Are We Ready for a Trans-boundary Compensation Mechanism for Water Benefit-sharing?

By Han Bianqi, MK31 Fellow


The Greater Mekong Forum on Water Food and Energy provides a great chance for participants to exchange their knowledge and views on international rivers in the region. At the most recent Forum in Bangkok, in November 2016, my attention was caught by a presentation titled “From MRC (Mekong River Commission) to LMC (Lancang-Mekong Cooperation) towards a healthy economy and healthy river in Greater Mekong: the core transboundary compensative mechanism for water benefit-sharing.” During the forum, when Professor He Daming from Yunnan University proposed a transboundary compensation mechanism for water benefit-sharing after introducing the Chinese-initiated Lancang-Mekong Cooperation, launched in 2016, participants around my table first understood that after building eight dams on the upper Lancang-Mekong mainstream, China finally admitted those dams caused negative impacts to downstream states and would like to offer certain compensation under the LMC. However, when the presentation reached its end and a short discussion followed, several pairs of eyes widened when they found out that what was being proposed instead was that downstream states might get a bill under the transboundary compensation mechanism if they expected river flow augmentation from the upstream dams during times of drought, or that they had to offer to pay China if they asked for no more dams to be built on the upstream.

Riparian Impacts

For years, Chinese researchers and hydropower companies have claimed that the dams on the upper Lancang-Mekong River caused no substantial impact to the river. Research done by third parties, however, reaches a different conclusion. A study just published in 2017 led by researchers from Aalto University in Finland revealed that the hydropower projects in China have caused major river flow changes to the Mekong River since 2011.[1] An analysis of river flows in Northern Thailand indicates that the upstream hydropower operations considerably increased dry season flows and decreased wet season flows. The study furthermore shows that the dry season flows have also become increasingly variable. Additionally, the NGO International Rivers, once published a similar observation that the change of river flows would affect farmers’ plantation on river banks in dry season and reduce floodplain area and nutrients deposited on the floodplain.[2] Water temperature has also been altered by the operation of dams on the Lancang River, while fish reproduction and migration will be changed due to water temperature fluctuations. The whole cascade of dams may trap more than 90 per cent of the suspended sediment load coming from China[3].

With these issues raised, I wonder how the advocates of the transboundary compensation mechanism will address these impacts in their proposal. Have they already had an accurate calculation of the value of sediment, fish species and farmers’ loss and are ready to pay compensation in return? Surely, the Lancang-Mekong Cooperation would not establish a mechanism only to make the downstream states pay compensation to upstream states.

Mekong-Lancang River at dusk (Credit: voa)

Mekong-Lancang River at dusk (Credit: voa)

The Compensation Conversation

The proposal on transboundary compensation mechanism would change the rules of conservation and utilization of international rivers fundamentally. In the past century, the water in international rivers was never recognized as the sole property of upstream states, even though the water originated from it. Without human intervention, the water of international rivers just temporally runs within the territory of a riparian state and will keep flowing to its own end. The water released by the upstream states is the water that should flow to the downstream if there are no dams, so the downstream states would never have the need to pay compensation.

Dams on the Mekong have been a source of tension between China and countries downstream (Credit: Daniel Berthold)

Dams on the Mekong have been a source of tension between China and countries downstream (Credit: Daniel Berthold)

Compensation for not exploiting water and natural resources in order to conserve ecological systems has no international precedent. A similar case might only be found in the context of fighting against greenhouse gases. Ten years ago, after discovering 846 million barrels of oil reserve under the Yasuni National Park, a UNESCO biosphere reserve in the Amazon rainforest, the government of Ecuador proposed a pioneering conservation plan to keep the “oil in the soil” if the international community would like to pay $3.6 billion compensation.[4] The international community, however, did not pay the compensation suggested by Ecuador. So, the initiative to keep oil in the soil of Yasuni National Park unfortunately did not succeed. One commented that such “a proposal to change history” was a “big idea for a small country.”[5]

Now a Chinese scholar is proposing something similar. After gaining the capacity to control the Mekong River like a tap, we need to carefully and critically consider big ideas to change the pattern of cooperation among Mekong states.

Under the Lancang-Mekong Initiative, a comprehensive approach of cooperation covering transportation, economy, agriculture, water resources and poverty reduction has been promoted. Widening the scope of cooperation certainly is good for downstream states which might expect to develop their economy piggybacking on the expansion of Chinese investment. But a comprehensive approach is not always an integrated approach. By decoupling water resources from other sectors[6], the cooperation on water resources is easily dwarfed by more attractive sectors like industry, agriculture and energy, although these sectors are essentially all linked to the use of water to a certain degree.[7] Therefore, it is vital that the Lancang-Mekong Initiative remains integrated and cooperative. The sustainability of water resources should be taken into consideration in all the current five fields of cooperation.


[1] Aalto University, Study shows China hydropower operations considerably increase dry season flows and decrease wet season flows, 6 January 2017,

[2] International Rivers, Understanding the Impacts of Chinese Upper Mekong Dams, December 2014,

[3] Id.

[4] The Guardian, Oil Drilling Underway Beneath Ecuador’s Yasuni National Park, 26 October 2016,

[5] Jilles Mast, Yasuni-ITT: The Politics of Maintaining Oil in the Soil and Money Grow on Trees, 9 May 2014.

[6] In China, the cooperation on water resources between Langchang River and Mekong River is administrated by Ministry of Water Resources,, 2017.

[7] Middleton, C. and Allouche, J. (2016) “Watershed or Powershed? A critical hydropolitics of the ‘Lancang-Mekong Cooperation Framework’” The International Spectator, 51:3, 100-117, DOI: 10.1080/03932729.2016.1209385