Large Dams

The World Conservation Union The World Bank

Large dams have been a subject of growing international debate and controversy. They have played a key role ineconomic development, meeting a variety of purposes, including electricity generation, flood control and irrigation.Yet their adverse environmental, social and even economic impacts are increasingly noted. In 1996 the World BankOperations Evaluation Department completed an internal review of 50 large dams funded by the World Bank.IUCN–The World Conservation Union and the World Bank agreed to jointly host a workshop in April 1997 to dis-cuss the findings of the review and their implications for a more in-depth study. The workshop broke new groundby bringing together representatives from governments, the private sector, international financial institutions andcivil society organizations to address three issues:

■ Critical advances needed in knowledge and practice

■ Methodologies and approaches required to achieve these advances

■ Proposals for a follow-up process involving all stakeholders

Two days of working together achieved a remarkable consensus on how to move forward. Most notably, agree-ment was reached for IUCN and the World Bank to facilitate the establishment a two-year international commis-sion by November 1997. Its mandate is to review the development effectiveness of dams and to develop standards,criteria and guidelines to advise future decision-making. Part I of these proceedings summarizes the workshopdiscussion and recommendations for future action. Part II contains a series of overview papers commissioned forthe workshop on four key topics: engineering and economics, social and stakeholder issues, environmental sus-tainability, and future challenges facing the hydro industry.

Published with financial support from the Swiss Agency for Development and Cooperation.

IUCN–The World Conservation Union The World BankRue Mauverney 28 1818 H Street, NWCH-1196 Gland Washington, D.C.Switzerland USA

The World Bank

LEARNING FROM THE PASTLOOKING AT THE FUTURE

WORKSHOP PROCEEDINGSGland, Switzerland

IUCN–The World Conservation Union& The World Bank Group


LARGEDAMS

LARG

E DA

MS

IUCN - THE WORLD CONSERVATION UNION

Founded in 1948, IUCN-The World Conservation Union brings together States,government agencies, and a diverse range of non-governmental organizations(NGOs) in a unique membership: 895 members in all, spread across 138 coun-tries. As a Union, IUCN seeks to influence, encourage and assist societiesthroughout the world to conserve the integrity and diversity of nature and toensure that any use of natural resources is equitable and ecologically sustain-able. A global secretariat and 35 regional and country offices coordinate theIUCN Programme and serve the Union membership, representing their viewson the world stage and providing them with the strategies, services, scientificknowledge and technical support they need to achieve their goals. Through itssix Commissions, IUCN draws together over 6,000 expert volunteers in projectteams and action groups, focusing in particular on biodiversity conservationand the management of habitats and natural resources. The WorldConservation Union builds on the strength of its members, networks and part-ners to enhance their capacity and to promote global alliances in support of con-servation at the local, regional, and global levels.

THE WORLD BANK GROUP

The World Bank Group is a family of multilateral development institutionsowned by and accountable to member governments. These governments exer-cise their ownership function through Boards of Governors on which eachmember country is represented individually. The World Bank today includesfive international organizations: The International Bank for Reconstruction andDevelopment (IBRD) is the largest source of market-based loans to developingcountries and is a major catalyst of similar financing from other sources. It lendsto governments or to public or private entities with government guarantees.The International Finance Corporation (IFC) supports private enterprise in thedeveloping world through the provision and mobilization of loan and equityfinancing and through advisory services. The International DevelopmentAssociation (IDA) provides finance on concessional terms to low-income coun-tries. The International Centre for Settlement of Investment Disputes (ICSID)provides conciliation and arbitration services for disputes between foreigninvestors and host governments. The Multilateral Investment GuaranteeAgency (MIGA) provides noncommercial investment risk insurance and tech-nical services to help promote investment flows.

Inside Cover 7/31/97¥epp 2/2/99 3:05 PM Page 1

LEARNING FROM THE PASTLOOKING AT THE FUTURE


April 11-12, 1997

Editor: Tony DorceyCo-Editors: Achim Steiner

Michael AcremanBrett Orlando

The joint IUCN/World Bank initiative on Large Damswas implemented with financial assistance from the

Swiss Agency for Development and Cooperation.


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LARGE DAMS: Learning from the Past, Looking at the Future

The designation of geographical entities in this book, and the presentation of the material, do not imply the expressionof any opinion whatsoever on the part of IUCN or the World Bank Group concerning the legal status of any country,territory, or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.

The views expressed in this publication do not necessarily reflect those of IUCN or the World Bank Group.

This publication has been made possible in part by funding from the Swiss Agency for Development and Cooperation.

Published by: IUCN, Gland, Switzerland and Cambridge, UK The World Bank Group, Washington, D.C.

Copyright: © 1997 International Union for Conservation of Nature and Natural Resources and the InternationalBank for Reconstruction and Development/the World Bank Group

Reproduction of this publication for educational or other non-commercial purposes is authorizedwithout prior written permission from the copyright holder provided the source is fully acknowledged.

Reproduction of this publication for resale or other commercial purposes is prohibited without priorwritten permission of the copyright holder.

Citation: IUCN - The World Conservation Union and the World Bank Group. July 1997. Large Dams: Learningfrom the Past, Looking at the Future. Workshop Proceedings. IUCN, Gland, Switzerland andCambridge, UK and the World Bank Group, Washington, DC. v. + 145 pp.

ISBN: 0-8213-4028-X

Layout, cover Robert Dorrelldesign by:

Cover photos: Clockwise from top right: (1) Pakistani settler and irrigation canal in the Tarbela Damarea, Pakistan; (2) Construction site at the Pangue Dam, Chile; (2) Spillway construction at VictoriaDam, Sri Lanka; (4) Tarbela Dam, Pakistan. All photos courtesy of the World Bank Group

Produced by: IUCN US, Washington, DCIUCN Global Policy and Partnership Unit, Gland, Switzerland

Printed by: Reproductions, Incorporated. Gaithersburg, Maryland.

Available from: IUCN Publications Services Unit219c Huntingdon Road, Cambridge CB3 ODL, United KingdomTel: +44 1223 277894; Fax: +44 1223 277175E-mail: [email protected]; www: http://www.iucn.orgA catalogue of IUCN publications is also available

The World Bank1818 H Street, NW, Washington, DC 20433, USATel: 202-477-1234; Fax: 202-477-6391E-mail: [email protected]; www: http://www.worldbank.org

The text of this book is printed on 50% recycled paper made with 30% post-consumer waste.




TABLE OF CONTENTS

Preface iiList of Invited Workshop Participants iii

PART I: SUMMARY REPORT OF THE WORKSHOP

0.0 Summary Contents 31.0 THE WORKSHOP: ORIGINS, PLANNING AND PROCEEDINGS 41.1 Growth of Controversy 41.2 World Bank Review 41.3 World Bank Partnership with

IUCN-The World Conservation Union 51.4 Preparations for the Workshop 51.5 What Happened? 82.0 MAJOR CONCLUSIONS AND RECOMMENDATIONS 92.1 A World Commission 92.2 The Proposed Agenda 112.3 Implementation Strategy 113.0 EPILOGUE 12

PART II: OVERVIEW PAPERS

4.0 ENGINEERING AND ECONOMIC ASPECTS OF PLANNING, DESIGN,OPERATION AND CONSTRUCTION OF LARGE DAM PROJECTSby Engelbertus Oud and Terence Muir 17

5.0 SOCIAL IMPACTS OF LARGE DAMSby Thayer Scudder 41

6.0 ENVIRONMENTAL SUSTAINABILITY IN THE HYDRO INDUSTRYby Robert Goodland 69

7.0 MEETING HYDRO’S FINANCING AND DEVELOPMENT CHALLENGESby Anthony Churchill 103

8.0 HYDROPOWER: A NEW BUSINESS OR AN OBSOLETE INDUSTRY?by Anthony Churchill 111

APPENDIX A

A.1 CRITICAL ADVANCES NEEDED IN KNOWLEDGE AND PRACTICE 121A.2 METHODOLOGIES AND APPROACHES FOR ASSESSMENT 124

APPENDIX B

B.1 INTRODUCTORY REMARKSby David McDowell 127

B.2 INTRODUCTORY REMARKSby Robert Picciotto 130

B.3 MCDOWELL-WOLFENSOHN CORRESPONDENCE 134

APPENDIX C

C.1 LIST OF PAPERS AVAILABLE TO THE WORKSHOP PARTICIPANTS 139C.2 BIOGRAPHIES OF THE REFERENCE GROUP 141





Preface ii

PREFACE

Working in partnership towards sustainable development is an often-cited objective. The workshop on largedams jointly organized by IUCN - the World Conservation Union and the World Bank Group has been acknowl-edged by all involved as a promising example of learning and cooperation.

Together we decided to tackle one of the “big debates” in sustainable development. For far too long conflictand controversy have prevented constructive dialogue and objective assessments. Given the many differing per-spectives on large dams, a great challenge remains in interpreting their development effectiveness and applyingthe lessons learned to future decisions on whether dams have a major role to play in land, water and energydevelopment and how particular dams should be selected, constructed and operated. This challenge reflects thecomplex judgments involved in meeting development needs, maintaining the viability of ecosystems and protect-ing the livelihoods and cultures of people affected by such major infrastructure developments.

The workshop in Gland has created an important opportunity for addressing these questions in an open, trans-parent and rigorous process. It is our hope that the proposed independent commission to be established byNovember 1997 will enable all stakeholders to make substantive contributions to the review of large dams andthe development of new standards, criteria and guidelines to inform future decision-making.

We would like to thank the participants of the workshop for the time and effort they invested in making thisdialogue a success. Their continued commitment to the follow-up process of establishing the commission hasbeen remarkable. The support of the Swiss Agency for Development and Cooperation (SDC) in contributing tothis large dams dialogue was critical and their role in supporting this partnership is appreciated by all involved.We also owe a special vote of thanks to the authors of the overview papers — Robert Goodland, EngelbertusOud, Terence Muir, Thayer Scudder and Anthony Churchill — who provided an important starting point for ourdiscussions.

