Potential Benefits of Sharing Water from Hydropower ... - WLE Mekong

Potential Benefits of Sharing Water from Hydropower Reservoir Case Study from Central Highlands, Vietnam Vũ Xuân Nguyệt Hồng1, Yumiko Kura2, Benoit Laplante3, Tarek Ketelsen3, Hồ Công Hòa1, Bùi Phương Liên1, and Nguyễn Việt Anh3

1. 2. 3.

Central Institute for Economic Management (CIEM), Hanoi, Vietnam WorldFish – Greater Mekong Region, Phnom Penh, Cambodia International Centre for Environmental Management (ICEM), Hanoi, Vietnam

Report for the Challenge Program on Water & Food Mekong Project MK2: “Assessing the Value of Water” 30 JUNE, 2014

Acknowledgments The authors would like to acknowledge the following individuals and organizations in Vietnam who have facilitated this research: Department of Planning and Investment and other provincial authorities of Gia Lai and Kon Tum provinces, People’s Committee of Chupah District, People’s Committee of Sathay District, members of the field survey team from the Statistics Units of Chupah District and Sathay District, and the survey respondents in the Chupah and Sathay districts. This research was carried out through the CGIAR Challenge Program on Water and Food (CPWF), which is funded by the UK Department for International Development (DFID), the European Commission (EC), the International Fund for Agricultural Development (IFAD), and the Swiss Agency for Development and Cooperation (SDC). CPWF is a partner of the CGIAR Research Program on Water, Land and Ecosystems (WLE). WLE combines the resources of 11 CGIAR Centers, The United Nations Food and Agriculture Organization (FAO) and numerous international, regional and national partners to provide an integrated approach to natural resource management research. This program is led by the International Water Management Institute (IWMI), a member of the CGIAR Consortium. wle.cgiar.org All errors and omissions which may remain in this report are those of the authors and shall not be attributed to any of these individuals and organizations.

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TABLE OF CONTENTS I.

INTRODUCTION ............................................................................................................................... 7

II.

CASE STUDY BACKGROUND ............................................................................................................ 9 II.1

Description of the Study Site .................................................................................................. 9

II.2

Description of the Yali Falls Dam .......................................................................................... 11

II.3

Characteristics of Water Resources and Natural Seasonal Flow Patterns at the Study Site 13

II.4

Key Water Resource Issues and Policies in the Context of Hydropower Development ....... 15

III. CASE STUDY METHODOLOGY ....................................................................................................... 17 III.1

Review of Existing Legal Documents Governing Water Management ................................. 17

III.2

Discussion with Relevant National Authorities and Stakeholders ........................................ 17

III.3

Household Survey ................................................................................................................. 18

III.4

Projection of Future Water Demand in Gia Lai and Kon Tum Provinces .............................. 20

III.5

Assessment of Water Availability and Future Stress in Gia Lai and Kon Tum Provinces ...... 21

III.6

Scenario-Based Analysis of Trade-Offs in Water Benefits of the Yali Reservoir ................... 23

IV. FINDINGS: IMPORTANCE OF WATER FOR LOCAL LIVELIHOODS ................................................... 27

V.

IV.1

Contribution of Water to the Economic Activities of Local Communities ............................ 27

IV.2

General Patterns of Water Access and Uses......................................................................... 28

IV.3

Use of the Yali Reservoir and Its Water ................................................................................ 32

FINDINGS: POSSIBLE FUTURE WATER COMPETITION AT PROVINCIAL SCALE .............................. 34 V.1

Water Demand in 2030 ......................................................................................................... 34

V.2

Pattern of Water Availability, Surplus and Deficit ................................................................ 36

VI. FINDINGS: TRADE-OFF BETWEEN YALI HYDROPOWER GENERATION AND WATER USE IN SURROUNDING AREAS .......................................................................................................................... 41 VI.1

Scenario 1 Results ................................................................................................................. 41

VI.2

Scenario 2 Results ................................................................................................................. 42

VI.3

Scenario 3 Results ................................................................................................................. 43

VI.4

Year-To-Year Sensitivity Between the Scenarios .................................................................. 44

VII. OPTIMIZING WATER BENEFITS SHARING ...................................................................................... 47 VIII. CONCLUSIONS ............................................................................................................................... 49 REFERENCES .......................................................................................................................................... 51

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LIST OF FIGURES Figure 1: Organizing Framework of the MK2 Project on Water Valuation ............................................. 7 Figure 2: Location of Yali Reservoir......................................................................................................... 9 Figure 3: Monthly Precipitation in Kon Tum Province .......................................................................... 14 Figure 4: Seasonal Pattern of Natural Flow Regime in the Yali Reservoir ............................................ 15 Figure 5: Location of the Surveyed Villages .......................................................................................... 19 Figure 6: Sub-catchment of Yali Reservoir within Gia Lai and Kon Tum provinces .............................. 22 Figure 7: Steps for Calculating Moisture Budget .................................................................................. 23 Figure 8: Multiple Water Use Scenarios for Yali Reservoir ...................... Error! Bookmark not defined. Figure 9: Water Availability and Energy Production Calculation Process ............................................. 26 Figure 10: Current and Projected Water Demand in Gia Lai Province (excluding hydropower) .......... 35 Figure 11: Current and Projected Water Demand in Kon Tum Province (excluding hydropower) ...... 35 Figure 12: Water Availability/Moisture Budget in Gia Lai and Kon Tum Provinces.............................. 37 Figure 13: Surface Water Surplus/Deficit in Gia Lai and Kon Tum Provinces on Baseline Demand ..... 38 Figure 14: Dry Season Water Deficit Under Current and Future Water Demand ................................ 39 Figure 15: Dry Season Moisture Budget (Left) and Water Deficit (Right)............................................. 40 Figure 16: Difference in Reservoir Storage and Energy Production Between Scenario 1 and Scenario 2 .............................................................................................................................................................. 42 Figure 17: Current and Future Water Demand in the Yali Reservoir Vicinity, Including Kon Tum City 43 Figure 18: Difference in Energy Production Between Scenario 1, and Scenario 3a (2010) and 3b (2030) .................................................................................................................................................... 44 Figure 19: Water Withdrawal Versus Hydropower Production Loss in Wet, Dry, and Average Years . 45 Figure 20: Comparison of Loss in Energy Production and Company Revenue Between Scenarios ..... 46

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LIST OF TABLES Table 1: Key Economic Indicators for Kon Tum Province and Gia Lai Province .................................... 11 Table 2: Characteristics of the Yali Reservoir........................................................................................ 12 Table 3: Yali Dam Hydropower Generation Rate .................................................................................. 13 Table 4: Surveyed Villages .................................................................................................................... 19 Table 5: Characteristics of Farming in Surveyed Households ............................................................... 20 Table 6: Water Use Coefficients Used in Demand Projection (2010) ................................................... 21 Table 7: Key Water Uses/Values Assessed for the Case Study ............................................................. 27 Table 8: Income Portfolio from Economic Activities............................................................................. 28 Table 9: Types of Water Sources Used by Surveyed Households (%) ................................................... 29 Table 10: Sources of Irrigation Water for Crops ................................................................................... 29 Table 11: Sources of Water Used by Surveyed Households (%) ........................................................... 30 Table 12: Type of Toilet Facilities Used................................................................................................. 30 Table 13: Daily Average Water Consumption per Household (liters/household/day) ......................... 31 Table 14: Accessibility of Households to Water Sources Outside the House ....................................... 32 Table 15: Importance of Yali Reservoir as Perceived by Local Communities ....................................... 32 Table 16: Sources of Water Supply in the Central Highlands ............................................................... 36 Table 17: Economic Benefits of Water per m3 for Local Communities ................................................. 48 Table 18: Economic Benefit of Water per m3 for the Iali Hydro Power Company................................ 48

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LIST OF ACRONYMS CPWF Challenge Program on Water and Food DWRM Department of Water Resources Management EVN

Electricity of Vietnam

FSL

full supply level

GWh

gigawatt hour

IHPC

Iali Hydropower Company

IWRM integrated water resources management km km

kilometer 2

square kilometer

3

cubic meter

3

m /s

cubic meter per second

mm

millimeters

m

MARD Ministry of Agriculture and Rural Development MOL

minimum operating level

MONRE Ministry of Natural Resources and Environment MRC

Mekong River Commission

MW

megawatt

NTFP

non-timber forest product

NWRC National Water Resources Council SEDP

Socio-Economic Development Plan

USD

US Dollar

VND

Vietnamese Dong

WSI

water storage infrastructure

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I.

INTRODUCTION The overall goals of the Challenge Program on Water and Food (CPWF) Mekong Project 2, Assessing the Value of Water, are to assess the value of the various uses of water and to estimate the costs and benefits associated with different water management strategies. In particular, the project aims to (1) quantitatively assess the value of water resources and water bodies to local livelihoods and to (2) analyze the linkages between human impacts on water resources (in this case, the development of water storage infrastructure (WSI) for hydropower generation purposes) and how the resulting changes impact local values and livelihoods that are derived from the water resource. The guiding research framework of the project is presented in Figure 1.

Figure 1: Organizing Framework of the MK2 Project on Water Valuation The objective of this case study in Vietnam is twofold. First, we aim to assess the economic benefits of water resources to the local communities living around the Yali hydropower reservoir. Second, we aim to analyze and evaluate the trade-offs between the current singlepurpose use of the reservoir and the possible alternative of a multiple-use reservoir. With this case study, we aim to provide insight into the future potential for multiple uses of reservoir water and we highlight the need for coordination of water management strategies among different sectoral users in two central highland provinces of Vietnam. The main research questions guiding this case study are:

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1) What are the impacts on water demand of the projected socio-economic developments in the provinces of Kon Tum and Gia Lai? How will the water quantity be affected in the Yali Reservoir? 2) What are the main sources of water that support the livelihoods of the households in the villages around the reservoir and how much do different sources of water contribute to the villagers’ economic activities? 3) What would be the trade-offs between single use and multiple uses of reservoir water, taking into consideration the seasonal differences in water availability and demand?

For purpose of examining the above questions, a survey was conducted in 4 localities living in the watershed basin of the Yali Reservoir in Vietnam. Based on collected information and analysis, this case study yielded three types of findings: (1) the pattern of water utilization and the role of water in the diverse livelihoods of local communities in the areas adjacent to the Yali Reservoir; (2) the patterns of future water stress in the catchment basin of the Yali Reservoir; and (3) potential economic gains and trade-offs from multiple uses of Yali Reservoir water for non-hydropower purposes. In the next section, we present background information pertaining to the Yali Reservoir and its existing use. Details of the study methodology are presented in Section III. Survey results and key findings are presented and discussed in Section IV to VII. Conclusions and recommendations are presented in Section VIII.

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II.

