have a serious dialogue with
    downstream countries regarding, especially, the effects of the
    dams they're building, on waterflow. And so far, that has not
    taken place. We welcome, of course, China recently sharing some
    data, but it's not the whole set. And, you know, essentially,
    we want them to share not only part of the current--I think
    they're only sharing data--daily waterflow during wet season.
    We want them to share, during dry season, what happens. We also
    want them to share historical data. And it's really only
    looking through historical data you're going to get the trend.
    It's not--it's no good--I wouldn't say it's no good; it's some
    help. But, having the current data only is just a slice of the
    picture.
        But, more than that, we would want them to be part of any
    kind of organization that takes place in that region, in terms
    of discussing overall effects, in terms of fisheries, in terms
    of the environment, and what this true cost and benefits are,
    so that people in the region can make the decision, based on
    true cost-benefit analysis.
        Senator Webb. China is very reluctant, particularly in this
    region, to engage in multilateral dialogue. Do you see any
    movement on that front with respect to these issues?
        Mr. Yun. I think we have to encourage them. Mr. Chairman,
    you and I have recently discussed the issues of South China
    Sea, for example. And I think this is another example in which
    United States interests may not be directly involved, or we
    have no real presence there, in terms of sharing borders, but,
    at the same time, regional stability requires we look a little
    bit beyond and engage China and the neighboring states into a
    sustainable dialogue. It can be in a multilateral forum. I
    mean, there are lots of existing mechanisms.
        We have, for example, there is the ASEAN mechanism, there
    is the Mekong River Commission mechanism. As you mentioned,
    there is also the Asian Development Bank mechanism. But, beyond
    that, I think we need to, you know, be more engaged in the
    region with China and the neighboring states.
        Senator Webb. I would agree with that comment, and I
    appreciate your saying it. As I've said many times, the United
    States is a vital ingredient in maintaining regional balance.
    And, even as you point out, we do not have geographical
    boundaries in this area. We certainly can provide, sort of,
    facilitation in order to encourage multilateral cooperation.
    And, quite frankly, if American dollars are going into these
    projects, we can decline to invest in projects that are clearly
    harmful to environmental concerns.
        Thank you very much, Secretary Yun. I know we'll be seeing
    you many times more in this subcommittee, and we appreciate
    your testimony.
        Mr. Yun. Thank you very much.
        Senator Webb. The second panel today, I'd like to welcome
    three experts who've made notable efforts to document the risks
    facing the Mekong River and consider solutions to these
    challenges.
        Dr. Richard Cronin is a senior associate at the Stimson
    Center, where he has directed the Southeast Asia Program since
    2006. Dr. Cronin joined the Stimson Center after a long career
    with the Congressional Research Service. He received his Ph.D.
    from Syracuse University, his master's and bachelor's degree
    from the University of Houston. He is a veteran of the Vietnam
    war. Earlier this year, Dr. Cronin published a report entitled
    ``Mekong Tipping Point: Hydropower Dams, Human Security, and
    Regional Stability,'' in which he analyzed the development of
    hydropower dams along the Mekong River, and the regional
    impacts of this activity.
        Welcome again to this subcommittee, Dr. Cronin.
        Ms. Aviva Imhof directs the Southeast Asia and Latin
    American programs at International Rivers. In her position, Ms.
    Imhof works with regional international partners to investigate
    hydropower projects, disseminate information, and provide
    technical, legal, and campaign assistance. Prior to this, Ms.
    Imhof directed the International River's Mekong program for 7
    years. She was the lead organizer of Rivers for Life, the
    second international meeting of Dam-Affected People and their
    Allies, a conference in 2003 that brought together 300 people
    from 62 countries in Thailand. She has also written extensively
    on the efforts to halt destructive river development projects
    in Southeast Asia.
        And welcome, Ms. Imhof.
        Our third witness is Ms. Dekila Chungyalpa, from the World
    Wildlife Federation. She is the U.S. director for the Greater
    Mekong Program and has led WWF's efforts on the Mekong region
    since 2005.
        In July, WWF released a study, entitled ``River of Giants:
    Giant Fish of the Mekong,'' which profiles four giant fish
    species living in the Mekong that rank among the world's
    largest freshwater fish. Ms. Chungyalpa also leads WWF's
    activities on the river basin climate change adaptation and
    sustainable solutions for hydropower. Previously, she worked
    for 5 years with the WWF in the eastern Himalayas and has
    extensive experience working with local communities. Ms.
    Chungyalpa speaks five languages: Sikkimese, Tibetan, Hindi,
    Nepali, and English.
        I thank all of you for being here today. And we will begin
    with Dr. Cronin.
        Welcome.

           STATEMENT OF DR. RICHARD CRONIN, SENIOR ASSOCIATE,
                   THE STIMSON CENTER, WASHINGTON, DC

        Dr. Cronin. Thank you, Mr. Chairman.
        I appreciate this opportunity to offer my perspectives on
    these urgent issues regarding water insecurity in Southeast
    Asia.
        I've organized my written statement so as to respond
    specifically to the five questions that you posed. But, in this
    few minutes' time I have, I would like to----
        Senator Webb. Let me say, by the way, because I should have
    said it before, that your full statements will be entered into
    the record----
        Dr. Cronin. I thank you.
        Senator Webb [continuing]. At the beginning of each of your
    testimony. And you're welcome to take whatever time you like to
    make your points orally.
        Dr. Cronin. Thanks very much. I appreciate that.
        My colleagues, in their statements, have already provided
    really eloquent and well-informed coverage of the human
    environmental tragedy that is unfolding. I will use my few
    minutes here to address two things. First--two points--one is
    the risks of both Chinese and proposed Lower Mekong projects
    the region's hard-won peace, stability, and the longer term
    prospects for sustainable development. Second, I will also
    address the Lower Mekong Initiative, which you've already been
    discussing with Mr. Yun.
        The character and the impact of the 8 or more large-to-mega
    dams that China is building on the upper half of the river, and
    the dams--now 11 dams and one other water project--proposed for
    the lower river--lower half of the river in Southeast Asia by--
    primarily by Cambodia and Laos, are different but of equally
    negative impact. And again, in the written statement--and I'm
    sure you'll hear from my colleagues--China's dam cascade in
    Yunnan will have different impacts, as opposed to those of the
    Lower Mekong dams. China, basically, is going to change the
    hydrology of the river in a very serious way, and hold back
    silt in its dams, that is necessary to replenish fields and
    rebuild the Mekong Delta every year after the dry season. And
    the Lower Mekong dams, to put it briefly, will block the
    migration of wild fisheries--and we're talking fish--we're
    talking about fish worth about $9 billion as they work to--
    their way through the economy, and which constitute anywhere
    from 40 to 80 percent of the protein in diets of some 60
    million people as you've already mentioned in your remarks.
        From a regional peace and security perspective, the worst
    aspect of China's Yunnan cascades is capability of the two
    biggest reservoirs, one of which is already filling--the
    Xiaowan dam--to regulate flow of water from Yunnan to the Lower
    Mekong. China plans to use this storage to put as much as 40
    percent or more water into the river during the dry season in
    order to keep its smaller, but still large, dams running year-
    round--that is, its three dams below Xiaowan--and to support
    navigation of large cargo boats between southern Yunnan and
    Luang Prabang, Laos.
        Augmenting the dry-season flow can be--in years of
    drought--can be a positive benefit, but the amount of water
    that China plans to release in the dry season will reduce the
    normal extremes of wet and dry in the river that give it its
    great productivity, and particularly of aquatic life and
    agriculture. So, some water in the dry season, if it's
    unusually dry, will help, but that's not what China has in
    mind. China wants to put more water in the river every dry
    season. And during the dry season, China is the most important
    source of water in the river.
        Even more troubling are the political and geopolitical
    ramifications. If Laos and Cambodia go ahead with their plans
    for damming the middle and lower reaches of the river, they
    will make themselves dependent on China to release water, from
    the Xiaowan Dam and this other even larger dam it's building,
    in the right quantity and at the right time to keep the dams
    operating downstream for several months of the year during the
    dry season. So, they're--Laos and Cambodia--setting themselves
    up, if they build these dams, to be totally dependent on China
    during the dry season, for most of those dams to keep
    operating.
        Equally or more troubling, China has, thus far, refused to
    countenance making cooperative water management part of the
    agenda of the Asian Development Bank-led Greater Mekong
    subregion, known as GMS. The GMS originally started with 11
    ``flagship programs,'' they called them, but most of the money
    is going to build roads and bridges in the regional power grid
    that you referenced earlier. And China will not allow the river
    to be part of that discussion. So, we already have the MRC with
    the four Lower Mekong countries, and China is not a part of
    that. And then we have the GMS, where China is a part, as well
    as Burma--or Myanmar, as you wish--but won't let the water
    issue be discussed.
        So, you made some comments in your statement about what we
    should be doing at the ADB. And I think that's one of the areas
    that the--where the United States should be using its
    influence.
        Mr. Chairman, the Obama administration has made the Mekong
    Basin the focal point of its professed engagement with
    Southeast Asia and ASEAN, and not a moment too soon.
        All of the Lower Mekong countries understand the
    geopolitical nature of the U.S. initiative; and, to varying
    degrees, they all welcome it. Because of the wider context of
    enhanced United States engagement with ASEAN, the LMI has been
    welcomed by most other Southeast Asian countries, due to
    concern about China's hegemonic potential, both in mainland
    Southeast Asia and the South China Sea.
        One serious weakness of the LMI, at present, and one that
    you've already addressed in your questions to Deputy Secretary
    Yun, is that the initiative originated in the Bureau of Asian
    Pacific Affairs. It's a foreign policy initiative not backed by
    much in the way of coordination or funding. Its programmatic
    pillars of health, education, climate change, and
    infrastructure were developed--were really developed on an ad
    hoc basis. And one of the problems right now--and you raised
    this issue is that the infrastructure pillar is empty. And the
    reason it's empty, I think, is that there are no programs to be
    rebranded under the LMI. So, the infrastructure side is where,
    if we're going to put more money into this initiative, it ought
    to be--on the river itself, on the hydrological issues, and
    the, you know, the future of fisheries and food security and
    human security and the Mekong Delta.
        This, however--infrastructure actually is an area where the
    United States should be providing, and could be providing,
    technology and capacity-building, especially in modeling, river
    monitoring, and full-scope cost-benefit analysis of proposed
    dams and other infrastructure programs. I think, again, Deputy
    Secretary Yun alluded to us moving in this direction. But, I
    don't think--I don't sense that that's going to come fast
    enough to have an impact on a river which really is at a
    tipping point.
        Thus, the most urgent need is planning and coordination,
    especially for getting adequate funding in place for fiscal
    year 2012. I agree entirely with your legislative initiative on
    the ADB authorization. The United States should be leveraging
    its influence and voting power on the boards of directors of
    not only the ADB, but also to the World Bank, to get them to
    partner with the United States in supporting specific LMI
    programs or program objectives. In other words, it doesn't have
    to be the LMI, exactly, but if we can get--leverage our
    influence to get them involved in this issue, that would be a
    great benefit.
        Neither the ADB nor the World Bank can get directly
    involved in construction--constructing mainstream dams on the
    Mekong, because their extreme environmental and socioeconomic
    impacts are too severe to pass muster with the Bank's own
    criteria. The risk, though, is that, as in the case of Laos'
    recently completed and controversial Nam Theun 2 Dam on a major
    tributary, the Bank should not participate in funding the
    project. Let me clarify what I'm saying here. There's a risk
    that the banks will jump in, to be relevant, and put money into
    environmental mitigation--if it's possible--relocation and
    alternate livelihoods for dams that it cannot otherwise support
    under its own principles. This is a slippery slope. They
    started on this slope at Nam Theun 2. And I think a big mistake
    for the banks to--in the interest of, perhaps, being relevant
    to the countries in the region--to get involved in these
    secondary aspects to mitigate or environmental damage or
    relocate people and give them--help them get new livelihoods.
        Finally, Mr. Chairman, the United States should not,
    cannot, and does not, seek to compete with China for
    infrastructure assistance or obstruct the growing economic
    integration of ASEAN countries into China's production chain.
    We haven't been involved in that business for a long time; that
    is, infrastructure--heavy infrastructure. That said, however,
    provided that infrastructure projects, excluding these
    mainstream dams, and activities are not exploitative or
    environmentally destructive, the expansion of trade investment
    ties between China, its Mekong and ASEAN neighbors can be a
    win-win situation for all. Unfortunately, at present, this is
    far from the case. What we can do, and have already
    accomplished to a surprising extent, is to use our expanded
    engagement in the region, as I would put it, to ``keep China
    honest.'' You alluded already to the--and as did Deputy
    Secretary Yun--to the fact that China has become a bit more
    responsive to its neighbors' concerns; for instance, about
    what's going on in Yunnan, how much water was being released--
    whether it was filling or spilling--the Xiaowan Dam, during the
    last drought. But, there's no transparency there. And that
    needs to change.
        And more broadly, American reengagement with Southeast
    Asia, and our firmer stance regarding China's growing
    assertiveness in the South China Sea, have predictably been
    criticized by Beijing, sometimes in angry language. But, the
    main observable effect, to date, has not been an increase in
    regional tensions, but, rather, to cause Beijing to pay
    noticeably more attention to the concerns, fears, and interests
    of its neighbors. U.S. friends and allies in Southeast Asia
    welcome this trend, and they want more of it. This is a major
    achievement, and one that needs a strong and constructive
    followup by the administration and by the Congress.
        In conclusion, rather than creating regional nervousness,
    the initial impact of American reengagement in the Mekong, and
    the wider Southeast Asia region, has been working to the
    benefit of peace and stability, as intended. Now is not the
    time to rest on these still tentative laurels.
        Thank you, sir.
        [The prepared statement of Dr. Cronin follows:]

     Prepared Statement of Dr. Richard P. Cronin, Director, Southeast Asia
                    Program, Stimson Center, Washington, DC

        Mr. Chairman, thank you for the opportunity to offer my
    perspectives on the urgent issues regarding Water and Security in
    Southeast Asia. I have organized my statement so as to respond
    specifically to the five broad questions you posed as well as offering
    some additional observations that I think are relevant to your
    objectives in organizing this hearing.
        Comparatively speaking, 30 percent of the world's fresh water is in
    Asia but it is very unevenly distributed. The South of China is well-
    watered but the north and west are extremely dry, as is Central Asia.
    Southeast Asia generally has ample water resources but with two
    important caveats: First, most of the region's rainfall occurs during
    the monsoon or wet season, which can be unreliable. Second, in the
    Mekong Basin a large portion of water available during the dry season
    comes from the spring and summer melting of the winter snowcap in
    Tibet. Nonetheless, the adaptation of flora and fauna to the extremes
    of wet and dry are the main reasons for the river's rich bounty and
    they are gravely threatened by hydropower dams, especially on the main
    stream and major tributaries. The conditions have made the Greater
    Mekong Region Subregion (GMS) a major wet rice growing region, with
    Thailand and Vietnam the world's first and second rice exporters.

    Government policies and standards in Southeast Asia that address
    population growth, pollution, and industrial activity, and the impact
    on the region's water use and management.

