About 95 percent of the dam's 1,260-megawatt capacity is intended for export to Thailand, which is financing the project. Thailand would operate the dam, turning it over to Laos after 30 years.
The Lower Mekong supports nearly 60 million people who depend on it for their livelihood, says the World Wildlife Fund.
While the Laos government says that only preparatory work on the dam has been conducted, the Bangkok Post reported that work is still under way at the site, including a dike straddling the Mekong River that locals say is obstructing the passage of boats.
The site also includes paved roads and constructed buildings for workers. Checkpoints have been set up on the road leading to the work camps, barring relocated villagers and outsiders from entering, the Post reports.
Cambodian Foreign Minister Hor Namhong said last week that the dam could threaten fish populations in the Mekong.
"We have already informed the government of Laos about the consequences," he said, Cambodia's The Phnom Penh Post reports.
Speaking July 13 during a visit to Phnom Penh, U.S. Secretary of State Hillary Clinton, noting that "tens, hundreds of millions of people" depend directly or indirectly on the Mekong River Basin for their livelihoods, said it is also extremely vulnerable to the effects of climate change and infrastructure development.
"That's why it's important that national and regional strategies be based on sound scientific assessments of any impact that could be forthcoming," Clinton said, adding that the Mekong River Commission -- comprised of Laos, Thailand, Vietnam and Cambodia -- is the "best forum for facilitating these assessments."
Clinton said the United States was prepared to commit up to $1 million to support the commission studies to look at "among other things, the potential impact of future dams on the main stem of the river."
"Laos' decision to proceed unilaterally with the Xayaburi Dam is already (a) clear violation of the 1995 Mekong Agreement and its failure to act in good faith toward its neighboring countries is a violation of international law," stated California environmental group International Rivers in its most recent blog.
International Rivers says construction will disturb the riverbed enough to "significantly affect fish populations and the flow of sediments downstream" and make it impossible to collect baseline data and conduct accurate impact studies.