PREAMBLE

Environmental and social welfare considerations were embedded in the founding Treaty, between the governments of the Kingdom of Lesotho and the Republic of South Africa, for Phase 1 of the Lesotho Highlands Water Project (LHWP). These commitments are quoted in the Box below. The relevant Treaty articles were given effect through the commissioning of environmental impact assessments (EIAs), which led to the implementation of Environmental Action Plans (EAPs) for both Phases 1A and 1B. The Phase 1 EAPs have, to date, applied only to the dam basins and upstream catchment areas.

In the mid-1990s, attention turned to the downstream environment, as global environmental awareness turned the spotlight on the mitigation and/or management of downstream impacts of large dams.

The Treaty, although it was written at a time when the overriding concern was upstream impacts, compels the Project Authorities to account for all areas and communities affected by the Project.

The complexities of riverine systems, as revealed in the studies undertaken, make the formulation of a clear statement of policy intent and commitment an essential precursor to the implementation of a management system for downstream impacted areas.

In-stream Flow Requirements Studies (IFR)

LHDA in 1997 contracted consultants to undertake an in-stream flow assessment of the Project, a process that was completed in March 2002. The study was ground breaking with respect to the importance attached to and level of study of socio-economic aspects of flow modifications. A key aspect of the study was the estimation of potential resource losses to communities due to reduced flows, and estimation of the value of these losses (in local prices), such as fish, wild vegetables and wood, and of mitigation of impacts, such as increased public and animal health risks.

Since increased downstream releases, above the Treaty mandated minima, for IFR purposes would have impacts on the project yield, hence on project benefits, an additional study was commissioned to model the impacts of IFR flows on project economics.

Policy Development Process

A vital component of policy development is the involvement of affected parties in the process. In addition to a pilot survey and consultation process in 16 downstream villages, undertaken by the consultants during April and May 2002, LHDA’s public liaison group is continuing to consult with potentially affected downstream communities. LHDA also held a conference or pitso with the 24 Principal Chiefs of Lesotho, who are key public representatives, to inform them about the policy development process and engage their participation. A workshop was held with them on the IFR Public Information Documentation. A further meeting/workshop was held to present the Draft IFR Policy. A further workshop will be held to present the approved Policy and Procedures. The study reports have been released for public inspection and the Draft Policy posted on websites and lodged in libraries for public comment.

The Project Authorities, in determining appropriate river condition targets, allocating water for the IFR and establishing a sound approach to mitigation and compensation, have had to:

Ø strike a balance between the water resources development goals and ecosystem conservation and protection goals;

Ø assess the trade-offs between river condition, community needs, and the implications of different release options in terms of financial losses and lost economic benefits to the two countries;

Ø decide, in the context of the Treaty, what are “reasonable measures” for maintaining the welfare and livelihoods of affected persons and communities, and for ensuring the protection of the quality of the environment.

Policy Implementation

The implementation of the Policy will be guided by detailed Procedures and Action Plans, which will provide the operating framework for Phase 1 dams.

DEFINITIONS OF KEY CONCEPTS

Capping levels for lowflows are the limits placed on lowflow rates for a particular flow scenario or release regime. For management purposes, this means that lowflows up to the upper capping level would be released downstream, while any amount above that would be stored in the dams and used for transfer to South Africa. Capping levels are a more flexible way of accounting for natural flow variability than specifying a single lowflow rate for any particular season or set of conditions. The lower limit is the 99^th percentile, that is, flow rates below this occur only 1% of the time.

Compensation is the restitution of losses sustained because of Project effects. Compensation in the downstream context refers to cash, goods and services offered and distributed to replace or compensate for assets or resources lost, and/or activities/resources which are impeded sufficiently to affect their productivity or efficacy, due to project development and implementation.

Compensation Bands are broad categories of compensation correlated to the severity of impacts (e.g. high for the villages in the proximal reaches and low for villages in the distal reaches) calculated on a per household basis, with the number of households fixed at the number identified by the IFR study approval (because LHDA is compensating for the estimated loss of resources).

DRIFT (Downstream Response to Imposed Flow Transformations) methodology, uses the present-day flow regime of the river as a starting point, then holistically describes the biophysical and social consequences of several possible future flow regimes, or flow scenarios, each of them comprising a different combination of flow reductions.

Flow regime refers to the seasonal pattern and quantities of flow in a river, whether natural or modified.

Flow scenarios are projections of possible flow regimes downstream of the control structures. The scenarios are ‘constructed’ from different combinations of components of the natural or modified flow regimes of each river, also taking limitations of release mechanisms from the dams into account.

Hydrological year class is one of the five classes categorising the hydrological record into Extra wet (Plus 2), Wet (Plus 1), Average, Dry (Minus 1) and Extra dry (Minus 2) in which the ensuing hydrological year is predicted to fall.

