Hydropower benefit-sharing and resettlement: a conceptual review

Globally, hydropower developers are increasingly expected to share benefits with people living in project-affected 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 benefit-sharing 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 project-affected 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.