CASE STUDY BACKGROUND I I . 1 D e s c r i p t i o n o f t h e St u d y S i t e

Figure 2: Location of Yali Reservoir The study site is the Yali hydropower reservoir which stretches across both Gia Lai and Kon Tum provinces on the Krong Poko, a tributary of the Sesan River. The reservoir is in the Central Highlands of Vietnam, about 70 kilometers upstream of the Cambodian border. These provinces are relatively undeveloped and the local economies are dominated by the agriculture sector. In 1991, Kon Tum province was newly created after splitting from Gia Lai province. Thus, the size and development level of the economy in Gia Lai is more advanced than in Kon Tum. These provinces share many common characteristics, one of which is an ambitious targets for growth. Over a 5-year period, they aim to increase their populations by 8 to 10% and more than double their economies (Table 1). Both provinces are basing their growth strategies on a rapid development in the industry and service sectors, including hydropower development. The Yali Falls dam began construction in 1993 with financial support from the governments of Russia and Ukraine, as well as various other forms of technical assistance from Sweden, Switzerland, and the World Bank (Wyatt and Baird 2007). It became fully operational in 2002. The Yali Reservoir is bordered by the Sathay and Kon Tum districts in Kon Tum province and 9

the Chupah district in Gia Lai province. These 3 districts have a combined population of approximately 112,000. Administratively, the Sathay district consists of 10 communes and one town while the Chupah district has 14 communes and one town. Only 4 communes in Sathay district and two communes in Chupah district are located in close proximity to the Yali Reservoir.

The livelihood and living conditions of these local communities have been significantly transformed since the beginning of the construction of the Yali hydropower project. To evacuate the villages from the area to be inundated by the future reservoir, the project began the first phase of resettlement in 1994. Gradually, a total of 12 villages were relocated. This involved moving 1,658 families (8,475 people) over the course of 6 years until the resettlement phase was completed in 2001 (Cao 2003; Dao et al. 2004).

Prior to resettlement, livelihoods of the local communities were primarily based on rural agriculture, with more than 80% of the population being farmers and 80% being either illiterate or having a low education level. The production systems were based on shifting cultivation and agro-forestry in uplands, with some lowland farming along the rivers and streams. A large percentage of the population (approximately 65%) belonged to ethnic minority groups (Cao 2003; Dao et al. 2004).

According to impact assessments conducted in the early 2000s, fewer than 10 years after the first resettlement started, the communities’ livelihoods shifted from predominantly swidden agriculture practices in forested uplands to the production of cash crops on newly reclaimed lands, with cassava and corn production in uplands and paddy rice cultivation along rivers and streams. It appears that, immediately after resettlement, villagers who were resettled near their original villages (1 to 3 km away) continued to use the semi-flooded area around the reservoir for farming during the dry season and used the Yali Reservoir itself for washing, fishing, and transportation. A shortage of land suitable for cultivation, especially for wet rice, was reported as a major problem during this period. The provision of adequate farmland for all the resettled households took many years to complete and changing the farming practices took even longer, resulting in a temporary decline of average household income (Cao 2003; Dao et al 2004). Initial compensation to resettled households was given in the form of cash and/or farming inputs. However, delays were experienced in the provision of new farmland, general infrastructure, housing, and support for new crop production systems. These delays resulted in a variety of difficulties for the resettled communities. These difficulties were compounded by the fact that some households had to be resettled a second time as a result of the construction of another dam upstream (i.e. in 2003, the construction of the Pleikrong dam started). Food production and household income reportedly declined significantly after the resettlement (Cao 2003). Despite these difficulties in restoring agriculture production and income, significant improvements were also reported in terms of access to services such as public wells, health and education facilities, and roads. More investment in agriculture inputs and training were mentioned as priority interventions in the assessment report (Cao 2003).

Nearly 20 years after the first village was resettled to make way for the Yali Reservoir, the transformation process continues to evolve. All of the local population now has access to the national electricity grid, irrigation schemes and wells, and there is improved road access. 10

Agriculture, forestry and fisheries still play important roles in the economic activities of Sathay and Chupah districts. However, the production systems have intensified to include industrial plantations of cassava, rubber, and coffee, in addition to rice production. In general, the economic structures of both Sathay and Chupah districts have shifted towards the industry, trade and service sectors. Table 1: Key Economic Indicators for Kon Tum Province and Gia Lai Province 1 Information

Gia Lai

Kon Tum

I. Socio-economic results from 2006-2010 2

1. Area (km )

15,536.92

9,614.5

2. Population in 2010 (Pers)

1,302,436

443,368

10.82

16.48

3.5

1.64

19,250

5,951

14.78

13.422

13.6

14.71

8. Proportion of agriculture sector in 2010 (%)

41.17

41.04

9. Proportion of industry and construction sector in 2010

31.14

24.4

27.69

34.56

1. Area (km )

15,536.92

9,614.5

2. Population in 2015 (Pers)

1,417,000

510,000

3. Rate of household at poverty standard in 2015 (%)

2

0

4. Unemployment rate in urban area in 2015 (%)

-

-

48,489

14,280

34.22

28

12.8

15

33

33-34

36.7

31-32

30.3

35-36

3. Rate of household at poverty standard in 2010 (%) 4. Unemployment rate in urban area in 2010 (%) 5. GDP of 2010 (billion VND) 6. GDP per capita of 2010 (million VND) 7. Average GDP growth rate/year of 5 years (%)

(%) 10. Proportion of service sector in 2010 (%) II. Socio-economic targets for 2011-2015 2

5. GDP of 2015 (billion VND) 6. GDP per capita of 2015 (million VND) 7. Average GDP growth rate/year of 5 years (%) 8. Proportion of agriculture sector in 2015 (%) 9. Proportion of industry and construction sector in 2015 (%) 10. Proportion of service sector in 2015 (%)

II.2 Description of the Yali Falls Dam The Yali Falls dam takes advantage of a natural drop in river channel elevation at the Yali Falls site. The dam is 60 meters high and has 4 turbines that generate electricity. The dam has a production capacity of 720 megawatts (MW) and a design flow of 424 cubic meters per second (m3/s), according to the Mekong River Commission’s (MRC) hydropower database (MRC 2009). 1 Sources: Statistical Yearbook of Kon Tum 2010; Socio-Economic Development Plan for 2011-2015 of Kon Tum; Socio-Economic Development Plan for 2011-2015 of Gia Lai.

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The size of the reservoir is 46.3 square kilometers (km2) in surface area and 981.5 million cubic meters (m3) in volume at full supply level (FSL) 2. Table 2: Characteristics of the Yali Reservoir 3 Category

Reservoir characteristics

Yali

masl

515.0

Minimum Operating level

masl

490.0

m

25.0

m

21.2

Depth Draw down Average depth of reservoir (FSL)

m

13.3

Area of reservoir at FSL

sq km

46.3

Area of reservoir at MOL

sq km

16.2

km

113.4

Average depth of reservoir (MOL)

Perimeter of reservoir at FSL Area Perimeter of reservoir at MOL Area exposed at drawdown Average slope of land in drawdown

km

52.4

sq km

30.2

%

8.1

Area exposed at drawdown which is between 0 – 5 % slope

sq km

13.5

Total volume of reservoir at FSL

M m3

981.5

M m3

215.5

M m3

766.0

-

2.4

Volume Total volume of reservoir at MOL Active (Live) storage Perimeter/area at FSL Perimeter/area at MOL Ratios

Unit

Full supply Level

Length of reservoir at FSL (dam to top of reservoir) Perimeter length index (Perimeter x length/Area at FSL Length of reservoir at MOL (dam to top of reservoir) Perimeter length index (Perimeter x length/Area at MOL Contributing catchment area

Catchment Mean annual flow at the dam site Length of river from dam to confluence with the Mekong

-

3.2

km

23.0

-

56.4

km

14.3

-

46.3

sq km

3,878.1

m3/sec km

359.5

The Iali Hydropower Company 4 has been set up by Electricity of Vietnam (EVN) to manage the operation of the Pleiklong, Yali, and Sesan 3 hydropower plants. Another EVN subsidiary company manages the Sesan 3a, 4, and 4a dams on the Sesan River downstream. The operation of all 6 dams is coordinated by the same optimization system managed by EVN in Hanoi (Ta Van Luan, personal communication, October 7, 2010 5).

The Yali dam generates 3.68 billion KWh annually, which contributes to approximately 9% of 6 EVN’s total hydropower output. Even though the hydropower plant’s operation schedule is not publicly disclosed, it is understood that, under the current management, water from the Yali 2

Based on MK3 calculation. Another estimate places it at 65km2 (Cao 2003). Sources: MRC, 2009; MK3 calculations. 4 The company uses the English spelling “Iali” for its name instead of “Yali” which is more commonly used in other English documents referring to the site. 5 Meeting with Ta Van Luan, Director, and Doan Tien Cuong, Deputy Director of Operation, at Iali Hydropower Company, Pleiku, Vietnam, 7th October, 2010. 6 Calculated based on average annual electricity production reported by Ialy Hydropower Company (http://ialyhpc.vn/?php=about&basic=detail&id=240) and the total annual electricity production in Vietnam in 2011 as reported by EVN (http://www.nldc.evn.vn/News/7/371/Bao-cao-nam-2011.aspx) 3

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Reservoir is managed solely to maximize electricity production. Water extraction for other purposes is not allowed, while non extractive uses such as fisheries are tolerated. Table 3 shows hydropower productivity relative to the active storage 7 level of the reservoir. Area 2 [km ] 65

Table 3: Yali Dam Hydropower Generation Rate 8 Active storage [million m³] 779

Head [m] 215

Discharge [unit flow] 1099.01

MWh/unit flow

55.07

621.95

212.5

1099.01

521.16

45.62

488.56

210

1099.01

515.03

38.77

378.16

207.5

1099.01

508.89

34.99

277.79

205

1099.01

502.76

25.59

108.13

200

1099.01

490.5

16.04

0

190

1099.01

465.98

527.29

I I . 3 C h a r a c t e r i s t i c s o f W a t e r R e s o u r c e s a n d N a t u r a l Se a s o n a l F l o w Pa t t e r n s a t t h e St u d y Si t e Yali Reservoir is located in the West Truong Son mountain range, which has the monsoon tropical climate of the plateau region. The average annual temperature of the area is 23.5°C and the highest average temperatures (>25°C) occur in March, April and May (Kon Tum Statistical Office, 2010). The monsoon tropical climate is characterized by two distinct seasons: the dry and the wet season. The wet season generally starts in May and continues until the end of October and the dry season is from November to April. Peak rainfall occurs in July and August with average rainfalls of 310 millimeters (mm) and 344 mm, respectively (Figure 3). On a wet year, the maximum rainfall in July could reach 669 mm. 90% of the total annual rainfall occurs during the wet season. On the other hand, rainfall sharply declines in dry season, with less than 1 mm of rainfall often recorded in January. Drought and surface water shortages occur in the dry season and limit agriculture production due to prolonged heat, high evaporation rates, and extremely low precipitation.