Tony Dorcey, who facilitated the workshop, proved indispensable in creating the right atmosphere and theright process for an open and constructive debate. Together with Mike Acreman, workshop rapporteur, he pre-pared the workshop summary report. Andres Liebenthal (OED/World Bank) and Achim Steiner (IUCN) formedthe team that prepared and coordinated much of the process that led up to Gland. The support provided by theIUCN staff in Washington and Gland in organizing the workshop and producing these proceedings was critical.To all those who made the Gland workshop a reality, we owe a debt of gratitude.

This publication is an invitation to work with us in building on the success of the Gland initiative. As you willsee from the letters included in Appendix B3, both of our institutions have fully committed themselves to realizingthe mandate given to us in Gland, Switzerland.

George GreeneAssistant Director GeneralIUCN–The WorldConservation Union

Robert PicciottoDirector GeneralOperations Evalution,The World Bank Group



iii Participants List

Sanjeev AhluwaliaTata Energy Research InstituteIndia

Peter BosshardThe Berne DeclarationSwitzerland

John BriscoeWorld BankUnited States

Wenmei CaiBeijing UniversityPeople’s Republic of China

Stuart ChapeIUCN/LaosLao People’s Democratic Republic

Eduardo de la Cruz CharryISAGENColumbia

Shripad DharmadhikaryNarmada Bachao AndolanIndia

Mbarack DiopTropica Environmental Consultants Ltd.Senegal

Steve FisherIntermediate Technology Development GroupUnited Kingdom

Robert GoodlandWorld BankUnited States

George GreeneIUCN Switzerland

David IverachNam Theun Two Electricity ConsortiumLao People’s Democratic Republic

E.A.K. KalitsiVolta River AuthorityGhana

Andres LiebenthalWorld BankUnited States

Richard MeagherHazra Engineering CompanyUnited States

Patrick McCullyInternational Rivers NetworkUnited States

Jeff McNeelyIUCNSwitzerland

Kathryn McPhailWorld BankUnited States

Reatile MochebeleleLesotho Highland ProjectLesotho

Ricardo Luis MontagnerMABBrazil

Engelbertus OudLahmeyer International GMBHGermany

Bikash PandeyAlliance for EnergyUnited States

*Elias Diaz PenaSobrevivenciaParaguay

Thomas PhilippeElectricité de FranceFrance

Robert PicciottoWorld BankUnited States

Jean Yves PirotIUCNSwitzerland

INVITED PARTICIPANTS TO THE LARGE DAMS WORKSHOP

˜

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Martyn RiddleInternational Finance CorporationUnited States

Thayer ScudderCalifornia Institute of TechnologyUnited States

Aly ShadyInternational Commission on Irrigation andDrainageCanada

Andrew SteerWorld BankUnited States

Richard SternWorld BankUnited States

Jan StrömbladABBSweden

Theo Van RobbroeckInternational Commission on Large DamsSouth Africa

Pietro VeglioWorld Bank United States

*Martin Ter WoortAcres International Ltd.Canada

Tanlin YuanMinistry of Water ResourcesPeople’s Republic of China

*Mishka ZamanSUNGI Development FoundationPakistan

Robert ZwahlenElectrowatt Engineering Ltd.Switzerland

FACILITATOR

Tony DorceyUniversity of British ColumbiaCanada

RAPPORTEUR

Michael AcremanInstitute of HydrologyUnited Kingdom

COORDINATOR

Achim SteinerIUCN/Washington officeUnited States

OBSERVERSRicardo Bayon

IUCNSwitzerland

Timothy CullenWorld BankUnited States

MEDIAStephanie Flanders

Financial TimesUnited Kingdom

Daniel HoffmanNeue Zuercher ZeitungSwitzerland

Jan KristiansenAgence France-PressFrance

Gideon LichfieldThe EconomistUnited Kingdom

Stephanie NebehayReuters Switzerland

Kalpana SharmaThe HinduIndia

* Invited but were unable to attend.


Participants List iv





PART I

SUMMARY REPORTOF THE WORKSHOP



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Group photograph of the workshop participants.

Summary Contents

Introduction ......................................................4

THE WORKSHOP: ORIGINS,PLANNING, PROCEEDINGS: .......................4

Growth of Controversy....................................4

World Bank Review..........................................4

World Bank Partnership withIUCN–The World Conservation Union .........5

Preparations for the Workshop ......................5

What Happened? ..............................................8

MAJOR CONCLUSIONS ANDRECOMMENDATIONS..................................9

A World Commission.......................................9

The Proposed Agenda...................................11

Implementation Strategy ..............................11

EPILOGUE.....................................................12

References......................................................14

Summary Report of the Workshop 3

LARGE DAMS: LEARNING FROM THE PASTLOOKING AT THE FUTURE

Summary Report of the Workshop



4 Summary Report of the Workshop

INTRODUCTION

Something different and most promising happenedin Gland, Switzerland, in early April 1997. For twodays, 37 stakeholders, representing diverse interestsfrom around the world, explored whether they couldwork together in seeking resolution of the highly con-troversial issues associated with large dams. Givenmore than two decades of increasingly acrimoniousexchanges about the development effectiveness oflarge dams, most participants were not optimisticabout the outcome. But by the time they left Gland,all had been surprised and excited by the breadth ofthe consensus on how to move forward and theissues to be addressed. Most notably, agreement wasreached on the next step: A World Commissionshould be established to assess experience with largedams and to propose if and how they can contributeto sustainable development. All those present inGland committed to making the commission a realitywithin six months and to seeking a mandate for it toreport within two years.

In Part I, this monograph summarizes what hap-pened in advance of the workshop, during the twodays of discussions and immediately following theworkshop’s conclusion. In drafting the proceedings,we have attempted to capture what was new and dif-ferent about the Gland workshop and to identify theimplications for how to build on the initial consensusand sustain its momentum. Part II contains the fulltext of three overview papers that were commis-sioned and two others that were reproduced toinform the discussions.

1.0 THE WORKSHOP: ORIGINS,PLANNING AND PROCEEDINGS

1.1 GROWTH OF CONTROVERSYDams have played a key role in development since

at least the third millennium B.C., when the firstgreat civilizations evolved on major rivers, such asthe Nile, Tigres-Euphrates and Indus. From theseearly times, dams were built to supply water, controlfloods, irrigate agriculture and provide for navigation.More recently, since the onset of the industrial revo-lution in the 18th century, they have also been builtto produce motive power and electricity. In the 20thcentury, new technologies have made possible the

construction of increasingly large dams to meet vari-ous mixes of these purposes; the 221-meter-highHoover Dam, inaugurated in the United States in1935, ushered in a new era of big dams. In the lasthalf of this century, construction around the worldaccelerated, with some 35,000 large dams being builtbetween 1950 and the late 1980s (InternationalCommission on Large Dams, 1988), the largest ofwhich, Nurek in Tajikistan, reached 300 meters high(International Water Power and Dam ConstructionHandbook, 1995).

However, there has been mounting controversy,particularly over the last two decades, about the roleof large dams in development (Goldsmith andHildyard, 1984; McCully, 1996). As development pri-orities changed and experience accumulated with theconstruction and operation of large dams around theworld, various groups argued that expected economicbenefits were not being produced and that majorenvironmental, economic and social costs were notbeing taken into account. In the 1980s proposals forlarge dams began to be fundamentally questioned bylocally affected interests and global coalitions of envi-ronmental and human rights groups (for example,Sardar Sarovar). In the 1990s this has resulted in asuccession of calls for a moratorium on World Bankfunding and reparations for those affected by con-struction of large dams (for example, the 1994Manibeli and 1997 Curitiba Declarations).

1.2 WORLD BANK REVIEWWhen he was appointed president of the World

Bank in 1995, James Wolfensohn announced hisintention to undertake a review of its developmenteffectiveness. Although it had been involved in thefinancing of a relatively small proportion of the largedams, the World Bank Group had become a majorfocus of criticism because of the number of problem-atic projects, including some of the biggest and mostcontroversial, in which it was involved. It was in thiscontext that the independent Operations EvaluationDepartment (OED) of the World Bank began areview of large dam projects. The first phase wasdesigned to be an internal desk study of 50 largedams assisted by the Bank and was completed byOED in September 1996. The second phase wasplanned to be a broader study, involving the collec-tion of new data and participation by other stakehold-ers, to evaluate the development effectiveness of

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large dams in terms of technical, economic, socialand environmental implications for future financingby the World Bank Group, as well as other sources.

Using available data for projects completedbetween 1960 and 1995, the dams were classifiedaccording to their economic justification and whetherthey satisfied the impact mitigation and managementpolicies existing at the time of their approval, or couldhave been planned so as to satisfy policies that theBank had introduced over the intervening years(Liebenthal et al., 1996). OED concluded that while90 percent of the dams reviewed met the standardsapplicable at the time of approvals, only about one-quarter were implemented so as to comply with theWorld Bank’s current, more demanding policies. The

review also concluded that mitigation of the adversesocial and environmental consequences of large damswould have been both feasible and economically justi-fied in 74 percent of the cases. The main conclusionwas OED’s conditional support for the constructionof large dams, provided that they strictly comply withBank guidelines and fully incorporate the lessons ofexperience. The analysis, conclusions and recommen-dations were summarized and made public in anOED Précis (1996).

1.3 WORLD BANK PARTNERSHIP WITHIUCN-THE WORLD CONSERVATIONUNION

One of the initiatives of the director-general ofIUCN, David McDowell, upon his appointment in1994, was to seek strategic partnerships with keyinternational agencies so that they might worktogether to resolve controversial issues and meetjoint interests. An agreement negotiated with theWorld Bank and signed in 1994 was one of the earlypartnerships to be established. It was under thisagreement that the Bank approached IUCN in 1996with the idea that they might jointly host a workshopto discuss the findings of the OED desk review(Phase I) and their implications for the design,methodology and process of a proposed in-depthstudy (Phase II) on large dams to be undertaken in1997-98. In agreeing to proceed, both organizationsrecognized that this workshop would address one ofthe most controversial issues in the field of environ-ment and development policy today and that a suc-cessful outcome was by no means assured.