Instream flow requirements (IFR) describe a modified flow regime for a river that is linked to a description of the condition or health of the river that this flow regime achieves. In relation to water resource development projects, the IFR refers to the amount, quality and timing of water released through or over dams and associated structures to meet riverine ecosystem and social needs in the reaches downstream thereof.

The flow regime of a river consists of several different kinds of flow, each of which contributes to the overall maintenance of the aquatic and riparian ecosystem:

Ø Low flows occur when the river is not in flood. They are larger and more varied in the wet season than in the dry season. They create different conditions in different seasons, dictating the occurrence and densities of aquatic species.

Ø Freshets are a component of low flows scheduled either to complement the required magnitude of low flows, in a form of small floods, or introduced to increase variability of flow within the system.

Ø Small floods occur several times within a year. They stimulate spawning in fish, flush out poor quality water, cleanse the riverbed and sort the river stones by size, thereby creating different kinds of habitat. They trigger and synchronize activities as varied as upstream migrations of fish and germination of seedlings on riverbanks.

Ø Large floods occur less than once a year. They trigger the same responses as small floods, but, in addition, they provide the scouring flows that shape the river channel. They move and cleanse cobbles and boulders on the riverbed, and deposit silt, nutrients, eggs and seeds on floodplains. They inundate backwaters, secondary channels and floodplains, and trigger bursts of growth in many species. They also recharge soil moisture levels in the banks, enabling seedlings of riparian trees to grow.

Ø Flow variability on a daily, seasonal or annual basis, acts as a form of natural disturbance. Fluctuations between low flows and small and large floods change conditions through each day and season, creating mosaics of areas inundated and exposed for different lengths of time. The more diverse the physical conditions, the higher the biodiversity and the greater the resilience of the ecosystem to disturbance.

IFR encompasses the entire riverine system, including the requirements of the aquatic ecosystem occurring within the river channel banks, the riparian zone and floodplain.

Other terms applied to the IFR concept are river or ecological reserve and environmental flow requirements. The term IFR has been retained in this policy to maintain consistency with all the documentation on this matter in the LHWP, from consultants’ reports to correspondence records.

Impoundment means any in-channel storage of relatively large volumes of water behind control structures, such as a dam or weir.

Local Legal Entity (LLE): A legally constituted body, comprising representatives of communities and nominated by them, established to act as a vehicle for managing community trust funds.

Mean annual runoff (MAR) refers to the long-term average annual water flow from a watershed; it is a measure of the average amount of water available as natural river flow.

Mitigation means changes in project design, operations and or/project area management in order to reduce levels of impact and/or resource losses.

Off-set compensation, is a form of compensation where a requested benefit may be delivered which does not constitute direct replacement of a loss, eg. village infrastructure is requested as compensation for loss of wood resources.

Population at risk (PAR) is the human population, which is deemed to be at risk of being impacted by flow changes in rivers downstream of the LHWP impoundments.

Project is ‘the Project’ or the Lesotho Highlands Water Project.

Reach (as in river reach) is a stretch of river that has consistent or more or less homogenous characteristics throughout, in terms of geomorphology, hydrology and aquatic biota.

Proximal Reach is the river reach close to the dam structure, where the level of degradation is more than 40% of the present river condition, where present implies condition prior to impoundment.

Distal Reach is the river reach further away from the dam structure, where the level of degradation is equal to, or less than 40% of the present river condition, where present implies condition prior to impoundment.

Release regime, similar to flow regime, refers to the seasonal pattern and quantities of water released from an impoundment into downstream rivers.

Resources, at their most generic meaning, are anything that is useful to people, that can be utilized to generate economic wealth or sustain life. Hence, a mineral is an economic resource, while a wild vegetable is a survival resource to Highlands' people. In environmental terms, a distinction is made between renewable resources--plants and animals, solar energy--and non-renewable resources--minerals, land area. Non-renewable resources are resources of which there is a finite supply on the planet; they do not replenish themselves like renewable resources.

Riparian zone/area [inhabiting or situated on the bank of a river] is that part of the riverine ecosystem which occupies the banks of the river channel and areas immediately adjacent to them, where the influence of river flow/water flowing in the river is felt. It is usually distinguished by an assemblage of plant species, which is different from that in nearby terrestrial habitats, often dominated by woody plants.

River condition classification is a way of describing the condition of a river. Such classification systems generally comprise a set of five or six qualitative descriptions of the state of the riverine ecosystem, from pristine, natural conditions through progressive (or regressive) changes until the ecosystem is so transformed as to be non-functional. The river condition classification developed by the LHDA for the Lesotho Highlands Water Project affected rivers is loosely related to the river condition classification used by the South African Department of Water Affairs and Forestry for the management of rivers, but differs in the number of condition states defined and in the way in which it is used. The Project affected rivers classification adopted in this policy was also developed using the DRIFT database. Another major difference is that there is no government policy context for the application of the river condition classification in Lesotho, so that LHDA has developed an approach to its application which will have to be refined and tested in relation to broader policy developments in Lesotho.