        To answer the first question you posed, most but not all Southeast
    Asian governments have generally done a better job of reducing
    population growth rates than protecting their forests from rampant
    destruction and rivers, estuaries, and other water resources from
    pollution and the unsustainable use of ground water. Most large coastal
    cities in Southeast Asia are sinking from the depletion of their
    aquifers, even as the threat of rising sea levels and exceptionally
    severe storms caused by climate change are beginning to be felt.
    Jakarta, Bangkok, Manila, Hanoi and Ho Chi Minh City are frequently
    flooded even by storms of common and predictable strength.
        Unsustainable population growth remains an underlying cause of
    environmental degradation as well as political instability in some
    parts of the Mekong Basin, especially in upland areas which already are
    suffering from excessive exploitation. The comparatively youthfulness
    of most of the Mekong country populations ensures considerable growth
    momentum for some time after fertility rates decline to replacement
    level.
        In Mekong Southeast Asia the population of Laos was growing at an
    estimated 2.73 percent per year as of 2007, with a very young age
    structure--41.2 percent of the population aged 14 years and under.
    Cambodia is growing more slowly at 1.73 percent per year, but
    Cambodians 14 and under still account for 34 percent of the population.
    The relevant figures for Vietnam are 1.04 percent growth and 26.3
    percent of the population at 14 or under. The Thai population is
    growing at well under 1 percent per year and only 21 percent of the
    population is 14 years or younger. Myanmar's growth rate has fallen
    from 2.5 percent in the mid-1970s to below 1.0 percent in 2008, no
    doubt due in part to the dim economic prospects for a population with a
    comparatively high level of literacy but forced to live under the
    misrule of the military junta.
        Because of the still largely young populations of the Lower Mekong
    countries--besides Thailand--demographers estimate that the population
    of the Mekong Basin will increase from 73 million at present to about
    120 million by 2025, an increase of 65 percent. Moreover, some areas
    are growing far more rapidly and unsustainably. For instance, the
    population around Cambodia's Tonle Sap Great Lake is growing three
    times faster than the rest of the Cambodian population. Incomes of
    people living around and even on the Tonle Sap not surprisingly are
    one-third of those of Phnom Penh and poverty is four times as high.
    Certainly rapid population growth is a major factor in poverty but so
    are development policies that unsustainable exploit the resources of
    the poorest citizens for the benefit of more politically important
    urbanites.
        As often pointed by Southeast Asians, the United States, Europe,
    and other parts of the more developed world equally abused their
    resources until they were almost gone. The problem is that this
    historically factual argument glosses over some important differences
    between the industrial states of the northern hemisphere with
    developing Asia and Africa that are critically important. Europe long
    ago dammed all of its major rivers but the process took place over a
    couple of hundred years and occurred simultaneously with
    industrialization. The United States took a century to exploit the
    resources of a rich but comparatively lightly populated continent. The
    Native Americans paid a terrible price, of course, but until the
    closing of the frontier in the late 19th century Americans could always
    move on to somewhere else after local resources were exhausted. Today
    New England is more forested than in the early 19th century, but mainly
    because the whole basis of the economy has changed.
        In contrast, the Greater Mekong River Basin (GMS), which some call
    ``Asia's Last Frontier,'' offers no new rich western lands and some
    important natural resources such as timber that once seemed
    inexhaustible have been rapidly depleted, mainly by illegal cutting.
    Nor do many of the poorest Southeast Asian countries have the realistic
    potential for the kind of rapid industrialization that took place in
    Europe, North America and Northeast Asia to absorb people who lose
    their lands, fisheries, and livelihoods. In other words, the relentless
    expropriation of shared community water resources is not likely to have
    the same kind of positive outcome for the 60 million or so Lao,
    Cambodians, and Vietnamese (in the Mekong Delta) who will loose their
    livelihoods and food sources. These days, forests are destroyed as much
    to make way for rubber and palm oil plantations as for the timber. For
    maximum efficiency, these operations seek to minimize employment, and
    in the case of Chinese investments, labor is imported directly from
    China and the workers live in self-contained camps.
        Hydropower development is even more detached from future employment
    opportunities and higher living standards. For a variety of reasons,
    starting with geography and inappropriate economic policies,
    industrialization and services industries are not likely to spring up
    to create new livelihoods for most of those displaced by the dams. The
    record thus far of relocating, compensating, and providing new lands
    and occupations of those displaced by hydropower dam projects gives no
    cause for optimism. Especially because of the particularly devastating
    impact of mainstream dams on fisheries and existing agriculture, the
    most likely consequence will be the spontaneous migration to cities, in
    some cases across borders, with the attendant social ills of increased
    squalor, crime and trafficking in drugs and human beings.

    The political, environmental, sovereignty and regional security impact
    of China's water use and hydropower development along the upper Mekong
    River, and China's in regional water resources management.

        The most important aspect of the Mekong in terms of water and
    security--both national and human--is that the river is a transboundary
    resource shared by six countries: China which controls the source and
    upper half of the river, and five downstream Southeast Asian
    countries--Burma/Myanmar, Laos, Thailand Cambodia, and Vietnam.
        China's ongoing construction of a massive cascade of eight or more
    dams on the Upper Mekong in Yunnan and plans by Laos and Cambodia for
    11 dams on the lower half of the River's mainstream epitomize the
    skewed nature of what passes for ``development'' in Chinese minds as
    well as in some quarters of the Asian Development Bank (ADB), the World
    Bank and the African Development Bank. Of course large to mega-sized
    dams generate much-needed electricity for cities and industries and
    which tends to boost overall GDP growth, but at a huge cost to those
    who lose their forests, fisheries, and farms.
        Dams on the main stem of any river are highly destructive of its
    core hydrology and the existing ``environmental services'' such as
    aquatic life and clean water for agriculture and drinking. The case of
    the Mekong River Basin is at the extreme end of the
    developmentenvironment dilemma. The Mekong is one of the most
    productive river basins in the world in terms of fish and agriculture,
    second only to the Amazon, which is 12 times its size.
        Both upstream and downstream dam proposals have different impacts
    on the River's hydrology, ecology, morphology, and human security. I
    will begin by discussing China's hydropower development program in
    Yunnan Province, in the far southwest of the country.

                             CHINA'S YUNNAN CASCADE

        The character and impact of the eight or more large to mega dams
    that China is building on the upper half of the river, which China
    calls the Lancang Jiang (``Turbulent River'') and the dams proposed for
    the lower half of the river in Southeast Asia are different in
    important respects.
        The main environmental impact of China's dams will be to capture
    much of the silt that flows down from the Tibetan Plateau with the
    spring snowmelt and late summer monsoon rains, thereby depriving
    downstream farmers of the annual nutrient renewal of their fields and
    denying the Mekong Delta that replenishment of silt necessary to keep
    the South China Sea at bay. China's Yunnan Cascade will also shift the
    timing of the seasonal monsoon ``flood pulse'' that triggers the
    spawning migration of many fish species.
        Worst of all, the reservoirs of China's two biggest dams in the
    Yunnan cascade, the Xiaowan Dam that began filling last fall or winter
    and the Naozhadu Dam, now under construction, can hold 15 and 22
    billion cubic meters of water respectively. This is more than one
    season's annual flow of the upper half of the river and it will give
    China the ability to regulate the river from Yunnan to the South China
    Sea. China plans to use this storage to put as much as 40 percent or
    more water into the river during the dry season in order to keep the
    smaller (but still quite large) dams running year-round and support
    navigation for large cargo boats between southern Yunnan and Luang
    Prabang, Laos, and for yet unrevealed plans for irrigation and possibly
    other water diversion schemes.
        These plans to regulate the river to support navigation and
    changing power demands are extremely destructive environmentally and
    ecologically. Ever since construction was begun on the first dam at
    Manwan, which came on line in 2003, very erratic river flows have
    scoured river banks and destroyed dry season vegetable gardens, and
    even drowned villagers on river banks in northern Laos who were caught
    unawares by fast rising water from dam operations. Manwan, it should be
    pointed out, has only \1/15\th the storage capacity of the Xiaowan Dam
    upstream. To be clear no more water can come down the river than can
    pass through the Manwan Dam's flood gates at a given time, but the
    whole point of building Xiaowan as a giant cistern is to keep Manwan
    and two other smaller dams operating year round.
        Even more troubling, are the potential political and geopolitical
    ramifications of China's Yunnan cascade. Many citizens and even
    officials in the downstream countries blamed China for the last dry
    season extreme drought, the worst in 50 years. The drought was only
    broken when the monsoon rains returned this summer. China protested
    that it was also suffering from the same drought, but because it
    provided no data about the operation of its dam it was never certain
    whether the Chinese dams were spilling, filling, or passing along as
    much water as entered the reservoirs upstream.

                              TROUBLING DEPENDENCY

        Even in ``normal'' years the dry-season flow of the Lower Mekong is
    too meager to generate hydropower. In many places you could walk most
    of the way from Vientiane, Laos to the Thai side of the river. If Laos
    and Cambodia in particular go ahead with their plans for damming the
    middle and lower reaches of the river they will make themselves
    dependent on China to release water from the Xiaowan Dam in the right
    quantity and at the right time to keep the turbines running for several
    months of the year.
        Some officials from those countries have expressed confidence that
    China would never withhold water for any prolonged period for the
    practical reason that it needs to keep enough water flowing to keep its
    own southernmost dams generating power during the dry season. There are
    at least a couple of flaws with this theory. First, at times of
    prolonged drought China may not have enough water in the reservoir to
    keep its own dams operating. This appears to have been what happened in
    the recent dry season, though in this case China had only begun to fill
    the Xiaowan Dam during the preceding rainy season.
        In addition, in view of predictions that climate change will
    continue to cause the retreat of glaciers and the shrinking of the
    winter snowcap in Tibet, China may give higher priority in the future
    to storing water than producing power. Moreover, China is already
    considering the diversion of some Mekong water to the Yangtze River to
    make up for water it plans to redistribute from that river to the
    Yellow River in the bone dry North. The risk that China will engage in
    ``water nationalism'' is a real one, and a strong reason for not
    building Lower Mekong dams.

    The challenges of proposed dam construction along the Lower Mekong
    River, and the impact on the region's environment, food security,
    sovereignty, and economic development.

        The Lower Mekong is very different than most other important rivers
    of the world in that some 60 million people depend directly on, or
    indirectly, on its almost unparalleled bounty of fish and annual load
    of silt that replenishes otherwise nutrient-deficient soil. This food
    resource is not only of vital importance to local livelihoods, but the
    rice produced with the Mekong's waters in Thailand, Cambodia, and
    Vietnam's Mekong Delta is important to the global rice market. The
    people who depend on the river badly need to improve their standards of
    living and nutrition, but destroying the natural functions of the river
    is not the way to do this. Rather, the river and its bounty of fish and
    agricultural production have to remain the base of the Mekong counties'
    economic pyramid. Already hundreds of dams are operating, under
    construction, or planned for tributaries in the mountains of Laos,
    Vietnam's Central Highlands, and the higher elevations of Thailand and
    Cambodia.
        The true cost-benefit ratio of many of these projects have been
    questionable, but they are of a different order altogether than dams on
    the mainstream that, if carried out as planned, would turn 90 percent
    of the lower half of the river into a series of nine or more slow
    moving lakes, connected by stretches of fast moving but highly variable
    channels and cascades that cannot support life.

    The effectiveness of existing regional mechanisms for managing water
    resources in Southeast Asia and options for improving regional water
    resources management.

        The current incarnation of the Mekong River Commission (MRC) was
    created in 1995 when four of the lower Mekong countries signed The
    Agreement on the Cooperation for the Sustainable Development of the
    Mekong River Basin. This agreement established norms for water use,
    flow maintenance, environmental protection, and areas of cooperation,
    to name a few. It eventually led to the establishment of four
    institutional goals for the MRC: To promote and support coordinated,
    sustainable, and propoor development; to enhance effective regional
    cooperation; to strengthen basinwide environmental monitoring and
    impact assessment; to strengthen the Integrated Water Resources
    Management capacity and knowledge base of the MRC bodies, National
    Mekong Committees, Line Agencies, and other stakeholders.
        The Mekong River Commission provides a valuable scientific research
    resource and an institutional structure for cooperative water
    management for the four Lower Mekong countries. Unfortunately, the MRC
    mechanism has made little real progress toward the goal of fostering
    cooperation. There still are no enforceable rules and MRC countries
    seem unlikely to adopt them under current circumstances. Moreover, the
    MRC is ultimately an advisory body, with no independent legal authority
    to coordinate, plan, or oversee projects--under the current situation,
    these remain sovereign prerogatives.
        Because of a long term lack of trust among the Lower Mekong
    countries, concerns about sovereignty and the high priority given to
    the exploitation of ``national'' resources for development, one
    country's interests often are almost inevitably in conflict with those
    of its neighbors or the region as a whole. Moreover, the goal of truly
    cooperative, equitable, and sustainable use of the Mekong is largely
    moot as long as China, along with Burma/Myanmar, has declined to join
    the MRC. Beijing refuses to share either significant information about
    its dams or the data that it used in or derived from its own
    environmental and hydrological studies. Even more troubling, China thus
    has refused to countenance making cooperative water management of the
    ADB-led Greater Mekong Subregion (GMS) cooperative development program.
    Instead the GMS has focused on crisscrossing the Mekong Basin with
    roads, bridges, and even a regional electric power grid, without
    including the river that gives the region its name.

    The United States policy toward water resources management in Southeast
    Asia, particularly along the Mekong River, existing U.S. Government
    efforts to promote improved water resources management; and options for
    the United States to play a more constructive role in addressing these
    challenges.

        Mr. Chairman, the Obama administration has made the Mekong Basin
    the focal point of its professed reengagement with Southeast Asia and
    ASEAN, and not a moment too soon. Of course the United States never
    really left the region, especially in regard to our military
    capabilities and engagement in East Asia and the Pacific, but it has
    been widely accepted that especially after 9/11 the United States was
    distracted, and tended to make antiterrorism cooperation the focal
    point of its regional engagement. An effort to rebalance U.S.
    engagement was begun late in the second George W. Bush administration,
    but the Obama administration has greatly expanded the policy
    qualitatively, and has begun to mobilize additional budget resources to
    expand our involvement more substantively. We have a long way to go and
    need to mobilize the resources, expertise, and capabilities of a wide
    variety of departments and agencies as well as leverage our important
    positions on the boards of the ADB and World Bank.

                         LOWER MEKONG INITIATIVE (LMI)

        With the approval of the four MRC countries Secretary of State
    signaled U.S. reengagement with the region by signing a Letter of
    Intent (LOI) for cooperation with the CEO of the Mekong River
    Commission, Jeremy Bird, at the annual ASEAN Foreign Ministers meeting
    which was hosted by Thailand at Phuket in July 2009. Initially the
    concept involved a sister river partnership between the MRC and the
    U.S. Mississippi River Commission. What the State Department now calls
    the Lower Mekong Initiative (LMI) has great potential but some
    important ongoing limitations.
        All of the Lower Mekong countries understand the geopolitical
    nature of the U.S. initiative, most especially China, and to varying
    degrees and the exception of China, they all welcome it in varying
    degrees. Because of the wider context of enhanced U.S. engagement with
    ASEAN, the LMI has also been welcomed by most Southeast Asian
    countries, all of whom worry about China's hegemonic potential both in
    mainland Southeast Asia and the South China Sea.
        For the same reasons the administration's decision to approve the
    ASEAN Treaty of Amity and Cooperation (TAC) and apply for membership in
    the East Asian Summit (EAS) have also been widely applauded, as has
    Secretary of State Clinton's declaration at this years ASEAN Foreign
    Ministers' meeting in Hanoi that we have important interests in the
    South China Sea and that our position on the maritime territorial
    disputes is that boundaries of 200 mile Exclusive Economic Zones
    (EEZ's) should be anchored on the shore. Effectively, the Obama
    administration has aligned itself with the principles of the UN
    Convention on the Law of the Sea, and against China's claim to most of
    the South China Sea on the basis of a historical presence.
        One important limitation of the LMI at present is that the
    initiative originated in the Bureau of East Asian and Pacific Affairs.
    This was a foreign policy initiative not backed by much in the way of
    programs or funding. Though it was intended to cover the areas of
    health, education, climate change, and infrastructure, the main agency
    involved besides the State Department was the U.S. Geological Survey,
    which had already initiated the Mississippi-Mekong Partnership with
    Vietnam's Can Tho University.
        The substance of the LMI shows the strengths and weaknesses of the
    American governmental structure. On the one hand, many departments and
    agencies have already been involved in activities that support the LMI
    objectives, especially much-needed human capacity-building and
    education. On the other hand, these activities still are not
    coordinated in any meaningful way. Moreover, in the absence of strong
    coordination, too much depends on the individual enthusiasm and
    leadership of government officials to generate ad hoc cooperation.
    Officials come and go, and senior bureaucrats have strong influence
    over department and agency priorities and often legislative mandates
    for much of their budgets.
        Mainly by rebranding existing USG efforts the State Department
    identified by the latest count about $200 million for FY 2010, mainly
    in the form of environment-climate change, health, and education and
    training. Some other activities already underway show the wide array of
    support the administration and Congress could generate through a
    concerted approach. For instance, the Corps of Engineers, presumably
    under its own international agenda, has brought senior officials from
    the Lower Mekong countries and possibly China to visit Columbia River
    dams, where they had the opportunity to learn first hand about the high
    cost and limited success of fish ladders and other means to move salmon
    around dams that block their spawning runs. Corps representatives have
    even participated in MRC ``stakeholder consultation'' meetings to
    explain that fish ladders and ``fish ways'' are not practical on the
    Mekong River.
        USAID has ongoing programs on climate change adaptation. The
    Education Department and the Center for Disease Control have long had
    programs in the LMI countries.
        Recently a colleague and I have even participated in programs on
    mainstream hydropower issues for Mekong country officials and NGOs
    under the State Department's International Visitor Program.
        Infrastructure remains a blank space in the four LMI pillars,
    probably because there were no existing programs that could be
    rebranded. This is an area where the United States could be providing
    technology and capacity-building, especially in the modeling, river
    monitoring, and full scope cost-benefit analysis of proposed dam and
    other infrastructure programs. Nonetheless, Secretary of State Clinton
    has repeatedly emphasized her concern about Mekong fisheries, food and
    human security and the future of the Mekong Delta.
        On the technology side, the Commercial Service of the U.S. Commerce
    Department and the EX-IM Bank can help promote relevant U.S.
    technology, including sensing technology for river flows, changes in
    silt loads, and pollutants, as well as alternative energy like
    efficient gas-fired thermal power plants.
        Both Thailand and Vietnam are already exploring the possibility of
    acquiring U.S.-designed third generation nuclear power plants, namely
    Westinghouse's Passive Core Cooling Systems (PCCS) which are not
    dependent on large amounts of river water. The technology is licensed
    to a South Korean company but Westinghouse still supplies important
    reactor and control components. Obviously there are a host of issues
    about nuclear power, starting with proliferation risks and safe spent
    fuel disposal, but increasingly even environmentalists are coming
    around to the view that modern nuclear power could be preferable to
    coal and other thermal power. Solar and wind power also have
    considerable potential in Southeast Asia but China is likely to emerge
    more competitive than the United States in these areas of applied
    technology.