Special funding to support the workshop was pro-vided by the World Bank through the Swiss Agencyfor Development and Cooperation (SDC), which haddecided that one of the priorities in allocating theSDC/OED trust fund should be to seek a resolutionto the conflicts surrounding large dams.

1.4 PREPARATIONS FOR THE WORKSHOPRobert Picciotto, director general for Operations

Evaluation Department of the World Bank, andGeorge Greene, assistant director general of IUCN,were given overall responsibility for the workshop.Reporting to them, Achim Steiner, who was IUCN’sliaison officer to the World Bank, and AndresLiebenthal, who had led OED’s desk review, wereasked to organize the workshop, focusing on five keypreparatory tasks: agreement on the specific objec-tives, development of background information, selec-tion of participants, facilitation of the sessions anddesign of the agenda.

Objectives of workshopFour specific objectives were developed through

discussions among some of the key stakeholdersassociated with IUCN and the World Bank:

■ Review the OED desk study of large dams in

Acceptable

Unacceptable

Acceptable

Unacceptable

Potentiallyacceptable

90%

10%

26%

26%48%

The impact of large dam projects

Under old policies

Under new policies

OED PRECIS, SEPTEMBER 1996, WORLD BANK

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terms of its data, assumptions, approach, analysis andconclusions and compare the results to documentedexperience from other sources, including experienceof industrialized countries;

■ Develop a methodological framework for thePhase II study that would consider the critical issuesthat need to be addressed in determining the futuredevelopment of a large dam—including evaluation ofalternatives and social, resettlement, environmental,economic, technical and other relevant policy criteria;

■ Propose a rigorous professional and transparentprocess for defining the scope, objectives, organiza-tion and financing of follow-up work, including aPhase II study incorporating basic guidelines forinvolvement by governments, the private sector andnon-governmental organizations (NGOs) as well as

public participation, information disclosure and sub-sequent dissemination of results; and

■ Identify follow-up actions necessary for thedevelopment of generally accepted standards forassessment, planning, building, operation and financ-ing of large dams that would adequately reflectlessons learned from past experience.

Background informationIn addition to providing the invited participants

with a copy of the desk review report, it was decidedthat background papers should be commissioned toprovide independent overviews of experience fromother sources, including experience of industrializedcountries, in three key topic areas: engineering andeconomics, social and stakeholder issues, and envi-ronmental sustainability. After consulting extensively

Box 1: Summary of Oud and Muir Paper on Engineering and Economic Aspects

Engelbertus Oud, the head of Water, Power and Land Development for Lahmeyer International, a German engineeringfirm, and Terence Muir, also of Lahmeyer International, summarize the main engineering and economic aspects of the plan-ning and design for large dam projects. One important trend in large dam projects is the increased role of private-sectorfinancing. This has led to an emphasis on the part of private developers to cut project costs, shorten the duration of designand construction, and offload as much risk as possible onto other parties, particularly the host government. There are also anumber of technological developments that make the planning, construction and operation of large dam projects more effi-cient. Another very important trend is increasing public interest in large dam projects. This leads, in turn, to changes in howdams are planned, designed and operated. The review of project Environmental Impact Assessments (EIAs) and projectdesign, as well as regular inspection of construction and operation of dams, particularly as they grow older, by a group ofindependent experts, is seen as key to providing suitable assurance to the public, dam owners, lenders and governments. Itis also acknowledged that increasing public scrutiny of environmental and social impacts will make the trade-offs betweenthe benefits and costs of dam construction more explicit.

Box 2: Summary of Scudder Paper on Social Impacts

Thayer Scudder, a professor in the Institute of Development Anthropology at the California Institute of Technology,asserts that the adverse social impacts of dam construction, whether short-term or cumulative, have been seriously under-estimated. Large-scale water resource development projects have unnecessarily lowered the living standards of millions oflocal people. According to the World BankÕs senior environmental advisor, ÒInvoluntary resettlement is arguably the mostserious issue of hydro projects nowadays. Scudder argues that the goal of resettlement must be for those removed and thehost population among whom they are resettled to become project beneficiaries. The income and standard of living of thelarge majority must improve to the greatest extent possible. Besides resettlers and hosts, other people affected by damconstruction include rural dwellers residing downstream from a dam. They are often neglected in project assessmentsbecause it is assumed that they will benefit from the project; however, there are frequently significant negative downstreamimpacts. While the World Bank has attempted to improve its performance, it continues to underestimate adverse resettle-ment outcomes and downstream impacts. Although more detailed research is needed, Scudder suggests a number of waysin which all project affected peoples can become better off. These include increasing local participation, improving thedesign and implementation of irrigation schemes, training and technical assistance to utilize the reservoir fisheries, andstrategic flood releases that can benefit downstream users and habitats. Multilateral donors are essential to ensure thatmore local people become project beneficiaries.

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to identify individuals who would be widely viewed aswell-qualified, papers were commissioned fromEngelbertus Oud, Thayer Scudder and RobertGoodland. In addition, two previously publishedpapers by Anthony Churchill were reproduced. (SeeBoxes 1-4 and full texts in Part II.)

A separate compendium of previously publisheddocuments, including relevant directives and policiesof the World Bank and providing different viewpointson key issues, was also assembled (see the list ofpapers distributed at the workshop Appendix C1). Allof these background materials, along with biographi-cal information provided by those attending, weresent to the invited participants in advance of theworkshop.

Participants. There was a very high level of inter-

est among key stakeholders in attending the work-shop. Balancing the need to ensure diversity and tokeep the numbers manageable, 39 participants wereultimately invited and accepted; they included sevenfrom the World Bank, six from government agencies,seven from local NGOs (two of whom were unable tocome at the last minute), five from IUCN, eight fromprivate dam construction and consulting companiesand industry organizations, and four fromacademia/research. The goals set to ensure abreadth of representation were substantially met,with the exception of participation by women (seeBiographies of the Reference Group in Appendix C2).Four representatives of the international media (TheEconomist, Financial Times of London, Hindu andNeue Zuercher Zeitung) also participated as observersand reported on the workshop discussions under

Box 3: Summary of Goodland Paper on Environmental Impacts

Robert Goodland, an advisor on environmental assessment in the Environment Department at the World Bank, pro-vides an overview of the debate embroiling the hydroelectric industry regarding the environmental sustainability of damconstruction. Goodland examines ten major issues in the controversy over dams, including transparency and participa-tion; demand-side management, efficiency, and conservation; the balance between hydro and other renewables; largedams vs. small and medium-size dams; Sectoral Environmental Assessments (SEAs); storage dams vs. run-of-riverdams; involuntary resettlement; project-specific mitigation; and, finally, the damage costs of greenhouse gas emissions.On each issue, he summarizes the position taken by the proponents and opponents of dams. He argues that the mainway of making dam construction environmentally sustainable is to integrate environmental and social criteria into the tra-ditional least-cost sequencing through a Sectoral Environmental Assessment. The SEA will not only encourage better siteselection, but also will allow a comparison of energy supply alternatives. It is acknowledged that ensuring that dam con-struction is environmentally sustainable will necessarily mean that some hydro projects do not go forward. But withouthigher standards, Goodland argues, the hydro industry will continue to decline, and coal and other fossil-fuel alternativeswill flourishÑan environmentally retrograde course.

Box 4: Summary of Churchill Papers on Future Challenges Facing the Hydropower Industry

Anthony Churchill, a senior advisor with the Washington Energy Group and former principal advisor for finance andprivate-sector development at the World Bank, argues that hydropower is at an international crossroads. The environmen-tal and social problems associated with dams, particularly poorly conceived and executed resettlement programs, have tar-nished the reputation of the hydro industry. Performance problems, such as cost overruns and project delays, have alsoplagued the industry. Further criticisms leveled at the hydro industry include poorly defined products, lack of discipline,and political, rather than economic, decision-making. As countries increasingly look to the private sector to finance hydroprojects, all of these problems threaten to discourage future investments in hydropower. In order for hydropower to suc-ceed in the future, the resettlement issue must be resolved. The industry must also become more competitive by develop-ing new technologies to improve efficiency while improving its systems of accountability. One alternative is for the industryto create developersÑthat is firms with sufficient capital, technical skills and marketing ability to finance and manage therisks inherent in hydropower projects. Ultimately, what is needed, Churchill asserts, is a new model of public-private part-nership, whereby the private sector agrees to undertake greater responsibility for project results, and the governmentagrees to treat electric power as a commercial business subject to the discipline of the market.

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Chatham House Rules, which allow for quotationsfrom the proceedings without attribution to individu-als.

Facilitation. Given the record of controversy,challenging issues to be addressed and the extremelyshort time available at the workshop, it was conclud-ed that one person should chair and facilitate theentire process. Ideally, the individual would be a prac-ticing facilitator and knowledgeable about the issuesbut not be identified with previous controversies con-cerning large dams. Tony Dorcey, a professor at theUniversity of British Columbia with international

experience in multi-stakeholder processes and riverbasin management, was selected and becameinvolved in the detailed planning.

Agenda. Many potential difficulties had to beanticipated in designing the agenda for Gland. Therewould be only two days in which to address highlycomplex and controversial issues. Only a small pro-portion of the participants were expected to knoweach other, and while they would offer a remarkablewealth of experience, this was rooted in a great vari-

ety of contexts and projects. In addition, they wouldbring strongly held views, along with varying histo-ries of involvement in the controversies about largedams. The agenda therefore had to be designed withthese and other considerations in mind.

Overall, the chosen strategy was to provide earlyopportunities for people to get to know each otherand express their views, but to begin searching assoon as possible for where there might be groundsfor agreement on next steps. To foster interaction, itwas planned to make extensive use of three facilitat-ed breakout groups, each consisting of a cross-sec-

tion of the participants. Eachgroup would be allocated one of thethree topic areas examined in theoverview papers (engineering/eco-nomic/finance, social and stake-holder, and environmental). Toguide discussion, each group wouldbe asked to address three ques-tions based on the workshop objec-tives:

■ What are the criticaladvances needed in knowledge andpractice for the assessment anddevelopment of large dams?

■ What methodologies andapproaches are required to achievethese advances?

■ Who should be involved,and what should be the process forfollow-up action?

