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11.1. DEFINITIONS
Report No 678-F-001
METSI CONSULTANTS: SUMMARY OF MAIN FINDINGS FOR PHASE 1 DEVELOPMENT
SECTION 11. MITIGATION AND COMPENSATION
The terms "mitigation" and "compensation" are used here in the conventional sense, mitigation meaning changes
to project design, operations and/or project area management to reduce levels of impact and/or resource losses,
while compensation refers to cash, goods or services offered to replace resources which are unavoidably lost or
activities which are impeded as a result of project development and implementation. Both terms represent cost to
the project but the proportions of each of total project cost and the ways in which the costs are calculated and
apportioned may be quite different.
Both mitigation and compensation require some reference baseline condition for estimation. This is normally
taken to be the defined pre-project situation, and this concept is inherent in the conditions of the Treaty (Section
1.2), which refers to existing standards of living of local communities and the existing quality of the environment.
These standards and qualities, to the extent to which they can be adequately identified and measured, should
logically become the objectives of mitigation and compensation programmes. The costs of implementing the
mitigation measures, including any foregone benefits from the project, represent approximately the mitigation
costs. It follows that an environmentally friendly project would have few if any mitigation costs, e.g., a water
diversion scheme built to minimum degradation standards (Section 5).
The main form of mitigation for the downstream impacts of the LHWP is the release of water in amounts and at
times which minimise the types of biophysical effects and social and economic consequences described in detail
in this report and in the technical report series.
Two additional terms are used in the context of compensation. "Compensation costs" in the Economics Report
(No. 648-F-22) is the shortfall in resource values caused by the project actions, i.e., the changes in downstream
flow regime, which would have to be replaced to bring community welfare back to its supposed pre-project levels.
It refers to the same amounts identified as "resource losses" used in this report. "Compensation delivery costs" is
a term used below to indicate the extra costs that may be incurred to deliver the compensation to the
communities in question. Whereas a particular community living near a particular reach may incur an estimated x
Maloti loss in timber losses due to river flow reductions, it might cost a total of x+y Maloti to deliver an equivalent
amount of wood in compensation to that community, y being the compensation delivery costs brought about by
the setting up of a nursery, growing of seedlings, costs of transportation to the villages, and the costs of providing
long-term extension services. Compensation delivery costs are frequently greater than zero in undeveloped rural
situations where the resources impacted, e.g., fish, trees and plants, occur naturally and their production is
provided as an unpaid service by the natural ecosystem.
Communities living within access of supply outlets might utilise alternatives or substitutes for resources impacted
by the project, e.g., store-bought fish to replace wild caught fish no longer available, in which case the cost of the
substitute represents more accurately the value of the resource loss. However, the great majority of the people
living downstream of the LHWP have no or, at best, difficult and tedious, access to alternative supply sources and
the use of substitutes is not a practical consideration.
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