                   URGENT NEED FOR PLANNING AND COORDINATION

        The most urgent need is planning and coordination, especially for
    getting adequate funding in place for FY 2012. I'm not sure where these
    functions should be located, whether in the State Department or
    elsewhere. At present the EAP Bureau has neither the staff nor the
    funding to accomplish this task. USAID would be a possibility, but only
    with a designated program and adequate staff and funding. Putting the
    coordination responsibility might--and I emphasize might--also make
    sense because USAID operates under the general policy direction of the
    State Department.
        Many departments and agencies could give more substance to the LMI,
    and in fact many of them are already involved in some way with the
    Mekong River Commission and individual governments. An inclusive list
    could include, in alphabetical order: The U.S. Agency for International
    Development (USAID), Army Corps of Engineers, Centers for Disease
    Control and Prevention (CDC), the USDA and its National Institute of
    Food and Agriculture and Foreign Agricultural Service (FAS),
    Departments of Commerce, Education, and Energy, Export-Import Bank (EX-
    IM), U.S. Geological Survey, Health and Human Services (HHS), and the
    National Oceanic and Atmospheric Administration (NOAA).
        The United States should also be leveraging its influence and
    voting power on the boards of directors of the ADB and World Bank to
    jointly support specific LMI programs or program objectives. Both banks
    have been putting the mantle of poverty reduction over projects that
    may ultimately impoverish more people than they help. In my view and
    that of many other observers, it's past time for the United States to
    push harder for projects that aim to raise the incomes and improve the
    lives and health of the poorest and the most natural resource-dependent
    populations where they live.
        At the same time, the United States Executive Directors to the
    Banks should be instructed to oppose egregious hydropower projects,
    especially mainstream dams which do not meet World Bank and World
    Commission on Dams criteria. Neither the ADB nor the World Bank can get
    directly involved in constructing mainstream dams on the Mekong because
    their extremely environmental and socioeconomic impacts are too severe
    to pass muster with the Banks' own criteria.

                             ``KEEP CHINA HONEST''

        Finally, Mr. Chairman, the United States should not, cannot and
    does not seek to compete with China for infrastructure assistance or
    obstruct the growing economic integration of the ASEAN countries into
    China's production chain. We haven't been involved in infrastructure
    development assistance for decades and are not likely to become so in
    the future. For better or worse--mainly for the worse--most of these
    dam projects are being carried out by commercial developers and
    commercial or state-owned banks. That said, however, provided that
    infrastructure projects and activities are not exploitative or
    environmentally destructive, the expansion of trade and investment ties
    between China and its Mekong and ASEAN neighbors can be a ``win-win''
    situation for all. Unfortunately, at present this is far from the case.
        What we can do--and have already accomplished to a surprising
    extent--is to use our expanded engagement with the region to ``keep
    China honest.'' U.S. naval and other military power combined with our
    still potent ``soft power''--political, economic, and cultural--still
    counts for enough to influence our friends and worry China.
        Interestingly, while a few observers from Southeast Asia have
    worried that the region could be caught in the middle of a growing
    United States-China rivalry, most regional leaders and observers
    welcome the asymmetrical balancing role that the U.S. provides. While
    American reengagement with Southeast Asia and our firmer stance
    regarding China's growing assertiveness in the South China Sea have
    predictably been criticized by Beijing, some times in angry language,
    the main observable effect to date has not been an increase in regional
    tension. Rather, the most important effect has been to cause Beijing to
    pay noticeably more attention to the concerns, fears and interests of
    its neighbors. This is a major achievement and one that needs a strong
    and constructive followup by the administration and Congress.
        In conclusion, rather than creating regional nervousness, the
    initial impact of American reengagement in the Mekong and the wider
    Southeast Asia region has been working to the benefit of peace and
    stability, as intended. Now is not the time to rest on these still
    tentative laurels.
        Thank you, Mr. Chairman for giving me this opportunity to share my
    views with the committee. I will be glad to answer as best I can any
    questions you may have, either orally now or in writing later.

        Senator Webb. Thank you, Dr. Cronin. I fully agree with the
    final statement that you made. I was very gratified to see
    China beginning to move forward with some cooperation here,
    although it has, as I mentioned earlier, been extremely
    hesitant to deal with sovereignty issues; and this is a
    sovereignty issue----
        Dr. Cronin. Yes.
        Senator Webb [continuing]. It's a water sovereignty issue
    on--other than on a bilateral basis. So, there is some room for
    hope there.
        And, Ms. Imhof, welcome.

      STATEMENT OF AVIVA IMHOF, CAMPAIGNS DIRECTOR, INTERNATIONAL
                          RIVERS, BERKELEY, CA

        Ms. Imhof. Thank you, and good afternoon.
        Mr. Chairman, thank you for the opportunity to testify
    before you today on the risks to the Mekong River Basin.
        My organization, International Rivers, and I, personally,
    have been involved in monitoring hydropower developments along
    the Mekong River for the past 15 years. We've documented the
    impacts of existing dams and advocated for the rights of the 60
    million people who depend on the Lower Mekong River for their
    livelihoods. And in a region, as you can imagine, that is
    riddled with nondemocratic governments, it's not an easy task.
        As we've already heard, the Mekong River is one of the
    world's great river basins. And we've heard about the
    importance of fisheries to people's livelihoods, and the
    importance of fish migrations, and the fact that dams block the
    migration fish, and the enormous impacts that that will have on
    the ecosystem and livelihoods.
        We've also heard about China's plans to build a cascade--
    or, they're currently building the cascade of eight dams on the
    Upper Mekong. So, I won't talk about that.
        What I will talk about is that--you know, I want to go
    through a little bit about the dam plans for the region, first,
    and then the impacts that that will have.
        Laos, which contributes about a third of the Mekong's flow,
    is undergoing a dam-building boom. The government's signed
    deals with foreign investors to build more than 50 dams on
    Mekong tributaries, mostly for sale of power to Thailand and
    Vietnam. Laos is also considering 10 projects on the Mekong
    mainstream. Right now, it sells power from eight projects to
    Thailand. And we've spent a long time documenting the impact of
    these projects--they're all on Mekong tributaries--the impacts
    to people's livelihoods. And over 100,000 people right now are
    suffering the impacts from existing dams on Mekong tributaries
    in Laos and have not been adequately compensated for their
    losses. Sometimes, it's been 10 years that people have been
    suffering impacts and haven't been compensated. And a number of
    these projects have been funded by the Asian Development Bank.
    So, it's very timely that you're introducing legislation to
    deal with the issue of Asian Development Bank-funded dams.
        And one of the big concerns, of course, is that, with all
    these tributary projects that are already having an impact on
    people's livelihoods--these are smaller projects than the
    mainstream dams--if Laos can't even ensure that these projects
    have adequate mitigation and compensation mechanisms for
    affected communities, then how on earth are we going to deal
    with this--these massive mainstream dam projects that will have
    even greater impacts?
        Vietnam also has plans to build up to 48 new dams by 2025,
    many of which are already under construction. And, here again,
    we find that dam cascades are being built on two major Mekong
    tributaries, the Se San and the Srepok, the impacts of which
    are being experienced by more than 55,000 villages living
    downstream in Cambodia who, today, have not received
    compensation for their losses.
        Cambodia has also committed to an extensive domestic
    hydropower development program, mostly financed with the
    support of the Chinese Government, and they're considering two
    dams, also on the Mekong mainstream in Cambodia.
        And meanwhile, in Thailand, where there is more political
    space, Thailand has faced such huge opposition to dam
    construction in the past that it's basically looking to import
    electricity from neighboring countries, rather than to build
    more dams in its own territory, because it knows it would face
    too much opposition.
        So, I want to now discuss the regional planning and policy
    context and how this affects water resources development in the
    Mekong Basin. As this committee would be aware, and as you are
    aware, the Mekong region's political context is challenging,
    with a number unaccountable and undemocratic regimes. While, on
    paper, some of the national laws regarding water resources
    development in the region are progressive, there is a great gap
    between policy and practice. And I believe you also noted this
    in your opening statement.
        In Laos, Cambodia, and Vietnam, hydroconcessions, including
    those on the Mekong mainstream, seem to be given out to any
    interested developer on a first-come-first-served basis without
    any attention paid to basin development planning processes or
    the reputation of the company involved. Even where laws are
    strong--even where strong laws are in place on paper, they're
    often not followed in practice. Like environmental impact
    assessments are often not released before a dam is given an
    approval for construction in violation of domestic laws. And
    weaknesses in government capacity in Laos and Cambodia
    particularly exacerbate the problems with regulation and
    enforcement.
        And this week, institutional and regulatory framework has
    been compounded by changes to the regional investment
    environment for hydropower development. Today, energy
    construction companies from China, Vietnam, Thailand, and
    Malaysia are developing, funding, and building large dams. Thai
    and Chinese companies and financial institutions, such as Thai
    EXIM and China Eximbank, are becoming particularly prominent in
    developing and funding hydropower projects in the region, as
    are Thai and Chinese private banks. And these new actors are
    yet to adopt any international social and environmental
    standards in their operations, which leads to poor planning
    processes and even poorer project outcomes.
        I want to focus now specifically on plans for the Lower
    Mekong mainstream. As we've heard, there are plans for a
    cascade of 12 large dams on the Mekong River's mainstream, and
    most of the power would be sent to Thailand and Vietnam. In
    total, the dams would transform two-thirds of the length of the
    Lower Mekong River into a series of reservoirs that would
    require the resettlement of at least 88,000 people. And in
    order to assess the implications that this cascade would have
    on the Mekong River's ecology and economy, the Mekong River
    Commission commissioned a Strategic Environmental Assessment of
    the proposed mainstream dams. Conducted over a period of 15
    months, the SEA team has just delivered its final report to the
    Mekong Secretariat. And this really is the first-ever
    comprehensive, cumulative impact assessment of dam construction
    on the Mekong mainstream, so it's a very significant report.
    And what the SEA does is, it highlights the significant
    environmental, social, and economic impacts that the dams are
    expected to have, while also warning of the skewed cost-benefit
    distribution likely to occur.
        The SEA warns that the decision to move forward with just
    one dam alone would result in permanent and irreversible
    changes to the Mekong River ecosystem. The projects, as a
    whole, would impact more than 40 million people, an incredible
    number of people, who rely on the Mekong River for their
    livelihoods and food security.
        Just a few of the impacts mentioned in the SEA's impact
    assessment report: Through blocking fish migration routes and
    changing the water quality and quantity of water, the dams
    would cause fishery losses of between 700,000 and 1.4 million
    tons each year, which is estimated to be worth between around
    $500 million and $1 billion. In turn, the livelihoods and food
    security of millions of people would be impacted, and there's a
    consensus amongst fisheries scientists in the region that these
    impacts cannot be mitigated. There's no technology available to
    mitigate these impacts to fisheries.
        The dams would also impact the immense biodiversity of the
    Mekong River. Important critically endangered species, such as
    the Irrawaddy dolphin and the giant Mekong catfish, would
    likely be driven to extinction. The dams would flood key
    biodiversity zones, national protected areas, and Ramsar
    wetlands sites, impacting terrestrial and aquatic habitat for
    fauna and flora. And more than half of the Mekong's riverbank
    gardens would be inundated by
    the dams and damaged by daily water fluctuations. This would
    result in lost income generation of between $18 and $57
    million, while also affecting food security by reducing
    household vegetable consumption.
        And finally, as we've heard a little bit, today the
    reduction of sediment flow in the Mekong River would have
    serious consequences for Cambodia's flood plains and great
    lakes system, along with the Mekong Delta in Vietnam. And, of
    course, these impacts would be compounded by climate change, as
    well.
        The SEA team also finds that the economic benefits of the
    projects would accrue mostly to the private developers and
    contractors building the projects, and that the projects would
    actually have relatively little impact on power supply for
    Thailand and Vietnam, the two major consumers of electricity.
    So, basically, as we can see, the projects would have a massive
    impact and then wouldn't actually even add much, in terms of
    meeting regional energy needs.
        These findings have led the SEA team to recommend that all
    decisions on Mekong mainstream dams be deferred for a period of
    10 years, and that this period of time be used to examine
    alternative nondam options for generating electricity from the
    Mekong mainstream, as well as to improve the understanding of
    the river basin's ecology and potential impacts of the
    projects.
        So, the question now facing the region's governments and
    the Mekong River Commission is whether they will adopt the
    recommendations of the SEA. And unfortunately, Mr. Chairman,
    the writing on the wall is not good. We've heard, from some
    sources, that the MRC, because it doesn't like the conclusions
    of the SEA, is attempting to distance itself from the SEA
    recommendations and to move forward with some of the dams.
        And, very significantly, just yesterday it was announced
    that the Government of Laos has submitted official notification
    to the MRC for the Xayaburi Dam on the Mekong mainstream, which
    would be the first dam that's being proposed to be built on the
    Mekong mainstream. And this will trigger the MRC's consultation
    process with regional governments. And they're expecting a
    decision to be made within 6 months. The MRC is likely to allow
    this consultation process to go forward, despite the fact that
    the SEA report hasn't yet been released publicly, hasn't been
    translated into regional languages or considered by regional
    governments, nor has its finding been incorporated into the
    Xayaburi EIA.
        So, to allow the Xayaburi consultation to go forward
    without considering the findings of the SEA would be like
    getting a diagnosis of cancer and then ignoring it. Mr.
    Chairman, this must not be allowed to happen.
        Which brings me to the final part of my presentation, which
    is, What can the United States do to avert disaster on the
    Mekong? As a first step, the U.S. State Department, in its role
    as a donor to the Mekong River Commission and to regional
    governments, should push for the SEA report to be publicly
    released and endorsed by the MRC and member countries before
    any consultation process on an individual dam, like Xayaburi,
    be initiated. The United States should help push for the SEA's
    recommendations to be followed, which means deferring decisions
    on mainstream dams for at least 10 years. The United States
    could offer the assistance of the U.S. Geological Survey in
    generating more comprehensive data sets on the river's
    hydrology, ecology, sediment flows and water quality, and
    ensuring that this information is released in the public
    domain. The U.S. State Department should continue to voice its
    concerns over the security risks these dams pose, and continue
    its work in highlighting the importance of regional food
    security and the role that fisheries plays in the region.
        Finally, we believe that, through providing support and
    training for better energy planning processes, such as
    integrated resources planning, which is a technique used by a
    lot of U.S. utilities, coupled with technical assistance and
    startup funds for investment and energy efficiency and clean,
    renewable energy sources, the United States could play an
    instrumental role in pushing for a clean energy future for the
    Mekong region, allowing the Mekong River Basin to be preserved
    for future generations.
        Chairman Webb, thank you again for the opportunity to
    contribute to this important debate.
        [The prepared statement of Ms. Imhof follows:]

