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Government plays an important role as a well-being capital provider through policies, strategies, or even direct provision to local residents to improve their livelihoods. Pak Mun Dam is one of the most controversial dams in Thailand, and government intervention is needed to solve the issues the dam has created. This study tests the premise that government intervention will impact overall well-being only through structural means by providing strategy and policies related to social and economic well-being. Government training programs and government services will impact over all well-being through social well-being. A satisfactory solution to the Pak Mun Dam situation will impact overall well-being through economic well-being. In this study a number of items, related to different well-being dimensions, were examined. The findings suggest that appropriate policy must address the four significant items which surfaced in the economic well-being measure and ten items in the social well-being dimension.

The marginal rate of substitution shows that negatively affected residents of Pak Mun Dam are willing to trade three units of economic well-being to gain one more unit of social well-being. Marginal rate of substitution (MRS) provides important information to the government regarding such trade-offs. Given the limited budget and resources, the optimal point of the combination of these dimensions of well-being should be determined in order to provide better strategy and policy to improve the conditions for residents affected by the dam’s construction. Structural Equation Model (SEM) was used to find a standardized estimate of each dimension and used it for MRS calculation.