Corporate Social Responsibility (CSR) and Benefit Sharing Mechanisms Hydropower Sector Shivcharn S. Dhillion, Ph.D. ENVIRO-DEV, Norway 1 HydroVision India 2012 (Dhillion)
Benefit Sharing and CSR Defining through elaborating on: • How it is framed? • How it is practiced? • What are the lessons learnt? • Based on Case Studies, World Bank Funded and own consultations and literature reviews Sweco Norway and ENVIRO-DEV Consultants 2
Benefit Sharing • Best studied, discourses and analyses – Convention on Biodiversity, CBD (policy, financing and maintenance) • In hydropower: Less Clarity of Benefit Sharing under the umbrella of Corporate Social Responsibility – Especially in line with impact mitigation needs (EIA/SIA/ESIA) 3
Introduction Why Benefit Sharing Right Now ? 4
Evolution in social and environmental Evolution in social and environmental concerns in hydropower development concerns in hydropower development 5
A Shifting Paradigm A Shifting Paradigm • 1990s: concern, agitation, risk aversion • Two decades of understanding these risks and management responses � S � � � Sustainable hydropower ustainable hydropower demands a integrated, demands a integrated, comprehensive approach comprehensive approach – Early consideration of externalities – Investment in environmental and social assets – Innovation in management responses 6
Introduction: Four Drivers of Value Four Drivers of Value Greater focus on energy Energy security in an increasingly Security complex sector More mature understanding of the cost of hydrologic Water Regional variability and the concept Security Coordination of water security Development programs and Climate change natural resource management based on � � The strategic and � � regional coordination � � � � The strategic and development value of development value of Shaped by the imperative of mitigating and adapting to hydropower is expanding hydropower is expanding climate change 7
On the concept of benefit sharing in hydropower Two relevant efforts aiming to improve the social performance of hydropower investments introduced the concept of benefit sharing in the hydropower sector: • International Energy Agency (IEA, 2000) • World Commission on Dams (WCD, 2000). 8
International Energy Agency (2000), Hydropower and the Environment: • For IEA: • “an important issue associated with hydropower projects is that of ensuring social justice through the fair distribution of project costs and benefits among local communities, society at large, project proponents and governments”. 9
International Energy Agency (2000), Hydropower and the Environment: • (Recommendation # 5) suggests: • “sharing benefits with local communities” because local communities should benefit from a project, both in the short term and in the long term. • Community benefits do not necessarily mean monetary benefits at all. Improved access, improved infrastructure, support for health and education programs, legal title to land are all important benefits that may be derived from a hydropower project (IEA, 2000). • International Energy Agency (2000), Hydropower and the Environment: Present Context and Guidelines for Future Action, IEA Technical Report, Annex III-Volume I: Summary and Recommendations, Paris, France. 10
World Commission on Dams • Report of the World Commission on Dams, as part of their seven strategic priorities (Strategic Priority # 5) suggests: • “Recognizing entitlements and sharing benefits”. • … “appropriate mechanisms should be introduced to ensure equitable distribution of development opportunities generated by the dam” (WCD, 2000). 11
Social risk issues in hydropower (not exhaustive) Means of Living and • Livelihoods Well Being • Indigenous populations • Resettlement • Cultural Heritage & Traditions 12
Livelihoods 13
Indigenous populations �������������������������������� ������������������ Indigenous Groups Issues ILO 169 14
Resettlement Gumu Bazaar 15
Cultural Heritage Campanar Sant Romà church, Catalunya, Espana 16 ICH - Social Risk Management Course 2010
Social Risks and their Management � Stakeholder Responses � Disagreements � Time Constrains � Image 17
Social license to operate • … addressing the demands and expectations that emerge from neighborhoods, environmental groups and community members, and other elements of the surrounding civil society. • Failure to properly understand these expectations can generate a diversity of risks (reputational damage, project delays or abandonment, security problems, etc.). 18