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In hydrologic terms, the active storage level is the total amount of reservoir capacity normally available for release from a reservoir below the maximum storage level. It is the total or reservoir capacity minus the inactive storage capacity. More specifically, it is the volume of water between the outlet works and the spillway crest. 8 Based on MK3 calculation. Hydropower generation at different active storage level was calculated using CSUDP Model, a generalized dynamic programming software, assuming that the hydropower plant operates at 90% efficiency.

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Monthly precipitation (mm)

800 700 600 500 400 300 200 100 0 Jan

Feb

Mar

Apr

May

Range

Jun

Jul min

Aug

Sep

Oct

Nov

Dec

Mean

Figure 3: Monthly Precipitation in Kon Tum Province 9 The catchment water of the Yali Reservoir originates from the upper north of Kon Tum province, flows toward the southwest into the Yali Reservoir, and, once discharged from the hydropower dam, the water eventually merges into the Mekong River in Cambodia. The Plei Krong reservoir is located immediately upstream of the Yali Reservoir while the Sesan 3, Sesan 4, Sesan 3A, and Sesan 4A dams are located downstream of the reservoir (see Figure 1). The water inflow into the Yali Reservoir is a function of water balance in the entire catchment basin upstream. However, the inflow is heavily influenced by the operation of the Plei Krong reservoir, as most of the water released from this reservoir flows directly to Yali Reservoir. Figure 4 shows the seasonal patterns of the natural flow regime of the Yali Reservoir. Water inflow varies between months and seasons. In the dry season, the average daily inflow is less than 100 m3/s and the lowest inflow of 45.9m3/s occurs in March. In the wet season, the average daily inflow is greater than 400 m3/s, with the highest inflow of 770 m3/s occurring in August. There are wetter years and drier years but the seasonal pattern is similar from year to year. The monthly inflow in August can reach 2.96 billion m3, which is 3.8 times the reservoir volume, while inflow in March averages only 0.12 billion m3, i.e. 15% volume of the Yali Reservoir. Severe water shortages occur from January to April when the monthly inflow fills up less than 30% of the reservoir’s volume. Overflow and flooding are likely to occur in August and September because of continuous intensive rain adding water on top of an already full reservoir.

9

Source: 1976-2006 records from Kon Tum monitoring station.

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Figure 4: Seasonal Pattern of Natural Flow Regime in the Yali Reservoir10

I I . 4 K e y W a t e r R e s o u r c e Is s u e s a n d P o l i c i e s i n t h e C o n t e x t o f H yd r o p o w e r D e ve l o p m e n t Water resources and reservoir management in Gia Lai and Kon Tum provinces, as elsewhere in the country, is governed by the Law on Water Resources (LWR 1998), the National Water Resources Strategy (NWRS 2006), and a number of Decrees and Decisions at the national level (e.g. Decree 112 11, Decree 120 12, Decree 149 13, and Decision 686 14). Provincial governments do not make their own water legislations. However, the two involved provinces make water management decisions in the catchment basin of the Yali Reservoir independently from one another. Each provincial authority prepares and adopts industrial sector master plans and socio-economic development plans (SEDP) for their respective provinces and districts. These plans have implications on water demand and water uses within the entire province. Within the entire Sesan/Krong Poko sub-basin, water use patterns in one province can affect water availability and quality in the other province. Despite this, the planning process is undertaken in each province without a clear understanding as to whether these plans impact water demand in their own province, whether the water availability in one district is impacted 10

MK3 calculations. According to Decree No. 112/2008/ND-CP of October 20, 2008, hydropower and irrigation reservoirs are to be managed by multiple relevant authority agencies at all levels (from the national to the commune level) for multiple purposes of utilization and exploitation 12 Decree No-120/2008/ND-CP dated December 1- 2008 on river basin management 13 Decree No-149/2004/ND-CP on issuance of permits for water resources exploitation, utilization and wastewater discharge 14 Decision of the Prime Minister No. 686/QD-TTg of 12 May, 2011, regulates the operating procedures for associated reservoirs in flood season. 11

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by SEDPs in other districts, or whether there will be enough water in the sub-basin to support the implementation of these plans in both provinces.

In the context of relative water abundance, this approach has not thus far encountered significant difficulties on a systematic basis. However, moving to a scenario of increasing water scarcity (as illustrated by the 1 in 100 year drought experienced in the geographical area of the Yali Reservoir from 2009 to 2010), decision-makers have recognized that the availability of water in the sub-basin may in fact become a constraining factor to the development of the region. There is thus an urgent need to account for the impacts of socio-economic development plans on water demand. Through various consultations and interviews of provincial officials in Gia Lai and Kon Tum, the project team found that there was no clear mechanism for the coordination of water management and for allocating decision-making in the two provinces.

Under the provisions of LWR (1998), in case of water shortage domestic users (i.e. water for living) are given the highest priority over other uses, such as irrigation, industry, hydropower, and environment. In practice, however, implementation of these rules is still weak. The water for living policy has not been integrated into formal decision making processes and the measures that are required to implement it in practice do not exist.

According to Decrees No. 112 and No. 120, Vietnam’s Prime Minister is responsible for facilitating water sharing regarding “big reservoirs of national importance” or inter-provincial river basins, in the case of drought and serious water shortages. Prioritizing various water uses and users within the provincial boundaries lies at the responsibility of respective local People’s Committees. Although Decree 112 lists some guiding principles of integrated water resources management (IWRM), it does not offer specific criteria or procedures in which water allocation decisions are to be made.

At the national level, the Ministry of Natural Resources and Environment (MONRE), through its Department of Water Resources, has been given a new mandate to oversee cross-sectoral water resource allocation. The National Water Resources Council (NWRC) was established as an interministerial body with representatives from many line ministries to provide advice on water resource policy, as well to take the role as “mediator” on water related conflicts between central ministries or between different levels of local authorities. In reality, much of the technical capacity and resources remains within the Ministry of Agriculture and Rural Development (MARD). Limited capacity and resources hinder MONRE’s ability to effectively undertake its complex responsibilities of coordinating the intersectoral and transboundary nature of water management.

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III.

CASE STUDY METHODOLOGY The key drivers of change in water resources in the context of this case study are: •

•

Overall water demand upstream in the catchment of the Yali Reservoir will increase in the future and intensifying upstream water extraction and use would affect water quality and quantity of the runoff and the inflow into the reservoir. Water stress in the areas around the Yali Reservoir may worsen and may prompt change in the reservoir water management regime from a single-purpose use for hydropower generation to multiple uses for non-hydropower purposes.

To answer the research questions presented in Section I, the team implemented a series of research activities as described below.

I I I . 1 R e vi e w o f E x i s t i n g Le ga l D o c u m e n t s G o v e r n i n g W a t e r M a n a ge m e n t A number of legal documents currently govern general water management in each province and, in particular, the use of the water in the Yali Reservoir. These include a number of decrees (e.g. Decree 112, Decree 120, and Decree 149) and decisions (e.g. Decision 686). Before the economic values of the existing water allocation and water uses were assessed, the existing legal framework guiding the allocation of water across provinces and sectors was reviewed to ascertain the rules and boundaries around current water resource exploitation and management, as well as the future potential for multiple uses. Furthermore, a number of sector master plans (typically covering a period 5 years) and provincial socio-economic development plans (covering a period of 5 or 10 years) have implications on future water demand in the provinces and, consequently, water supply in the Yali Reservoir. These various plans were reviewed in detail to project water demand until 2030.

III.2 Discussion Stakeholders

with

R e l e va n t

National

Authorities

and

The research team held several meetings with a variety of relevant organizations and authorities at both the national and local levels. At the national level, meetings with the Department of Water Resource Management (DWRM, a department within the Ministry of Natural Resources and Environment) and EVN were held. DWRM is responsible for the development of water basin management plan for all water basins of the country. These discussions provided information on the overall legal background of reservoir management, the coordination and responsibilities of different ministries pertaining to the use of water reservoirs and to the setting of priorities for water use allocation, and provided key insights into the current state of hydropower reservoir management in the country.

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Discussions were also held at the provincial and district levels in both Kon Tum and Gia Lai provinces with relevant line agencies and community representatives. These discussions contributed to: •

• • •

Understanding the trends in socio-economic development over the last 5 years and plans for the next 10 to 20 years in the two provinces; Understanding the role of national and local (provincial and district) authorities in reservoir management and their responsibilities in both regulation and in practice; Assessing the extent of the existing constraints and challenges pertaining to multiple uses of the water in the Yali Reservoir; and Assessing whether each province has any formal or informal guidelines regarding water extraction and use (both surface and ground water), land use, or regarding human settlements upstream of the Yali Reservoir, in order to ensure the quantity and quality of the water recharge into the reservoir.

I I I . 3 H o u s e h o l d Su r ve y

With the objective of gaining a detailed understanding of the contribution of water resources to the economic activities and well-being of the local communities living near the Yali Reservoir, a household survey was conducted in two districts that surround almost the entire perimeter of the Yali Reservoir: the Sathay district in Kon Tum province and Chupah district in Gia Lai province. In each district, one commune bordering the reservoir was selected, namely the Yali commune in Sathay district and the Iali commune in Chupah 15.

Three villages in each commune were selected as survey sites. From each commune, two of the villages selected are in close proximity to the reservoir while the third village is relatively farther away from the reservoir. The reason for this selection process was to allow for analysis of the different roles water plays in the households’ economic activities according to their distance from the reservoir. The villages in Chupah district are located close to the dam itself, while the villages in Sathay district are farther away from the dam and closer to the upstream edges of the reservoir (Figure 5).

15

There are communes named “Yali/Iali” in both Sathay and Chupah districts. These communes are both located next to Yali Reservoir. Ialy commune in Chupah district has became “Ialy Town” according to the Government Resolution No 128/NQ-CP dated 23 December 2013 on the establishment of Ialy town. The territory of the town covers entirely the previously Ialy commune in Chupah district.

