Local benefit sharing in hydropower projects can be defined as the systematic efforts by project proponents to sustainably benefit local communities affected by hydropower investments. Benefit sharing is a promising approach for implementing hydropower projects sustainably, and is emerging as a supplement to the requirements of compensation and mitigation. Benefit sharing can provide equitable development, sustainability, and smooth project implementation for hydropower development. For benefit sharing mechanisms to work, the key enabling conditions are government policies, the legal and regulatory framework, corporate social responsibility strategies of development companies, and the capacity of local communities. Stakeholder engagement is essential in initiating and designing benefit sharing programs. Monetary benefit sharing and non-monetary mechanisms are commonly used in benefit sharing in hydropower projects. Monetary benefit sharing means sharing part of the monetary flows generated by the operation of the hydropower projects with local communities. Commonly used monetary benefit sharing mechanisms include:  Direct payments/revenue sharing  Preferential electricity rates  Payments for environmental or ecosystem services  A community development fund  Equity sharing Non-monetary benefit sharing refers to the approaches adopted by the project entity for ensuring that local communities benefit from construction and operation of a hydropower project in non-monetary terms. A hydropower project can share benefits with local communities in non-monetary terms, such as improved infrastructure, support for health and education programs, improved access to fisheries and forests, and legal title to land. Examples of non-monetary benefit sharing mechanisms include:  Modifying project design and operation  Watershed management  Associated infrastructure and public service investment  Employment creation To ensure that local communities share the social and economic benefits of hydropower projects, benefit sharing arrangements need to be carefully planned and designed as part of the project. A well-designed benefit sharing program should (a) have clear objectives; (b) carefully define the target population; (d) include benefit sharing mechanisms; and (d) identify responsible agencies, as well as implementation arrangements. Generally, the design of a benefit sharing program needs to be consistent with other studies and assessments, such as social and environmental impact assessments, socioeconomic studies in the project areas, and a resettlement action plan. It normally includes the following steps:  Understanding the impacts of a hydropower project on local communities  Analyzing the legal and regulatory framework and local development context vi  Carrying out consultations with stakeholders  Designing the objectives of benefit sharing programs  Determining the beneficiaries of benefit sharing programs  Designing the types and mechanisms of benefit sharing  Exploring benefit sharing arrangements through multiple entry points  Setting up the implementation arrangements of benefit sharing programs Some of the Bank’s safeguard policies require sharing benefits with project-affected people. For instance, the policy on Indigenous People (OP 4.10) requires that “the borrower includes in the IPP arrangements to enable the Indigenous Peoples to share equitably in the benefits” when a project involves “the commercial development of natural resources on land or territories that Indigenous Peoples traditionally owned.” The policy on Involuntary Resettlement (OP 4.12) requires that “resettlement activities should be conceived and executed as sustainable development programs, providing sufficient investment resources to enable the persons displaced by the project to share in project benefits” when involuntary resettlement is unavoidable. The policy on Environmental Assessment (OP 4.01) requires that EA takes into account the natural environment and social aspects, and “explores opportunities for environmental enhancement.” This guide provides some advice to task teams on how to design effective local benefit sharing mechanisms in hydropower projects. Benefit sharing arrangements would ensure that local communities have the opportunity to benefit directly from hydropower development, which will make hydropower projects more environmentally and socially sustainable. As a long-term arrangement, benefit sharing can facilitate local development. It can respond to unexpected environmental circumstances in the operation of dams to ensure local communities receive adequate benefits. Arrangements for the equitable sharing of benefits can offer scope for local communities and all other stakeholders to avoid conflicts and focus on creating synergies to maximize local development opportunities

A Guide for Local Benefit Sharing in Hydropower Projects

Resource Key: 6GH9BXUE

Document Type: Report

Creator:

Author:

  • Chaogang Wang

Creators Name: {mb_resource_zotero_creatorsname}

Place: Washington D.C.

Institution: World Bank

Date: June 2012

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Local benefit sharing in hydropower projects can be defined as the systematic efforts by project proponents to sustainably benefit local communities affected by hydropower investments. Benefit sharing is a promising approach for implementing hydropower projects sustainably, and is emerging as a supplement to the requirements of compensation and mitigation. Benefit sharing can provide equitable development, sustainability, and smooth project implementation for hydropower development. For benefit sharing mechanisms to work, the key enabling conditions are government policies, the legal and regulatory framework, corporate social responsibility strategies of development companies, and the capacity of local communities. Stakeholder engagement is essential in initiating and designing benefit sharing programs. Monetary benefit sharing and non-monetary mechanisms are commonly used in benefit sharing in hydropower projects. Monetary benefit sharing means sharing part of the monetary flows generated by the operation of the hydropower projects with local communities. Commonly used monetary benefit sharing mechanisms include:  Direct payments/revenue sharing  Preferential electricity rates  Payments for environmental or ecosystem services  A community development fund  Equity sharing Non-monetary benefit sharing refers to the approaches adopted by the project entity for ensuring that local communities benefit from construction and operation of a hydropower project in non-monetary terms. A hydropower project can share benefits with local communities in non-monetary terms, such as improved infrastructure, support for health and education programs, improved access to fisheries and forests, and legal title to land. Examples of non-monetary benefit sharing mechanisms include:  Modifying project design and operation  Watershed management  Associated infrastructure and public service investment  Employment creation To ensure that local communities share the social and economic benefits of hydropower projects, benefit sharing arrangements need to be carefully planned and designed as part of the project. A well-designed benefit sharing program should (a) have clear objectives; (b) carefully define the target population; (d) include benefit sharing mechanisms; and (d) identify responsible agencies, as well as implementation arrangements. Generally, the design of a benefit sharing program needs to be consistent with other studies and assessments, such as social and environmental impact assessments, socioeconomic studies in the project areas, and a resettlement action plan. It normally includes the following steps:  Understanding the impacts of a hydropower project on local communities  Analyzing the legal and regulatory framework and local development context vi  Carrying out consultations with stakeholders  Designing the objectives of benefit sharing programs  Determining the beneficiaries of benefit sharing programs  Designing the types and mechanisms of benefit sharing  Exploring benefit sharing arrangements through multiple entry points  Setting up the implementation arrangements of benefit sharing programs Some of the Bank’s safeguard policies require sharing benefits with project-affected people. For instance, the policy on Indigenous People (OP 4.10) requires that “the borrower includes in the IPP arrangements to enable the Indigenous Peoples to share equitably in the benefits” when a project involves “the commercial development of natural resources on land or territories that Indigenous Peoples traditionally owned.” The policy on Involuntary Resettlement (OP 4.12) requires that “resettlement activities should be conceived and executed as sustainable development programs, providing sufficient investment resources to enable the persons displaced by the project to share in project benefits” when involuntary resettlement is unavoidable. The policy on Environmental Assessment (OP 4.01) requires that EA takes into account the natural environment and social aspects, and “explores opportunities for environmental enhancement.” This guide provides some advice to task teams on how to design effective local benefit sharing mechanisms in hydropower projects. Benefit sharing arrangements would ensure that local communities have the opportunity to benefit directly from hydropower development, which will make hydropower projects more environmentally and socially sustainable. As a long-term arrangement, benefit sharing can facilitate local development. It can respond to unexpected environmental circumstances in the operation of dams to ensure local communities receive adequate benefits. Arrangements for the equitable sharing of benefits can offer scope for local communities and all other stakeholders to avoid conflicts and focus on creating synergies to maximize local development opportunities

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