Hydropower benefit-sharing and resettlement: A conceptual review

Globally, hydropower developers are increasingly expected to share benefits with people living in projectaffected areas. Nevertheless, hydropower benefit-sharing has not found sufficiently widespread application, and the concept is not yet widely understood. The present paper aims to make the following contributions: First, we clarify the commonalities and differences between benefit-sharing, compensation and related concepts, which refer to processes in which developers transfer resources to project-affected people. We suggest that benefitsharing can be understood as a 'sustainability intervention', i.e. the focus is on making an additional and positive long-term development impact, beyond replacing or marginally improving on lost assets. Further, we propose that benefit-sharing is defined by the transfer of resources and services that are 1) substantively different from those serving as compensation for lost assets; 2) determined via participatory processes with projectaffected people and 3) delivered in the later stages of the timeline from dam planning to operation. Second, we explore some governance challenges on the pathway towards 'good' benefit-sharing, highlighting: (i) that effective participation by project-affected people requires capacity building over time, involving a gradual transfer of control over spending decisions; and (ii) that the appropriate institutional set-up for benefit-sharing may be dependent on the existing capacity of governments in the dam-hosting location. Legally mandated benefit-sharing mechanisms to raise funds may be more appropriate in the context of high existing state capacity, whereas developer-led mechanisms will be required where the existing capacity is low. In practice, a mix of multiple institutional arrangements and benefit-sharing mechanisms is possible and desirable.

Automated summary

Global hydropower developers are increasingly expected to share benefits with people living in project-affected areas, but the concept of benefit-sharing is not widely understood or applied. This paper clarifies the differences between benefit-sharing, compensation, and related concepts, and emphasizes the importance of making a positive long-term development impact beyond simply replacing lost assets. Effective benefit-sharing requires capacity building and participatory processes with project-affected people to transfer resources and services, ultimately leading to governance challenges that can be addressed through appropriate institutional set-ups tailored to the capacity of governments in the dam-hosting location.