System Supply Capability: The amount of water computed using the LHDA WRMS model that determines the capability of the system then build to supply for a specific year, all Project required water uses, without compromising the medium-term (5 to 10 years) reliability, taking into account the current status of the reservoir levels.

System Demands: The quantities of water demand from the system for IFR releases provided by the IFR Policy and water delivery to RSA, which includes hydropower.

System Surplus: The amount of water remaining after allocations have been made to IFR releases and water delivery to RSA.

System Deficit: A shortfall in water allocated to RSA demand as determined from time to time during the operations of the system.

Surplus water (in the storage system) is water present in the dams that exceeds the Nominal Annual Yield of the system as indicated by the system yield model on a monthly basis and as defined in Article 7(6) of the Treaty.

1. PURPOSE & OBJECTIVES

1.1 Purpose

1.1.1 The purpose of the IFR Policy of the Lesotho Highlands Development Authority is to provide for the management of flow releases for the maintenance of predetermined conditions for riverine ecosystems downstream of Phase 1 impoundments. It will also provide for the mitigation of, and compensation for, flow related impacts on resources, ecosystems and communities in downstream areas, and other secondary or indirect losses.

1.1.2 This means that the Policy will

Ø Specify the core components of a system to manage water releases from Phase 1 impoundment structures which will

· guarantee that some water is reserved for riverine ecosystems and human communities downstream of control structures;

· ensure that reserved water is made available to the ecosystems at appropriate times, including responses to any emergency environmental events.

Ø Lay down a framework for the determination of resource losses and other downstream impacts, and for the delivery of compensation to affected downstream communities for such losses and impacts.

1.2 Objectives

1.2.1 To provide for the maintenance of specific target river conditions;

1.2.2 To provide for an appropriate release regime from each impoundment, namely, Katse and Mohale Dams, Muela Tailpond and Matsoku Weir, to achieve the above objective;

1.2.3 To establish principles of mitigation of impacts and compensation for losses;

1.2.4 To establish the basis for the assessment of resource and social losses and levels of and procedures for compensation;

1.2.5 To set out the objectives of a monitoring programme which will support the IFR release regime, compensation and mitigation policy; and

1.2.6 To provide for an appropriate IFR management system, which allows for the systematic and periodic review and audit of performance.

2. PRINCIPLES

2.1 In compliance with Treaty commitments, management of the downstream environment shall, as for upstream areas of the project, aim to maintain and where feasible improve the welfare of project-affected people; and it will aim to protect the quality of the environment as far as is practically and reasonably feasible.

2.2 Releases of water from the dams shall be optimised to meet environmental criteria and community user requirements, except to the extent that emergencies may override such considerations, in which case community concerns will be addressed through the established Emergency Preparedness Programme.

2.3 There are uncertainties about river ecosystem behaviour in response to flow modifications. In this context, due diligence is adopted as the over-riding criterion to be implemented in the form of adaptive management, which will aim progressively to reduce the levels of uncertainty, by monitoring and assessing actual conditions against expected and desired conditions (‘expected’, as predicted by the DRIFT database, and ‘desired’ condition as per the river condition targets).

2.4 Ecological management of the downstream rivers affected by the LHWP shall be undertaken in relation to the river condition classification, which has been developed for Lesotho Highlands Water Project affected rivers. [This classification is set out in Table 4.1] LHDA’s management objective for affected Project rivers is to target the highest river condition class or state that is feasible, bearing in mind that the release of water out of the LHWP structures is not the only determinant of river condition. The general goal, where feasible, is to prevent affected rivers from degrading beyond a “moderately modified” state. The specific objective is not to transform, degrade or modify any given river reach by more than two states from its baseline state (see Table 4.2).

2.5 Adaptive management to address the impacts of reduced downstream flows will provide for mitigation and compensation by payment for resource losses and increased risks, and flow release adjustments, in accordance with clearly articulated procedures. Payment for compensation of resource losses and health aspects will primarily take the form of cash payments to community trust accounts, which will empower communities to decide amongst a range of developmental programmes and projects, as they deem appropriate. Individual claims will be considered on their merits. Adaptive management will also include for the review of impacts other than those involving resource losses. Appropriate responses will be made.

2.6 Due emphasis shall be placed on the welfare, safety, involvement, and the needs of the Population at Risk. Downstream communities shall be kept aware of the possible effects of dam operation. When floods are to be expected, an early warning system in downstream areas shall be activated.

2.7 A participatory management style shall be adopted in downstream areas. Management shall be transparent, so that all and ongoing decisions will be inclusive of community concerns and can be scrutinized by affected persons, communities and interested parties.

2.8 When water yield in the Phase 1 storage system cannot meet all allocations, the order of priority in allocations shall be:

Ø IFR releases;

Ø water delivery;

Ø power generation, which is tied to the water delivery.