18

Figure 5: Location of the Surveyed Villages An important concern in the sampling methodology was the presence of multiple ethnic groups in these target areas, each with their own spoken and written languages (other than Vietnamese). Of the three selected villages, two had residents from predominantly minority ethnic groups, while one village’s residents were primarily of the Kinh majority group. A sample of 350 households were selected randomly from the 6 villages. Roughly the same number of households were surveyed in 4 villages and fewer households were surveyed in the two smaller villages in Sathay districts, Cho and Dong Hung. The sample households were selected based on the random selection principle. Table 4: Surveyed Villages

Chupah District (Gia Lai province) No of Total No of Name of surveyed households Village households in village Bloi Village (Bana) 67 208 Van Village (Gialai) 67 163 Ia Ping Village (Kinh) 66 224

Sathay District (Kon Tum province) No of Total No of Name of surveyed households Village households in village Cho Village (Gialai) 41 60 Tum Village (Gialai) 67 98 Dong Hung Village (Kinh) 42 61

Total

Total

200

595

150

219

19

Table 5: Characteristics of Farming in Surveyed Households Whole sample

Chupah district

Sathay district

Percentage of households with farm land

79.7%

70.5%

92.0%

Total land area for farming (ha)

608.1

291.2

316.9

2.2

2.0

2.3

- Home garden

23.1%

23.3%

22.9%

- Upland farm

60.1%

57.3%

62.8%

- Lowland farm

12.8%

19.4%

6.3%

- Riverbank garden

0.0%

0.0%

0.0%

- Forest

0.0%

0.0%

0.0%

- Drawdown area of Yali Reservoir

4.0%

0.0%

8.1%

Average farming area per household (ha) Type of land (% of total land area):

III.4 Projection of Future Water Demand in Gia Lai and Kon T u m P r o vi n c e s Current and future water demand for consumptive use, such as for agriculture, aquaculture, industry, and for domestic use, for each district in Gia Lai and Kon Tum province has been quantified through extensive research of the study area. The team compiled and reviewed existing socio-economic development plans (SEDPs) at the district and province levels over the past 5 years and for the next 10 to 20 years in the two provinces, including plans for new irrigation schemes, reservoir construction, and water supply infrastructure. This information was used to estimate the water demand for each user sector. In addition, the master plans for small hydropower plants in the two provinces were also examined. Based on the SEDPs, literature, and expert information on sectoral water demand and use, the team has designed a simple methodology for projecting future water demand at the provincial level by sector and by district (from a baseline in 2010, to 2015 and 2020 projections). This was accomplished by converting the production targets in the SEDPs for different crops, livestock, industries (including hydropower), and population growth, into the required water quantities needed to meet these targets. Water requirement coefficients were used to estimate the water demand for different types of major crops (including forestry and aquaculture), livestock, and domestic and industrial water uses (Table 6). The resulting water demand projections are presented in Section IV below.

20

Table 6: Water Use Coefficients Used in Demand Projection (2010) 16 Water Use Coefficients Domestic use Rural Dry season Rainy season Urban Dry season Rainy season Industry (concentrated industrial zones) Agriculture Rice Winter-spring (dry season) January - April Summer-autumn (rainy season) May - November Other crops Winter-spring bean Summer-autumn bean Rainy season corn (May August) Winter-spring corn (September - December) Sugarcane (whole year) Pepper (whole year) Coffee Tea Cashew nut Rubber Cassava Livestock Aquaculture Cattle Pigs Poultry

Unit 3

m /person/day

3

m /person/day

3

m /ha/day

3

m /ha/crop

Kon Tum

Gia Lai 0.077 0.060 0.094 0.110 0.100 0.120

0.077 0.060 0.094 0.110 0.100 0.120

20.0

20.0

17,297

18,244

14,597

15,544

2,700

2,700

2,033 41

1,645 41

556

556

835

835

7,121 4,610 4,500 3,750 2,500 50 50

7,788 4,984 4,300 3,600 2,400 50 50

8,000 0.135 0.050 0.026

8,000 0.135 0.050 0.026

3

m /ha/crop

3

m /ha/crop 3 m /animal/day 3 m /animal/day 3 m /animal/day

I I I . 5 A s s e s s m e n t o f W a t e r A va i l a b i l i t y a n d F u t u r e St r e s s i n G i a La i a n d K o n T u m Pr o vi n c e s Spatial and time series data for rainfall, temperature, soil type, land use, and topography were inputted into a distributed hydrological model for the catchment areas. This model was used to assess the geographic distribution of seasonal water availability and to calculate moisture budgets for the sub-catchments of the Sesan/Krong Poko basin in Gia Lai and Kon Tum provinces. These calculations were used to identify specific areas that may experience water 16

Sources: domestic water use in rural area is based on the households survey conducted by MK2; urban domestic use is based on Ministry of Construction, 2011. Submitting paper No. 68/TTr-BXD for the approval of National Urban Development Agenda 2011-2020; agriculture water uses are based on Prof. Dr. Bùi Hiếu, Nguyễn Quang Phi, 2006. Balancing the water use in the Bazan land of central highlands (www.vncold.vn).

21

shortages (Figure 7) 17. The results are expressed using a set of numerical indicators, rather than estimating the actual quantity of surface water runoff and ground water available in each subcatchment.

Figure 6: Sub-catchment of Yali Reservoir within Gia Lai and Kon Tum provinces Natural surface water availability in this analysis is represented by “moisture budget” (S), whereby water availability is the difference between the input - average precipitation rate for each sub-catchment (P) - and the output - average evaporation rate for each sub-catchment (E). The units are in millimeters. (S) = (P) – (E)

Using the moisture budget as an indicator helps explain the relative availability of surface water in different parts of the catchment and the provinces at different time scales, allowing for comparisons within the study area to be made. This indicator can also help identify potential water stress areas where acute or prolonged water deficit conditions could impact agriculture production and the livelihoods of local communities. As there are two distinct seasons in the study area, moisture budget was also assessed for variation between the dry and wet seasons. 17 Data sources: annually and seasonally precipitation GIS layers from INHEM; daily evaporation at Kon Tum and Pleiku stations from 1979 – 2004 from NCHM; Digital Elevation Model (90 x 90 meters), province and district boundaries GIS layers from ICEM databases.

22

The seasonal and annual water demands for consumptive use in each district, estimated through the analysis described above, were also factored into this calculation in order to estimate the level of possible water shortages. This approach can identify areas where water demand exceeds the moisture budget within the district and, thus, where there is reliance on some form of water management intervention such as water storage facilities and/or ground water extraction.

The total consumptive water demand was estimated only at each district level, which is an administrative unit. Therefore, water demand was divided by the surface area of each district in order to estimate water demand per square meter unit (m3/m2). The unit water demand was then summarized by each sub-catchment area, which is a geophysical unit. Consumptive water demand (WD) of each sub-catchment is the sum of water demand in each square meter area within its boundary. Surface water surplus/shortage (S1) was calculated by subtracting consumptive water demand from the moisture budget and is expressed in millimeters. (S1) = (S) – (WD)

The output of this calculation process is a geographically distributed indicator of water availability in the dry and wet seasons for each sub-catchment (Figure 7).

Figure 7: Steps for Calculating Moisture Budget

I I I . 6 S c e n a r i o - B a s e d A n a l ys i s o f T r a d e - O f f s i n W a t e r B e n e f i t s of the Yali Reservoir As indicated earlier, the Yali Reservoir water is currently managed for single sector use hydropower generation. To answer one of the key research questions for the project, a trade-off analysis of hydropower outputs was conducted based on the following alternative water management scenarios (Figure 8): •

Scenario 1 (baseline) – Single use: Reservoir is managed exclusively for hydropower production 23

• •

Scenario 2 – Multiple-use rural: Reservoir water is used to meet 100% of the total water demand for agriculture, domestic and aquaculture uses by local communities living within a 2 km buffer zone around the reservoir Scenario 3 – Multiple-use urban and rural: Reservoir water is used to meet 100% of the total water demand by the local communities within a 2 km buffer zone around the reservoir, as well as to meet the water demand of Kon Tum City in 2010 (Scenario 3a) and in 2030 (Scenario 3b).

Figure 8: Multiple Water Use Scenarios for Yali Reservoir Scenario 1 represents the current pattern of water storage and use in Yali Reservoir. It is based on the annual power generation outputs reported by the company, as well as the operational schedule model. The model assumes a near maximum rate of hydropower production with the amount of water available in the live storage of the reservoir. This scenario also assumes that no water is taken out of the Yali Reservoir for consumptive uses by the local communities and thus serves as the baseline for comparison with the other two scenarios.

In Scenario 2, the 2 km buffer was selected as a way to limit potential consumptive water users to those villages within easy access/walking distance from the Yali Reservoir. It is based on the assumption that users outside the 2 km buffer would require water withdrawal solutions that are technologically more complex and expensive, making it less realistic for them to use the reservoir water directly. Consumptive water demand of these communities living within the 2 km buffer mostly comes from irrigation and domestic use and is currently met through both surface and ground water sources.

24

To illustrate more important trade-offs, Scenario 3 was established by adding the future water demand for Kon Tum City in 2030 to the current water demand by communities living within a 2 km buffer zone around the reservoir. The agriculture, domestic and industrial water demands of Kon Tum City, a provincial capital located immediately upstream of the Yali Reservoir, are more substantial than the demand of the local communities within the 2 km buffer because of the city’s larger population. The water demand of Kon Tum City is far more concentrated geographically compared to rural areas. This means that the economics of a more sophisticated water withdrawal and distribution system (e.g. centralized pumped water supply and storage) could actually be feasible if the water from the Yali Reservoir were to be used to meet the city’s future demand.

We did not attempt to estimate future water demands of the communities in the 2 km buffer zone of the reservoir, as the quantity of water required in rural areas is negligible compared to the demand of Kon Tum City. However, based on district planning information, future demand for Kon Tum City was obtained for the year 2030 using the methodology described earlier. Consumptive water demand for Kon Tum City consists of demand from irrigation, domestic uses, and industry. Although some climate change models predict that precipitation is likely to decrease and evaporation is likely to increase in the dry season by 2030 (ICEM 2012), we did not incorporate climate change factors into this analysis.

A simple water balance model was developed for the Yali Reservoir and its 2 km buffer zone. A MODSIM hydrological model, a generalized river basin Decision Support System and network flow model developed at Colorado State University, was setup to assess the trade-offs in hydropower production under multiple-use scenarios of the Yali Reservoir water. The model used daily inflow, precipitation, and evaporation data to calculate the quantity of water stored in the reservoir that is available for hydropower production 18. The daily outflows through the turbines were computed based on the active volume of the reservoir and electricity production was calculated based on the power generation capacity of the plant at 90% efficiency with different outflows 19. Changes in active storage level directly result in changes in energy production; the less water stored in the reservoir, the less hydropower produced.

The model was calibrated by comparing the computed average annual energy production figures based on Scenario 1 with the annual energy production estimate taken from the MRC hydropower database (same as the reported annual energy production figures from the Ialy Hydropower Company). The computed value is within a 2% difference from the reported values, confirming the level of accuracy of the model.

For Scenarios 2 and 3, the outflow was calculated based on the water available in the reservoir for energy production after subtracting the quantity of water required to meet the demand in the buffer zone and in Kon Tum City. Outputs from the model are daily active storage of the reservoir (in m3) and daily energy production (in MWh). The tradeoffs in hydropower production between the scenarios were analyzed for monthly, dry season, wet season, and annual total productions. For the purpose of this analysis, wet season 18 19

Natural daily inflows to the reservoir are results from MK3 project, processed by Vmod model. Active storage capacity and power generation of the Yali Reservoir are results from MK3 project, processed by SCUPD model.

25

was determined to be the period from May to October and the dry season to be from November to April.

Figure 7 illustrates the steps for calculating the moisture budget, i.e. assessing the magnitude of surface water surplus/shortage, in Kon Tum and Gia Lai provinces. Figure 9 illustrates the structure of hydrological model linking the changes in reservoir storage capacity with energy production for different scenarios.