To ensure adequate consider-ation of each of the three questionsand cross-fertilization of ideas

among the groups, two complete iterations of thethree were planned, with the groups reporting backon the results of the first iteration after the first day.

1.5 WHAT HAPPENED?Overall, the strategy worked better than the orga-

nizers had dared to hope for. In large part, this wasbecause all the participants were committed to mak-ing it work. There was a shared sense that thisunique convening of the diversity of interests in largedams had to be made to work because, if it should

Andres Liebenthal of the World Bank and Shripad Dharmadhikary of the Struggleto Save the Narmada (NBA) continue the dialogue during a break.




fail, the opportunity to try again would be immenselydifficult to recreate. For varying reasons, it transpiredthat the time was right to try a different approach.

This was not, however, immediately evident as theparticipants were gathering to meet each other inGland. Earlier in the week, the International RiversNetwork (IRN) issued a statement, endorsed by 49other non-governmental organizations from 21 coun-tries, that was highly critical of the OED review. In anarticle headlined “Ecologists square up for damdebate,” the Financial Times of London (April 10,1997) quoted the IRN as concluding the OED reviewwas based on “seriously flawed methodology andincomplete and inadequate data.” The evening beforethe workshop, in introducing themselves to oneanother and voicing expectations, the participantsexpressed hopes for progress but did not shrink frommaking clear their positions and stressing the legacyof mistrust and acrimony that would have to be over-come for any measure of success. In several cases,adversaries were meeting each other face-to-face forthe first time.

The remarks made during the opening plenarieson the first morning reiterated and amplified many ofthe refrains of support, caution and criticism from thenight before. The limitations of the OED desk reviewand its preliminary nature were acknowledged by theauthors and other participants. Criticisms of its data,analysis and conclusions ranged from specific chal-lenges of its estimation of costs and benefits tomethodological issues, such as the discount rate usedand the scope of its treatment of ecosystem impactsand social consequences. (For details, see statementsincluded in the companion volume of papers tabled atthe workshop.) There was widespread recognitionthat further work was essential and that it would needto be comprehensive in scope, transparent in conductand defensible in its analyses.

The presentations after lunch, based on the com-missioned papers, reinforced many of the morning’sconcerns but also advanced the discussion by sug-gesting ways in which they should be addressed inthe next phase of work. Moving into the breakoutgroups, the discussions quickly began to pick up thevarious proposals and build on them in addressingthe three assigned questions. By the end of the after-noon, as participants walked around to review the flipcharts showing the results of each group’s work, and

afterward in discussions over dinner, it was evident toall that there was a surprising amount of agreementabout how to address the questions concerning criti-cal advances needed in knowledge and methodolo-gies, which had received most attention in the timeavailable.

The next morning the groups reconvened and, in asecond iteration, refined ideas in the light of whatother groups had proposed and focused particularlyon developing the proposals for next steps and theirimplementation. Over lunch, representatives fromeach of the groups reviewed all the proposals andidentified where there was general consensus oneach of the three questions. When these were pre-sented to the closing plenary, they were unanimouslyadopted following some fine-tuning adjustments. Therelative ease with which they were accepted reflectedthe breadth of consensus that had been built over thetwo days. While nobody underestimated the difficul-ties that would be encountered in seeking to resolvethe issues in the next phase of work, all were werecautiously optimistic about what might be achievedand committed to working together to make it hap-pen.

2.0 MAJOR CONCLUSIONS ANDRECOMMENDATIONS

The major conclusions and recommendations fromthe workshop are highlighted in this section. Basedon the final plenary and drawing on all that precededit, they are presented here so as to focus attention onthe next steps that were agreed to. They areexpressed in specific terms as articulated by the par-ticipants. It was, however, recognized that thespecifics may well need to be reconsidered by all ofthe stakeholders involved during the process ofimplementation.

2.1 A WORLD COMMISSIONThe most important achievement was the agree-

ment to establish, by November 1997, a two-yearWorld Commission with the following terms of refer-ence:

■ To assess the experience with existing, new andproposed large dam projects so as to improve (exist-ing) practices and social and environmental condi-tions;

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■ To develop decision-making criteria and policyand regulatory frameworks for assessing alternativesfor energy and water resources development;

■ To evaluate the development effectiveness oflarge dams;

■ To develop and promote internationally accept-able standards for the planning, assessment, design,construction, operation and monitoring of large damprojects and, if the dams are built, ensure affectedpeoples are better off;

■ To identify the implications for institutional, poli-cy and financial arrangements so that benefits, costsand risks are equitably shared at the global, nationaland local levels; and

■ To recommend interim modifications—wherenecessary—of existing policies and guidelines, andpromote “best practices.”

The Commission would be composed of five toeight members, including an internationally recog-nized chairperson. The members would have appro-priate expertise and experience and would be widelyregarded as having integrity and being objective,independent and representative of the diversity ofperspectives including affected regions, communities

and private and public sectors. Most members wouldbe part-time, although one to three commissionerscould be full-time.

A consultative group would be established andcomprised essentially of the participants who attend-ed the workshop, plus others invited by theCommission (for example, NGOs, the EuropeanUnion, the Organization for Economic Cooperationand Development, governments, multilateral develop-ment banks, and other government and privatefinancing agencies) to ensure effective and balanced

representation of all stakeholders and keyactors. As the name suggests, the groupwould be used as a sounding board forideas from the Commission. Members ofthe group would join task forces or work-ing groups and recommend specialistswho might be involved.

The Commission would be supportedby a small Secretariat of full-time profes-sionals who might be provided at least inpart by secondments. One possibilitywould be for the Secretariat to operateunder the auspices of the IUCN.

The Commission and Secretariatwould operate through study groups,hearings, task forces, contracted studiesand so on. The overall process wouldinvolve stakeholders in a full and mean-ingful way throughout. Wherever possi-ble, it would work with other organiza-tions that have appropriate expertise and

already have relevant studies underway. Early in itswork the Commission would confirm that its pro-posed program of studies and expected productsmeet decision-makers needs.

The products from the Commission’s work wouldinclude recommendations on policies, standards,guidelines, best practices and codes of conduct toensure the affected parties are better off as a resultof building and operating large dams. The resultswould also include an understanding of the accuracyof predictions of costs and benefits used in the damplanning process and of their overall developmenteffectiveness and the need for restoration and repara-tion where necessary.

Two days of discussions and working groups break new ground on how tomove forward on the large dams issue.

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The Commission would require a budget that isadequate to ensure its independence and to fulfill itsmandate. Views were variously expressed that thisimplied a budget of several million dollars even if var-ious forms of in-kind contributions were made.

2.2 THE PROPOSED AGENDAThrough the discussions in the breakout groups

and drawing on all the background materials, it wasrecognized that the specific items needing to be puton the agenda for the World Commission are funda-mentally determined by an evolving paradigm oflarge dam development. Ideas about development ingeneral and dam construction in particular havebegun to shift over the past decade. In looking at thefuture of dams it is necessary to learn from the pastby reviewing the success or failure of earlier projectsin the context of the situation in which they were con-ceived, designed and built and to develop guidelinesfor the future based on those lessons and the con-cepts, expectations and reality of an emerging newera.

In the past, development issues were often consid-ered sector by sector in isolation. For example, a min-istry of agriculture would identify a single priority fordevelopment: namely, the need for more food. Thebelief in human domination of nature and unquestion-able benefits of large dams meant that often only asingle option was considered. The dam would bedesigned on the basis of narrowly defined least eco-nomic cost.

In recent years a new paradigm has begun toemerge. The development process should be basedon analysis of multiple criteria, including food, water,energy, foreign currency, health, employment, humanrights, equity, sustainable use of natural resources,and conservation of natural ecosystems and theirgenetic stocks. The analysis should involve consider-ation of the long-term and quantitative and qualitativevalues. Decision-making should be more transparentand accountable and made through consultation withmultiple stakeholders, including local communities,numerous authorities and government departments,industry and NGOs. The role of many stakeholdersshould also change, with more development beingfinanced by the private sector, communities becom-ing empowered, and action being taken through part-nerships. Choices should be made by consideringmultiple and integrated development options, such as

including demand management, a run-of-the-riverhydropower scheme, conjunctive use of surface andgroundwater, and development of traditional localwater management and agricultural practices.Overall, the choice of projects should be put in thelarger contexts of sectoral (e.g., energy, water) andnational and regional development plans and strate-gies along with international commitments (e.g., U.N.Framework Convention on Climate Change). Thefinal choice should be the one with maximum accep-tance, or least regret.

Implementing the evolving paradigm will not bewithout its costs. The information needed for soundmultiple criteria decision-making are far higher, themethods are far more complex, the coordination ismore demanding, and the consultative process ismore time-consuming. Managing the process willinvolve new skills for the decision-maker to learn, andnew manuals and guidelines are certainly required.Indeed, new decision-making processes and policieswill be required when it is recognized that alteringecosystem functions is viewed as much as a socialchoice and philosophy as a simple technical option.

It was in this context of the evolving paradigm thatproposals were developed for the specific items thatshould be on the Commission’s agenda (i.e., the criti-cal advances needed in knowledge and practice forthe assessment and development of large dams, andthe methodologies and approaches required toachieve these advances). In Boxes 5 and 6 the itemsthat were identified are listed for the three issueareas considered by the breakout groups: engineer-ing and economic/financial issues, social and stake-holder issues, and environmental issues. Furtherdetails on each of the listed items, based on the notesfrom the breakout groups, are summarized inAppendices A1 and A2.

2.3 IMPLEMENTATION STRATEGYAgreement was also reached on an implementation

strategy to take effect immediately at the end of theworkshop. David McDowell, director-general ofIUCN, agreed to establish by May 31, 1997, anInterim Working Group (IWG) composed of IUCNand World Bank staff. The IWG would draw on par-ticipants in the workshop for advice and support inestablishing the Commission. The chairperson for theCommission would join the Working Group uponselection, and the earlier, the better.

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By the end of October, the Working Group wouldestablish full terms of reference for the Commissionand its Consultative Group, membership of theConsultative Group, membership of the Commission,capabilities and location of the Secretariat, an outlineprogram and budget for the Commission andSecretariat, a funding strategy for the two years ofthe Commission, and a date for the first meeting ofthe Commission and Consultative Group.