2.9 When water yield in the Phase 1 storage system exceeds all initial allocations, the Surplus water shall first be allocated to increasing IFR releases to that designated for the next highest hydrological year class, and second between all possible uses, namely additional hydropower, water delivery or some other use, unless compelling circumstances dictate otherwise.

2.10 The resources identified in the IFR study as being impacted by reduced river flows shall form a basis for mitigation and compensation planning and payments, so that compensation shall take account of, and be guided by, the IFR studies and further consultations with affected communities.

2.11 Recognising that losses of non-direct use value (i.e. intangibles) have arisen from the Project, LHDA will study the extent of these losses (in the context of other Project losses and benefits) and identify offset and other options for further development as was done in the case of the Maluti Minnow.

2.12 All costs relating to the implementation of the IFR Policy and its mitigation and compensation shall be regarded as Project costs and shall be borne by the Project.

2.13 IFR Procedures will be subject to on-going management review and revision.

3. SCOPE OF THE POLICY

3.1 Ambit of policy

3.1.1 The Policy addresses the release of water from Phase 1 dams for ecosystem and socio-economic requirements in downstream river reaches (see 3.3).

3.1.2 The Policy addresses mitigation of impacts and compensation for resource losses that can be directly linked to changes in flow patterns in rivers downstream of LHWP structures.

3.1.3 The Policy will cover changes in downstream river reaches that can be shown to have been caused or exacerbated by the Project.

3.2 Temporal scope

3.2.1 This Policy shall take effect from the date of its approval. Calculation of compensation, however, will make allowance for the differences in impoundment date of the three structures.

3.2.2 The policy shall apply for an indefinite period.

3.2.3 The IFR Policy will be subject to an annual review by independent experts and an independent audit at least once every five years. The IFR Policy may be changed only after independent audit, review and consultation with stakeholders.

3.2.4 The bulk allocation in the IFR Policy will not be changed within 3 years of Policy approval, unless there are compelling reasons that emerge from review, and provided that stakeholders are consulted.

3.3 Spatial scope

3.3.1 This policy shall apply to all rivers in Lesotho affected by the Project downstream of dams. It will focus on the affected river reaches and associated location of the Population at Risk (PAR) along the Malibamats’o, Matsoku and Senqunyane rivers below Katse Dam, Matsoku Weir and Mohale Dam, respectively, and the Senqu River to its junction with the border of the Republic of South Africa. The Nqoe River below Muela Tailpond to its confluence with the Hololo River, and the Hololo River to its confluence with the Caledon River are also included**.

3.3.2 The applicable river reaches and their approximate lengths are described in Table 4.2.

3.3.3 The primary PAR is located within a corridor about 10 km wide, with the river as its centre line and the lesser of the 5km or the watershed divisions as its outer boundaries. However, communities residing outside this corridor who can demonstrate losses, may be considered for compensation on an ad hoc basis.

** It should be noted that Muela and the Nqoe River were not included in the IFR studies, because of the Treaty provision (Article 7:10) to allow the natural river flow to pass through the dam into the downstream river.

Table 4.1 Definitions of the River Condition Classes using key indicators/ descriptors.

Indicator

State 1

State 2

State 3

State 4

State 5

Pristine

Near natural

Moderately modified

Significantly modified

Severely modified

GEOMORPHOLOGY/HYDRAULICS

Instream Habitat Diversity

Full natural diversity

5-15% loss in diversity

15-40% loss in diversity

40-70% loss in diversity

>70% loss in diversity

Pool depth

Natural

5-15% loss in depth

15-40% loss in depth

40-70% loss in depth

>70% loss in depth

Bank erosion or collapse

<5% of bank area

5-10% of bank area

10-20% of bank area

20-40% of bank area

>40% of bank area

WATER QUALITY

Mean monthly temperature¹

Natural

< 3^OC

< 4^OC

< 5^OC

< 6^OC

pH annual range* change

Natural

< 0.5 pH units

< 1.0 pH units

< 1.5 pH units

< 2 pH units

Rapid Biological Assessment Score

Total Score: Unknown

Total Score: ≥ 95

Total Score: 94-70

Total Score: 69-45

Total Score: < 45

VEGETATION

Zone definition²

All present and distinct

Loss of ≤ 2 zones and/or zone definition less distinct

Loss of ≤ 3 zones and/or zone definition indistinct

No definition

Species composition of riparian vegetation

Full complement

Change in ratios of indigenous species

Dominated by hardy indigenous species and/or exotic species

Dominated by exotics and/or weedy indigenous species

Dominated by one or two species, often > 80% exotics OR no plants

Structure

Full array of growth forms

5-10% reduction in growth forms

11-25% reduction in growth forms

26-50% reduction in growth forms

> 50% reduction in growth forms

FISH

Community composition

Full complement of indigenous species in natural proportions. No exotic species.

