The dam was expected to flood 447 square kilometres (173 sq mi) including 47 villages near the construction site and about 11800 local people would be relocated in the newly built resettlement villages. The activists in exile stated that the dam would submerge historical temples, churches and cultural heritage sites important to Kachin identity and history and the natural heritage of the Kachin people in Myitsone area would be lost.[25]
In response, the government reported in the state-run New Light of Myanmar that relocated villages from the project area had been provided with all forms of aids including water, electric power and buildings and that the government also helped in relocation of religious buildings.[27] CPI reported a total expense of 4.1 billion kyats in compensation and 25 million U.S. dollars in resettlement.[28] In addition, the government stated that the remote region would benefit greatly from the new roads and access to electricity.[27]
Local communities pointed out other issues such as the dam's location on earthquake-prone zone. They opposed the dam site because it is less than 100 kilometres (62 mi) from the major Sagaing fault line, posing a risk to basin inhabitants if an earthquake weakened the dam or caused landslides in the reservoir. If the Irrawaddy Myitsone Dam broke during an earthquake, it would endanger the lives of hundred of thousands of people downstream in Kachin State’s largest city, Myikyina.[29]
In response, the government said that the dam would withstand an earthquake of magnitude 8.0 Richter scale. In an interview with Xinhua News, Lu Qizhou, President of China Power Investment Corporation said that Myitsone Hydropower Station follows the standard of fortification intensity 9, two points above the intensity of Zipingbu Hydropower Station that withstood 2008 Sichuan earthquake of 8.0 Richter scale.[19] On the other hand, Burmese scientists who carried out the environmental assessment, recommended to build two smaller dams farther upstream instead of building on earthquake-prone zone.[30]