3.0 EPILOGUE

Immediately after the workshop, David McDowellwrote to James Wolfensohn to report on the outcomeand to initiate the implementation strategy (see corre-spondence in Appendix B3). In his response, Mr.Wolfensohn expressed his support for the next stepsand identified the senior members of the WorldBank’s staff who would participate in the WorkingGroup to advance the implementation strategy.

In early June, the first meeting of the WorkingGroup was held in Washington, D.C. It was co-

Box 5: Critical Advances Needed in Knowledge and Practice

(See Appendix A1 for elaboration of each item)

Engineering and economic/financial issues● Dam engineeringÑStructural design and operation to meet ecosystem objectives● Competitive marketsÑTrade-offs of financing by development agencies vs. private sector● Internalizing externalitiesÑIncorporating all impacts of the dam in cost-benefit analysis● Discount rateÑRelationship between discount rate and sustainability of projects● Technical informationÑFor example, water needs of downstream ecosystems● Decommissioning of damsÑAnticipating the need to pay for it● Appropriate technologyÑSuited to local skills base● External impacts of hydro-power generation and other technologies (e.g., greenhouse gases, or GHGs)● Technical flexibilityÑFor example, to release sediment or artificial flood releases when needed

Social and stakeholder issues● Definition of affected groupsÑWho are the stakeholders?● Appropriate level of participationÑStakeholders involved at all stages● Transparency in decision-makingÑMust be seen to be fair● Equitable sharing of costs, benefits and riskÑAllow all stakeholders to contribute● HealthÑRisks of diseases such as rift valley fever and schistosomiasis● Indigenous knowledge systemsÑMake use of traditional technologies and systems

Environmental issues● EIA policyÑTo include a comprehensive evaluation of alternatives● EIA processÑTo include environmental health and social well-being ● EIA financing and responsibilityÑWho pays for restoration and reparation?● EIA quality control and consistencyÑEIAs should be independent● Participation in EIAsÑDecisions made through discussion and information sharing ● Biodiversity, ecosystems and hydrologyÑWater requirements of ecosystems

Cross-cutting issues● Multidisciplinary approachesÑInvolving many specialists, from engineering to sociology● The scale of planningÑe.g., integrated river basin management ● Monitoring and evaluationÑLarge dams projects should have a long horizon

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chaired by George Greene (IUCN) and Andrew Steer(World Bank) and resulted in agreement on the ele-ments of a work plan for meeting the goal of estab-lishing the Commission by November. Members ofthe Reference Group are being kept informed ofdevelopments and involved in the discussions byInternet and fax. The next meeting of the WorkingGroup, to include some of the Reference Group mem-bers, was scheduled for the middle of August so that

it can be held in conjunction with the SeventhStockholm Water Symposium.

The Swiss Agency for Development andCooperation, under its agreement with theOperations Evaluation Department of the WorldBank, agreed to contribute funding to the initial costsof this interim process, while additional supportwould be sought from other contributors.

Box 6: Methodologies and Approaches for Assessment

(see Appendix A2 for elaboration of each item)

● Definition of termsÑe.g., environment and sustainability, overexploitation and safe yield● Trade-offsÑBetween financial performance and impacts on people and the environment● Valuation of non-traded goods and servicesÑe.g., ecosystem functions ● Discount ratesÑResearch on the relationship between discount rates and project sustainability● Definition of stakeholdersÑMethodologies for defining stakeholders● Stakeholder involvementÑGuidelines on how to involve stakeholders● Institutional capacity developmentÑe.g., training needs assessment workshops● EthicsÑGuidelines on ethics and tribunals of inquiry to hear grievances.● Ecosystem approachÑInteraction and interdependencies between all elements● Implementation of treaties and conventionsÑe.g., Ramsar or Biodiversity Conventions● Proactive EIA approachÑTo evaluate alternative proposals● Water requirements of ecosystemsÑSuch as wetlands ● Conservation of biodiversityÑProcedures for assessing and conserving threatened species● PlanningÑe.g., multiple criteria analysis● Demand managementÑMethodologies for reducing water demand ● ScaleÑHow does the scale of a dam relate to impacts, decentralization and privatization?● Private sectorÑHow does the private sector values risk?● ResponsibilitiesÑWho pays for data collection, impact evaluation and decommissioning?● Interdisciplinary teamsÑMethodologies for collaboration between specialists

Anticipating the time and budget constraints that the Commission would face, the group made suggestions for employing acarefully selected set of case studies in addressing the above issues. The set would be chosen to include possibilities forassessments of projects which are:

● Existing, under development and proposed (i.e., learning from not only assessing past experience but also experimentingin ongoing design, development and operations);● Different in their biophysical and socioeconomic contexts (i.e., understanding the implications of the range of different envi-ronmental and developmental situations in which large dams are built);● Differing in their primary purposes (i.e., examining the opportunities and constraints associated with flood control, watersupply, hydroelectricity production and various mixes of these purposes); ● Differing in their sizes and technologies (i.e., learning what the trade-offs are between large and small dams and theopportunities associated with appropriate and emerging technologies); and● Successes and failures (i.e., learning from what works and what doesnÕt).

In selecting, designing and carrying out such case studies and assessments, the Commission would put into practice theprinciples that define the new paradigm and would be expected in any future development of large dams.

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REFERENCES

Goldsmith, E., and N. Hildyard, eds., The Social andEnvironmental Impacts of Large Dams (Wadebridge:Wadebridge Ecological Centre, Cornwall, U.K., 1984).

International Commission on Large Dams (ICOLD).World Register of Dams. Paris, 1988.

International Water Power and Dam ConstructionHandbook (Sutton: IWPDC, Sutton, U.K, 1995).

Liebenthal, A., et al. “The World Bank’s ExperienceWith Large Dams: A Preliminary Review of Impacts”(Washington: Operations Evaluation Department,The World Bank, 1996).

McCully, P., Silenced Rivers: The Ecology and Politicsof Large Dams (London: Zed Books Ltd., 1996).

“World Bank Lending for Large Dams: A PreliminaryReview of Impacts,” OED Précis No. 125, WorldBank, 1996.

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PART II

OVERVIEW PAPERS

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Engineering and Economic Aspects of Planning, Design, Construction and Operation 17

By ENGELBERTUS OUD and TERENCE C. MUIR, of Lahmeyer International GmbH

Paper Contents

Definition of Large Dams .............................19Trends in Planning........................................19Conflicts Between Economicand Financial Planning..................................22Optimization of Projectsin System Context .........................................24Trends in Design...........................................28Construction ..................................................31

Considerations During theOperation Period ...........................................32Rehabilitation and Upgrading ofExisting Dam Projects ..................................33Long-Term Trends ........................................33Summary and Conclusions ..........................34Acknowledgements .......................................34Bibliography...................................................34Annex One......................................................35Annex Two .....................................................37

Mr. Engelbertus Oud heads the Water, Power and Land Development Department of LahmeyerInternational GmbH, the largest German consulting engineering company.

Dr. Terence C. Muir joined Lahmeyer International in 1973 and has been team leader of numerous nation-wide water resources and hydropower development projects.

ENGINEERING AND ECONOMIC ASPECTSOf Planning, Design, Construction and Operation of Large Dam Projects

Men working on the service spillway at the Tarbela Dam, Pakistan

PHOTO COURTESY OF THE WORLD BANK



18 Engineering and Economic Aspects of Planning, Design, Construction and Operation

ABSTRACT

Large dams have become the focus of an intenseworldwide debate. After publication of the August1996 report on the World Bank’s experience withlarge dams, the World Conversation Union (IUCN)and the World Bank organized a joint workshop inApril 1997 to move forward the debate in terms of anew set of principles to guide future decision-makingabout large dams. As a contribution to the workshop,

this paper summarizes the lessons learned andtrends in the planning, design, construction and oper-ation of large dam projects, specifically addressingengineering and economic aspects. Environmentaland social issues are addressed in two accompanyingpapers, which were also presented during the work-shop.

This paper summarizes the main trends for largedam projects as follows:

■ Increased understanding and awareness of com-plex technical, environmental and social issues thatare inherent to large dam projects, and realizationthat the development of large dam projects involves atrade-off between the benefits gained against losses.

■ Increased awareness that environmental sustain-ability and high discount rates are in conflict.

■ Increased public scrutiny of large dam projectsand increased public interest in large dam projects asa result of campaigns by non-governmental organiza-tions (NGOs).

■ Increased public consultation in identifying andscreening of projects.

■ Increased private-sector financing and, as a con-sequence, drive to cut costs and the duration ofdesign and construction, and to reduce financialrisks.

■ A number of technological developments whichmake the planning and construction of large dam pro-jects more efficient.

■ The recognized need for independent monitor-ing and control of project cost, dam safety and envi-ronmental and social impact during all phases of pro-ject design, construction and operation.

■ Increased need for safety inspection and envi-ronmental management of existing dam projects.

■ Increased interest in modernization and upgrad-ing of existing schemes.

ENGELBERTUS OUD

Mr. Engelbertus Oud heads the Water, Power and LandDevelopment Department of Lahmeyer International GmbH, thelargest German consulting engineering company. Mr Oud joinedthe firm in 1975 and has been team leader of a considerablenumber of hydropower and power system development studies.Currently he is project manager of the study of alternatives forthe controversial 680 MW Nam Theun 2 hydropower project in thePeople’s Democratic Republic of Lao. The study, carried out forthe Lao government under the auspices of the World Bank,includes a strong component of public consultation and participa-tion.

Engelbertus OudLahmeyer International GMBHLyoner Strasse 22, POB 710651D-60496 Frankfurt Am MainGermany

Fax: (0049) 69-6677-414

E-mail: [email protected]

TERENCE C. MUIR

Terence C. Muir joined Lahmeyer International in 1973 and hasbeen team leader of numerous nationwide water resources andhydropower development projects in countries in Asia, Africa andSouth America. At present he is the project manager of theHydropower Development Plan for Lao PDR, executed as part ofthe European Union/Laos Cooperation Program.

