“Benefit sharing” by local communities in hydropower projects aims to move beyond compensation for negative environmental and social impacts, to designing and implementing projects in such a way as to create sustainable development for all. Benefit sharing can be financial, such as revenue or equity sharing, the creation of community development funds, and preferential electricity rates. It can also include such things as improvements to infrastructure, support for health and education programmes, improved access to fisheries, better watershed management, and employment opportunities.
Effective stakeholder engagement by hydropower developers is essential to the creation of benefit sharing programmes that will help mitigate the risks and maximize the benefits of their projects.
This page shares resources and tools related to Benefit Sharing in the hydropower sector.
Nepal is leading the way in benefit sharing with its Local Shares phenomenon that sees up to 10% of shares in hydropower developments set aside for purchase by people in affected communities. Local Shares have proven very popular, raising millions in equity for developers and creating local ownership and public support for hydropower projects. However, IFC's study also found investors, among them women and others who are socially, economically and culturally disadvantaged, are facing undue risk as they sell assets or go into debt to purchase Local Shares without a full understanding of the risks and returns. The report makes several recommendations for regulators and developers to address these gaps.