Full complement of indigenous species, plus very low numbers of exotic species

Noticeable shifts in natural community structure, moderate numbers of exotic species

Very few natural fish and/or exotic fish dominate

Very few fish dominated by exotic species

¹After South African DWAF Guidelines (1999); values given represent degrees Centigrade change from the natural mean monthly temperature

²Zones include: Aquatic Zone, Lower Wetbank Zone, Upper Wetbank Zone, Lower Dynamic Zone, Tree/Shrub Zone, Back Dynamic Zone (Report LHDA 648-F-16)

* pH Annual Range refers to the change in pH units, not levels.

5. BULK INSTREAM FLOW REQUIREMENTS

5.1 IFR maintenance flows

5.1.1 LHDA shall aim for the delivery of the percentage Mean Annual Runoff (MAR) at the IFR Site proximal to each structure, as specified below in the second column of Table 5.1.

5.1.2 To achieve this, LHDA shall release, from each control structure, long-term average flows amounting to the %MAR shown in the third column of Table 5.1. [The instream flow at each IFR Site comprises a combination of control structure releases and runoff from the catchment between the control structure and the IFR Site.]

5.1.3 Releases shall be distributed in the optimal distribution of base flows and floods as determined by DRIFT, taking account of wet and dry cycles. LHDA is modifying the dam operating model to include IFR releases, and the detailed schedule of IFR releases shall be issued annually, immediately before the onset of the rainy season.

5.1.4 When water yield in the Phase 1 storage system exceeds all initial allocations, the surplus water shall first be allocated to increasing IFR releases to that designated for the next highest hydrological year class, and second between all possible uses, namely hydropower, water delivery or some other use, unless compelling circumstances dictate otherwise.

Table 5.1 Bulk IFR allocation at proximal IFR Sites and associated dam releases

Structure/ IFR Site	Initial bulk IFR at IFR site		Dam release		Treaty Minimum Dam Releases
Structure/ IFR Site	(%MAR)	(MCM)	(%MAR)	(MCM)	(%MAR)	(MCM)
Matsoku/ 1	40.0	34.8	39.7*	34.4	Not stipulated*	Not stipulated*
Katse/ 2	15.3	88.1	12.1**	66.9	2.8	15.7
Mohale/ 7	22.0	78.1	10.3***	31.9	3.1	9.5
‘Muela/11	100	4.8	100****	4.8	100	4.8

* Although the Treaty did not stipulate a release from Matsoku, the feasibility study base flow of 50 litres per second (1.8% MAR) may be interpreted as equivalent to a Treaty minimum, for comparative purposes.

** Flood releases subject to the results of test releases from low-level outlets. The difference between 15.3% at the IFR Site and the 12.1% dam release is supplied by the intervening catchment.

*** IFR Site 7 is 28 km downstream of the Mohale Dam wall; the difference between 22% and 10.3% is made up by the catchment over that distance.

****’Muela was not included in the IFR study, as the Treaty (article 7(10)) specified 100% MAR to be released downstream. The amount to be released downstream (4.8MCM ) is the mean annual flow in the Nqoe River (LHDA Operations and Maintenance Group (2002) Flow Releases Downstream of Katse and Muela Reservoirs. LHDA Report, Maseru, April 2002).

6. ADAPTIVE MANAGEMENT SYSTEM

6.1 DRIFT-based adaptive management

6.1.1 LHDA shall implement an adaptive management system for IFR management and related matters, using the DRIFT database as a primary management tool.

6.2 Public participation

6.2.1 The management system shall include mechanisms for the active involvement of stakeholders in decision-making processes, including planning, implementation, monitoring and evaluation of projects and programmes that affect their lives.

6.3 Monitoring

6.3.1 LHDA shall implement a comprehensive, long-term IFR monitoring programme.

6.4 Evaluation, Review and Audit

6.4.1 LHDA shall develop detailed procedures for evaluation, audit and review of the performance of the IFR Policy at least every five (5) years. An external audit shall be carried out and the procedures shall make provision for public inspection and involvement.

6.4.2 LHDA shall record its responses to the recommendations of the audits and shall produce a response report that will be posted for public information.

6.5 Records

6.5.1 LHDA shall keep detailed records of all matters pertaining to the implementation of this Policy, including

Ø Records of the quantity and quality of releases from all structures;

Ø Periodicity and content of all community consultation processes;

Ø Annual environmental, resource and socio-economic monitoring results and analyses;

Ø Annual Reports, Specialist Reviews and Audits.

6.6 Disclosure

6.6.1 LHDA shall continue the public disclosure and involvement processes, started during development of the Policy, for the full period of implementation of the Policy.

7. DOWNSTREAM COMPENSATION AND MITIGATION

7.1 Purpose

7.1.1 The purpose is to mitigate environmental impacts and to effect compensation to the downstream communities who suffer as a result of changed river flows.

7.2 Legal Obligations

7.2.1 The basis for mitigation and compensation is the Treaty of the Lesotho Highlands Water Project [1986: Articles 7 (18) and 15], as highlighted in the Preamble.