Note: This paper was commissioned by IUCN from the authorsfor the joint IUCN The World Conservation Union/World Bankworkshop. Any personal opinions should in no way be con-strued as representing the official position of the World BankGroup or IUCN.

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CAVEAT: The authors have specifically beenasked to focus on engineering and economic issues.This does not imply that they believe that theseaspects can be seen in isolation, as if there would beno interface with environmental and social issues.The contrary is true, as environmental and socialissues are increasingly affecting the selection, plan-ning and evaluation of large dam projects, and theauthors wish to register that they wholeheartedlysupport this trend.

1. DEFINITION OF LARGE DAMS

The International Commission on Large Dams(ICOLD) defines “large dams” as dams with a heightof 15 meters or more. If dams between 10 and 15meters high have a crest length over 500 meters, aspillway discharge over 2,000 cubic meters, or areservoir volume of more than 1 million cubicmeters, they are also classified as large dams. Usingthis classification, worldwide there are about 40,000such large dams and an estimated 800,000 smalldams.

The International Journal on Hydropower & Damsuses the term “major dam project” for projects thatfulfill one or more of the following criteria: damheight of more than 150 meters; dam volume of more

than 15 million cubic meters; reservoir volume ofmore than 25 billion cubic meters; and installedcapacity of more than 1000 MW. There are more than300 dams of this category worldwide. Large dams areprincipally required only for major power production,irrigation and, to a lesser extent, water supplyschemes.

2. TRENDS IN PLANNING

THE OLD APPROACHUntil recently, the terms of reference for planning

studies for large dam projects generally required afuture demand (water, power) to be covered in aleast-cost manner. The planning procedure was todevelop alternative technical solutions, to select theleast-cost option, and to mitigate the environmentaland social impact of the plan or scenario to a mini-mum. ’Least-cost’ was defined as the minimum pre-sent worth of investment, operating and maintenancecosts over a specified planning period, applying real-term discount rates of 10 to 12 percent (in developingcountries), and often ignoring external costs associat-ed with control and mitigation of the environmentaland social impacts.

In the industrialized countries some form of publicdiscussion and feedback on design has been ensured

through legislative and regu-latory processes involvinghearings. In the developingcountries, however, deci-sions on developmentoptions have generally beentaken in isolation by govern-ments and utilities togetherwith the international fund-ing agencies, following thepreviously mentioned least-cost approach.

The reaction to this tech-no-economic planningapproach has been the callfor a more ’sustainable devel-opment’ and to the formationof interest groups that want-ed more attention to be paidto non-technical and non-eco-

Development of Large Dam ProjectsOLD PLANNING PROCEDURE

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nomic issues. For a considerable time these groups,generally NGOs, were seen as project opponentsseeking to obstruct development.

The more stubborn the reaction of the technocrat-ic world to this opposition, the more fanatic and spec-tacular became the opposition of the NGOs. This hasbeen, of course, ideal food for the media and opposi-tion politicians, and the result has been that manyprojects, in particular large infrastructure projects,stalled during the planning process as decision-mak-ers and/or funding agencies did not want to burntheir fingers. Painful examples from the recent pastare the withdrawal of the development banks fromlarge irrigation projects (India) and hydropower pro-jects (Nepal).

Other large projects were implemented in spite ofconsiderable opposition but turned out to be nolonger the least-cost project as a result of costlydelays and modifications during the implementationphase. Nuclear power plants are a perfect example inthis respect.

Disregard for civil rights of primitive people livingin the forest and rural communities by those incharge of decision making, often a clique of upper-class urban families and/or insensitive military or

autocratic rulers used to commandeering lowerranks, has led to numerous flagrant violations ofhuman rights during the planning, construction andoperation phase of large dam projects, which are typi-cally built in remote areas rather than in urban areas.The issue of appropriate Operational Directives of theWorld Bank addressed this problem and has beeninstrumental in better protecting the rights of minori-ty groups.

THE NEW APPROACHPlanning should avoid unnecessary expenditure

and effort on projects that in the end will not be car-ried out. Planning procedures must therefore begeared toward maximized acceptance (or minimizedregret).

To ensure broad acceptance of projects or systemdevelopment alternatives, it is important to presentand discuss as early in the planning stage as possibleall the pros and cons of competing scenarios withinterested parties, including the persons directlyaffected by the project and NGOs, taking intoaccount technical, economic, financial, environmen-tal, social, institutional, political and risk factors. Theinterested parties should jointly formulate a limitednumber (say, five to eight) of alternative plans tocover the future demand. These plans should be

diverse with respect to theirimpacts and should includeplans featuring demand-sidemeasures (such as promotionof energy-saving lamps in thepower sector or drip irrigationin the agricultural sector) aswell as the no-project option.

Subsequently, the necessarystudies should be done toquantify and evaluate thealternative plans in sufficientdetail to be able to outline theconsequences of each plan.Workshops should then beorganized in which all inter-ested parties can discuss theresults and try to reach con-sensus about the best plan tobe adopted for implementa-tion.

Development of Large Dam ProjectsNEW PLANNING PROCEDURE

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It is beyond the scope of this paper to describe thisprocess of consensus-seeking in great detail. Onemethod would be for interested parties to firstreceive a fairly comprehensive presentation of theresults of the study of alternatives, then split up intorelatively small specialist working groups to discussand give ratings to each of the project alternativeswith respect to, say, economy, environment, impacton local population, etc. The expert group on environ-ment, for example, would first rank and then assignweights to possibly numerous environmental factorsto be considered. These weights would be uniformlyapplied to each of the competing alternatives. Thenthe individual members of the working group wouldbe asked to give scores to the various factors underconsideration. The scores would be multiplied byweights and then summed to arrive at an overall rat-ing for environmental issues for each alternative.

The working groups would also be asked to verbal-ly describe their main findings. Thereafter, the par-ties would jointly look at the trade-offs between theoverall ratings of major disciplines. Inferior (Paretosub-optimal) and other unacceptable solutions wouldbe discarded (e.g., a hydropower option that wouldproduce power at twice the cost of an alternative ther-mal power plant). The remaining range of acceptablechoices would be discussed until most parties canagree on the alternative proposed for implementation.The entire process should be controlled by an inde-pendent and unbiased facilitator who however shouldbe able to broadly understand the type of project orprojects under discussion.

This would be a very democratic approach butmay be rather novel and even considered unaccept-able in some countries, since decision-making is car-ried out at an autocratic political level without directconsultation with the people affected. Thus, theremay be limits as to how open this kind of workshopcan be made in practice. The development banksshould nevertheless pursue a policy that ensuresmaximum participation of project stakeholders, and ifthis is altogether rejected by a particular government,then the international funding agencies should refrainfrom becoming involved.

The major difference from previous planning practicewould be the attempt to reach a consensus of all par-ties concerned at as early a stage as possible, thusavoiding last-minute surprises after years of develop-

ment expenditures, as has happened with severallarge dam projects in the recent past.

THE ROLE OF PRIVATE DEVELOPERSWith few exceptions, the development, ownership

and operation of large dam projects in the past hasbeen the responsibility of governments and nationalutilities. In industrialized countries such projectswere financed from internal sources or balance sheetborrowings; in developing countries concessionarycapital from multilateral and bilateral agencies wasused.

In the last ten years, irrevocable changes haveoccurred in this regard. Governments everywhereare experiencing greater difficulty in raising financefor large infrastructure projects. This is particularlytrue of power sector investments which are increas-ingly being perceived as commercial. In developingcountries there has been an accompanying shift inconcessionary lending priorities from physical infra-structure to social infrastructure. With an accelerat-ing demand for power-sector investment capital, theprivate sector has been encouraged to fill the voidthrough private-sector financing and ownership.

In summary, the increasing role of private sectordevelopment leads to:

■ Emphasis on financial project efficiency,resulting in reduced availability of time and fundsfor planning, investigation and construction work,and also an emphasis on cost-cutting operationand maintenance procedures;

■ Externalization of the indirect costs associat-ed with the project to the maximum extent possi-ble;

■ Levying of water (or power) tariffs that guar-antee an attractive financial internal rate of returnon the investment, with these rates typically beinghigher than those projects financed conventional-ly in the past from grants and concessionaryloans; and

■ Off-loading of as much risk as possible ontoother parties, particularly onto the government.

It is clear that there is a strong need for adequateregulation and control in order to maintain standardsof safety and workmanship, guarantee reasonable tar-iffs and government benefits, avoid government

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exposure to undue levels of financial risk, and miti-gate environmental and social impacts.

Private developers want to limit upfront planningand preparation cost to a minimum and will try toshift as much of the costly design work to a point intime where it has secured financing of the scheme.Financial closure requires an accurate cost estimateand time plan for implementation. Public oppositioncould delay or even halt the implementation of a pro-ject and it is, therefore, in the interest of a developerto select a project that can be assured of broadendorsement by the public but which may not neces-sarily be the least-cost option. This can only beachieved through public consultation in the planningprocess as described above.

Particularly in developing countries, private devel-opers see themselves exposed to major political risks,for example, the threat of nationalization or difficul-ties in converting local currency revenues into thehard currencies needed to repay the loans. The inter-national development agencies may be willing toinsure the developers against that sort of politicalrisk. This implies that the agency’s operational direc-tives need to be followed, particularly those dealingwith environmental and social concerns. The direc-tives of the international development banks also callfor public participation and consultation.

The emerging planning process for schemes fund-ed by the private sector, but with involvement of theinternational development banks, appears to be as fol-lows:

■ Formulation of a limited number of diverse pro-ject alternatives number (say, five or six, one beingthe no-project option);

■ Rapid analysis of these alternatives, consideringtechnical, economic, financial, environmental, social,political and risk factors;

■ Election of the best overall solution through aconsensus-seeking approach that involves all projectstakeholders, including the people affected by theproject as well as government and non-governmentorganizations;

■ Preliminary arrangements for project financing(memoranda of understanding with banks and devel-opment agencies, tariff negotiations);

■ Project optimization and feasibility design,

including elaboration of environmental and social mit-igation and compensation measures;

■ Financial closure (arrangement of project fund-ing and final tariff negotiations); and

■ Detailed design, tendering and project construc-tion, and implementation of socioenvironmentalaction plans.