Precipiation

Reservoir inflow

Active storage in the reservoir

Consumptive water demand

Hydropower production

Evaporation

Figure 9: Water Availability and Energy Production Calculation Process

26

IV.

FINDINGS: IMPORTANCE OF WATER FOR LOCAL LIVELIHOODS In this case study, we assessed the contribution of water to the livelihoods of the local communities. The major categories of water uses considered in the household survey were capture fisheries, agriculture, domestic use (e.g. drinking and washing), aquaculture, and livestock. Table 7: Key Water Uses/Values Assessed for the Case Study What is assessed/important Local Direct Use

Important

- Fisheries - Agriculture - Domestic use (drinking, washing)

Provincial/Sub-basin Assessed

Important

Assessed

















 







- Hydropower



- Aquaculture



- Livestock



20



National Important



Assessed



I V . 1 C o n t r i b u t i o n o f W a t e r t o t h e E c o n o m i c A c t i vi t i e s o f Lo c a l Communities On average, 80% of the economic activities of surveyed households came from agriculture, including livestock, fisheries, aquaculture, and forestry. 70.1% of the household income came from crop agriculture, 4.8% from livestock, and 1.3% from fisheries. Of the non-agriculture activities, the most common activities contributing to the income of the majority of the sampled households were still related to the agriculture sector, such as on-farm wage labor, agriculture services, and rice wine production. All of these economic activities can be considered “waterdependent”, as without water these activities cannot exist.

We found out that there was one peculiarity in the survey sample from Ia Ping village. Only 10.6% of the surveyed households in Ia Ping village (predominantly of the King ethnic majority group) own farming plots whereas nearly 100% of the households in all other surveyed villages own at least one plot of land for farming. Ia Ping village is located nearby the Yali hydropower station and the households there include workers for the Yali hydropower company.

20

Importance of water uses was determined during stakeholder consultation before the survey was designed. The survey covered other water uses that were not necessarily considered “important” by the stakeholders for purpose of comparison.

27

Table 8: Income Portfolio from Economic Activities Whole sample

Economic activity 1. Agriculture Of which, Farm Livestock Fishery

Chupah

1000 VND

Structure

48246.4

79.2%

42904.0

70.1%

46684.8

69.0%

38708.2

70.7%

4.8%

3924.1

5.8%

2299.6

4.2%

1.3%

2165.0

3.2%

109.5

0.2%

2999.4 795.7

%

1000 VND

Structure

52841.5

78.1%

Sathay

%

1000 VND

Structure

43690.5

79.8%

%

Forestry

1635.6

2. Non-agriculture

12730.4

3.0% 20.8%

67.7 14817.3

0.1% 21.9%

2573.2 11059.5

4.7% 20.2%

3. Total

61,204

100%

67,659

100%

54,750

100%

In general, the surveyed households in Sathay district are more specialized in producing industrial cash crops to sell compared to surveyed households in Chupah district, who produce significant amounts of food crops for their own home consumption. The Sathay households generally reported more cash expenditures on agriculture inputs, land rentals, and loan repayments. In the Sathay villages, average household income is slightly lower than in the Chupah villages but the range of income disparity is wider than in the Chupah villages. This is because the average household income is much higher for Dong Hung village (Kinh ethnic group) than for Cho village (Giarai ethnic group). 21

Of the major categories of cash crops, coffee production most heavily relies on irrigation schemes using canals and pumps in both districts (nearly 100% of coffee-growing households using non-rainwater sources for irrigation), followed by rice production in Chupah district (53% of households using non-rainwater sources for irrigation). Other major industrial crops are nearly 100% rainfed, namely cassava, rubber, and cinnamon.

These cash crops contribute to much of the average income of the surveyed households in both districts, however, other crops, namely rice, maize, and vegetables, play an important role in the domestic food supply. On average, the households in Chupah district keep 72% of rice, 34% of maize, and 100% of the vegetables produced for home consumption. On the other hand, households in Sathay district keep 34% of produced rice for home consumption, sell all other crops for cash, and do not report any harvest of vegetables or maize.

I V . 2 G e n e r a l Pa t t e r n s o f W a t e r A c c e s s a n d Us e s

The main sources of water to support the economic activities of these local communities are rainwater, groundwater (through public and private wells), and rivers and streams, as shown in Table 9 and Table 10. Public and private wells are by far the most important source of water for domestic uses in both districts, however, the pattern of water use and access are very different between Chupah (near the dam) and Sathay (near the reservoir edge) districts. 21

Income difference between Kinh village and Giarai village is not universal; in Chupah district, Giarai and Bana ethnic households have higher income level than that of Kinh households.

28

Table 9: Types of Water Sources Used by Surveyed Households (%) Drinking

10

Rain Water /Springs 1

Bathing

9

6

5

78

1

Washing

9

6

5

76

0

Irrigation (incl. river bank garden)

36

30

6

22

4

Fishing

0

n/a

n/a

n/a

9

Livestock watering

8

0

0

50

0

Transportation

0

n/a

n/a

For

River/Stream

Tap Water

Wells

Yali Reservoir

6

80

0

0

Table 10: Sources of Irrigation Water for Crops Crop type

Irrigation sources

Rice

Cassava

Coffee

Cinnamon

Rubber

1 = Reservoir

no

2 = Irrigation canal

no

no

X

no

no

3 = Stream

XX

no

XX

no

no

4 = Rain Water

XX

XXX

no

XXX

XXX

no

no

no

no

5 = Dug well

no

no

XX

No

no

6 = Drilled well

no

no

no

no

no

7 = River

no

no

no

no

no

8 = Mountain water drop

XX

no

no

no

no

9= Others

no

no

No

no

no

Crop type

Irrigation method

Rice

Cassava

Coffee

Cinnamon

Rubber

1= Canal irrigation

X

no

no

No

no

2=Flood irrigation

XX

no

no

no

no

3= Motor pumping

no

no

XXX

no

no

4 = Drawdown agriculture

no

no

no

X

XXX

5= Manual watering

no

no

No

no

no

6= Rain water

XX

XXX

no

XXX

no

Note: X fairly important; XX important; XXX very important

The most notable difference is that the households in Chupah district seem to have more advanced access to water supply and sanitation compared to those living in Sathay. In Chupah, they do not use river, stream, or mountain spring water for domestic uses (Table 11). Conversely, over 20% of the households in Sathay district collect drinking water from small rivers and streams, especially during the dry season. 72.9% of the households in Chupah district have some form of toilet facility at home, while only 41.3% of Sathay households have toilet facilities at home (Table 12).

29

Table 11: Sources of Water Used by Surveyed Households (%) 22

Source of water

Drinking

River Stream/Creek Rain Water Barrel Mountain water drop Tap – public Public open wells Drilled public well Other

0.0% 0.0% 0.0% 0.0% 2.6% 7.1% 86.3% 2.0%

River Stream/Creek Rain Water Barrel Mountain water drop Tap – public Public open well Private open wells Drilled public well Others

0.6% 16.3% 0.0% 3.4% 12.1% 27.6% 38.9% 0.4% 1.4%

Use of water for Washing Bathing Irrigation clothes IN CHUPAH DISTRICT 0.0% 0.0% 0.0% 0.0% 0.0% 39.1% 0.0% 0.0% 4.0% 0.0% 0.0% 3.4% 2.6% 2.6% 4.2% 7.1% 8.1% 0.0% 86.3% 85.3% 38.2% 2.0% 2.0% 11.1% SATHAY DISTRICT 0.0% 0.0% 4.8% 21.4% 21.4% 26.2% 0.0% 0.0% 16.7% 15.0% 14.4% 42.9% 8.9% 8.9% 9.5% 21.3% 21.4% 0.0% 31.5% 31.9% 0.0% 0.3% 0.3% 0.0% 1.4% 1.4% 0.0%

Livestock cleaning 0.0% 13.3% 0.0% 0.0% 0.0% 0.0% 86.7% 0.0%

Table 12: Type of Toilet Facilities Used No of surveyed households Type of toilet

Percentage of total

All

Chupah District

Sathay District

All

Chupah District

Sathay District

Septic tank

63

61

2

15.7

30.2

1.3

Semi-septic tank

37

18

19

10.9

9.0

12.7

Hand dug holes Open land/forest/bush

108

67

41

30.5

33.7

27.3

140

53

87

42.3

26.6

58.0

Other

2

1

1

0.6

0.5

0.7

Total

350

200

150

100

100

100

Household water consumption has been estimated to reach 488 liters in the rainy season and 770 liters in the dry season. As shown in Table 13, the largest share of water use is for livestock and home gardens (67% of water use in the dry season). However, the quantity of water used for this purpose is much higher in Chupah district than in Sathay district. On the other hand, the pattern of water use in Sathay district does not differ very much between the dry and rainy seasons. The reasons for these differences are unclear, however, access to a stable water supply from drilled public wells in Chupah district (See Table 11) appears to be the main factor affecting the patterns of water uses.

22

Top two highest ranked water sources in each category are highlighted in the table.

30

Table 13: Daily Average Water Consumption per Household (liters/household/day) DRY SEASON (liter per day) Water use purpose

Overall of 2 districts

Chupah district

Sathay district

Max

Min

Average

Max

Min

Average

Max

Min

Average

For cooking and drinking

200.0

1.5

30.4

80.0

1.5

7.6

200.0

10.0

53.3

For other domestic use

900.0

5.0

184.0

650.0

30.0

250.3

900.0

5.0

117.7

4,100.0

1.5

512.9

4,100.0

1.5

751.7

1,000.0

10.0

274.1

100.0

1.0

42.8

20.0

1.0

10.5

100.0

50.0

75.0

For cattle or poultry and watering garden around the house Other purposes

RAINY SEASON (litter per day) Overall of 2 districts

For cooking and drinking

For other domestic use For cattle or poultry and watering garden around the house Other purposes

Chupah district

Sathay district

Max

Min

Average

Max

Min

Average

Max

Min

Average

300.0

1.2

33.6

20.0

1.2

6.3

300.0

10.0

60.9

1,270.0

2.0

188.0

605.7

2.0

225.6

1,270.0

5.0

150.5

980.0

0.6

170.7

450.0

0.6

29.5

980.0

10.0

311.9

250.0

1.0

95.3

30.0

1.0

15.5

250.0

100.0

175.0

Households with stable access to water from private wells or taps at home do not need to collect water from the outside as often as those who do not have access to wells or taps at home. The survey responses from the households in Sathay district who collect water from the outside show that they leave home to collect water 12 times every week (almost twice a day) while the answer was 6 times a week in Chupah. In the dry season, people have to go outside more frequently to collect water (Table 14).

The distance and time it takes to collect water are similar between the two districts, ranging from 240 to 350 meters, and taking between 15 to 23 minutes each time. In the dry season, more households have to collect water from the outside, covering an additional 50 meters in distance. This pattern is more pronounced in Sathay district where over 50% of the households collect water from the outside during the dry season.