7.3 Objectives

7.3.1 To provide mechanisms for determining community losses, identifying mitigation and compensation packages and establishing effective and timely delivery mechanisms;

7.3.2 To involve the Population at Risk (affected downstream communities) in the decision- making process about mitigation and compensation ;

7.4 Duration

7.4.1 Application of compensation and/or mitigation shall be considered to be in relation to estimated permanent losses to be suffered.

7.5 Eligibility for Compensation

7.5.1 The Policy regarding mitigation and compensation shall be applied differentially to downstream communities affected by flow reductions, as consistent with the differing levels of impact predicted by the IFR studies. Communities residing in river reaches subject to resource losses above Minimum Degradation levels of impact, due to the IFR releases mandated in this Policy, with high predictability of experiencing detectable levels of impacts and/or resource losses, shall be eligible to receive compensation immediately. This applies to IFR reaches 1, 2, 3, 7 and 8, the so-called proximal reaches.

7.5.2 To facilitate the uniformity of application of compensation in these reaches, compensation will be paid in accordance with the resource loss values estimated in the IFR studies. This means that compensation payments will be highest in the river reaches closest to the dams, and will diminish downstream.

7.5.3 In reaches predicted to experience Minimum Degradation levels of impact, marginal levels of impact are expected. The LHDA requires that the occurrence of detectable impacts and resource losses be verified by monitoring, before compensation will be applied to communities residing along these river reaches. This applies to reaches 4, 5 and 6 on the Senqu River, the so-called distal reaches.

7.6 Application of Compensation

7.6.1 It should be noted that the approach to downstream compensation is different from that utilised for upstream compensation. Upstream, compensation deals with a relatively small number of people with relatively large losses, whose magnitude and link to project activities can be determined with precision, e.g., size of house, size of field or garden, number of trees. In addition, since the assets will be flooded, the loss is usually total. In contrast, downstream compensation involves a very large number of people with relatively small losses whose magnitude and link to river flows cannot be determined precisely and for which the loss is likely to be partial, but permanent. Thus the approach to downstream compensation is based on using the best available estimates for communities rather than specific measurements for individuals.

7.6.2 Affected communities will receive compensation for losses of the following riverine resources, including:

Ø Firewood and construction timber;

Ø Fish resources;

Ø Wild vegetables and medicinal plant resources;

Ø Animal forage;

7.6.3 Compensation for resource losses will be advised to the communities on the basis of the estimates on annual resource loss values provided by the IFR studies.

7.6.4 Communities will also receive compensation in mitigation of public and animal health impacts.

7.7 Compensation Payment Principles

7.7.1 The primary form of compensation will be cash payments by LHDA into Local Legal Entity accounts, to be used by the communities for their own resource replacement and/or other economic or community development programs.

7.7.2 The period for which compensation will be payable will be defined as perpetuity, starting from effective date of this policy.

7.7.3 The amount payable will be calculated as the estimated annual loss per river reach (as estimated in the IFR study), phased in over 8 years (as per the predictions of the IFR study), at a discount rate of 8% over 50-year period. Where the impoundment preceded the date of effectiveness of this Policy, compensation shall be phased in over a shorter period, to take account of this. The per reach total will be divided amongst communities on the basis of the number of households per Local Legal Entity and the location of communities relative to the river.

7.7.4 The method of payment will comprise two payments: the first will be for the period from the date of effectiveness of this policy to 2013; the second and final payment will comprise the balance of compensation owing (as calculated for the present value over 50 years), taking into consideration the findings of the 10-year review of Policy implementation (see Review (clause 7.10)).

7.7.5 Compensation will be paid into the Local Legal Entity accounts as soon as the account has been established according to the laws of Lesotho.

7.7.6 Technical Assistance: Cash compensation payments will be complemented by Technical Assistance to be made available to the communities to assist them in developing their own resource replacement programmes, should they so desire. The technical assistance will enable the communities to make informed choices as to different options, to benefit from design advice and to manage the construction process and to ensure that the community gets value for money.

7.7.7 Notwithstanding the availability of technical assistance, communities would be free to develop other mitigation measures, such as the development of small business or crop/livestock diversification.

7.7.8 Resource Replacement Programs: If a significant number of villages request, as an alternative, specific resource replacement programmes, LHDA will consider the establishment of broad-based programmes, subject to the proviso that:

a) they do not exceed community compensation;

b) the programmes be economically and technically feasible and

c) that estimated delivery costs do not exceed 25% of the proposed resource replacement programme costs.

LHDA shall pay these delivery costs.

7.7.9 Mitigation of Public and Animal Health Impacts: Monies designated for the mitigation of public and animal health impacts, as estimated in the IFR study, will be divided proportionately in a similar manner amongst communities, and will be paid out as part of the payments to community trust accounts.