Social License to Operate (social viability) Controlling these risks requires the need to obtain a Social License to Operate (SLO) 19
Stakeholder's perspectives: communities • Communities • The Issuance of a SLO primarily requires that community concerns have been taken into account at some extent 20
CSR – Corporate Social Responsibility 21
Why do firms engage in (”expensive”) CSR? What are the consequences of CSR? Some evidence on strategic behavior by firms – increased CSR � improved financial performance • (Peter & Mullen, 2009) 22
Stakeholders perspectives: Promoter • Promoter / Developer Short term vs Long term profits Inter-temporal optimization Profit sharing Why? Firms are ”also” interested in producing social goods + reputation 23
A Synthesis of International Best Practice Benefit Sharing 24
Approaches and Methodology Benefit Sharing and Hydropower Development (current study) Benefit Sharing and Hydropower Development (current study) 1. Theoretical Assessment - Discussion notes (mechanisms and Approaches). Based on literature and concept notes from IFIs (i) Note 1 – A working definition of enhancing and sharing development benefits. (ii) Benefit Sharing mechanisms (iii) Governance options (iv) Economic Assessment of Enhancing Benefits (v) Social and Development Benefits 2. Elaboration of methodology for selecting best case studies . Ranking of potential case studies (6 focal case studies + 4 extended desk studies + specific project reports). 3. In depth studies of focal case studies , including field visits 4. Best Practice and Lessons Learned . Overall synthesis, comparison as well as redefining the concept and the mechanisms. 25
Approaches and Methodology Methodology for selecting best case studies . Cases Tripartite Community Geographic Range of Likelihood of Ease of logistics partnerships involvement scale mechanisms transferability for field work (synergies of mechanisms and obtaining across and lessons information for mechanisms) this study Case 1 Case 2 ........ 26
Approaches and Methodology Methodology for selecting best case studies . Original typology of Benefit Sharing mechanisms adapted from a World Bank Concept Note 27
Approaches and Methodology Methodology for selecting best case studies – Partnerships 28 ICH - Social Risk Management Course 2010
Approaches and Methodology Selected Case Studies Focal Case Studies (field + stakeholder workshops) • Lesotho Highlands Water Project – Transboundary, basinwide and multipurpose, multiple dams and large scale (Lesotho/RSA) • Khimti 1 HPP – Hydropower, medium scale (Nepal) • Angostura HPP – Hydropower, large scale (Costa Rica) • San Carlos HPP – Hydropower, large scale (Colombia) • Glomma & Laagen Basin – Whole basin study with many dams (Norway) • Nam Theun 2 HPP – Mainly hydropower, large scale (Lao PDR) Extended Case Studies (desk) • Bujagali HPP – Mainly hydropower, large scale (Uganda) • High Aswan Dam – Mulipurpose, very large scale (Egypt) • A’Vuong HPP – Mainly hydropower, large scale (Vietnam) • Columbia Basin – Transboundary, basin scale, multiple dams (USA/Can) 29
Main Findings From Case Studies Khimti 1 HPP - Details Khimti I Hydropower Project (Khimti I HEP) is a 60 MW run-of-river hydropower plant on the Khimti Khola (tributary), Central Nepal. With a gross head of 684 meters (a drop from 1,270 to 586 meters above sea level) it has an annual production of 350 GWh. It is located in the Dolakha district, about 100 km east of Kathmandu, in the middle hills of Nepal. Khimti Khola is a tributary of Tamakoshi (Tama River). 30
Main Findings From Case Studies Khimti 1 HPP – Main Benefit Sharing findings Case Typology Aspect of Typology Beneficiary Group and Process followed and Study (mechanism) social/environment outcomes component Khimti 1 Institutions, Establishing local Helped expanding rural Allowing neutral organizations Policies and institutions. electrification for the local (NGOs) to facilitate and farming communities. Capacity Establishing public manage (partly) Building private partnerships. implementation programme Creation of user (with KREC). Community (non- groups (e.g. the initiated needs led to monetary) KREC cooperative). community level institutions (user groups) which facilitated Partnership with benefit sharing interventions. UNDP. Significant number of household having electricity through a stage-wise process over time. The degree of acceptance is very high. 31
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