      Prepared Statement of Aviva Imhof Campaigns Director, International
                              Rivers, Berkeley, CA

        Mr. Chairman, Senator Inhofe and members of the committee. Thank
    you for the opportunity to testify before you today on the risks to the
    Mekong River Basin and its inhabitants from the construction of large
    dams.
        My organization, International Rivers, and I personally, have been
    involved in monitoring hydropower developments along the Mekong River
    for the past 15 years, documenting the impacts of existing dams built
    in the Basin and advocating for the rights of the 60 million people who
    depend on the lower Mekong River Basin for their livelihoods. In a
    region that is riddled with nondemocratic governments, this is no easy
    task.
        The Mekong River is one of the world's great river basins. The
    river still flows freely for most of its length; until recently the
    region's years of war and instability had protected the river from
    massive dam construction.
        Seventy different ethnic groups live in the Mekong Basin and their
    livelihoods and cultures are intimately connected with the river's
    natural cycles. The river boasts one of the world's most diverse and
    productive inland fisheries, in some areas supplying the people of the
    region with up to 80 percent of their protein needs. Whether it's the
    Tonle Sap or Great Lake of Cambodia--the country's fish basket--or the
    tropical wetlands of the Mekong Delta--the rice bowl of Vietnam--the
    river sustains the people and ecosystems of the region.
        The Mekong River is second in biodiversity only to the Amazon, home
    to up to an estimated 1,500 different species of fish. By comparison,
    the Mississippi River in the United States--also recognized for its
    high biodiversity--has only 241 fish species. Included amongst the
    Mekong's aquatic biodiversity are such emblematic and threatened
    species as the Mekong Giant Catfish--a species that grows up to 9 feet
    in length and weighs up to 600 lbs--the endangered Irrawaddy freshwater
    dolphin, and the world's largest freshwater fish, the giant freshwater
    stingray. The Mekong's fisheries are highly migratory--at least a third
    of Mekong fish species migrate between the mainstream and its
    tributaries, including 70 percent of the commercial fish catch.
    Migrations are timed to coincide with the Mekong's annual monsoon
    pulse.
        The Mekong supports the world's largest inland fishery, with
    approximately 2.6 million tonnes harvested annually from the Lower
    Mekong Basin. By some estimates, this amounts to close to 20 percent of
    the world's freshwater fish yield. At first catch, the Mekong's wild-
    capture fisheries have an estimated value of US$2-3 billion. By the
    time fish-based products have been transported, processed, and marketed
    to the final consumer, the fish are estimated to be worth between
    US$5.6 and $9.4 billion. In comparison, although the Mississippi River
    is nearly as long as the Mekong, its commercial fishing generates only
    0.1 percent of the Mekong's first-catch fish value. The revenues
    generated from wild-capture fisheries and fish trade make a significant
    contribution to the Gross Domestic Product (GDP) of each Mekong
    country. Eight percent of Lao's GDP and 16 percent of Cambodia's GDP
    can be traced to fisheries.

                                 FOOD SECURITY

        Fish are extremely important to food security in the Mekong Basin.
    Fish consumption in mainland Southeast Asia far exceeds most other
    places in the world. Per year, the average person in the Lower Mekong
    Basin eats 56.6 kilograms of freshwater fish products. This is over two
    times the average total fish consumption in Europe and America. In
    every Mekong country fish are the most important source of animal
    protein. Although the amount of animal protein from fish varies--from
    an average of 60 percent in Vietnam to as high as 79 percent in some
    Cambodian villages and 78 percent in the Khong district of Lao--it is
    well-established that fish protein is important to food security
    throughout the region. Fish are also an essential source of vitamins
    and minerals, helping to ward off the nutritional deficiencies that are
    sadly still too common.
        Fisheries are not the only important food source provided for by
    the Mekong. The Mekong River also supports a productive agricultural
    sector. The deposition of rich alluvial silt on the floodplains during
    the wet season allows for highly productive floodplain agriculture. The
    Mekong Delta in Vietnam--one of the most densely populated areas on
    Earth, and one of the most productive, is known as the rice bowl of
    Vietnam. The Delta produces upward of 16 million metric tonnes of rice
    annually, enough to feed about 77 million Vietnamese for a year. The
    Delta also supports highly productive shrimp farms, orchards and market
    gardens. Floodplains throughout the Mekong Basin allow for highly
    productive wet season rice farming with a minimum of artificial
    fertilizer or pesticides. In addition, many Mekong residents grow
    vegetables on the riverbanks in the dry season, which are an important
    source of income and food.

                              MEKONG UNDER THREAT

        Yet this beautiful, dynamic and thriving river system is under
    threat. China is building a cascade of eight dams on the Upper Mekong
    in Yunnan province. Four of these projects have already been completed,
    and at least two more are under construction. The projects are being
    developed without any consultation with downstream countries and
    without any publicly available studies on their potential downstream
    impacts. Limited environmental impact assessments have only recently
    been made available within China for some of these projects, although
    only after the dams have now been built, and there has been no
    comprehensive assessment of the cumulative impacts of these projects on
    the ecology and hydrology of the Mekong River in downstream countries.
        Academics have linked changes to the Mekong River's daily hydrology
    and sediment load since the early 1990s to the operation of the Upper
    Mekong dam cascade. Since the mid-1990s, communities downstream in
    Northern Thailand, Burma, and Laos have suffered from a loss of fish
    and aquatic plant resources, which have impacted local economies and
    livelihoods; and since the second project, Dachaoshan, was completed in
    2003, local people have been reporting a 50-percent decline in fish
    catch. They also report serious erosion downstream and significant
    fluctuations in river levels caused by dam operation. These impacts
    will be magnified greatly as the larger projects in the cascade are
    completed and their reservoirs filled. The upper Mekong dams will store
    water in the wet season for release in the dry season, causing
    significant changes to the lower Mekong's flow regime, and impounding
    crucial sediment that will no longer flow downstream to fertilize the
    floodplains.
        But China is not the only country with massive dam plans. Laos,
    which contributes about a third of the Mekong's flow, is undergoing a
    dam-building boom. In its bid to become ``the battery of Southeast
    Asia,'' the government has signed deals with foreign investors to build
    more than 50 dams on Mekong tributaries, and is considering 10 projects
    on the Mekong mainstream. Power from these projects would be sold to
    neighboring Thailand, Cambodia, and Vietnam. Laos already sells power
    to Thailand from eight hydropower projects. While not all of the
    proposed projects for Laos will move forward, those that do will have
    serious impacts on the health of the river ecosystem and the
    livelihoods of hundreds of thousands of Laotians who depend on rivers
    for fish, agriculture, water supply, transportation and other aspects
    of their lives.
        Vietnam also has plans to build up to 48 new dams by 2025, many of
    which are already under construction. Dam cascades are being built on
    two major Mekong tributaries, the Se San and Srepok Rivers, the impacts
    of which are being experienced by ethnic minorities living in Vietnam
    and by Cambodian villagers living downstream. Vietnam has paid no
    compensation to the tens of thousands of Cambodians living downstream
    who have been affected by the Yali Falls Dam and four other projects on
    the Se San River. Approximately 55,000 people have suffered from daily
    erratic water fluctuations, widespread flooding, illness due to poor
    water quality, loss of riverbank gardens, and diminished fish stocks.
    Dam-induced flooding has killed at least 39 people. While the
    downstream impacts were acknowledged by the Vietnamese Government in
    2000, there has been little progress in addressing these impacts.
        Cambodia has also committed to an extensive domestic hydropower
    development program, financed with the support of the Chinese
    Government and facilitated through the technical expertise of Chinese
    construction companies. To date, deals have been reached on five major
    hydroelectric projects outside of the Mekong basin, and at least 9 dams
    in the Mekong Basin are being studied. In justifying its hydropower
    program, the Cambodian Government claims it is trying to balance the
    need for environmental and social protections against the need for
    electricity to support its economic development. Civil society groups
    in Cambodia, however, have expressed concern over the loss of
    Cambodia's natural heritage and questioned the approval process, which
    has been conducted behind closed doors without the participation of
    local communities and other concerned stakeholders.
        Thailand, meanwhile, has faced such huge opposition to dam
    construction within its borders that it is looking to import
    electricity from neighboring countries rather than face the inevitable
    battles that would occur were it to propose additional dams in Thai
    territory.

                    THE REGIONAL PLANNING AND POLICY CONTEXT

        I want to now discuss the regional planning and policy context and
    how this affects water resources development in the Mekong Basin. As
    this committee would be aware, the Mekong region's political context is
    rather challenging. Laos and Vietnam are still ruled by one-party
    Communist regimes. Thailand's democracy has been under repeated attack
    the past few years, and Cambodia, while theoretically a democracy, has
    been ruled by Hun Sen for the past 25 years. Burma, meanwhile,
    continues to suffer under the rule of a military dictatorship.
        The Mekong River Commission (MRC) is a river basin management
    organization directed by the governments of Cambodia, Laos, Thailand,
    and Vietnam. Significantly, China is not a member of the MRC. Today the
    agency survives on international donor aid from the World Bank,
    Australia, Denmark, Finland, France, Japan, Sweden, and the United
    States, amongst others. The MRC has struggled over the years to define
    its role in managing the Mekong Basin since it has no real
    decisionmaking authority over government development plans, and since
    the 1995 Mekong Agreement, which acts as the organization's
    Constitution, does not allow any government or entity to veto another
    government's plans for development on its portion of the river.
    Therefore, the MRC's role has been relegated to one of coordination
    amongst member countries, as well as conducting important research and
    data management activities. In recent years, the member governments
    have been pushing for the MRC to take on more of a role as a river
    basin development organization, rather than a river basin management
    organization, with serious consequences for how the organization is
    responding to plans for regional developments. I will come back to the
    MRC below.
        While on paper some of the national laws regarding water resources
    development in the region are somewhat progressive, influenced by donor
    agencies such as the World Bank and Asian Development Bank, there is a
    great gap between policy and practice.
        In Laos, where the lion's share of dams are being planned, laws and
    policies surrounding hydropower development have improved over the past
    few years, but the country still lacks an overall planning process for
    hydropower development. Hydro concessions, including those on the
    Mekong mainstream, seem to be given out to any interested developer on
    a first-come, first-served basis, with little apparent concern for
    basin planning processes or the reputation of the company involved.
        Many Lao laws, regulations and policies contain important
    provisions to ensure participation, consultation, information
    disclosure, compensation and resettlement with livelihood restoration
    for affected communities. However, in practice, these provisions are
    often not followed, or are implemented on an ad hoc, case-by-case basis
    depending on the will, expertise and resources of the environmental and
    social consultants and the dam developer. The government's
    environmental regulator, the Water Resources and Environment Agency,
    lacks the authority, staff and resources to comprehensively review the
    significant number of proposed hydro projects and monitor them during
    construction and operation to ensure compliance with Lao laws and
    regulations. Decisions about whether or not to proceed with a project
    appear to be made exclusively the Ministry of Energy and Mines and the
    Ministry of Planning and Investment.
        The situation is similar for Cambodia. While Cambodia on paper has
    a number of strong laws that should safeguard the environment and
    ensure adequate protection for affected communities, in practice their
    effectiveness is limited due to inadequate resources and, on occasion,
    institutional disincentive. Enforcement of Cambodia's laws is very
    weak. For example, even though Cambodian law requires an EIA to be
    completed for a dam project before approval, in reality a few dams have
    recently been approved apparently without an EIA. Cambodia still lacks
    any law governing resettlement of populations. And the endorsement by
    senior Cambodian politicians of extensive hydropower development plans
    has signaled to the government's bureaucracy that these projects should
    be pushed through.
        A similar situation exists in Vietnam, where the Ministry of
    Industry and Trade makes decisions on projects before the Ministry of
    Natural Resources and Environment (MONRE) has appraised their
    environmental and social impacts and mitigation plans. The Vice
    Minister of MONRE, Nguyen Thai Lai, was recently quoted in the Saigon
    Times as stating that ``In reality, our current appraisal procedures
    face many obstacles, because investors only send their project
    documents to MONRE for appraisal after they were already approved by
    the Ministry of Industry and Trade. . . . Mitigation plans may either
    be neglected or poorly presented.'' For example, in the case of the
    massive Son La Hydropower Project being built in the North of the
    country, which is displacing more than 91,000 people, the final
    approval of the project's EIA occurred in 2007 while formal
    construction started in 2005.
        Civil society groups and energy analysts have also questioned
    Thailand and Vietnam's power development plans, which heavily promote
    the development of new large-scale electricity generation plants, such
    as fossil-fuel fired power stations and hydropower dams, and that are
    increasingly locking the region into a centralized electricity supply
    model. They claim that future electricity demands are overestimated,
    and that the potential that investment in energy efficiency measures,
    renewable energy, and decentralized energy options could play are
    downplayed, especially in the more industrialized cities of Thailand
    and Vietnam. They argue that existing plans mostly serve the interests
    of the state-owned electricity utilities, energy companies, and the
    construction industry, rather than the needs of the regions'
    electricity consumers.
        The weak institutional and regulatory framework in the region has
    been compounded by changes to the regional financial investment
    environment for hydropower development. Traditional actors in
    supporting energy development in the region such as the World Bank and
    Asian Development Bank are becoming increasingly marginalized and
    instead, energy and construction companies from Vietnam, China,
    Thailand, and Malaysia are developing, funding, and building large
    dams. Armed with the support of private banks from their own countries
    and the promise of government guarantees through their export-import
    banks, these dambuilders are fast displacing the western corporations
    and multilateral banks that previously dominated the region's hydro
    scene.
        Thai and Chinese companies and financial institutions are becoming
    particularly prominent in developing hydropower projects in the region.
    While the Thai Exim Bank is an increasingly keen supporter of
    hydropower projects in the region, it does not have an environmental
    policy and its activities are generally unaccountable to civil society.
    Thai Exim Bank has not yet adopted the Common Approaches on Environment
    and Officially Supported Export Credits, agreed upon by OECD countries,
    which outlines environmental and social standards for export credit
    agencies. Thai commercial banks are also willing financiers of major
    energy projects, but none have yet signed up to the Equator Principles,
    a set of voluntary environmental and social standards that have been
    adopted by more than 60 private banks around the world.
        The China Export-Import Bank, China's official export credit
    agency, is also becoming an important player in the Mekong region, as
    are a number of China's major State Owned Enterprises, often with the
    Bank's financial backing. China Exim is closely aligned with the
    strategic overseas interests of China's Government, on whose behalf it
    may offer concessional loans and export credits, especially in
    implementing China's ``Going Out'' policy. For example, Chinese
    companies are involved in developing four of the proposed Mekong
    Mainstream Dams: three in Laos and one in Cambodia, and Chinese
    companies are developing a series of hydropower projects on tributaries
    in Cambodia and Laos.
        Most of these new actors are yet to adopt international social and
    environmental standards in their operations, leading to poor planning
    processes and project outcomes.