The change to private-sector development posesseveral other questions. Will governments concernedhave the ability and resources to negotiate appropri-ate terms and conditions with a fair sharing of bene-fits and risks? Will developers, who are increasinglyfrom countries without an established history of envi-ronmental protection, recognize the need for ade-quate social and environmental mitigation measures?Will there be sufficient time and investment to identi-fy key problems or fatal flaws?

It goes without saying that the projects to be devel-oped by the private sector must still be embeddedinto an overall water resources development plan forthe country concerned and that the development ofthis plan similarly requires participation and consulta-tion of the public on a wide variety of issues. Heregovernment authorities and international develop-ment agencies can and should play a major role.

3. CONFLICTS BETWEEN ECONOMICAND FINANCIAL PLANNING

Economic planning has begun to internalize exter-nal costs in the planning process. External costs areeconomic costs borne by society, but are not reflect-ed in tariffs. A good example here are penalties foremissions from thermal plants, such as CO2, causingglobal warming; SO2 and NOX, causing acid rain; andPM10, causing respiratory illnesses. External costsassociated with large dam projects could, for exam-ple, be the loss of a major waterfall, the loss of biodi-versity in the area inundated by the reservoir, the dis-appearance of migratory fish in the river due to theconstruction of the dam, CH4 emissions from irrigat-ed paddy fields, which lead to increased global warm-ing, and so forth. The values that are to be attributedto the various external factors are not always clear inthe absence of established procedures. It would be abig step forward if the international developmentbanks would agree on and publish acceptable proce-

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dures and typical values forthe most important externali-ties.

The trend toward private-sector financing will inevitablylead to a reduced focus oneconomic optimality andgreater focus on financial via-bility. In other words, theresults of financial analysiswill have greater impact ondecision-making by the pri-vate sector than the results of(socio-)economic analysis.Targeted rates of return forthe private sector are, for pro-jects in developing countries,often in the range of 15 to 20percent, equivalent to 12 to 17percent in real terms, stillhigher than the 10 to 12 per-cent economic discount rate(opportunity cost of capital)which the development bankshave typically used for the planning of major infra-structure projects.

High discount rates do not support sustainabledevelopment, as the long-term damages or costs asso-ciated with a project are simply discounted away. Thecost of decommissioning a nuclear power plant, forexample, is in the same order of magnitude as theconstruction cost, but accrues only after 30 to 40years of operation. If discounted at 10 percent perannum, the decommissioning cost becomes totallyirrelevant, equivalent to only a few percent of thetotal construction cost. Similar examples for waterresources projects are the increase in soil salinity andreduction of soil fertility due to irrigation, theincreased use of fertilizers and the effect on ground-water quality in the long term.

Moreover, financial analysis considers only mone-tary cash flows, and external costs are not taken intoaccount, which again jeopardizes sustainable develop-ment. If, for example, certain fish species becomeextinct in a river downstream of a major dam, there isnormally no financial penalty for the project develop-er, but costs are borne by society as a whole.

In several environmental studies—for example,

those dealing with global warming—a discount rate(social preference rate) of 0 to 3 percent per year isused. A real term rate of 3 percent per annum is inci-dentally also the real term return on U.S. dollar gov-ernment bonds, which in a way should reflect the per-ceived “value of the future.”

It appears that it is high time to reconsider the dis-count rate and the inclusion of external costs. A solu-tion the authors favor, but is flatly rejected by theWorld Bank, would be to select and “optimize” pro-jects (not just large dams, but all projects with majorsocioeconomic and environmental impact) based onthe social rate of preference, say 3 percent perannum, explicitly considering external costs and ben-efits. This would be a major step toward achievinglong-term sustainable project concepts and wouldstimulate the use of water conservation measures asagainst the construction of oversize dam projects.Once projects have been formulated, they can beadopted by the government or private sector forimplementation. As a result of the low 3 percent dis-count rate used to formulate the scheme, financialsupport may be needed to make it financially viable,and here the international donor community can playan important role.

Development of Large Dam ProjectsPLANNING CONTEXT (1)

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4. OPTIMIZATION OFPROJECTS INSYSTEM CONTEXT

Large dam projects, partic-ularly those producinghydropower, need to be opti-mized in a system context.First, this means that inselecting the best dam sites, itshould be kept in mind whatthe other developments in theriver basin can be and howthese affect each other.Second, it means that the pro-ject should be optimized aspart of the overall power sys-tem and not just be comparedto a thermal plant of a particu-lar type, which would oftenlead to projects that are toolarge. The systems analysisrequires the use of complex hydrothermal operationmodels, and the analysis of a range of alternativepower system expansion plans—with and without theproject, with and without demand side managementmeasures—needed to select the overall best plan.The trends in system expansion planning are:

■ A move from single-objective toward multi-objec-tive models, as well as a move away from determinis-tic least-cost optimization toward detailed multi-objec-tive simulation. These detailed simulation modelsproduce an array of useful data, for example thermalplant emissions, risk indicators, employment figuresand so on, which are relevant in selecting the bestoverall plan;

■ Increasing use of chronological models even forlong-term planning, using hourly time steps ratherthan seasonal load duration curves, allowing moredetailed simulation of system behavior;

■ Improved simulation of the behavior of IPP pro-jects, which try to exploit the power purchase agree-ment and are not necessarily operated in merit order;

■ Models increasingly able to simulate power poolarrangements, where several utilities cooperate inproviding power to their consumers;

■ Planning models that have become financialrather than economic models, able to simulate com-mercial arrangements and to predict the income,debt service and profit of individual plants extractedfrom the data generated by means of complex systemoperation simulations; and

■ System operation models extended beyond thereservoirs to include the rivers and groundwaterareas affected, considering both water quantity andwater quality.

PROBABILISTIC INVESTMENT ANALYSISAND AVOIDANCE OF RISKThe likelihood that a project becomes an economic

or financial success depends to a large extend on thefollowing factors: probability of cost overrun, proba-bility of delays during construction, availability andvalue of water, robustness of the water and/or powerdemand forecast, and probability of difficulties duringthe operation period.

An important consideration is to assess to whomthe risk actually occurs. Governments and developerscan insulate themselves from risks by lump-sum fixedprice contracts with adequate liquidated damagesprovisions. The turnkey contractor then bears the fullrisk, reflected in a higher turnkey contract price, ofcourse.

Development of Large Dam ProjectsPLANNING CONTEXT (2)

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PROBABILITY OF COST OVERRUNThe availability of modern software for the dimen-

sioning, costing and evaluation of hydro projectsenables rapid answers to questions such as:

■ What is the effect on the total project costs iftunnel X is not in good rock for 80 percent of itslength but, say, only 50 percent, and the remainingpart is in poorer rock classes?

■ What is the effect on total project cost if the leftbank excavation is not 5 meters but 8 meters deep?

■ What is the effect on project cost if the perme-ability rating at the dam site is worse than expected?

■ What is the effect of an increase in cement costsof, say, $90 per ton to $110 per ton?

By asking the various experts involved in the pro-ject about the probability of such deviations from theadopted base case, various possible cost estimatescan be prepared and, assuming unconditional proba-bilities, a distribution function of expected projectcosts can be prepared, showing the probability thatthe cost of the project will exceed certain levels.

Of course, the actual price paid for the project alsodepends on bidding conditions, market conditions,loan conditions, inflation rate and so forth, and thesecan be taken into account in a similar manner.

PROBABILITY OF DELAYSDURING CONSTRUCTIONDetailed construction scheduling is necessary in

order to understand the interdependence of construc-tion and manufacturing activities, expected weatherconditions, etc. By critically examining the probabili-ties that certain activities may be subject to delay(and cost overrun), a number of construction scenar-ios can be developed, each with their own likelihood.If, for example, the diversion works would be over-topped with a frequency of once in 20 years, thenthere is a given probability that the construction sitewill flood during the diversion period and that delaysare to be expected. Or if major water intrusions occurduring tunnel excavation, these may also have animpact on the construction schedule.

These data can be superimposed over the distribu-tion curve for project costs.

AVAILABILITY AND VALUE OF WATERActual flows may deviate from the mean flow, and

the start of commercial operation of the project maycoincide with a cluster of dry or wet years. The fol-lowing procedure allows such effects to be consid-ered in the analysis. The hydrologist could, for exam-ple, estimate that there is a 5 percent probability thatthe mean flow will be 10 percent lower than the esti-mated value and a 20 percent probability that it willbe 5 percent lower; likewise, there could be 5 percentand 10 percent probabilities that the long-term meanflow would be 10 percent or 5 percent higher.

Then, for the cash flow analysis, which extends overthe economic lifetime of the project, the hydrologicalcycle would be superimposed over the period of cashflow analysis and rotated. For example, for Case 1 theoperation year 2000 would coincide with hydrologicalyear 1950, 2001 with 1951, etc. For Case 2, 2000would coincide with hydrological year 1951, 2001with 1952, and so forth, thus creating as many poten-tial outflow, or power and energy generation, seriesas there are years in the hydrological reference peri-od.

These series can then be used to calculate the benefitcash flows. Benefits may not be just one value, butcould be a range of values or time-variant values—forexample, three possible fuel price scenarios in apower system expansion plan, each with the sameprobability. This process can be automated, and theresult would be a distribution function of the expect-ed benefits.

ROBUSTNESS OF WATER ORPOWER DEMAND FORECASTBenefits cannot be realized if the demand for water

or power has not grown as fast as predicted. Thiscould happen because there are delays in the devel-opment of the irrigation area to be supplied by theproject or because of a slowdown in the electricitydemand growth.

Most power and energy demand forecast modelslink in one way or another growth in electricitydemand to GDP. Since the correlation is between his-toric GDP and historic growth of the electricitydemand, an error is made in using the model withfuture GDP growth targets set by the government,which are almost always over-optimistic. The only

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26 Engineering and Economic Aspects of Planning Design, Construction and Operation

thing that can result is an over-optimistic forecast ofthe electricity demand. It would be worthwhile to cor-relate historic GDP performance with projected GDPforecasts made in the past in order to understandhow optimistic the GDP targets of the governmenthave been. Then, the necessary adjustments to theforecasting model could be made. With increasingwelfare, the GDP-demand elasticity usually declines,

and this factor should also be taken into considera-tion.

