A recent World Bank (WB) report has given a a poor rating to the Lesotho Highlands Water Project (LHWP) which is saddled with major resettlement problems. According to an estimate, the first of the four phases in the LHWP, Phase IA, is expected to displace 1,500 people and affect the livelihood of 20,000. Shortage of hygienic water and poor sanitation conditions have contributed to an increase in typhoid and child mortality in villages. A series of dams, pumping stations and tunnels would be constructed under the US $2 billion project. Regardless of unresolved problems facing Phase IA of the Lesotho scheme, the environmental panel has given a green signal to the WB to extend support to Phase 1 B of the project.