                             MEKONG MAINSTREAM DAMS

        I now want to focus specifically on the plans for dams on the Lower
    Mekong Mainstream. Until now, the lower Mekong mainstream has remained
    free-flowing, one of the last great river basins of the world to be
    relatively unaffected by massive dams and diversions. Yet since mid-
    2006, Thai, Malaysian, Vietnamese, Russian, and Chinese companies have
    been preparing detailed studies for a cascade of 12 large hydropower
    dams on the Mekong River's mainstream. Eight of the dam sites are in
    Laos, two are in Cambodia, and two are on the Thai-Lao border. Most of
    the power generated would be sent to energy-hungry cities in Thailand
    and Vietnam.
        In total, the dams would turn about half of the river between
    Northern Laos and Central Cambodia into reservoirs that, according to
    official estimates, would require the resettlement of at least 88,000
    people.
        In order to assess the implications that this cascade of dams would
    have on the Mekong River's ecology and economy, the Mekong River
    Commission (MRC) commissioned a Strategic Environmental Assessment
    (SEA) of the proposed mainstream dams. Conducted over a period of 15
    months, the SEA team has just delivered its final report to the MRC
    Secretariat. The Assessment was carried out by an Australian consulting
    company, the International Centre for Environmental Management, and
    comprised a series of studies, intensive program of consultations, and
    detailed expert analysis of the issues associated with developing
    hydropower on the Mekong mainstream. As such, the Strategic
    Environmental Assessment represents the first ever comprehensive
    cumulative impact assessment of dam construction on the Mekong
    mainstream, helping to provide a broader understanding of the costs and
    benefits involved with building mainstream dams.
        The SEA highlights the significant environmental, economic and
    social impacts the dams are expected to have, while also warning of
    skewed cost benefit distribution likely to occur. The SEA warns that
    the decision to move forward with just one dam alone would result in
    permanent and irreversible changes to the sustainability of the river
    system's productivity, which in turn would impact millions of people
    who rely on a healthy river for their livelihood and food security.
        The following are some of the key impacts mentioned in the SEA's
    Impact Assessment:
        Altering the Flow and Nature of the River: The dams would transform
    66 percent percent of the length of the Lower Mekong into a series of
    stagnant reservoirs and sections of rapidly fluctuating water flows
    downstream of the dams. These changes would irreversibly change the
    natural flow of the river.
        Impacts to Fisheries and Food Security: The dams would block vital
    fish migration routes, disrupt flood pulses, reduce wetlands, and
    change habitat necessary for the Mekong fisheries. These changes would
    result in significant fishery losses of between 700,000 to 1.4 million
    tonnes, which is estimated to be worth between US$476 million and
    US$956 million. In turn, the livelihoods and food security of millions
    of people would be impacted, with Cambodia expected to suffer the most.
    No mitigation technology currently exists which could effectively
    mitigate the impacts to the Mekong fisheries. Reservoir fisheries would
    also not be able to compensate for the loss of capture fisheries and
    would produce at best one-tenth of the lost capture fisheries
    production.
        Threats to Aquatic Biodiversity: Through changes to the river's
    morphology, flow and aquatic habitat, the immense biodiversity of the
    Mekong River would be at risk. More than half of the recorded fish
    species in some zones would be lost. In addition, important iconic and
    critically endangered species, such as the Irrawaddy dolphin and the
    giant Mekong catfish, would likely be driven to extinction.
        Terrestrial System Changes: The Mekong dams would have a major
    impact on terrestrial ecosystems and agriculture due to areas of
    inundation. Nearly half of the Lower Mekong River's land and forested
    areas is located in recognized Key Biodiversity Zones, as well as in
    National Protected Area and Ramsar sites. The dams will inundate
    important wetlands and river channel areas and impact terrestrial
    habitat for fauna and flora. Transmission lines and access roads would
    further alter the landscape.
        Lost Riverbank Gardening: More than half of the Mekong's riverbank
    gardens would be inundated by the Mekong dams and damaged by daily
    water fluctuations. This would result in lost income generation of
    between US$18 million to US$57 million, while also reducing household
    vegetable consumption. The households that would be hardest hit are
    those located in Northern Laos.
        Mekong Delta Instability: The reduction of sediment flow in the
    Mekong River would have serious consequences on the transport of
    important nutrients which help to fertilize Cambodia's floodplains and
    Tonle Sap or Great Lake system, along with the Mekong Delta in Vietnam.
    These impacts in turn would affect the stability of the Mekong Delta
    through impacts to inland and coastal fisheries, increased saline
    intrusion, reduced agricultural productivity, and destabilizing the
    river channels and coastline of the Mekong Delta.
        Livelihood, Culture and People: The livelihoods and food security
    of more than 40 million people who depend on the Mekong River's rich
    fisheries would be undermined through the construction of the Mekong
    Mainstream Dams. Furthermore, impacts to agricultural land, compounded
    with climate change impacts, could further reduce food security in the
    region. By changing traditional ways of living, the dams could lead to
    increased poverty and difficulty in meeting the Millennium Development
    Goals.
        What is of even greater surprise is the findings of the SEA team
    that the economic benefits of the projects would accrue mostly to the
    private developers and contractors building the projects, and that the
    projects would have relatively little impact on power supply for
    Thailand and Vietnam, the two major consumers of the electricity from
    these projects. They would have only a minor impact on electricity
    prices for Thailand and Vietnam and would generate the equivalent 1
    year's demand growth for the lower Mekong Basin. Taken in this context,
    the tradeoffs are enormous in the proposition to dam the mainstream,
    since the impacts would be massive, and yet the projects themselves
    would not contribute significantly to the region's energy security.
        The SEA concludes that the mainstream dams have the potential to
    create international tensions within the lower Mekong Basin due to the
    extensive impacts from the scheme, that many of the risks from the dams
    cannot be mitigated at this time, that there still remain critical gaps
    in understanding about the river ecosystem, that there are many
    substantial gaps in governance in the region, and that the governments
    lack capacities in personnel and skills to manage the projects. These
    findings lead the SEA team to recommend that decisions on mainstream
    dams be deferred for 10 years, and that this period of time be used to
    examine alternative nondam options for generating electricity from the
    Mekong Mainstream, as well as to improve the understanding of the river
    basin's ecology and potential impacts of the projects in order to make
    a decision about whether the tradeoffs are manageable or not.
        The question now facing the region's governments and the Mekong
    River Commission Secretariat is whether they will adopt the
    recommendations of the SEA. Unfortunately, the writing on the wall is
    not good. While the SEA final report was delivered to the Commission in
    August, it has yet to be released to the public. We have heard from
    some sources that the MRC--because it does not like its conclusions--is
    attempting to distance itself from the SEA recommendations and to move
    forward with some of the dams.
        Indicative of the lukewarm response of the MRC to the report is
    that the latest draft of the Basin Development Plan, the main planning
    instrument developed by the MRC to coordinate river basin developments.
    The plan's latest draft makes little mention of the Strategic
    Environmental Assessment, and instead recommends that the six dams
    planned for the cascade north of Vientiane go forward. This strategy
    (along with the other options) is now being discussed among the four
    Mekong governments and an agreement should be made by the end of the
    year. The MRC is also pushing for the regional approval process to
    begin on the planned Xayaburi dam on the Mekong mainstream in northern
    Laos, which is the project at the most advanced stage of planning. The
    Xayaburi dam would displace thousands of people in Laos, disrupt an
    important fish migration route and cause the extinction of the
    critically endangered Mekong giant catfish by destroying one of their
    last natural spawning habitats. The MRC is pushing for the
    decisionmaking process on this first dam to start soon, despite the
    fact that the SEA report hasn't yet been released, considered by
    regional governments, nor incorporated into the Xayaburi EIA.
        Mr. Chairman, and Senators, this must not be allowed to happen.

                         THE ROLE OF THE UNITED STATES

        This brings me to the final part of my presentation: what can the
    United States do to avert disaster on the Mekong?
        As a first step, the U.S. State Department, in its role as a donor
    to the Mekong River Commission and to the regional governments, should
    push for the SEA report to be publicly released and endorsed by the MRC
    and member countries. The U.S. should help push for wide dissemination
    and public consultations to take place within the region around the
    SEA, ensuring that the needs and views of riparian communities are
    considered. The U.S. should also push for the SEA's recommendations to
    be followed, which means deferring decisions on mainstream dams for at
    least 10 years until the findings and recommendations provided by the
    SEA are adequately considered and implemented and informed
    decisionmaking can be guaranteed.
        The United States could contribute to this informed decisionmaking
    through offering the assistance of the U.S. Geological Survey in
    generating more comprehensive datasets on the river's hydrology,
    ecology, sediment flows and water quality, and ensuring that this
    information is released in the public domain.
        The U.S. State Department should also continue to voice its
    concerns over the security risks these dams pose, and continue its work
    in highlighting the importance of regional food security and the
    important role fisheries plays in the region.
        We understand that through the Lower Mekong Initiative, the U.S.
    plans to spend around $22 million in 2010 on environment programs in
    Cambodia, Laos, Thailand, and Vietnam. Some of this money will be
    allocated for the new ``sister-river'' partnership which was
    established between the Mekong River Commission and the Mississippi
    River Commission on May 12, 2010. This partnership aims to improve the
    management of transboundary water resources, learning from experiences
    in the Mississippi River Basin. Money will also be allocated for the
    initiative's work on climate change, which is looking at developing
    regional strategies to address the impact of climate change on water
    resources, food security, and livelihood. Yet beyond this, very little
    is known about what the State Department is planning to do with its
    Lower Mekong Initiative and Mississippi-Mekong River Partnerhsip. We
    would appreciate the Foreign Relations Committee's help in pushing the
    State Department to be more transparent about their engagement with the
    Lower Mekong countries and consult with NGOs in the U.S. and the
    region.
        Finally, we believe that the U.S. Government could play an
    instrumental role in providing technical assistance and support for the
    development of sustainable energy options for the region. Through
    providing support and training for better energy planning processes
    such as integrated resources planning and strengthening electricity
    regulators, coupled with technical assistance and startup funds for
    investment in energy efficiency and clean renewable energy sources, the
    United States could play an important role in pushing for a clean
    energy future for the Mekong region, allowing the Mekong River Basin to
    be preserved to allow for the security and continuity of future
    generations.
        Chairmen Webb, thank you again for the opportunity to contribute to
    this important debate.

        Senator Webb. Thank you very much, for your testimony, Ms.
    Imhof.
        And welcome, Ms. Chungyalpa.

    STATEMENT OF DEKILA CHUNGYALPA, DIRECTOR FOR THE GREATER MEKONG
              PROGRAM, WORLD WILDLIFE FUND, WASHINGTON, DC

        Ms. Chungyalpa. Thank you, Chairman Webb, Ranking Member
    Inhofe, and members of the subcommittee, for having me testify
    today.
        My name is Dekila Chungyalpa, and I'm the director of the
    Greater Mekong Program for the World Wildlife Fund.
        For almost 50 years, WWF has been working to protect nature
    all over the world. Today, we are the largest international
    conservation organization, with presence in over 100 countries.
        WWF has been working in the Mekong for almost three
    decades. The region is a treasure trove of biodiversity. Over
    1,000 new species were discovered between 1997 and 2007--one
    decade alone. The Mekong River is the second most biodiverse
    river in the world, with over 1,300 species of fish. It is home
    to four of the top giant freshwater species; among them, the
    giant Mekong catfish, known to be as long as 9 feet.
        The Mekong is the world's largest inland fisheries,
    accounting for up to 25 percent of global freshwater catch,
    worth up to $7 billion annually. It provides livelihoods for at
    least 60 million people, and is the main source of protein for
    the majority of people living in this basin. This river is not
    simply a waterway. Its unique combination of waterflow,
    sediment, nutrients, fish species, and connectivity are what
    make it so spectacular. It is a living ecosystem, and it is
    still healthy and intact, compared to most of the large rivers
    in the world.
        However, this may not be the case for long. A combination
    of large-scale hydropower in the Mekong mainstem, climate
    change impacts, especially in the delta, and watershed
    degradation, are all making the region much more vulnerable to
    environmental, economic, and, ultimately, political insecurity.
    The most urgent threat, as you've heard, that the Mekong River
    faces is that of large-scale hydropower in its lower mainstem.
        As you noted, yourself, Senator, in the Upper Mekong, China
    has completed building the Xiaowan Dam, which has 10 times the
    reservoir capacity than its three existing dams--that is, 10
    cubic kilometers, one--if you can just imagine it, 10 cubic
    kilometers--and is in the process of building an even larger
    reservoir. This, of course, gives China significant leverage
    over the Lower Mekong countries.
        In the Lower Mekong, there are currently 11 dams in
    different planning stages of development on the mainstem, with
    one in Sayabouly, as my colleague just mentioned, in northern
    Laos, which, just yesterday, was notified to the Mekong River
    Commission by the Lao Government. This is the first time the
    process
    of notification will actually be enacted by the Mekong River
    Commission.
        Almost 50 percent of the fish species in the Mekong are
    migratory and travel long distances to spawn. Dams on the
    mainstem would prevent them from doing so. One dam alone on the
    mainstem, such as Sayabouly, would cause the extinction of many
    wild populations, including the Mekong giant catfish.
        The Vietnam portion of the Mekong Delta is home to 17
    million people and contributes more than 50 percent of
    Vietnam's staple food crops. Reduction of sediment trapped by
    dams upstream would mean the delta's nutrients are no longer
    able to be replenished, threatening the very source of the
    country's wealth and security.
        WWF is not antidam. We recognize the aspiration of greater
    Mekong subregion governments to follow the growth strategies
    that were also followed by the United States and other
    developed nations. We advocate for energy from sustainable
    hydropower plants placed on suitable tributaries of the Mekong
    River. In collaboration with the Asian Development Bank and the
    Mekong River Commission, and with support from USAID's own ECO-
    Asia program, we are currently developing a basinwide
    sustainability assessment tool that identifies tributaries that
    are most important, in terms of fish migration routes in the
    Mekong.
        WWF has also identified 70 financial institutions that have
    invested in Mekong hydropower projects. These include five
    major U.S. institutions: JPMorgan, Morgan Stanley, State
    Street, Dimensional Fund Advisors, and Fidelity Group.
    Coincidentally, tomorrow in Bangkok, WWF, along with--Oxfam,
    Proparco, and the World Bank, are hosting a Hydropower
    Financing summit. It will explore the risks of hydropower
    financing on the Mekong mainstem. We have 30 confirmed
    participants from the banking sector, including Morgan Stanley.
    WWF hopes the summit will initiate a basinwide dialogue on
    sustainable hydropower planning and placement on the Mekong
    mainstem.
        I'd like to talk about two other related challenges. The
    Mekong Delta is one of the world's three most vulnerable deltas
    to climate change. Current projections state that the most
    likely outcome is a 1-meter rise in sea level by the end of
    this century. That would submerge one-third of the Mekong
    Delta. Adding dams to this equation limits the Delta from
    replenishing itself, just as sea-level rise begins to eat away
    at the coast and saline intrusion destroys productive lands.
        Already we are witnessing erratic changes in flood
    patterns. Without significant steps to alter the course we are
    on, cross-border migration, breakdowns of roads and
    infrastructure, and the resulting humanitarian challenges,
    could create major security issues in the region.
        The governments are fully aware of the potential for
    conflict caused by climate change. It is not uncommon for them
    to send military representatives to regional workshops on
    climate change.
        I was in New York City yesterday to meet with the Thai
    Minister of the Environment, His Excellency Suwit Khunkitti. He
    asked us to meet with him to discuss new solutions for
    environmental problems in the region. He said ``If we lose the
    forests, our water source is broken. If we lose our water, our
    lifecycle is broken. If our life cycle is broken, our economies
    and our communities are broken. If we lose our forests, we lose
    everything.''
        The foundation of the Mekong River is its watersheds. It is
    the forests that regulate the supply of waters to rivers, that
    absorb carbon, that buffer the region from climate change, and
    that harbor important biodiversity. Deforestation continues
    unabated in many parts of the region. Without a regional
    mandate and shared vision of sustainable development for the
    Mekong region, these combined challenges will undermine the
    well-being of the people and the development aspirations of the
    Mekong countries.
        His Excellency has raised a new idea. He would like the
    region to consider a Mekong Forest Commission, an agreement
    among the Lower Mekong countries to protect, conserve, and use
    commonly identified forests and critical watersheds in a
    sustainable manner, and is willing to champion this idea among
    his peers.
        Recent U.S. engagement has had a very positive impact on
    the Mekong region, not least of which is a renewed will to work
    on freshwater issues on a regional scale. A significant
    inspiration for this has been the two visits made by Secretary
    Clinton. Furthermore, the United States has demonstrated its
    long-term commitment to the region's stability through the
    State Department's Lower Mekong Initiative. The U.S. Government
    can continue to create long-term security in the Mekong region
    and call for a moratorium on the approval of mainstem dams to
    carry out a full assessment of the risks from such development,
    including the Sayabouly Dam in Laos.
        The U.S. Government should advocate the Mekong River
    Commission procedure that includes notification, prior
    consultation, and agreement, and, most importantly, monitor the
    procedure to ensure that a rigorous and transparent assessment
    is made, using all available scientific and expert analysis of
    the impacts of this particular dam.
        The U.S. Government can support the full recognition and
    endorsement of the 1995 agreement of the Mekong River
    Commission and bolster its authority to better manage and
    preserve the Mekong's water resources. We ask that the U.S.
    Government encourage a fair and meaningful dialogue with China.
        The Prime Ministers of the Lower Mekong countries have
    recently formally invited China and Myanmar to join the MRC. We
    are given to understand that Myanmar will actually accept the
    invitation. However, China has yet to respond. However, if the
    freshwater biodiversity fisheries and future of the Mekong
    River are to be sustained, a whole-of-basin approach must be
    attempted. As one of the largest global donors to multilateral
    development banks, the U.S. Government can demand that they
    take a whole-of-basin approach on hydropower, especially given
    their own mandate for poverty reduction and the importance of a
    free-flowing Mekong to millions of people.
        The U.S. Government can also promote green science-based
    solutions. The Lower Mekong Initiative has developed a modeling
    system for climate change, called ``Forecast Mekong.'' It helps
    the Vietnamese Government analyze adaptation to sea-level rise,
    and emphasizes sustainable solutions rather than stopgap
    measures, such as building more dikes and walls. The U.S.
    Government should continue to do so, but, more importantly,
    invest in and provide incentives for environmentally sound
    infrastructure development.
        And finally, we ask that the U.S. Government call for a
    regional agreement on sustainable use and development of
    natural resources in the Mekong region. Harnessing the
    political will demonstrated by His Excellency Khun Suwit
    through a Mekong Forestry Commission may be just the right
    place to begin.
        Chairman Webb, thank you once again for having me testify
    today.
        For more details on any of these points, please refer to my
    written testimony.
        WWF strongly urges the U.S. Government to continue to play
    an empowering role in the region and to support ecosystem-based
    approaches for a climate-resilient and free-flowing Mekong
    River.
        Thank you.
        [The prepared statement of Ms. Chungyalpa follows:]

