Southwestern China contains rich hydropower resources and a high concentration of impoverished people. The acceleration of hydropower development is an important way for promoting the development of impoverished areas and improving the livelihood assets of rural households. Taking Nujiang Prefecture as our focal area we conducted enterprise interviews and government discussions to arrive at a benefit-sharing mechanism for hydropower development. We found that heavy tax burdens on enterprises, low compensation standards, unreasonable electricity prices and weak development conditions are the main reasons that hydropower development is not accompanied by local economic development and improvement in the livelihoods of rural people. Based on a specific factor model and the theory of persistent income, a theoretical model is proposed and used to assess the scenario before relocation and the scenario after relocation. On this basis, policy recommendations for benefit-sharing mechanisms of hydropower development are proposed.
