The better irrigation facilities promised to them after they were relocated in the district's Ramnagar panchayat have not materialised. They still face an uncertain future.
The people are not allowed to use water from the dam to irrigate their land and no alternative facilities have been provided.
In desperation, they have given their land to a paper mill for monoculture plantations of invasive and exotic species.
Environmentalists say these plantations will affect groundwater resources and the local flora and fauna.
The West Coast Paper Mill (WCPM) in Dandeli has entered into a 20-year contract with the villagers. The deal fits into the company's Rs 1,260-crore modernisation plan.
But will it benefit the villagers? Most of them have their doubts. The company is exploiting the hapless farmers, they feel.
Nilu Solekar, member Ramnagar panchayat, elaborates on the straitened circumstances of his fellow agriculturists: "Farmers used to sell their land to people from Goa and Maharashtra. But once people from these states realised our land wasn't very productive, they stopped buying or bargained for cheap rates."
So, many of the farmers had no option but to lease out the land to WCPM. "If we had good irrigation facilities, we could have struck a better deal," says Sharad Gurjar, former president of Supa panchayat.
The company's representatives claim that the farmers have entered the deal voluntary and they haven't been exploited at all. However, the terms of the deal belie their claim.
The farmers are bound to sell their produce after the plantation matures""in five years. But not at market prices. "The deal signed last year bound us to sell eucalyptus for Rs 800 for a tonne. The plant's market price has shot up to more than Rs 3,000 per tonne now.
The deal also deprives us of market prices for other crops," says Solekar. Gurjar laments that "by the time the plants mature, the price will increase many times more".
Environmentalists fear that the plantations will compound the long-standing water problem of Ramnagar. WCPM has distributed water-guzzling and fast-growing plants such as eucalyptus, casuarina and acacia.
"There have been reports of groundwater depletion in many places in the panchayat," says Balachandra Hegde, coordinator of Sahyadari Wildlife and Forest Conservation Trust, a local NGO. Villagers allege that the company is dumping effluents into the Kali river.
They say the plantations have also brought in infectious diseases.
Experts link a new teak disease in the area to an insect thriving on acacia trees. WCPM representatives are unfazed. They say the plantations will actually reduce pressure on natural forests.
The paper mill's expansion plans are funded by the International Finance Corporation (IFC), an arm of the World Bank. Activists question the funding.
IFC assigns A,B,C categories to projects based on environmental and social sensitivity.
"This is irrational since WCPM hasn't carried out a comprehensive environmental impact analysis," says Leo Saldanha, co-ordinator of Environment Support Group, a Bangalore-based NGO.
In China, IFC has placed the pulp and paper sector in category A, he adds. Sameer Singh, IFC's environment expert, however, says the categorisation is not sector-specific but based on "certain" criteria in the IFC guidelines.