Involuntary resettlement of people living in areas that are to become dam sites and reservoirs is an unavoidable dimension of most hydro power projects. The resistance of people to being displaced from their homes and farms, supported by a global non-governmental movement, has delayed some dams and led to the cancellation of others. While dams usually necessitate the relocation of people, good resettlement planning and implementation can lead to improvements in their incomes, living standards, and satisfaction levels. A recently completed report by the Operations Evaluation Department (OED) of the World Bank, called Recent experience with involuntary resettlement, found that this was the experience of people displaced by the Shuikou and Yantan dams in China.

In 1993-4 the World Bank conducted a review of 146 Bank-assisted projects under implementation involving involuntary resettlement. Dams accounted for 63% of the people displaced by these projects. The review found major shortcomings in many projects, especially in restoring people to their pre-displacement incomes and living standards: the acid test of successful resettlement.

In 1996-7 the OED undertook an evaluation of eight recently completed projects to determine the resettlement outcomes and assess the performance of the Bank and borrowing governments in resettlement operations associated with large dams. China was selected as one of the six case study countries due to its position as the Bank’s largest borrower and the nation displacing the largest number of people in Bank-assisted projects. Shuikou and Yantan were the only Bank-assisted dams completed since the resettlement review began, so both were included in the OED study.

The OED evaluation team, accompanied by Bank resettlement experts and Chinese resettlement agency staff, visited the Shuikou and Yantan reservoirs. Shuikou was the main focus of the OED study, with Yantan serving as a comparison project to see if the lessons of Shuikou could be generalised. The OED study of Shuikou was significantly enhanced by the annual surveys of displaced people conducted by the East China Investigation and Design Institute (ECIDI) during 1992-7. ECIDI collected village level data for 35 of the 73 villages where people had to be relocated, and conducted annual surveys of 524 households in 17 of the 35 villages.

Resettlement at Shuikou

Shuikou dam is located on the Minjiang river in northern Fujian Province. It is a 101m-high dam with an installed capacity of 1400MW. The reservoir extends for 96km, up to and curving around the city of Nanping. In building it, around 67,200 rural and 20,000 urban people had to be relocated, including 17,200 people in Nanping. Given the narrowness of the river valley, most of these people had to be relocated from the valley floor to newly created terraces and levelled hilltops adjacent to the reservoir. The almost total loss of ploughable land necessitated an income-restoration strategy tailored to the remaining natural resources. Initial resettlement planning aimed primarily for land-based employment: 74% of the jobs to be created were to be based on grain and tree crops. Trees were to be planted sufficiently far ahead of relocation so that they would be yielding crops by the time the resettlers were relocated.

The resettlement operation did not go according to plan. During its early years, attention focused on construction of replacement housing and other com-munity infrastructure including roads, water systems, electricity and health facilities. Only after the construction was well under way did the preparations for resettler jobs reveal significantly less ploughable land than projected, 700ha rather than 2100ha.

This necessitated alternative means of income generation, and the Shuikou Reservoir Resettlement Office (SRRO) rose to the challenge.

SRRO developed four main types of non-farming activities:

•Establishing or expanding township and village enterprises to provide stable factory jobs for resettlers.

•Supporting rural sideline activities, such as raising pigs or ducks, cage fishing, and backyard mushroom growing, which require relatively little land and can be done by individual households.

•Developing service-oriented activities, ranging from setting up small shops to water transport services.

•Relying on migration of workers with special skills, such as theme park construction and insulation installation.

The four types of activities were critical in creating jobs and improving incomes.

The Shuikou area has benefited from investment from Hong Kong and Taiwan, as well as development caused by the project itself, further accelerating income growth among resettlers. Resettler incomes had surpassed pre-move incomes by 1994 (even after adjusting for inflation), just one year after the dam was completed and the reservoir filled. Resettler incomes increased another 44% during the next two years, surpassing income growth of non-displaced people in nearby villages. Resettlers generally have faster growing incomes because they have shifted their income sources to faster growing sectors (industry and services).

Not only did resettler incomes improve, but so did their standard of living. Whereas previously only 8% of their housing was mixed brick and concrete, after relocation 99% of it was. All types of community infrastructure improved, as did household assets. Resettler satisfaction with their improved houses, appliances, services, jobs and lifestyles was correspondingly high. Good resettlement makes satisfied resettlers.