31

Table 14: Accessibility of Households to Water Sources Outside the House Total Sample

Chupah District

Sathay District

Dry season

Rainy season

Average

Dry season

Rainy season

Average

Dry season

Rainy season

Average

% of households who go outside to collect water

31.1

16.3

23.7

11.9

10.4

11.2

50.3

22.1

36.2

Frequency of water collection (times/week)

10.4

8.0

9.2

6.9

4.8

5.8

13.9

11.2

12.5

Distance for collecting water (meters)

322.3

267.0

294.6

292.1

242.4

267.3

352.4

291.6

322.0

Time for collecting water each time (minutes)

21.9

17.6

19.8

21.0

15.5

18.3

22.9

19.7

21.3

I V . 3 U s e o f t h e Y a l i R e s e r vo i r a n d I t s W a t e r Despite the general water supply shortages during the dry season and the heavy reliance on groundwater, the surveyed villages have established livelihood portfolios that appear to be disconnected from the Yali Reservoir and its drawdown area, as shown in Table 15. Only a fraction of the households in the villages adjacent to the reservoir use the drawdown area for farming (11%, or 16 households out of 150 surveyed in Sathay district) or use pump to extract water for irrigation (7.5%, or 15 households out of 200 surveyed in Chupah district). Table 15: Importance of Yali Reservoir as Perceived by Local Communities Role of Yali Reservoir water for

% households consider as important

Average

Chupah

Sathay

Drinking

0.0%

0.0%

0.0%

Washing clothes

0.2%

0.0%

0.6%

Bathing

0.8%

1.1%

0.6%

Irrigation

3.8%

7.5%

0.0%

Aquaculture

0.2%

0.0%

0.6%

Fishing

9.1%

18.3%

0.0%

Livestock cleaning

0.0%

0.0%

0.0%

Transportation

0.0%

0.0%

0.0%

Tourism

0.0%

0.0%

0.0%

Trade / transporting goods

0.0%

0.0%

0.0%

Disposal of garbage

0.0%

0.0%

0.0%

Disposal of oil engine

0.0%

0.0%

0.0%

Micro-hydropower

0.0%

0.0%

0.0%

Others

0.0%

0.0%

0.0%

One activity that the Yali Reservoir is still considered important for is capture fishing. 14.4% of the surveyed households (29 households) in Chupah and 11.7% of the households (15 households) in Sathay are reportedly involved in fishing activities. Fishing activities can take place in other water bodies and streams besides the Yali Reservoir and therefore not all fishing households reported the Yali Reservoir to be important for the activity. Only 3.3% of the 32

households (or 5 households out of 150) in Sathay district are involved in aquaculture activity and, of those, only 1 operation uses the Yali Reservoir. Other households engaged in aquaculture use either streams or ponds. The importance of the Yali Reservoir through fishing activity signifies a different meaning in the two districts: it means food security for the survey area closer to the dam and the water intake (Chupah) and it means cash income generation for the area located farther away from the dam, within reach of the reservoir (Sathay).

The peak time for fishing activity roughly corresponds to the rainy season: from June to October in Chupah and from May to February in Sathay. Households in Sathay (within the upper reach of the Yali Reservoir) catch more fish in terms of the quantity in the Yali Reservoir, go fishing more frequently each month, and spend longer hours fishing each time compared to households in Chupah (closer to the dam). Although it comprises a relatively small percentage of the total households, the importance of fishing activity to the households engaged cannot be overlooked. Fishing appears to be a high priority livelihood activity for fishing households in Sathay district, with an average of 4 hours per day spent fishing throughout much of the year, from July to February. For these households, an average of 63.4% of the catch is sold for cash income. On the other hand, it appears that the households in Chupah district catch fish primarily for home consumptions and do not catch enough to have a surplus to sell. They also purchase fish for home consumption in addition to what they catch.

33

V.

FINDINGS: POSSIBLE FUTURE WATER COMPETITION AT PROVINCIAL SCALE V . 1 W a t e r D e m a n d i n 20 3 0 Both the quantity and quality of water available in the Yali Reservoir and its vicinity are influenced by water use in the catchment basin upstream, in both Kom Tum and Gia Lai provinces. However, currently these two provinces make water development decisions independently from one another. Furthermore, each provincial authority prepares and adopts socio-economic development plans (SEDPs) for their respective province (annual, 5-year, and 10-year cycles). These are developed without assessing the impacts of the plans on provincial water demand and without the knowledge as to whether or not there is enough water in the sub-basin to support the implementation process. Future water demand at provincial and district levels is heavily driven by the local SEDPs and sectoral master plans.

The review of these planning documents revealed that the aspirations of the sub-national governments towards further economic growth is based on more industrialized production sectors and population growth. There is indication that such growth would cause rapid increases in water demand for the different economic activities and for domestic use in the two provinces.

Based on the SEDPs from the Kon Tum and Gia Lai provinces, water demand estimates were calculated for the year 2010 as the baseline and projections were made for 2020 and 2030 by each water user sector and by district. The results show that, if the provinces and districts implement all the SEDPs and all sector strategies to meet the targets, the total water demand in these provinces would significantly increase by 2030 - by 20% in Gia Lai (Figure 10) and by 78% in Kon Tum (Figure 11). This translates to a total annual consumptive water demand (excluding water demand for hydropower) of 347 million m3 in Kon Tum province and 1,586 million m3 in Gia Lai province. To meet the future demand in the dry season23 alone, 90 million m3 of more water will be needed in Kon Tum province and 89 million m3 more in Gia Lai.

23

Here the dry season refers to the 6 month period between November and April.

34

Million M3/year

700

600

Water Demand in Gia Lai (excluding hydropower) Agriculture, forestry, fishery Service

500

Industry Domestic use

400

300

200

100

0

2010

2030

2010

Rain season

2030 Dry season

Figure 10: Current and Projected Water Demand in Gia Lai Province (excluding hydropower)

Million M3/year

300

250

200

Water Demand in Kon Tum (excluding hydropower) Agriculture, forestry, fishery Service Industry

150

100

50

0 2010

2030

2010

Rain season

2030 Dry season

Figure 11: Current and Projected Water Demand in Kon Tum Province (excluding hydropower)

35

The total annual water inflow into the Yali Reservoir through surface runoff is roughly 8.5 billion m3/year, not including the rainfall directly onto the reservoir surface. Given such a large amount of water flowing into the reservoir from its catchment basin, the projected increase in water demand may appear to be negligible. However, out of this 8.5 billion, dry season inflow is only 1.2 billion, or 14% of the total. Putting this into context, the projected 2030 dry season water demand in Kon Tum province, which is located almost entirely in the upstream catchment basin of the Yali Reservoir, is more than 20% of the dry season inflow into the Yali Reservoir. Whether consumptive use of such a high proportion of water in the upper catchment area would directly affect the water balance of the Yali Reservoir or not is difficult to assess at this stage. More detailed analysis of the water balance in the entire catchment basin, of the pattern of current water storage and withdrawal, and of the connection between surface and groundwater resources are needed.

Water withdrawal statistics at the provincial level shows that the water demand in Kon Tum province is met by 51% from rain, 43% from surface water, and 7% from groundwater. The reliance on surface water sources is significantly higher in Kon Tum than in other provinces in the Central Highlands (Table 16). Given the uncertainty around groundwater availability in the region and the cost of extraction, it is reasonable to assume that much of the future increase in water demand, especially for agriculture, will need to be met through the development of new surface water storage infrastructure or through the improved management of existing reservoir facilities. Table 16: Sources of Water Supply in the Central Highlands 24 Sources of water supply Province

Rain

Surface water

Groundwater

Kon Tum

51%

43%

7%

Gia Lai

64%

33%

3%

Dak Lak

65%

32%

3%

Dak Nong

64%

32%

3%

Lam Dong

59%

37%

5%

V . 2 P a t t e r n o f W a t e r A va i l a b i l i t y, Su r p l u s a n d D e f i c i t Is there enough surface water physically available to meet the future demand? How would increased water use upstream affect the hydropower production capacity of the Yali Reservoir?

The results of the moisture budget calculations show that, on average for the entire year, water availability remains in surplus for all districts in Gia Lai and Kon Tum provinces. Sathay district, adjacent to the Yali Reservoir in Kon Tum province, has the lowest level of water availability, with approximately 100 mm of moisture budget. However, the annual average figure masks the dramatic difference in the water budget between the dry and wet seasons. Figure 12 shows the pattern of the moisture budgets in Kon Tum and Gia Lai provinces in the dry season and wet season in an average year. 25 Much of the region experiences an annual cycle

24

Source: Prof. Dr. Bùi Hiếu, Nguyễn Quang Phi, 2006. Balancing the water use in the Bazan land of central highland (www.vncold.vn)

36

of surplus water availability during the wet season and a deficit during the dry season. The areas highlighted with orange and red colors indicate widespread moisture budget deficit conditions in dry season. This means that the natural rate of evaporation far exceeds the rainfall and can dry out surface water bodies, such as ponds and streams. Severe water stress is indicated in Sathay district and in the surrounding area of the Yali Reservoir. On average, more than 600 mm of moisture deficit occurs in Sathay district during the dry season.

On the other hand, part of K’bang district in Gia Lai has a moisture budget that is slightly in surplus even during the dry season. K’bang district is located in the East Truong Son mountain range, where the rainy season starts earlier than the other districts in the region. K’bang district also has the province’s highest mountain, Kon Ka Kinh, which receives more rainfall than any other part of Gia Lai province.

Figure 12: Water Availability/Moisture Budget in Gia Lai and Kon Tum Provinces Low water availability does not necessarily mean that there are water shortage problems on the ground. Water shortage is a function of water availability and demand. Only when the demand is not sufficiently met by the available supply does the deficit becomes a problem. Thus, it is important to analyze the water availability in light of current and of future water demands in these districts. According to the results of the water demand projections in 2030 by district (see Section IV, above), the total water demand is expected to increase by 78% in Kon Tum and by 20% in Gia Lai, compared to the baseline year of 2010. 25

Historic records show that there is a significant range in rainfall patterns between a wetter-than-average year and a drier year.

37

Figure 13 shows the results of water surplus/deficit calculations based on the baseline water demand (2010). The results indicate that surface water availability would remain in surplus if the overall water demand for an entire year is considered.

Figure 13: Surface Water Surplus/Deficit in Gia Lai and Kon Tum Provinces on Baseline Demand However, similar to water availability, the pattern of consumptive water demand has a seasonal dimension. The timing of high water availability and high water demand generally do not match. Water demand for irrigated agriculture, for example, is concentrated in dry season, while much of the excess surface water during the rainy season drains out of the catchment basin. The map in the upper right corner of Figure 13 indicates that water available in the dry season, as naturally distributed, does not meet the human demand.