7.7.10 Compensation in reaches subject to Minimum Degradation: LHDA operates with an annual budget that provides for contingencies which would over expenditure of this nature, should the need arise. The funds will be determined based on the estimated possible losses as in the IFR Study, calculated as in 7.7.3 above. Disbursement will be made following assessment of actual losses and will be implemented through the community based structure formed according to the Local Government process.

7.8 Compensation/Mitigation for impacts other than Resource Losses

LHDA will include appropriate procedures within the Adaptive Management System to monitor for any impacts other than resource losses, and will take appropriate action in accordance with best practice.

7.9 Compensation Plan

7.9.1 LHDA shall draw up detailed plan for implementation of compensation, which shall include the affected villages roster (for proximal reaches), schedules of community training and mobilisation into formal groups, establishment of Local Legal Entity accounts and payment of compensation into the accounts. In establishing these details, LHDA will take account of its experience with upstream payment of communal compensation into Local Legal Entities Accounts.

7.9.2 LHDA will establish a Downstream Compensation Dedicated Task Team (DCDTT) that will be responsible for all aspects of the downstream compensation process including the following:

7.9.2.1 To ensure compliance with the Treaty obligations and focus pro-actively in the compensation process.

7.9.2.2 Initiate consultation with affected communities and local government representatives on the subject of IFR compensation.

7.9.2.3 The consultations will be undertaken according to a systematic plan, starting with the proximal reaches (2, 1, 3, 7 and 8, in that order).

7.9.3 The purpose of the first round of consultation will be to establish contact, provide IFR study findings, discuss potential losses and determine options for the use of their compensation.

7.9.4 The second round of consultation will be to communicate the concept of compensation bands, introduce corporate or formal groups and provide training for establishment of formal groups in preparation for payment of communal cash compensation.

7.10 Review

7.10.1 Any affected community will have the right to request a review of their compensation allocation, based on losses that may have arisen that were not taken into account in the original allocation.

7.10.2 A formal audit of compensation allocations will be made at the end of the first ten-year period of policy implementation. Such review will involve community consultations and will take account of the results of LHDA’s biophysical and socio-economic monitoring. Should the review determine that any community’s losses and compensation had been underestimated, the balance owing of the community’s compensation award will be appropriately adjusted.

7.11 Dispute procedure

7.11.1 Any community aggrieved by any aspect of compensation shall be entitled to register a dispute, as outlined in the existing LHDA Conflict Resolution Policy Procedures, drawn within the framework of the LHWP Treaty and LHDA Order.

ABBREVIATIONS


DRIFT	Downstream Response to Imposed Flow Transformations
DCDTT	Downstream Compensation Dedicated Task Team
DTASU	Downstream Technical Assistance Service Unit
GOL	Government of Lesotho
EIA	Environmental Impact Assessment
EAP	Environmental Action Plan
IFR	Instream Flow Requirements
IFA	Instream Flow Assessment
IHAS	Instream Habitat Assessment Score
LHDA	Lesotho Highlands Development Authority
LHWC	Lesotho Highlands Water Commission
LHWP	Lesotho Highlands Water Project
LLE	Local Legal Entity
MAR	Mean Annual Runoff
PAR	Population at Risk
RBA	Rapid Biological Assessment
RSA	(Government of the) Republic of South Africa
TCTA	Trans-Caledon Tunnel Authority
WQ	Water quality
648 and 678	Contract 648 and Contract 678

Appendix 1

IFR POLICY EDITION 1 CORRIGENDA

KINGDOM OF LESOTHO

LESOTHO HIGHLANDS DEVELOPMENT AUTHORITY

LESOTHO HIGHLANDS WATER PROJECT

PHASE 1

CORRIGENDA

FOR INSTREAM FLOW REQUIREMENTS POLICY EDITION 1 of 13 December 2002

(Incorporated in and appended to the IFR Policy Edition 2)

30 July 2003

Approved IFR POLICY

Corrigenda 30 July 2003 – Incorporating WB comments

General

Insert ‘footer’ on every page.

IFR Policy Edition 2 of 30 July 2003

Preamble page ii line 23

Delete ‘in’

Section 1.1.1

Insert stop in line 3 after ‘impoundments’, and rewrite remainder to read

‘It will also provide for the mitigation of, and compensation for, flow related impacts on resources, ecosystems and communities in downstream areas, and other secondary or indirect losses.’

Section 1.1.2

Add to second bullet Comma after ‘times’ and ‘including responses to any emergency environmental events.’

Section 2.11

Add section 2.11 to read as follows: “Recognising that losses of non-direct use value (i.e. intangibles) have arisen from the Project, LHDA will study the extent of these losses (in the context of other Project losses and benefits) and identify offset and other options for further development as was done in the case of the Maluti Minnow”. Then change the numbering of the following sections to 2.12 and 2.13.

Section 3.2.1

Add the following sentence after the existing sentence:

‘Calculation of compensation, however, will make allowance for the differences in impoundment date of the three structures.’