Resettlement at Yantan

The conditions and guiding principles at Yantan were much the same as at Shuikou. Yantan dam is located on the Hongshui river in the mountainous northwest part of Guangxi Autonomous Region. It is a 110m-high dam with an installed capacity of 1210MW, and it also created a long, narrow reservoir. The Yantan area has a harsh topography, so ploughable land is even scarcer than at Shuikou. Yantan is also much further from the coast and its booming economy. Combined with its relative inaccessibility, Yantan did not have the marketing and foreign investment advantages that Shuikou had.

By March 1992 resettlement staff had relocated 7000 households with 43,200 people to areas adjacent to the reservoir. They had much more difficulty arranging jobs for the available labour force of 25,000. By March 1997 jobs had been arranged for 17,000 people. Other displaced people worked in subsistence agriculture and other non-arranged jobs. The main problem was the difficulty in creating township and village enterprises as had been done by SRRO. Rural-based sideline and service-oriented activities helped, but were much more limited than at Shuikou. Therefore 3600 people, including 1000 jobs, were transported to two sugar estates near Guangxi’s own booming coastal centre at Bei Hai. Another 11,500 people, including 3000 jobs, were to be moved to another government owned farm in the interior of Guangxi. Together these moves accounted for more than a third of the people displaced by the dam.

Resettler incomes already exceed pre-move levels. They lag incomes of unaffected people in the same jurisdictions and still fall short of resettlement agency targets. Resettlers have been provided with a food grain ration until new income sources raise overall income to an adequate level. The evaluation team found no evidence of widespread dissatisfaction. Resettlers invariably have better houses and services, and accept that the new farm enterprises promise even better returns in the future. The resettlers transported to the government sugar farms have significantly higher incomes, exceeding even most resettlers at Shuikou.

A development challenge

China’s performance on involuntary resettlement in these two projects is impressive, and exceeded that of the other six projects studied. Chinese authorities caution that domestically financed projects may not achieve the same level of resettlement performance as those assisted by the Bank, and Chinese performance still has room for improvement. Nonetheless, China was the only borrowing government that successfully planned and developed new sources of income for a majority of the resettlers.

Resettlement is approached as a development challenge and funds are used to improve existing lands, make marginal lands fit for agriculture, expand the area of irrigation, and establish or expand enterprises. The Chinese approach could offer lessons for countries that have been looking at resettlement as a burden.

There are several historical factors that contribute to China’s good performance.

•The planning culture: China has extensive experience at planning and creating jobs with the resulting pervasive involvement of local government in the social and economic life of the community.

•The information culture: even at Yantan, where there was no systematic monitoring or evaluation of resettlement, local governments kept extensive financial records of both resettlers and unaffected people.

•The socio-political culture: the ability to foster local economic well-being is the primary criterion for evaluating local leaders, thus wedding their interests to those of local residents. Resettlement officer accountability is a key factor in successful resettlement.

Local government capacity alone is not sufficient for successful resettlement; commitment is also necessary. China had previously had disastrous experiences with reservoir resettlement, especially during the Great Leap Forward and the Cultural Revolution, when insufficient regard was paid to individual welfare. During the 1980s, China instituted a new legal framework for resettlement, including preferential policies for resettlers such as tax credits, allocating hydro power revenues to resettlers, and other subsidies.

Much of the improved performance is due to significantly greater financial resources. As Chen Wangxiang documented (IWP&DC February 1993, pp19-20), per capita resettlement budgets have increased from US$300-400 in the 1950s to US$2000-3000 in the 1990s. At Shuikou the per capita resettlement budget exceeded US$3000, and actual resettlement expenditures may have been as high as US$6000 when contributions from other sources are added.

While some features of the Chinese experience are unique, at least four ingredients can be used elsewhere:

•The idea of approaching resettlement as a development opportunity and marshalling a range of instruments to carry it out.

•An imaginative exploration of micro-opportunities, propelled by the conviction that any but the most hostile environ-ments offer a multitude of options.

•The flexibility to adjust strategies when early ones break down, shifting to other sets of employment opportunities if necessary or stepping back in to restructure failing enterprises.

•Crucial involvement of competent local government, especially elected leaders.

What China does can be done by others. Capacity and commitment need to be developed. China’s focus on implementation, results on the ground, and compliance with its resettlement policies is a model for other countries. The World Bank is now aggressively using lessons learnt from China to improve resettlement planning, training, implementation, and outcomes in other resettlement operations it assists.

The OED report has been provided to the recently established World Commission on Dams to serve as an important input to the Commission’s deliberations in establishing global standards in the development of dams. The fact is that China — which once had serious problems associated with reservoir resettlement — is now a role model, and should be an inspiration to other governments.