The yellow circles in Figure 13 indicate areas where water shortage may be critical in the dry season, i.e. over 500 mm of water deficit. With the natural moisture budget, Sathay district is already severely water stressed in the dry season (map on the left in Figure 14). When the current level of consumptive water demand is factored in, the water deficit area expands to surrounding Dak Ha and Dak To districts (map in the center in Figure 14). The water deficit area expands farther to Kon Tum City when the 2030 water demand is also included (map on the right in Figure 14). The map on the right of Figure 14 highlights the areas that are likely to experience more severe dry season water shortages in the future, taking into account the projected water demand increase by major water user sectors by 2030. Water deficit conditions 38

would worsen significantly in La Pa, Ayun Pa, and Krong Pa districts in Southeastern Gia Lai province.

Figure 14: Dry Season Water Deficit Under Current and Future Water Demand Closing the gap in timing between when water is available and when demand for water is high is an important challenge for decision-makers and local farmers alike. This has been addressed in the Central Highland region of Vietnam through the construction of water storage infrastructure to capture rain and surface water runoff during the wet season and to distribute it during the dry season. Digging wells to pump out groundwater is another common response. Without these human interventions, local communities would face difficulty finding water for their daily needs and agriculture production, as illustrated by the results of the household survey in Chupah and Sathay districts, both located in the high water deficit area marked in Figure 14. The water demand projection exercise found that water demand for Chupah district is predicted to increase by 14% in 2030, while the demand in Sathay district would increase by 91% and by 25% in Kon Tum City. Currently the water demand in these areas is met by water sources other than the Yali Reservoir, the largest water storage facility in the vicinity.

The area within the 2 km buffer of the Yali Reservoir would have a moisture deficit of at least 400 mm in the dry season (see map on the left in Figure 15). This would mean that communities living in this area would need to increase ground water withdrawal, which they already heavily rely on (See “General patterns of water access and uses” above), or would need to develop more capacity for surface water storage in order to meet water demand for their daily domestic 39

consumption and for agriculture. They would face water shortage challenges even though they live nearby one of the biggest reservoirs in Vietnam. If the water demand in these areas continues to increase as projected and water competition between sectoral users and individuals intensifies in dry season, the current use of the Yali Reservoir water solely for hydropower generation may need to be reexamined.

Figure 15: Dry Season Moisture Budget (Left) and Water Deficit (Right)

40

VI.

FINDINGS: TRADE-OFF BETWEEN YALI HYDROPOWER GENERATION AND WATER USE IN SURROUNDING AREAS Given the water stress situation generally found in the vicinity of the Yali Reservoir, it is not inconceivable that, in the future, the Yali Reservoir water needs to be managed to accommodate the demand of multiple user sectors and stakeholders, especially the local communities. If so, what would be the impacts on hydropower production? What would be the trade-offs between the single use and multiple uses of the reservoir water, taking into consideration the seasonal differences in water availability and demand?

To answer these questions, we have conducted a scenario-based analysis on whether the water use by the local communities would negatively affect hydropower production and, if so, by how much 26. We constructed the following three water management scenarios to compare the hydroelectricity outputs (see Section III.6 for the methodology described in more detail):

• •

•

Scenario 1 (baseline) - Reservoir is managed exclusively for hydropower production Scenario 2 - Reservoir water is used to meet 100% of the total water demand for agriculture, domestic and aquaculture uses by local communities living within a 2 km buffer zone around the reservoir Scenario 3 - Reservoir water is used to meet 100% of the total water demand by the local communities within a 2 km buffer zone around the reservoir, and also to meet water demand of Kon Tum City in 2010 (Scenario 3a) and 2030 (Scenario 3b).

VI.1 Scenario 1 Results According to the hydrological modelling, on average, the Yali hydropower dam can produce approximately 3,595 GWh annually for the national energy grid system. In the dry season from November to April, the reservoir does not receive much inflow or rainfall. As a result, the active storage level of the reservoir is constantly at 0 m3, i.e. all water inflow to the reservoir is released out through the turbines to generate electricity without being kept in the reservoir storage. As the rain starts to pick up in May, the reservoir water level slowly rises and reaches its full capacity at 1 billion cubic meters in mid August. The reservoir remains at full storage level until the end of the wet season. Consequently, daily energy production reaches its maximum of 17 GWh in the wet season while daily energy production can be as low as 1 GWh in the dry season. The hydropower dam in the dry season only produces 29% of the energy produced in the wet season. The lowest level of total hydropower production is 66.97 GWh in March while the highest hydropower production is at 535.68G Wh in August. Extracting reservoir water for community uses is expected to have a more significant impact on hydropower production in the dry season, especially in March, than in the wet season.

26

In this analysis, we did not consider the trade-offs in hydropower production from entire cascade of the Sesan dams downstream of the Yali ̶ Sesan 3, Sesan 4, and Sesan 3A, 4A ̶ which receive water from the Yali Reservoir discharge. A scenario analysis of trade-offs between hydropower and irrigation development for the entire Sesan cascade in Cambodia and Vietnam was conducted by MK3 (Räsänen, et al. 2013)

41

VI.2 Scenario 2 Results Based on the results of the household survey conducted by the project, the total water demand to meet the current needs of the local population living within a 2 km buffer of the Yali Reservoir is estimated at 81.3 million m3 per year. Water demand varies between seasons, with the monthly average water demand in the dry season estimated at 9 million m3 and at approximately 5.4 million m3 in the wet season.

The quantity of water currently being used by the local communities is negligible compared to the quantity of water that flows through the Yali Reservoir every year, accounting for only 0.95% of the annual inflow into the reservoir.

Figure 16 shows the differences in power generated monthly and in the active storage capacity of the reservoir between Scenario 1 (baseline) and Scenario 2. For Scenario 2 in the dry season, when the active reservoir storage is maintained at a minimum level, the limited inflow has to satisfy both the hydropower production and local water demand. The result is a relatively small reduction in power production during dry season, with the greatest reduction of -7.54% in March. The negative impact on power generation begins to ease as the rainfall and reservoir inflow increases at the beginning of rainy season in May. By August and September, there is no difference in power generation between Scenarios 1 and 2 because the dam still can operate at its maximum capacity. When the rainfall starts to decrease in November and December, the power production rate is reduced. From December onward, reservoir storage is constantly reduced. Power production decreases further as the months progress to the middle of the dry season in February when there is only a limited amount of water available in the reservoir.

Difference(%)

Jan

Feb

Mar

Apr

May

0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0%

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Wet season

Power generation

Reservoir storage

Figure 16: Difference in Reservoir Storage and Energy Production Between Scenario 1 and Scenario 2 However, in terms of the overall impact on the power production output, Scenario 2 results in no significant negative impact. The annual total power production is only reduced by 1% (or 34.6 GWh). This reduction in power production output translates to an opportunity cost of 9.6 billion VND, approximately 450,000 USD, based on the unit value of electricity sold from the hydropower company to EVN. Most of this opportunity cost would incur in the dry season. 42

VI.3 Scenario 3 Results

Water demand (million m3)

Water demand for the current scenario was determined by 2010 figures and the future water demand was estimated for 2030. The consumptive water uses for communities living in the 2 km buffer zone around the reservoir and in Kon Tum City in 2010 (Scenario 3a) and 2030 (Scenario 3b) are estimated at 165 million m3 and 174.7 million m3, respectively. Similar to Scenario 2, the water demand varies seasonally in this projection, i.e. it is higher in the dry season and lower in the wet season (see Figure 17). The total demand for water is expected to increase by 5.8% between 2010 and 2030. 20 18 16 14 12 10 8 6 4 2 -

Jan

Feb

Mar

Apr

May

Jun

2010

Jul

Aug

Sep

Oct

Nov

Dec

2030

Figure 17: Current and Future Water Demand in the Yali Reservoir Vicinity, Including Kon Tum City

Figure 18 shows the differences in monthly power generation between Scenario 1 (Baseline), and Scenario 3a and Scenario 3b. The results show a similar pattern to those based on Scenario 2, however, the loss in power generation is more severe. The difference in energy production in the wet season is relatively small, with a monthly rate of loss smaller than 4%. There is no difference in energy production in August and September compared to the baseline. The biggest difference in the power generation between Scenario 1 and Scenarios 3a occurs in March when the dry season peaks. The loss is as much as -13.4% in March, a loss of 8.9 GWh. In Scenario 3b, the loss in March is -14.6%. The annual total electricity production would be reduced by 2.04%, or 73.4 GWh, if the future demand in 2030 were to be accommodated. 82% of this loss occurs in the dry season. The total power production loss translates to an opportunity cost of approximately 955,000 USD, based on the unit value of electricity sold from the Iali Hydropower Company (IHPC) to EVN. The difference between Scenario 3a and Scenario 3b seems relatively small. With a water demand increase of 5.8% from 2010 to 2030, the further reduction in annual energy production would be only 0.13%.

43

Difference in energy production (%)

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

0% -2% -4% -6% -8% -10%

Wet season

-12% -14% -16% 2010

2030

Figure 18: Difference in Energy Production Between Scenario 1, and Scenario 3a (2010) and 3b (2030)

V I . 4 Y e a r - T o - Y e a r S e n s i t i vi t y B e t w e e n t h e Sc e n a r i o s As shown earlier (Figure 3 and Figure 4), the study area experiences wide inter-annual variability in rainfall and surface water runoff availability. Based on the scenario analysis, it is clear that allowing the use of reservoir water for other consumptive uses would have some negative impact on the energy production potential of the Yali hydropower plant. However, the magnitude of this impact depends on the amount of consumptive use and the level of seasonal reservoir water storage in a given year, which is difficult to predict. All we are able to confirm from this study is that there is a linear relationship between the amount of water withdrawn for non-hydropower uses and the hydropower production loss, as seen in Figure 19. The larger the amount of water that is extracted from the reservoir, the less electricity that can be produced.

A sensitivity analysis of hydropower outputs to the inter-annual variability in rainfall and different water withdrawal scenarios reveals that the energy production loss would be more significant in a drier-than-average year than in a wetter-than-average year under Scenarios 2 and 3. For instance, in Scenario 2, we can assume that 81.3 million m3 of water is withdrawn from the reservoir to meet the non-hydropower demand. This would result in a production loss of 0.8% in a wet year as compared to a loss of 1.17% in a dry year. This means that the production loss would have a range of 7.19 GWH between a dry year and a wet year. With 174.7 million m3 of water withdrawn from reservoir, Scenario 3 would have a range of energy production loss between a wet year and a dry year that is 2.3 times larger (16.8 GWH). These differences represent the sensitivity of operating the reservoir under the uncertainty of water availability from year to year and the potential risk for decision-makers when balancing multiple uses of the reservoir water in a dry year.

44

Hydropower production loss (GWH)

100 90 80 70 60 50 40 30 20 10 0 0

10

20

30

40

50

60

70

80

90 100 110 120 130 140 150 160 170 180

Water withdrawal for other uses (million m3) Wet Year

Dry Year

Average

Figure 19: Water Withdrawal Versus Hydropower Production Loss in Wet, Dry, and Average Years The Iali Hydropower Company sells the hydroelectricity it generates to Electricity of Vietnam (EVN) at 280 VND/kWh, or approximately 1.3 cents/kWh 27. The energy production loss resulting from the different scenarios has been converted to a loss in the power plant’s revenue. Figure 20 compared the results of the 3 Scenarios as potential tradeoffs in energy production and, consequently, as losses in revenue to the hydropower company.