       Prepared Statement of Dekila Chungyalpa, Director, Greater Mekong
                  Program, World Wildlife Fund, Washington, DC

                                  INTRODUCTION

        Chairman Webb, Ranking Member Inhofe, and members of the
    subcommittee, thank you for having me testify today on the challenges
    to water resources and security in Southeast Asia. My name is Dekila
    Chungyalpa, and I am Director of the Greater Mekong Program of the
    World Wildlife Fund.
        For nearly 50 years, WWF has been protecting the future of nature.
    Today we are the largest international conservation organization in the
    world. Our unique way of working combines a global reach with a
    foundation in science, involves action at every level from local to
    global, and ensures the delivery of innovative solutions that meet the
    needs of both people and nature. We currently sponsor conservation
    programs in more than 100 countries, thanks to the support of 1.2
    million members in the Unites States and more than 5 million members
    worldwide.
        Using the best available scientific knowledge and advancing that
    knowledge where we can, WWF works to preserve the diversity and
    abundance of life on Earth and the health of ecological systems. We do
    this by protecting natural areas and wild populations of plants and
    animals, promoting sustainable approaches to the use of renewable
    natural resources, and promoting more efficient use of resources and
    energy while maximizing the reduction of pollution. WWF is committed to
    reversing the degradation of our planet's natural environment and to
    building a future in which human needs are met in harmony with nature.
        The six countries flanking the Mekong River are often grouped
    together and are collectively known as the Greater Mekong Subregion \1\
    (GMS). WWF has been present in the GMS countries (with the exception of
    Myanmar) for 30 years, working closely with all levels of government,
    as well as communities, development agencies and the private sector.
    This work has included not only traditional conservation issues, but
    has broadened the organisation's scope of work to include sustainable
    development. Given the significance of hydropower development to the
    region's ecosystems and natural resources, WWF is also an active member
    of the International Hydropower Association and the Hydropower
    Sustainability Assessment Forum. The Forum is developing a
    Sustainability Assessment Protocol, a tool to measure and guide
    performance in the hydropower sector. Its membership includes, among
    others, bilateral and multilateral development agencies and the Equator
    Principles \2\ Financial Institutions Group.
    ---------------------------------------------------------------------------
        \1\ The GMS comprises Cambodia, Laos, Myanmar, Thailand, Vietnam,
    and Yunnan province in China.
        \2\ The Equator Principles refer to a financial industry benchmark
    for determining, assessing and managing social and environmental risk
    in project financing.
    ---------------------------------------------------------------------------
                          THE MEKONG AND ITS RESOURCES

        WWF-US has identified the Greater Mekong Subregion as one of 19
    global priority places where we have chosen to focus our conservation
    efforts. This vast region contains irreplaceable treasures ranging from
    communities with rich cultural heritages to unique wildlife in
    spectacular natural landscapes. The region is home to almost 100
    distinct ethnic groups that are heavily dependent on the river and its
    natural resources for protein as well as livelihoods. It is also
    habitat to extraordinary biodiversity, including large mammals such as
    the Indochinese tiger, the Asian elephant, and the last remaining
    populations of the Irrawaddy dolphin.
        The region is defined by the Mekong River--the longest river in
    Southeast Asia. It unites 320 million people as it flows over 4,000
    kilometres starting in the Tibetan-Qinghai plateau, through China,
    Myanmar, Thailand, Laos, Cambodia, and Vietnam into the South China
    Sea. It also nurtures and sustains an extraordinary level of freshwater
    biodiversity and endemism. The Mekong River basin provides habitat for
    at least 1,300 species of fish, including four of the top 10 giant
    freshwater species of the world: Mekong giant catfish (Pangasianodon
    gigas), giant pangasius (dog-eating catfish) (Pangasius sanitwongsei),
    giant barb (Catlocarpio siamensis), and the giant freshwater stingray
    (Himantura chaophraya). By length, the Mekong is the world's richest
    waterway for freshwater biodiversity, fostering far more species per
    unit area than even the Amazon.
        The geomorphology of the Mekong is varied; from reservoirs of
    frozen water in its source area, to low depths and stretches marked
    with rocks and boulders, to enormous rapids and deep pools toward the
    end. At least 170 deepwater pools can be found in Cambodia and Laos
    alone, with the deepest measuring 80m in depth. In the dry season, when
    the Mekong often recedes and fish habitats on the floodplain disappear,
    deep pools play a crucial role, providing refuges for many of the
    Greater Mekong's fish species to feed and grow in. Moreover, the
    river's annual floods and flow patterns carry much needed sediments to
    sustain the agricultural productivity downstream.
        At least 150 of the river's fish species are migratory, and 50 of
    these are commercially important in the Mekong, particularly in the
    Tonle Sap, which provides up to 75 percent of Cambodia's inland
    fisheries. The Lower Mekong basin provides food security and
    livelihoods to over 60 million people, and fish is the main source of
    protein for these inhabitants, ranging from 42-51 kg per person per
    year \3\. It is estimated that approximately 2.8 million tons of fish
    and other aquatic animals are consumed each year, and an estimated 1.1
    million tonnes of aquaculture products are exported, making the Mekong
    the largest inland fishery in the world. Mekong fisheries yield 3.9
    million tonnes per year, accounting for 19-25 percent of inland catches
    worldwide and worth between $3.9 billion and $7.0 billion.\4\ The
    fisheries are heavily dependent on wild capture: aquaculture accounts
    for only 10-12 percent of production and it, too, depends on wild fish
    for feed. Preserving natural variations in river hydrology is important
    for sustaining high fish diversity; natural flood pulses are often what
    trigger fish to migrate to spawning habitats, migrating between distant
    habitats.
    ---------------------------------------------------------------------------
        \3\ Mekong River Commission. 2010 ``State of the Basin Report:
    2010.'' Mekong River Commission, Vientiane, Lao PDR.
        \4\ Mekong River Commission. 2010 ``State of the Basin Report:
    2010.'' Mekong River Commission, Vientiane, Lao PDR.
    ---------------------------------------------------------------------------
                              A REGION ON THE MOVE

        Of the six countries that comprise the GMS, three of these--China,
    Vietnam, and Thailand--are rapidly growing economies, while Cambodia,
    Laos, and Myanmar lag far behind in relative economic terms. The GMS is
    one of the fastest growing regions in the world, and the demand for
    energy, particularly in China, Thailand, and Vietnam is expanding.
    Rapid industrialization is pushing the development of hydropower in the
    Mekong Basin, including the proposed main-stem dams. In addition to
    fueling the fastest growing countries, hydropower development is seen
    as an avenue for poverty alleviation for Cambodia, Laos and Myanmar.
    The challenge facing the GMS governments is clear: they must sustain
    economic growth while simultaneously ensuring that the Mekong and its
    ecosystems remain healthy.
        The GMS initially was designed as a trade agreement facilitated by
    the Asian Development Bank, in order to strengthen connectivity and
    cross-border trade, and to integrate national markets. As such, it is
    really a grid of transport networks, often referred to as ``economic
    corridors.''
        The GMS Strategic Plan as it was originally conceived consists of
    305 planned projects worth $31 billion, broken down as follows:

       Roads and bridges--$7.6 billion
       Railways--$13.2 billion
       Ports and navigation--$2.6 billion
       Airports--$84 million
       Electricity grid--$338 million
       Gas pipelines--$1.3 billion
       Power stations--$4.8 billion
       Telecommunications--$29 million
       Tourism--$446 million
       Livelihood projects--$44 million
       Industrial estates--$1.0 billion

        While not directly mentioning hydropower, GMS clearly prioritizes
    development of a regional electricity grid and infrastructure that will
    move this forward. Given that the GMS is one of the fastest growing
    regions in the world, there is a correlating increase in the demand for
    energy. This demand for energy should be met with clean energy that
    does not aggravate climate change nor threaten the unique ecosystems
    and livelihoods of the GMS. Potential alternatives to mainstream dams
    should be explored, including carefully considered tributary dams, or
    other forms of renewable energy such as wind power or solar power.
        Currently, in the Upper Mekong, China has just completed building
    the Xiawan dam, which has a larger reservoir capacity (10 km\3\) 10
    times more than its three existing dams--Manwan, Dashwan, and Jinghong,
    (which add up to less than 1 km\3\) and is in the process of building
    an even larger reservoir (12 km\3\). This gives China significant
    leverage over the Lower Mekong countries. For example, China will be
    able to increase the mean monthly flow to Laos by 20 percent in March,
    the driest month of the year. However, these reservoirs are being built
    to produce cheap and reliable electricity for the Chinese market, and
    not to help agriculture, navigation or floods in the lower Mekong.

                         GROWING THREATS TO THE MEKONG

    Hydropower
        While hydropower development has potential economic and greenhouse
    gas reduction benefits, it also brings about enormous costs. Hydropower
    dams fundamentally alter the river ecosystem, often with negative
    impacts to livelihoods and biodiversity. Each subsequent hydropower dam
    further diminishes the river's ability to naturally adapt to ecosystem
    impacts. The clock is ticking; there are currently 11 dams in different
    planning stages of development on the Lower Mekong main stem, with one
    in Sayabouly, northern Laos, on the verge of being notified to the MRC
    Joint Committee by the Government of Laos. Hydropower threatens to
    impact the Mekong and its ecosystems in three main ways:
        (i) Delta stability: The Vietnam portion of the Mekong delta is
    home to 17 million people, contributes more than 50 percent of
    Vietnam's staple food crops and is the source for 60 percent of fish
    production in Vietnam. This region provides food for 40 million people
    and contributes 27 percent of Vietnam's GDP. Given that more than 22
    percent of Vietnam's population is located in the Mekong Delta, the
    spillover effects of hydropower development will be even larger.
    Reduction of sediment trapped by dams would mean that the delta's
    nutrients are no longer being replenished, threatening the very source
    of the country's wealth and security. Furthermore, this would increase
    the vulnerability of the delta, limiting its ability to replenish
    itself and making it more susceptible to sea-level rise and saline
    intrusion.
        (ii) Fish diversity: In September 2008, a team of fish migration
    experts organized by the Mekong River Commission concluded that there
    is no evidence that fish passage facilities currently used on dams in
    other large tropical rivers can cope with the massive fish migrations
    and high species biodiversity found in the Mekong. The technologies
    used on high dams in North America and Europe were developed for a very
    limited number of species (5 to 8). In contrast, there are 150 migrant
    fish species in the Mekong, and biomasses are 100 times greater.
        (iii) Livelihoods: There are at least 50 commercially important
    migratory fish species in the Mekong River, representing 70 percent of
    the total catch. Over 75 percent of rural households in the Lower
    Mekong Basin are involved in fisheries, both for their own consumption
    and for sale. Any impact on the ecological balance of the river also
    threatens the sustainability of these aquatic resources that millions
    of people depend on. Dams in the main stem would impede migration of
    fish and other aquatic animals, potentially reducing productivity of
    the fishery by as much as 60 percent and compromising the livelihoods
    of millions of people.

    Climate Change
        The Intergovernmental Panel on Climate Change has identified the
    Mekong Delta as one of the three most vulnerable deltas on the planet
    to climate change impacts. These impacts include sea-level rise, saline
    intrusion and more severe storms, which erode the coastline and
    undermine coastal ecosystems. Main-stem dams will block the sediment
    that builds the delta and with it the nutrients that feed the delta's
    immense. As sediment is trapped by dams, the reduction in the amount
    reaching the river mouth will decrease the capacity of the delta to
    replenish itself, making it even more vulnerable to sea-level rise,
    saline intrusion and erosion. With nearly a quarter of Vietnam's
    population located in the Mekong Delta, the combined impacts of the
    proposed main-stem dams and climate change will pose significant social
    and economic challenges to that country in coming years.
        The Mekong River is first and foremost an ecosystem. Anything done
    to impede its natural flow will also prevent it and the surrounding
    basin from adapting naturally to expected climate change impacts,
    including changes to average temperatures, water availability from
    precipitation and runoff, and sea level. Changes in temperature can
    affect rates of growth and reproduction for individual species and can
    also change species distribution and ecosystem processes such as
    nutrient cycling. WWF holds that climate change impacts will accelerate
    the extinction of some species given the high rate of endemism and
    habitat fragmentation found in the Mekong basin.
        Changes in the seasonal flow pattern in the Mekong River basin will
    strongly influence future species composition and ecosystem
    productivity. Changes in temperature and precipitation in the basin may
    also affect the very nature of the region's wetlands--vital aquatic
    systems that are used for rice cultivation and freshwater fisheries and
    help to mitigate floods and erosion. Sea-level rise will have
    significant negative impacts in the Mekong Delta region because of the
    delta's high population density, which is supported by productive
    wetlands and estuaries that are in turn maintained by naturally
    fluctuating water levels and input of fresh water from the river. These
    upstream inputs of freshwater deliver much-needed nutrients and
    sediments, which are critical for wetland soils to accumulate and
    prevent plants from being inundated.\5\ Sea-level rise and saltwater
    intrusion threaten to upset this natural balance and undermine the
    Delta ecosystem.
    ---------------------------------------------------------------------------
        \5\ Mekong River Commission. 2010 ``State of the Basin Report:
    2010.'' Mekong River Commission, Vientiane, Lao PDR.
    ---------------------------------------------------------------------------
        The anticipated human consequences of unmitigated climate change on
    the Mekong are hard to imagine. Projections across the Mekong basin
    show an array of climate change effects, including a potential sea-
    level rise of a meter by the end of the century. If unaddressed, a 1-
    meter rise in sea level could submerge more than a third of the Mekong
    delta, home for 17 million people and source of nearly half of Viet
    Nam's rice.\6\ Already, we are witnessing erratic changes in flood
    patterns in the Mekong Delta. Combined with sea-level rise, we can
    anticipate further breakdowns of roads and other infrastructure,
    leading to the increasing likelihood of economic and social
    instability. Even the more modest predictions of how the region and its
    communities, ecosystems and economies may be altered suggest that,
    without significant steps to reverse course, the humanitarian impacts
    of accelerating climate change in the Mekong are likely to present new
    security challenges for both GMS countries and the international
    community in the 21st century.
    ---------------------------------------------------------------------------
        \6\ Institute of Strategy and Policy on Natural Resources and
    Environment (Viet Nam) 2009 ``Vietnam Assessment Report on Climate
    Change (VARCC).''
    ---------------------------------------------------------------------------
                             GEOPOLITICS IN THE GMS