Section 3.3.1 - last line but one

‘are’ not ‘is’

Section 3.3.3

The first sentence to read as follows to maintain consistency with procedures:

‘The primary PAR is located within a corridor about 10 km wide with the river as its centre line and the lesser of 5 km or the watershed divisions as its outer boundaries.

Section 4.2.2

Insert double quotes in

“moderately modified” and “significantly modified” and at the end of the sentence ‘(as described in Table 4.1)’.

Table 5.1

Columns 6 and 7, row 1 (Matsoku), replace digits with ‘not stipulated’, refer to footnote * and add as follows

‘… Although the Treaty did not stipulate a release from Matsoku the feasibility study base flow of 50 liters per second (1.8% MAR) may be interpreted as equivalent to a Treaty minimum for comparative purposes.’

In footnote ** change 15.7% to 15.3%.

In footnote **** replace ‘unpublished report, LHDA’ with ‘ LHDA report’.

Section 6.3.2

Delete the whole section

Section 6.4.1 on page 9

Insert at the beginning of second sentence:

‘An external audit shall be carried out’

Section 6.4.2

Replace ‘such processes’ with ‘the audits’ and insert the word ‘a’ after ‘produce’

Section 7

Change heading to read ‘DOWNSTREAM COMPENSATION AND MITIGATION’

Section 7.3.3

Move Section to 7.6.1

Section 7.6.1.

In 3^rd line replace ‘river flows’ with ‘project activities’.

Change numbering of sections 7.6.1, 7.6.2 and 7.6.3 to 7.6.2, 7.6.3 and 7.6.4.

Section 7.6.3

Delete ‘the compensation bands’ and substitute with ‘the estimates on annual resource loss values provided by the IFR studies’.

Section 7.4.1 on page 10

Change 7.4.1 from bold to not bold 7.4.1

Insert a blank line after section 7.4.1.

Section 7.7 [NOTE: All changes in 7.7 now listed hereunder]

7.7.3 Replace existing paragraph with

‘The amount payable will be calculated as the estimated annual loss per river reach (as estimated in the IFR study), phased in over 8 years (as per the predictions of the IFR study), at a discount rate of 8% over 50-year period. Where the impoundment preceded the date of effectiveness of this Policy, compensation shall be phased in over a shorter period, to take account of this. The per reach total will be divided amongst communities on the basis of the number of households per Local Legal Entity and the location of communities relative to the river.’

Subject to the above paragraph, define ‘Local Legal Entity’ (LLE)

7.7.4 In line 1, add ‘the’ after ‘from’

7.7.5 Delete ‘once the community has agreed the calculation’. Substitute ‘Community Trust Accounts’ with ‘Local Legal Entity Accounts’. Substitute ‘will have’ with ‘has’.

7.7.8 Change the wording “do not exceed 25% of the cash compensation offered” to “do not exceed 25% of the proposed resource replacement programme costs”

Add the following sentence at end: “LHDA shall pay these delivery costs.”

7.7.9 Delete entire clause.

Change numbering of two successive clauses (7.7.10 becomes 7.7.9; 7.7.11 becomes 7.7.10)

Section 7.9.1.

Section reads as follows: “LHDA shall draw up a detailed Plan for implementation of Compensation, which shall include the affected villages roster (for proximal reaches), schedules of community training and mobilisation into formal groups, establishment of Local Legal Entity Accounts and payment of compensation into the accounts. In establishing these details, LHDA will take account of its experience with upstream payment of communal compensation into Trust Accounts.”

In the paragraph above, ‘Trust’ substituted with ‘Local Legal Entity’.

Section 7.9.2.3

Insert reach 8 so that phrase in brackets reads ‘(2, 1, 3, 7 and 8, in that order)’

Section 7.9.3

Replace ‘solicit perception on resource losses’ with ‘discuss potential’, delete ‘alternative’ and add to end of sentence ‘for the use of their compensation.’

Reach	Description	*Present river condition class**	Targeted river condition class
Reach 1	Matsoku River, from Matsoku Weir to confluence with Malibamats’o River (30 km)	2	3
Reach 2	Malibamats’o River, from Katse Dam to confluence with Matsoku River (18 km)	2	4
Reach 3	Malibamats’o River, from confluence with Matsoku R to confluence with Senqu R (35 km)	2	4
Reach 4	Senqu River between confluences with Malibamats’o and Tsoelike rivers (115 km)	2	3
Reach 5	Senqu River between confluences with Tsoelike and Senqunyane rivers (90 km)	2	2
Reach 6	Senqu River, from confluence with Senqunyane River to South African border (150 km)	2	2
Reach 7	Senqunyane River from Mohale Dam to confluence with Lesobeng River (90 km)	2	4
Reach 8	Senqunyane River, from confluence with Lesobeng River to confluence with Senqu River (40 km).	2	3
Reach 11	Nqoe and Hololo Rivers, from Muela Tailpond to confluence with the Caledon River (13 km)	2**	2