When the reservoir water is used to meet the water demand of communities living within the 2 km buffer of the reservoir (Scenario 2), the company would have an annual energy production loss of 34.6 GWh, or a loss of 450,000 USD, in sales revenue. If the reservoir water were to be used to also meet the water demand of Kon Tum City (Scenario 3a), the company would lose 68.7 GWh in annual energy production and consequently 895,000 USD. In the long term, if the water in the reservoir needed to meet the water demand of local communities and of Kon Tum City in 2030 (Scenario 3b), the company would lose 73.4 GWh annually, or approximately 1 million USD in revenue.

27

CIEM estimate based on a Vietstock news article of July 2007 (http://vietstock.vn/PrintView.aspx?ArticleID=44902 ) and personal communication with a State Hydropower company in 2010.

45

$1,600,000

60

$1,100,000

40

$600,000

20

$100,000

Revenue loss (US$)

Hydropower loss (GWh)

80

-$400,000

0 Scenario 2

Scenario 3a Energy

Scenario 3b Value loss

Figure 20: Comparison of Loss in Energy Production and Company Revenue Between Scenarios

46

VII.

OPTIMIZING WATER BENEFITS SHARING Given the limited availability of water resources and the increasing demand in both Gia Lai and Kon Tum provinces, local decision-makers will need to find ways to compare different management strategies and will need to determine whether the resulting trade-offs would be acceptable or not, based on their priorities and objectives for water resource management. Shifting the water management objective from a single economic sector development to balancing the demands among multiple user sectors, including securing the livelihoods of local communities under drought conditions, will pose some technical as well as ethical questions. As shown in Section VI, hydropower production losses resulting from Scenarios 2 and 3 appear to be relatively small, in the range of 1 to 3.5%, compared to the total annual hydropower production of the company. Does this finding open up the potential for allocating some reservoir water for local community uses so that the water benefits can be shared?

Comparing the significance of a loss to one stakeholder and a gain to another stakeholder is difficult, even if the unit of comparison is standardized into US dollars. The potential trade-offs described in Section VI represent a loss in revenue to the hydropower company, while the gains are accrued to the local communities. The redistribution of these benefits is invariably an equity issue. To facilitate the discussion further, we evaluated the trade-offs from a water efficiency and productivity28 standpoint, by comparing the economic benefit per cubic meter of water for different types of uses to different users 29.

Table 17 shows the benefits of water per cubic meter as currently derived by the local communities living around the Yali Reservoir. One cubic meters of water is worth between 0.22 and 0.50 USD for crop production and between 0.34 and 1.37 USD for livestock production. Currently these water benefits come from sources other than the Yali Reservoir.

28

Water productivity refers to the value of goods and services produced per unit of water consumed. Here the economic benefits of water use are estimated based on the study area, within 2km buffer of the Yali Reservoir. It does not include the total economic benefit from using water multiple times as it flows through the entire Sesan basin.

29

47

Table 17: Economic Benefits of Water Per m3 for Local Communities

Sathay district

Economic benefit (thousand VND/m3 water) From crops farming From aquaculture From domestic use From lifestock Economic benefit (USD/m3 water) From crops farming From aquaculture From domestic use From lifestock

Chu Pah district Kon Tum town

4.864 4.376 11.592 8.283 6.828 0.243 0.219 0.580 0.414 0.341

4.987 4.456 18.825 8.283 8.431 0.249 0.223 0.941 0.414 0.422

10.050 9.950 19.051 8.283 27.294 0.503 0.498 0.953 0.414 1.365

Total 6.061 5.519 15.627 8.283 10.014 0.303 0.276 0.781 0.414 0.501

Note: 1USD = 20,000 VND Using a very conservative estimate, the amount of the water that is required to generate the hydropower outputs as reported by the Iali Hydropower Company is 7.2 billion m3/year 30. The economic output of hydropower per m3 of water is 131.4 VND, or 0.007 USD, as direct revenue to the Iali Hydropower Company. This is far below the economic benefits that the local communities derive from one cubic meter of water for any single activity. For example, one cubic meter of water for crop production in Sathay and Chupah districts can generate 30 to 70 times higher the economic benefit than one cubic meter of water for hydropower production at the Yali Reservoir. Based on this comparison, the water productivity for local community use is much higher than hydropower company use. The total quantity of water used by local communities is much smaller than the water used by the hydropower plant while the value derived per unit water is much higher, regardless of the type of activity and the market value of the outputs. Table 18: Economic Benefit of Water Per m3 for the Iali Hydro Power Company 31

Water required for hydropower generation -- A 32

Average hydropower production (2003-2012) -- B 33

(million m3/year)

7,200

(million KWh/year)

3,378

Unit price of hydropower sold to EVN -- C

(VND/KWh)

Total sales value of hydropower output -- B x C = D Water economic benefit to the hydropower company – D/A

(million VND/year) (VND/m3)

280 945,840 131.4

30 Based on the installed capacity of the dam, turbine discharge of water at 424m3/second (PECC1 and MRC database), and maximum operating hours possible according to reservoir storage level. 31 Based on MK3 calculations. Strictly speaking, the amount of water used by hydropower plant is not considered as consumptive use. However, in this context, while the water is stored in the reservoir before going through turbines it cannot be withdrawn for other uses. 32 Iali Hydropower Company web site at - http://ialyhpc.vn/pct/slia.html.php 33 CIEM estimate based on a Vietstock news article of July 2007 (http://vietstock.vn/PrintView.aspx?ArticleID=44902 ) and personal communication with a State Hydropower company in 2010.

48

VIII.

CONCLUSIONS The household survey exercise in this study shows that the livelihoods of the communities living around the Yali Reservoir are dominated by income from the farming of cash crops, typically using water for irrigation from rivers and streams that flow into the Yali Reservoir. Their economic activities appear to have evolved nearly independently from the presence of the nearby Yali Reservoir. Other forms of “water-dependent” livelihoods, such as fisheries, and the use of Yali Reservoir in general, are very limited in scope.

Another marked characteristic of these communities is a heavy reliance on ground water for domestic uses, as well as for irrigation and livestock. Ground water appears to be heavily utilized and the level of household consumption of water is quite high throughout the year. Although the water they use is not directly withdrawn from the reservoir itself, it is taken out of the same catchment basin upstream of the reservoir. The pattern of water uses by local communities may have implications on the water balance of the reservoir if the level of water extraction intensifies. Although natural water availability in Kon Tum and Gia Lai provinces appears to be sufficient in meeting the current demand of the population on an annual basis, the area surrounding the Yali Reservoir can be considered a “water stress” region due to severe water deficiency in the dry season. If the projected increase in future water demand to meet socio-economic development targets is taken into consideration, the gap between water demand and availability in the dry season will inevitably worsen. More importantly, the scenario analyses clearly show that multiple uses of the Yali Reservoir water has the potential to bring about considerable benefits to the local communities at little cost to hydropower production. Even when the future water demand of Kon Tum City is included, the projected loss of revenue to the hydropower company is a relatively small percentage of its overall revenue.

However, the analysis also shows that, when considering the entire catchment area, the projected water demand by Kon Tum and Gia Lai provinces upstream of Yali Reservoir may significantly reduce water inflow into the reservoir in the dry season. If the socioeconomic development plans of the two provinces are fully implemented as proposed, the plans may pose water allocation challenges at the provincial level due to increased water demand.

These findings provide some basis for consideration of an alternative water management regime for the Yali Reservoir in an emergency situation. For example, if the local communities experience water shortages under drought conditions, the local authorities and the hydropower company could consider allowing them access to water from the Yali Reservoir. The negative impact on hydropower generation would be relatively small compared to the total electricity production. On the other hand, if the local communities are not able to access sufficient water supply for domestic uses and for economic activities, they will not be able to adapt to climate-induced shocks and their entire livelihoods may take years to recover from the damages.

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There appears to be a misconception that hydropower is the best way to maximize the economic benefits of water and that hydropower needs to be prioritized as a water user. Our analysis, however, illustrates that the economic benefit per unit water can be increased through enabling other types of uses, such as irrigated crop production, while minimizing trade-off in hydropower production.

It is also important to note that the scenario-based analyses and comparison of economic benefits and trade-offs are subject to several large assumptions. More research is needed to address the following information gaps before any actual decisions on reservoir water management are made. These include: •

• •

• •

Technical feasibility and cost of using and distributing the Yali Reservoir water for nonhydropower uses; More accurate estimate of the loss in hydropower production across the entire cascade of Sesan River dams if the water is diverted for other uses; Potential for increasing crop production by local communities through the expansion of their access to irrigation water from the Yali Reservoir during the dry season, including local farmer preferences; Most appropriate ways to maximize the benefit of additional water for the local communities; Better understanding of groundwater availability, recharge rates, and withdrawal potential to meet future demands.

We hope these to be addressed in the near future.

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REFERENCES Bùi Hiếu and Nguyễn Quang Phi, 2006. Balancing the water use in the Bazan land of central highland. (www.vncold.vn) Cao Thi Thu Yen. 2003. Towards sustainability of Vietnam’s large dams: resettlement in hydropower projects. M.Sc. thesis, Department of Infrastructure, Royal Institute of Technology, Stockholm, Sweden. Dao Trong Hung, Dao Thi Viet Nga and Tran Chi Trung. 2004. Study into Resettlement at the Yali Falls Dam, Kontum Province. Institute of Ecology and Biological Resources and International Rivers Network, Hanoi, Vietnam. ICEM (International Centre for Environmental Management). 2012. Climate Change impact and vulnerability assessment for the Lower Mekong Basin. Final report for USAID project Mekong Adaptation and Resilience to Climate Change (ARCC) prepared by ICEM, Ha Noi Vietnam. Kon Tum Statistical Office. 2010. Statistical Yearbook of Gia Lai province in 2009. MRC (Mekong River Commission). 2009. Hydropower Project Database. User's Manual. Basin Development Programme - BDP2. Mekong River Commission, Vientiane, Lao PDR. Räsänen, Timo A., Joffre, Olivier, Someth, Paradis, and Kummu, Matti. 2013. Trade-offs between hydropower and irrigation development and their cumulative hydrological impacts–a case study from Sesan River. Project report: Challenge Program on Water & Food Mekong project MK3 “Optimizing the management of a cascade of reservoirs at the catchment level”. ICEM–International Centre for Environmental Management, Hanoi Vietnam. Wyatt, Andrew B. and Baird, Ian G. 2007. “Transboundary Impact Assessment in the Sesan River Basin: The Case of the Yali Falls Dam”, International Journal of Water Resources Development, 23:3, 427 – 442.

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