        The Mekong countries are often seen as a cohesive bloc, largely due
    to the Greater Mekong Subregion (GMS). In realpolitik terms however,
    the GMS consists of nations that are very diverse culturally and that
    navigate strong bilateral tensions, as in the case of Thailand and
    Cambodia. The droughts experienced in 2010, and the subsequent
    assertions by Thailand that these may have been caused by dams on the
    Upper Mekong, have made it clear that lower Mekong countries are waking
    up to the decisions made by their Chinese neighbours to the north and
    are increasingly willing to take them to task. At the same time,
    Thailand and Vietnam have not acknowledged their own power development
    plans, which substantially rely on centralized hydropower development.
    In the context of this kind of political gridlock, it is not surprising
    that while the GMS has a designated Working Group on the Environment,
    it has so far not been successful in mainstreaming regional-level
    environmental planning and design into GMS's core business of economic
    growth and trade.
        Other regional forums exist, such as the Mekong River Commission,
    but it is handicapped by the fact that despite being an
    intergovernmental body created to promote sustainable management of the
    Mekong River, it is effectively limited to decisions made by the four
    lower Mekong governments through the Joint Committee and Council. China
    is so far only a dialogue partner and Myanmar is not included, thus
    leaving no constructive platform for dialogue on regionwide water use
    and management issues.
        In the past year, Vietnam and Cambodia have grown increasingly
    aware of the disproportionate burden that they will face as downstream
    nations if any of the Lower Mekong dams go forward. Not coincidentally,
    both countries share a history marked with famine, mass migration, and
    food insecurity. Add in the potential for political conflicts due to
    climate change impact scenarios in the regions, and it becomes clear
    why lower military departments from the lower Mekong governments have
    been known to attend WWF meetings and consult with us on water resource
    management and climate change.

           RECOMMENDATIONS: A SUSTAINABLE COURSE FOR THE MEKONG BASIN

        The decision to construct a dam on the main stem of the Mekong
    River will have permanent consequences and should be very carefully
    considered. In 1995, the four Lower Mekong countries signed an
    agreement that committed them to the sustainable development of the
    Mekong River. The proposed mainstream dams challenge this commitment.
    Prior to hydropower development, a comprehensive assessment of the full
    economic, social, and environmental costs and benefits in the Mekong
    Basin should be conducted. Approval of any of the main stem dams should
    be delayed until completion of this study. In addition, WWF offers the
    following specific recommendations for a way forward:
        (1) A 10-year delay in the approval of the mainstream dams would
    allow for a comprehensive cost-benefit analysis of their construction
    and operation.
        (2) The 1995 agreement of the Mekong River Commission should be
    fully recognized and endorsed, in particular the procedures for
    notification, prior consultation and agreement.
        (3) In collaboration with the Asian Development Bank (ADB) and the
    Mekong River Commission (MRC), WWF is testing Environmental
    Considerations for Sustainable Hydropower Development (ECSHD) in Sesan,
    Sekong, and Srepok tributary rivers in Cambodia. The project objective
    is to build a set of interventions into existing planning processes
    that will help move the Mekong countries towards adopting an agreed
    framework for sustainable hydropower development. The most recent
    advancement includes a river-basin-wide sustainability tool (R-SAT)
    developed in collaboration between ADB, MRC, WWF and support from USAID
    via EcoAsia. Merely developing the tool however does not mean it will
    be implemented. Therefore, promoting and financing similar approaches
    and the application of such tools is crucial.
        (4) One alternative to mainstream dams is tributary dams. These
    need to be considered as more feasible alternatives based on careful
    selection criteria and methodology. To ensure the overall ecological
    integrity of the Mekong Basin, some tributaries will need to remain
    free flowing to preserve the values of connectivity of the river from
    headwaters to the sea and to allow for migrant fish to continue to
    breed and support the livelihoods of local communities. WWF's Greater
    Mekong Program is using GIS-based tools to select free-flowing
    tributary candidates, and we promote the concept of free-flowing rivers
    to decision makers in these specific sub-basins.

                     ALTERNATIVE SOLUTIONS PROMOTED BY WWF

        WWF offers the following general recommendations for sustainable
    development in the GMS:
    Take an ecosystem-based approach
        Confronting climate change is one of the greatest challenges of our
    time. How do we address such an overwhelming issue and where do we
    start? There has been much analysis and discussion, but few practical
    solutions are being proposed at the local level to help communities,
    the private sector, policymakers and planners to provide ecosystems the
    opportunity to adapt to a changing climate.
        A resilient ecosystem has the ability to withstand threats and
    systemic shocks and can renew and restore itself even if degraded. The
    best example is that of mangrove forests and coastal wetlands in India,
    which were able to absorb the floodwaters during the 2004 Asian
    tsunami. Unfortunately, restoration and preservation of coastal
    wetlands is one of the few established and well-known adaptation
    strategies. In the case of freshwater ecosystems, there is an urgent
    need to understand how to build both ecosystem and social resiliency
    and to identify adaptation strategies at a site level.
        WWF is learning in our various project sites that ecosystems will
    not react in a gradual manner to climate change impacts but will
    instead react rapidly and at multiple scales. To complicate this
    further, the speed at which these impacts are taking place is
    outstripping most public sector thinking, which consists of reflexive
    and short-sighted reactions, such as the call for sea walls and other
    inappropriate structural investments that are already appearing in the
    Mekong Delta. The challenge therefore lies in convincing existing
    national and regional institutions to adopt environmental and social
    resilience-building strategies across all economic sectors and
    political boundaries.

    Engage the Finance Sector
        In 2009, WWF Greater Mekong Programme commissioned a report to
    investigate sources of funding that would allow the proposed dams to be
    constructed on the main stem. This study identified 12 project
    companies set to construct dams on the lower Mekong main stem and 70
    financial institutions that invested in the different stages of the
    feasibility study of these projects. For practical purposes, this list
    of financial institutions was then narrowed down to 28 banks:

    ----------------------------------------------------------------------------------------------------------------
                                                                                   Equator    Signatory    Specific
            Financial institution             Country of origin      CSR policy  principles   to UNEPFI   policy on
                                                                                   adopted   and/or PRI      dams
    ----------------------------------------------------------------------------------------------------------------
    Agricultural Bank of China...........  China..................          No          No          No           No
    Bank of Ayudhya......................  Thailand...............          No          No          No           No
    Bank of China........................  China..................         Yes          No          No           No
    Bank of Communications...............  China..................         Yes          No          No           No
    Barclays.............................  United Kingdom.........         Yes         Yes         Yes           No
    China Galaxy Securities..............  China..................          No          No          No           No
    CIMB Bank............................  Malaysia...............          No          No          No           No
    Guotai Junan Securities..............  China..................          No          No          No           No
    HSBC.................................  United Kingdom.........         Yes         Yes         Yes          Yes
    Industrial & Commercial Bank of China  China..................         Yes          No          No           No
    JPMorgan.............................  United States..........         Yes         Yes         Yes           No
    Morgan Stanley.......................  United States..........         Yes         Yes          No           No
    State Street.........................  United States..........         Yes          No         Yes           No
    Dimensional Fund Advisors............  United States..........          No          No          No           No
    Bank of Tokyo-Mitsubishi UFJ.........  Japan..................         Yes         Yes         Yes           No
    Sumitomo Mitsui Banking..............  Japan..................         Yes         Yes         Yes           No
    Calyon (part of Credit Agricole).....  France.................         Yes         Yes          No           No
    KBC Bank.............................  Belgium................         Yes         Yes          No           No
    OCBC Bank............................  Singapore..............         Yes          No          No           No
    UBS..................................  Switzerland............         Yes         Yes         Yes           No
    Standard Chartered...................  United Kingdom.........         Yes         Yes         Yes          Yes
    ANZ..................................  Australia-New Zealand..         Yes         Yes         Yes           No
    ADB..................................  .......................  ...........  ..........  ..........  ...........
    EXIM.................................  China..................         Yes          No          No           No
    CRBC.................................  China..................   Not Known          No          No    Not Known
    AmBank...............................  Malaysia...............   Not Known          No          No           No
    Fidelity Group.......................  United States..........         Yes          No          No           No
    RHB Bank.............................  Malaysia...............   Not Known          No          No           No
    ----------------------------------------------------------------------------------------------------------------

        WWF is currently hosting a Sustainable Hydropower Financing
    Conference, taking place on the 23rd and 24th of September 2010 in
    Bangkok, in order to facilitate open discussion of sustainable
    investment practices on the Mekong main stem. We have 30 confirmed
    participants from the banking sector involved in funding, insuring, or
    supporting the Mekong main stem dams, including Morgan Stanley.
        The conference has three objectives:
        1. To convince banks to finance sustainable hydropower projects in
    the Mekong. The summit incorporates a long-term approach by providing a
    solution--Sustainability Assessment Protocol, and the Environmental
    Considerations in Sustainable Hydropower Development--that financial
    institutions can use only to finance sustainable projects that are
    beneficial to the economy and people with minimal impacts on the
    environment.
        2. To build partnerships with key institutions in the financing
    sector, an essential and integral part of any investment project. WWF
    offers the summit as a solution-oriented event instead of what has
    usually been a charged dialogue between banks and NGOs. WWF hopes that
    financing institutions will continue to work with WWF in other
    infrastructure or investment project. There is an opportunity to create
    synergies between WWF and the financial institutions with respect to
    expertise, strength, and experience with sustainable development.
        3. To identify a bank to lead the charge in sustainable investing
    in the region. Often tokened as a ``lead arranger,'' such an
    institution could help WWF to reach its peers, and provide a good
    example of the benefits of sustainable investments. While some banks
    invited to the summit have had long histories of commitment to
    environmentally responsible financing, there are others who have not
    traditionally stood up for these types of issues. The summit is an
    opportunity to promote this practice and help those institutions
    interested in leading investment in sustainable hydropower development
    to become the champions.

    Engage the Private Sector
        WWF is working across the Mekong region with key industry water
    users, led by the Coca Cola Company, to help develop a task force to
    explore water stewardship issues and the role of the private sector in
    wise water use, particular given the impacts of climate change in the
    delta where many of these industries are based. This will consist of a
    multi-sector network that can jointly share the latest science and
    information, apply appropriate adaptation strategies within their
    markets, and invest in sustainable resilience building for local
    communities, businesses and ecosystems In addition this group will also
    explore innovative financial mechanisms for adaptation and water
    conservation to safeguard future water supply for biodiversity and
    livelihoods.

    Engage the Public Sector
        There is an urgent need for an integrated regional approach to
    natural resource management at policy and operational levels. The
    ongoing GEF 5 reforms offer an opportunity and could provide the
    resources required to make this happen. The countries of the region are
    willing take the bold step to commit a percentage of their GEF national
    allocations to a regional ecosystem based adaptation approach. We hope
    that such a strong regional signal demonstrates the lower Mekong
    governments' commitment to maintain the region's resilience for the
    benefit of its people, economies and biodiversity. Program components
    would include:

       Regionally integrated spatial planning that incorporates
            biodiversity conservation and climate change, applied for the
            sustainable management of priority landscapes in the GMS;
       Maintenance and restoration of critical ecosystems and the
            services they provide in selected test sites in priority
            landscapes by;
       Incentives to effectively manage biodiversity and carbon
            values to strengthen adaptation capacity in priority landscapes
            developed and tested;
       National and regional capacities improved for cooperation
            and coordination for ecosystems management and sustainable
            development;
       A discussion at the administrative level of the lower Mekong
            governments on sustainable hydropower and the need for a free
            flowing Mekong main stem.

                     AN IDEAL ROLE FOR THE U.S. GOVERNMENT

        The last 2 years have shown tremendous changes in the GMS, not
    least of which is a renewed will to work on a regional scale. A
    significant inspiration for this has been the two visits made by
    Secretary Clinton to the region. Furthermore, the U.S. Administration
    has substantiated its long-term commitment to the region's stability
    through The Lower Mekong Initiative; a partnership between the U.S.
    State Department and the governments of Cambodia, Laos, Thailand, and
    Vietnam to enhance cooperation on environment, health, education, and
    infrastructure development. In particular, two science-based approaches
    that are beneficial are:

    --The sister river partnership between the Mekong River Commission and
        the Mississippi River Commission allows the sharing of expertise
        and best practices in areas such as climate change adaptation;
        flood and drought management; hydropower and impact assessment,
        water demand and food security; and water resource management.
    --The establishment of the Delta Research and Global Observation
        Network (DRAGON), and a new interactive, modeling system called
        Forecast Mekong.

        This initiative creates the possibility of a strengthened lower
    Mekong bloc that is invested in regional win-win strategies rather than
    short term national interests that are unsustainable in the long run.
    Advancing similar relationships, as the United States has done with
    Vietnam, in the other lower Mekong countries will help make this a
    reality.
        Other ways that the U.S. Government could continue to strengthen
    these governments and to create long-term security in the Mekong region
    include:

       Call for regional cooperation on data gathering, analysis,
            and sharing: Hydropower is a regional issue. Regional measures
            must be put in place to ensure that the ecological products and
            services upon which the development of this region depends are
            not degraded or irreversibly lost, which requires a regional
            approach to cost-benefit analyses. There are still large gaps
            in knowledge in the region. For example, what is the value of
            environmental flows and ecosystem services provided by the
            Mekong River in monetary terms? Encouraging this kind of data
            analysis and sharing among all the six countries is crucial.
            This would also invite a stronger influence from academic
            institutions and civil society on policy and decision making
            processes.
       Promote green science-based solutions: The U.S. State
            Department led Lower Mekong Initiative has developed a new
            interactive modeling system for climate change impacts called
            Forecast Mekong. It will help the Vietnamese Government better
            understand and adapt to sea-level rise, emphasizing sustainable
            solutions rather than stop-gap measures such as building more
            dykes and walls. By promoting these types of science-based
            approaches, the US Government can further the development of
            green technological solutions in the Mekong region.
       Support strengthened governance and accountability with the
            Mekong River Commission: The U.S. Government can support the
            full recognition and endorsement of the 1995 agreement of the
            Mekong River Commission; in particular the procedures for
            notification, prior consultation and agreement for hydropower
            dam development. More specifically, a moratorium on the
            approval of mainstream dams should be established to allow the
            full assessment of the risks from this development.
       Encourage a meaningful dialogue with China: Recently, the
            four Prime Ministers of the Lower Mekong countries took part in
            the Mekong River Commission Summit to celebrate its 15th
            anniversary, giving the MRC a much higher profile than in the
            past. China was formally asked to join the MRC by the Cambodia
            government. It remains to be seen if they will. However, if the
            freshwater biodiversity, fisheries, and future of the Mekong
            River are to be sustained, a whole-of-basin and even-handed
            approach on hydropower must be attempted.
       Call on multilateral development banks to take a whole-of-
            basin approach on hydropower: While the multilateral banks
            wield less influence than they did in the past, they are still
            very important to less powerful governments in the region. It
            behooves them to take cumulative impacts of hydropower
            development into consideration, particularly for the Mekong
            River basin, where poverty reduction strategies must begin with
            the well-being of the river. A critical place to start is with
            the mainstreaming of sustainable development planning in all
            subdivisions and in particular, the promotion of alternative
            green energy over that of main-stem hydropower development.
          As one of the largest global donors to multilateral development
            banks, the U.S. Government can call on them to mainstream what
            their ``environmental arms'' develop and recommend. Often
            times, conflicting mandates within different subdivisions of
            the same institution are the bottlenecks to implementing
            innovative environmental solutions and integrating a whole-of-
            basin approach to development.
       Call for a regional agreement on climate change resiliency:
            Climate change will profoundly affect the Mekong River's
            biodiversity, water resources, and economy, all of which in
            turn will impact its people. National governments can only
            respond to climate change at a local level. Given that the
            impacts of climate change will be transboundary and has
            significant implications for security, a regionally coordinated
            response to climate change will be most effective. Guiding a
            regional climate adaptation agreement that builds resiliency
            for ecosystems, natural resources, biodiversity and most
            importantly, local communities, would bring a more peaceful and
            sustainable future for the Mekong region. One possible
            opportunity is the current Global Environment Facility (known
            as GEF V), which allows for a transboundary approach on
            protecting the Mekong region's most unique ability to provide
            for its people; the environmental services provided by the
            Mekong River and its watersheds.

