A number of programmes and policies in Laos are promoting the internal resettlement of mostly indigenous ethnic minorities from remote highlands to lowland areas and along roads. Various justifications are given for this internal resettlement: eradication of opium cultivation, security concerns, access and service delivery, cultural integration and nation building, and the reduction of swidden agriculture. There is compelling evidence that it is having a devastating impact on local livelihoods and cultures, and that international aid agencies are playing important but varied and sometimes conflicting roles with regard to internal resettlement in Laos. While some international aid agencies claim that they are willing to support internal resettlement if it is ‘voluntary’, it is not easy to separate voluntary from involuntary resettlement in the Lao context. Both state and non‐state players often find it convenient to discursively frame non‐villager initiated resettlement as ‘voluntary’.

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Sustained criticism in the 1980s and 1990s resulted in a decline of World Bank funding for large hydropower dams. The Bank subsequently participated in the World Commission on Dams process, which set higher global standards for hydropower dams. In 2005, the World Bank agreed to support the Nam Theun 2 Hydropower Project (NT2) in Laos, and in 2010 NT2 began diverting water from the Theun River into the Xe Bang Fai River. The World Bank has promoted NT2 as a successful model of poverty alleviation, justifying support for other large dams. Assessing actual impacts and associated mitigation and compensation is thus timely. This article presents qualitative field research from early 2014 about the downstream impacts of NT2 in the Xe Bang Fai River basin and a description and analysis of efforts to compensate for losses. The authors consider the situation with the assistance of baseline data collected in 2001, before project approval. Findings suggest that NT2 has had a significant negative impact, including on the livelihoods of large numbers of people dependent on the river's resources. Many of those impacted view compensation and mitigation efforts as having failed to adequately address their losses. Further independent investigation and documentation are needed.

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