AVERTING A DAM TRAGEDY : THE MEKONG AS A MODEL FOR COMMON ASYMMETRIC RESOURCES MANAGEMENT

Abstract

The future of the Mekong River ecosystem and the food, livelihood and well-being security it provides to tens of millions of people around Indochina and globally through food exports is in question. Several governments which share the river basin have been promoting hydroelectric dams to generate electricity either for use at home or for export to neighbours to earn revenue to finance national development. The scale, scope and speed of dam development is causing concern among downstream states raising diplomatic tension. Prospects for a sustainable outcome which fosters cooperation in place of competition and even conflict are limited because the current alternatives of dams or environmental preservation are Pareto inefficient, permitting welfare gains for some at the cost of losses for others. Coordination failure in the Mekong is a result of institutions ill-matched to the characteristics of the ecosystem. As the basis for a Pareto efficient resolution which ensures environmental security a new concept, common asymmetric resources, is presented to explain interests and relationships of riparian states. Guided by the concept of common asymmetric resources a new institution is proposed which is founded on the political and economic realities of the basin to replace the ill-suited institution of the Mekong River Commission. Environmental payments are introduced as an institution founded on the realities of the ecosystem, common asymmetric resources, and realpolitik. Environmental payments in the Mekong, similar to payments for ecosystem services, particularly watersheds, in some respects, are also an institutional innovation for the unique challenges of transnational common asymmetric resources. The value of environmental payments is determined by the opportunity cost of foregoing revenue from hydropower development thereby insuring hydro-dependent states have a strong incentive to accept environmental payments as a substitute for hydropower. Environmental payments in the Mekong are the least Pareto inefficient option and the only option with a reasonable chance of securing a Pareto efficient outcome. As a solution to the problems of the Mekong the concept of environmental payments is put to a simple, but severe, test of affordability focused on the case of payments by Vietnam, particularly the Mekong Delta, to Laos in return for instituting regimes of environmental stewardship to assure the environmental quality of the river which secures and sustains downstream communities. The test finds Vietnam could afford payments for environmental stewardship to Laos. Payments are even more feasible if contributions are made by other communities or states which value the global food and environmental security goods provided by the flow of the Mekong free from the obstructions of hydroelectric dams. Furthermore, hydroelectric dams in the Mekong are not necessary for energy security. Thailand, the biggest customer, can afford the next least cost alternative natural gas and has considerable renewable resources, including energy efficiency and better power planning, which could meet its needs. Common asymmetric resources management through environmental payments is the only realistic option for averting a dam tragedy of commons sense on the Mekong.