                                   CONCLUSION

        Chairman Webb, thank you once more for the opportunity to offer my
    comments on the importance of recognizing the Mekong River as one
    ecosystem. Taking this whole-of-basin approach emphasizes the critical
    need to protect the Mekong River's ecological functions, of which the
    free-flowing nature of its main stem is most important, for a peaceful
    sustainable future of the Mekong region. WWF strongly urges the U.S.
    Government to continue to play an empowering role in the region and to
    support ecosystem based approaches for improving climate change
    resilience for the entire Mekong River basin.

        Senator Webb. Well, thank you.
        And thank all of you for your testimony today, both written
    and oral, and that will be considered by our staff in great
    detail after this hearing is over. We appreciate the time that
    you've taken to come here and be with us today.
        The first thing I would just say, after listening to you,
    is that it is profoundly disturbing in its implications that--
    on a lot of different levels--environmentally, politically,
    culturally, strategically--in terms of this region, that we are
    not paying enough attention to this issue.
        And actually, Ms. Chungyalpa, when I was listening to you,
    one of the thoughts that went through my mind when you were
    talking about the enthusiasm on the climate change issue is,
    it's easy to get people to talk about climate change in the
    region, because there's no sovereignty dispute. You don't have
    to think about encroachment by another country, or the sorts of
    issues that are involved when we have to address the hydropower
    situation. The immediate reality of what could be happening
    with these--the construction of these dams, however, is
    extremely dangerous to the continuity of the region as it's
    existed for thousands of years. And it takes a little bit more
    of a push to get people in the region to discuss this issue.
        I know when I was in Vietnam in July, I found a real
    hesitation among even government officials to discuss this part
    of the problem, because it does go into the need for
    governments and the business sector to truly engage in coming
    up with some sort of a potential structure in which to address
    the problem.
        And it's one of our real challenges. One of the reasons I
    wanted to hold this hearing was to look at how do we help
    create an awareness of the immediacy, in terms of the
    seriousness of this problem? Quite frankly, the responsibility
    of the players, government, and business alike, who are more
    shortsighted and need to be addressing this is a way they
    perhaps don't want to.
        Let me start with this. And I'd like to hear all three of
    your thoughts. We have been working on this amendment, which we
    shared with you, that would go to ADB funding and, at the same
    time, as all of you have mentioned, in one form or another,
    there are other formulas that are taking place right now in
    order to finance these projects. There were several mentions of
    that. And China, particularly, is starting to finance its own
    construction. We saw, just a couple of days ago, China offered
    a $4.2-billion interest-free loan to Burma for mass hydropower
    projects: road construction, infrastructure, et cetera. So, how
    much good can we do with this amendment? How much can we affect
    the process? And what are your thoughts for, perhaps, other
    ways that we could go about it?
        And, Dr. Cronin, if you would?
        Dr. Cronin. Thank you, Senator.
        Well, I think the first thing is to raise the issue. And
    frankly, it won't be well--your amendment won't be that well
    received in Manila, at least by a lot of people in the Bank.
    But, it's essential to get a dialogue started on this. And
    there is an immediacy that needs to be addressed.
        One of the issues that concerns me is that if we--if the
    countries go ahead with these dams, you're talking about a 10-
    or 15-, even 20-year period when the river will be disturbed as
    the dams are built. And there is no one, you know, organizing
    or coordinating, or even strategizing, that I can see, about
    how to deal with the gap between when livelihoods are destroyed
    and food supplies are destroyed and when the benefits of
    electricity start to kick in. And so, that's an issue.
        And I mentioned--with regard to the ADB, I mentioned that
    there is a slippery slope of them getting involved in sort of
    being the little guy behind the elephants in the parade with a
    scooper--pooper-scooper--to clean up, if you will, after the
    damage is being done. And so, I would like to see us
    particularly weigh in on that issue and make sure--you know,
    that the dam--the Bank not go down that path.
        But, how to change the minds of the countries, and how to
    actually influence the Bank, is difficult. And in addition, as
    you just mentioned, the Banks are no longer central to this. I
    mean, this is all so-called ``public/private'' financing.
    Essentially, they're all commercial opportunities. And there's
    plenty of money around, apparently, to carry these projects
    out.
        But--so, the urgent issue remains, I think, to find ways to
    help the governments understand the consequences of what
    they're starting--what they're trying to--planning to do. And I
    think the ADB has a role--has an important role in that.
        Senator Webb. Thank you.
        Dr. Cronin. Thank you.
        Senator Webb. Ms. Imhof.
        Ms. Imhof. Thank you. Very good questions, of course, that
    you're raising.
        You know, China is now actually the world's largest dam-
    builder and funder. We have been collecting data on how many
    projects it's funding and building globally. And I've actually
    lost count, but it's probably--at the last count, I believe it
    was over 140 dam projects, around the world, that China was
    involved in. So, it is a very significant challenge.
        I think--with the amendment that you've proposed, I think
    it's a very good amendment, in very strong language, and I
    think it's very important, because the ADB has been kind of the
    main supporter of hydropower development in the region until
    recently. And one thing that we are concerned about is, with a
    lot of the focus on the Mekong mainstream dams, that there will
    be a greater push for dam projects on tributaries of the
    Mekong. And we even, here at WWF, you know, advocating for some
    tributary development. And our experience with tributary
    projects, as I mentioned before, that they are also extremely
    damaging and should definitely be assessed on a case-by-case
    basis.
        So, I think that the amendment is an important signal. I
    would recommend that it apply to the World Bank and the Asian
    Development Bank.
        And the other thing that's important about it is, it refers
    to transmission infrastructure. And actually, the ADB is
    proposing to finance a transmission line in southern Laos that
    would enable a whole slew of tributary projects in southern
    Laos to go forward that currently aren't going forward because
    they don't have transmission infrastructure. So, I think it's
    an important signal that the U.S. Government is concerned about
    the transmission infrastructure that allows these projects to
    go forward.
        I think it would be really important for yourself and the
    committee to also push Treasury to actually implement the--
    sorry--to actually pressure the ADB and World Bank to implement
    and adopt the kind of policy reforms that you refer to in the
    amendment--so, things like implementation of the World
    Commission on Dam Standards--because what we do know from
    experience--I mean, as you know, Treasury hates these sorts of
    mandated votes, because they say that it reduces their
    authority. I think that where it can be important is if
    Congress is really pushing Treasury to push for meaningful
    reform--policy reform at the institution, along the lines of
    what is in the U.S. legislation. So, I would really encourage
    you to press for that.
        In terms of what can be done about China, I think there has
    to be ongoing dialogue about Chinese financing overseas and
    China Export-Import Bank. I don't know if the U.S. Ex-Im Bank
    could play some kind of role in encouraging the China Eximbank
    to sign up to the common approaches adopted by the OECD on
    environmental and social impact assessment, lending in their
    operations. That might be one other role that the United States
    could play in encouraging China Exim to adopt international
    standards in its operations, and the same for Thai EXIM Bank,
    as well. And Thai EXIM, until now, has been very much neglected
    and kind of out of the loop, in terms of, you know, the
    international export credit agency community and looking at its
    standards of the projects it's financing.
        Senator Webb. Great insights. Thank you.
        Ms. Chungyalpa.
        Ms. Chungyalpa. Chairman, first, I'd like to respond by
    talking about climate change in the context of hydropower.
    Hydropower is often used as an example what green energy means.
    And we're really concerned, especially because it is posited in
    the Mekong as a solution rather than a big threat, in the
    context of climate change. So, climate change cannot be kept
    out of that dialogue, precisely for that reason.
        The other thing that we're very aware of is that climate
    change, in some sense, gives us an opportunity to talk about
    issues that most governments are unwilling to talk about
    publicly, and that includes hydropower. It actually allows us
    to indirectly bring up hydropower in--at very high levels, to
    make the point that if you actually dam the river, you are
    going to be basically creating maladaptation on the river, in
    the long term.
        Finally, as the U.S. Government has invested in the long
    term in sustainable development for this region, and if we are
    to save the river from hydropower, but then lose it to climate
    change, it is going to be a wasted investment. And I think that
    might be the broader context for climate change, and WWF's
    position on it.
        In terms of the ADB in particular, we applaud the language
    on the Asian Development Bank that was shared with us. The
    reality of the situation is, it's always about the economy. And
    in the case of the ADB, it's the economic arms that always win
    the battle over the environmental arms. What we have learned,
    sometimes in difficult situations, is that the Asian
    Development Bank might have arms that are willing to work on
    environmental sustainable solutions, might actually develop
    very innovative technological solutions, but, at the end of the
    day, they are going to be ignored by the other subdivisions of
    the Asian Development Bank. And maybe the most important role
    that the U.S. Government can play is to actually ask for
    mainstreaming of environmental sustainability, not just so it's
    side language in the Asian Development Bank's mandate, but
    actually mainstreamed within the mandate, especially when you
    consider that the mandate is about poverty reduction, not just
    in terms of large economic wins, but also at a household level.
        Senator Webb. Thank you.
        Ms. Imhof, you stated, in your testimony, that studies have
    shown that the planned dams would not contribute greatly to the
    region's energy security; they would have little impact on
    regional energy prices, and only generate the equivalent of 1
    year's demand for growth. What other energy alternatives would
    you suggest?
        Ms. Imhof. Thank you. I mean, the first thing is to look at
    the potential for expanding investment in energy efficiency,
    because there's huge potential. I mean, Thailand already has an
    energy efficiency program, but there is still huge potential
    for energy savings. And California is a great model of an
    entity. The State of California has managed to keep its power
    demand growth stagnant over the past 30 years, because of
    investments in energy efficiency. And the same goes for
    Vietnam, which doesn't have a strong energy efficiency program
    right now. And this is an area where I think there could be
    very good technology transfer between the United States and the
    regional countries.
        One of the other issues is that Thailand--energy analysts
    have shown that Thailand--the Electricity Generating Authority
    of Thailand, the main electric utility, has consistently
    overestimated power demand, so there is consistently a surplus
    of power in the Thai system. And this has been documented over,
    I believe, 10 or 15 years. So, there's an issue of where EGAT
    consistently says, ``We need more power. We need more power.''
    And we sign--EGAT signs these agreements and then ends up--you
    know, the demand growth doesn't meet it. There's also been
    studies showing that there's significant potential for
    repowering of existing plants, so generating more electricity
    from existing plants. There's biomass potential from rice
    husks. And then there's, you know, renewable technologies.
    There's not a lot of wind potential in Thailand, but there's
    certainly solar potential, as well. So, there is definitely
    potential there.
        The biggest issue is really the kind of political and
    economic interests that are driving these sorts of projects.
    And there's very strong--for example, the developer of the
    Xayaburi Dam project, a Thai company called CH. Karnchang, has
    very strong political interconnections with the Thai Government
    and is a very large Thai construction company. So, there's more
    political interests that are driving--and economic interests--
    that are driving the development of these projects, rather than
    actually the demand for power. I mean, there's still no study
    out there that actually says that this power is necessary to
    meet the region's energy needs.
        Senator Webb. Thank you.
        Dr. Cronin, in your written statement, you mentioned that
    China is already considering the diversion of some Mekong water
    to the Yangtze River to replenish water sent north----
        Dr. Cronin. Yes, sir.
        Senator Webb [continuing]. As part of the south-to-north
    diversion project. Where are they on this? And do we see that
    this is a serious plan? Because it certainly does go into what
    you would call water sovereignty----
        Dr. Cronin. Right.
        Senator Webb [continuing]. If they're taking water that
    historically would be going downstream, and diverting it to
    another place inside their own country.
        Dr. Cronin. Yes. Well, thank you. As in all things
    regarding Chinese decisionmaking on these kinds of sensitive
    political--geopolitical issues, they don't show their hand.
    These are rumors--and there's substance to them--that they are
    considering these projects. How far along they are is a big
    question. But, I think, in the longer term, the stark reality
    is that China does not have enough water. And, of course,
    China's going to try to transport--they're building canals to
    transport water over 1,700 kilometers, from the Yangtze River
    to the Yellow River, which is now running dry at the mouth
    during unusually dry seasons. And there's no way that China can
    keep growing the way it's growing and using water the way it's
    using it without resorting, ultimately, to some kind of water
    sovereignty--``water nationalism'' I would call it.
        So, the Indians are also very worried about projects--the
    plans that China has at least discussed or as--there is
    information about plans that China wants to dam the upper
    reaches of the Brahmaputra River in--I think it's in Tibet,
    actually. And the same kind of story, that if they bleed water
    away from the Brahmaputra River for their own use, then you've
    got the whole Bay of Bengal issue, for both India and
    Bangladesh.
        Senator Webb. The question occurred to me--Is there an
    international forum in which downstream riparian water rights
    could be considered with sort of decisional authority?
        Dr. Cronin. Unfortunately, no. And one of the problems with
    water rights is that, traditionally, countries that agree to
    negotiate over water rights and to--and countries that respect
    upstream/downstream rights, are talking about dividing shares
    of water: How much do you get, how much do we get? A good
    example is the Indus River Agreement between India and
    Pakistan. Essentially, they took five rivers and said to
    Pakistan, ``You get two, and India, you get three.'' And that's
    been a rather lasting agreement.
        But, the key issue with the Mekong is what we call the
    ``flood pulse.'' That is the flood pulse is necessary for the
    aquatic life of the Mekong, as we know it now, and these
    extremes of wet and dry. And so, if the monsoon flood pulse is
    broken or, for instance, if the river is contained and the
    pulse effect is lessened, then you don't have the same amount
    of water going into the Tonle Sap Great Lake. When the--you
    know, the water comes roaring down the Mekong, and when it gets
    to about Phnom Penh, the river divides, and there's
    obstructions--the river can't take all the water, and so it
    backs up into the Tonle Sap Great Lake. And so, that's almost
    like a lung, you know, the expansion and contraction of that
    great lake is the--as they say, the nursery of Mekong fish. And
    so, you can't--if you interrupt the flood pulse that's a huge
    problem.
        But, there's no international law, that I know of, no
    regime that would, in fact, address an issue like the flood
    pulse. In other words, you have six countries sharing the same
    river, and any one country disrupts the river, there's an
    impact on everybody. And it's like the--almost like the
    prisoner's dilemma, you know--problem, where one person--if
    they all cooperate, they all benefit. If they don't cooperate,
    everyone loses.
        Senator Webb. Well, I thank all of you for your
    information, and analysis and advice. As I said, the
    implications of this are profound and have an immediacy to
    them. I think this hearing will help bring greater awareness,
    here and in other places, of the immediate seriousness of this
    problem. Hopefully we can move forward to some sort of a
    structure in which we can start having an impact on these
    issues. And I have to say, Ms. Chungyalpa, when I tell my
    brother that there's a 9-foot catfish in the Mekong River,
    he'll be on the next plane with his rod and reel. [Laughter.]
        Ms. Chungyalpa. It is on the verge of extinction. He must
    hurry.
        Senator Webb. Do this before the next couple of years,
    right?
        But, thanks again for taking the time to come and help
    educate us. We will continue to see if we can't help raise the
    awareness of this issue.
        Thank you.
        This hearing's closed.
        [Whereupon, at 4:03 p.m., the hearing was adjourned.]