ASSESSMENT OF THE ENVIRONMENTAL AND SOCIAL IMPACTS CREATED BY THE VLRC INDUSTRIAL RUBBER PLANTATION AND PROPOSED ENVIROMENTAL AND SOCIAL PLANS

1 Earth Systems Lao Industrial Rubber Plantation of the Viet-Lao Rubber Company, Bachiang District, Champasack Province Assessment of the Environmental and Social Impacts created by the VLRC Industrial Rubber Plantation and Proposed Environmental and Social Plans Final Report 6 May 2007 Prepared by François Obein For Agence Française de Développement 2 3 Table of Contents Executive Summary 5 Introduction 6 Part A – Background and Legislative Framework 6 1. Brief description 6 2. Political background 6 3. Authorisation and Licence Agreement 7 4. Pre-feasibility study 8 5. Feasibility study 9 6. Contribution to the economic development of Champasack Province 9 7. Lao Policy, Legal and Administrative Framework 10 Environmental Protection Law 10 Forestry Law 10 Land Law and land titling legislation 10 PM Decree 192, 7 July 05, on the Compensation and Resettlement of Development Project 10 Labour Law 11 Decree 207/PM on Social security system for enterprise employees 12 Convention on climate change 12 Convention on the protection of the World Cultural and Natural Heritage 13 Other international conventions 13 8. Enforcement and implementation of the laws relative to the Project 13 Environmental Protection Law 13 Compliance with PM Decree 192 13 Labour law and social security Decree 14 Part B – Project Description 15 1. Project location 15 2. Land use in the plantation areas 16 3. Population 16 4. Development of the Plantations 16 Part C – Impacts 18 1. Environmental Impacts 18 Wildlife 18 Erosion and sedimentation 19 Chemicals 20 Waste Management 21 2. Social Impacts 21 Methodology 21 Loss of land and access to land 22 Loss of source of revenues (direct and indirect) 24 Resettlement of Ban Thongchanh 24 Influx of workforce external to the area 24 Monetary compensation provided by VLRC and associated problems 25 4 Part D - Environmental and Social Action Plans 27 1. Environmental Plan 27 Conversion to plantation and loss of habitats for wildlife 27 Erosion and sedimentation 27 Use and storage of chemicals 27 Waste management plan 28 2. Compensation Programme 29 3. VLRC Social Plan 29 Introduction 29 Workforce requirements 29 Current workforce 30 Employment contracts 30 Allocation of 8 ha of plantation per household 31 Complaints about employment at VLRC 31 Recommendations 31 4. Transition and Income Restoration Programmes 32 Transition programme 32 Income restoration programme 32 Conclusion 33 Annexes Annex 1 – Summary table of results of consultations per village. Annex 2 – Data collected at the household level. Annex 3 – Animal production systems. 5 EXECUTIVE SUMMARY Vietnam General Rubber Corporation entered into an Authorisation and Licence Agreement with the Government of Lao PDR on the 18th of January 2005 for the development and the operation, over a period of 50 years, of a 10,000 ha rubber plantation and the establishment and operation of a rubber processing factory in Lao PDR. The area selected for the development of the plantation is the district of Bachiang. 33 villages, totaling a population of 12,644 people, have been directly impacted by the project, having lost all or part of their agricultural lands. In October 2006 8,000 ha out of the 10,000 ha had already been planted and the remaining cleared. A Feasibility Study was undertaken in June and July 2006, reviewing the technical, financial, social and environmental aspects of the project and updating the pre-feasibility study undertaken by GERUCO earlier. Although the Feasibility Study is globally positive, in particular in financial terms, with a net benefit expected for the Vietnamese company, VLRC, of US$0.25B for a 20 year cycle and conservative market price for rubber, the study also raises concerns of a social nature in terms of compensation and employment and calls for an operationalisation of the Authorisation and Licence Agreement. The Consultant noted indeed that major existing Laotian legal instruments such as the Environmental Protection Law of 1999, and the Prime Minister Decree 192 on the Compensation and Resettlement of Development Project, had not been complied with during the development of the project and that negative environmental and social impacts had started to materialize, without plans in place to mitigate them. The environmental impacts observed are those commonly associated with industrial plantation projects, and are related to an easier access to wildlife and associated increased pressure, erosion and sedimentation during the preparation of the plantation, risks of pollution by improper storage and handling of chemicals and poor waste management practices. The major social impacts noted during the consultations undertaken by the Consultant result from the loss of land and access to land (83% of the agricultural lands have been lost) and the loss of source of revenues, associated with the inconsistent compensation approach taken by the Vietnamese company. In order to address the impacts created by the project, the Consultant recommends a number of measures that should be incorporated into an Environmental Management Plan, suggests that a Compensation Programme is put in place with the objective to provide a fair and uniform cash compensation to the households, that the Vietnamese company, VLRC, puts together a Social Plan addressing employment concerns, that a Transition Programme is set up to ensure that the severely affected households are not worse off because of the Project, and that an Income Restoration Programme is developed. ... - tailieumienphi.vn