Two other factors also lead to over-optimisticdemand forecasts. First, a too low demand forecastleads to power supply interruptions, which areextremely expensive, whereas a too high forecastleads to over-investment in plant and transmissionlines, which is less costly. It may therefore be betterfor the forecaster to err on the high rather than lowside. Second, in the past, power sector investmentslargely depended on the availability of grants andconcessional loans to finance the capital-intensiveprojects needed. When opportunities arose to obtainfinancing under favorable terms or when marketprices for equipment were very low, it was best tomake use of the situation and to implement a projectperhaps a few years earlier than actually needed bythe system, given the risk that these finance or mar-ket conditions would be less attractive in the future.Then, of course, demand forecasts needed to demon-strate that the project was “needed,” and this was insome instances done by predicting a (too) highgrowth of the demand.

Particularly dangerous are schemes that makeeach other feasible, such as a hydropower project andan aluminum smelter. The construction of the

hydropower plant must start well ahead of thesmelter. If then there is a slump in demand for alu-minum and the construction of the smelter isdelayed, there would arise the potentially unfortunatesituation that the hydropower project is being built inthe complete absence of an assured market.

Also, political risks must be considered here. It isobvious that the demand forecasts for countries orregions suffering from political instability are lessrobust than those for stable democracies.

The project benefits should be determined for anumber of forecast scenarios, with each scenariobeing assigned a probability of occurrence, and thisshould be considered in the overall probabilisticinvestment analysis.

It is beneficial to cover at least part of the futuredemand by a “flexible response” plant, such as a gasturbine or combined cycle, with short lead time and(compared to the overall system demand) smallcapacity, equivalent to, say, not more than 50 percentto 100 percent of the expected annual growth incapacity. This facilitates a flexible response to actualdemand growth by deferring or accelerating theseprojects as needed. Capital-intensive projects withlong lead times, such as large dam projects, shouldbe planned on the basis of a rather pessimisticdemand forecast, so that expensive mistakes canalmost certainly be avoided.

The main lesson is to make sure that capital-inten-sive projects can almost certainly be used even undera pessimistic forecast. A pessimistic demand forecastis associated with a poorly performing economy, andunder these conditions you cannot afford costly mis-takes.

DIFFICULTIES DURINGTHE OPERATION PERIODFactors that could affect the economic and finan-

cial performance of the project during the operationperiod include: unexpected reservoir leakage (suchas Samanalawewa, Sri Lanka); reservoir sedimenta-tion greater than expected, or more sudden (especial-ly after a severe earthquake, volcanic eruptionand/or major typhoon, as happened in thePhilippines); a landslide causing dam overtoppingwith a resulting widespread devastation (Vaiont, Italy)or damage to the power facilities (Guymush,

DEMAND

YEAR

NormalForecast

PessimisticForecast

Have ‘flexibleresponse” ready forquick implermentationsuch as gas turbine orcombined cycle.

Firmly plan capital intensive projects with long lead timesuch as hydro, nuclear or coal-fired steam plant.

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Armenia); and upstream regulation or water extrac-tion by later constructed projects (planned dams inEthiopia would reduce flows to the proposedBaardheere project in Somalia).

While it is not necessary to be overpessimistic andwhile it is not possible to assign probabilities ofoccurrence to such events, it is prudent to determineif such an event would have a severely adverse affecton the project economy.

RISK AVERSIONThe results of the above analysis are distribution

functions of the present values of project costs andproject benefits. A distribution function of the bene-fit/cost ratio can be produced, which would showwith what probability the benefit/cost ratio would fallbelow unity and by how much.

Large schemes may have lesser relative risks thansmall projects (because they have been subject tomore study), but if they go wrong, they can exert apotentially disastrous effect on even a national econo-my. In many instances, it would be less risky to builda number of smaller schemes with equivalent totalcapacity, even if this would be achieved at a higheroverall present value of cost, as this would spreadthe risk. A series of smaller projects has a lesserchance of ending up as an overall economic failure,which developing nations in particular can ill afford.The higher overall cost can be seen as an insurancepremium against disastrous economic performance.

THE IMPORTANCE OF COMPREHENSIVEFIELD INVESTIGATIONSComprehensive field investigations prior to con-

struction is the cheapest way of risk avoidance.However, due to the cost pressure on preparatorywork, particularly in the case of private sector fundedschemes where the developer does not have long-term expertise in hydropower projects, there is a ten-dency to economize on fieldwork. Topographic map-ping, hydrological measurements and geologicalinvestigations are reduced to a minimum. This is aworrying trend and should be countered from theoutset.

The hydrometric and meteorologic networks inmany developing nations have deteriorated due tolack of funds and lack of understanding that goodhydrological information is fundamental for the accu-

racy of benefit projections of water resources andother types of infrastructure development. Increasedsupport of donor and funding organizations is neces-sary to expand existing networks, to include moresediment and water quality sampling and to automatedata collection and processing.

Comprehensive field investigations include thefieldwork required to determine the environmentaland social impacts of the dam project, to identify miti-gation measures and to determine if they will work.The investigations need to be done before a final com-mitment is made to the project by the developer andthe government since the study could find the projectto be fatally flawed or to require inordinate mitigationmeasures.

ENVIRONMENTAL ASPECTSIn developed countries there is a strong trend

away from environmental assessment of completeddesign, to the incorporation of environmental teamsinto the design team. This is in recognition of theimportance of environmental matters. The environ-mental team prepares the Environmental ImpactAssessment (EIA), which is usually subject to inde-pendent review by consent authorities, such as theenvironment ministry. The independent reviewprocess is often weak or absent in developing coun-tries.

Some argue that the EIA team should be separateto the planning and design team. This is the old way,in which the latter would complete the design, fol-lowed by work on environmental mitigation mea-sures. It is much better to incorporate the environ-mental expertise into the planning and design teamfrom the start, where it can have its greatest influ-ence, before the project design becomes firmed up.This way assessment and mitigation of impactbecomes an integral part of the study.

Independence is important for public confidence inthe environmental assessment process, and isachieved through an independent review by eitherthe authority or, if this does not exist or does nothave the necessary capacity, by an independent panelof experts.

STANDARDS AND

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STANDARDS AND CHECKLISTS FOR STUDIESAnnex 1 shows the minimum requirements for

reconnaissance, pre-feasibility and feasibility studiesfor large dam projects.

Annex 2 shows a checklist for environmental andsocial issues that need to be addressed during theproject planning and design phase. Environmentaland social issues are also handled in two other papersto be delivered during the workshop.

5. TRENDS IN DESIGN

Whereas the previous section deals with trends inplanning, the following sections deal, in a somewhatscattered way, with individual design aspects, whichare almost all related to the desire to build large damprojects cheaper and faster. Some design changes arealso the result of increased awareness of environmen-tal issues.

Another aspect is that of the need for involvementof independent panels of experts already during thedesign phase, particularly for projects financed by theprivate sector, to make sure that safety and workman-ship meet internationally accepted standards.

Reservoirs. The trend is away from reservoirsthat inundate relatively large areas of valuable land,major settlements, areas occupied by indigenous peo-ple or areas with unique habitats. Generally, there isa tendency towards smaller-size reservoirs. Thiscould cause problems with sediment deposition inthe reservoir itself but reduce problems withupstream aggradation and downstream degradation.Multiple use of water is becoming more and moreimportant.

Reservoir clearing before impoundment is general-ly seen as necessary. Remaining vegetation needs tobe burned before the last rainy season prior toimpoundment to let rains wash away much of theorganic ashes, which would otherwise be trapped inthe reservoir and cause eutrification.

Dams. One of the major breakthroughs in damconstruction has been the development of the rollercompacted concrete (RCC) dam. The lower cementcontent and the mechanized placing of the concreteyield a relatively low unit cost of around $30 to $40

per cubic meter of dam body, less than half the priceof conventionally placed concrete. The RCC tech-nique enables rapid placement; dams can grow by 60centimeters (two compacted layers) per day, makingit possible to build a 200-meter-high dam in less thana year. Due to the lower cement content, less heat isdeveloped during hardening, which is an addedadvantage. With RCC dams, river diversion duringconstruction is often in-river, rather than by means ofdiversion tunnels. This also saves time and money.

So far, only gravity dams have been built usingRCC, but soon also arch gravity and arch dams willbe able to make use of the same technology, usingcomputer-controlled infrared or radar guided con-struction machinery to obtain the right shape.

The RCC technology has made many dams feasi-ble that in the past appeared to be economically unat-tractive.

Another type of dam that has gained increasedpopularity is the concrete-faced rockfill dam. Not onlydoes it have a smaller volume than a rockfill damwith a central core or an earthfill dam, but an addedadvantage is that placing can continue even duringinclement weather conditions, thereby reducing thecost and the risk of delayed completion.

Major dams are now generally built with drainageand inspection galleries and are well equipped withsensitive electronically controlled instruments to beable to monitor from a central control room any set-tlement, movement and seepage.

For smaller structures dams with geomembranelining (up to 80 meters high) and inflatable rubberweirs (up to 15 meters high) are becoming accept-able alternatives to concrete weirs and low rockfill orearthfill dams. The maximum depth of bentonitefilled cutoff trenches for controlling seepage hasgradually increased over time and now can go downto 60 to 80 meters.

Spillways. Spillway hydraulics are now betterunderstood, particularly with respect to chute aera-tion requirements, and this has led to the use of high-er specific discharges, with an upper limit of about200 cubic meters per meter width of the spillwaychute. This has had a cost-saving impact.

Scouring in the plunge pool area, downstream of




the spillway flip bucket, is also now better under-stood, and by ensuring a safe distance there is lessdanger of undermining the stability of the dam.

Better forecasting techniques and spillway moni-toring can lead to improved safety. Flood warning sys-tems for the downstream inhabitants can help toevacuate people in a timely manner during extraordi-nary flood events. It is necessary to carry out floodzoning along the downstream river and delineateareas that will, with the dam in place, be subject to,say, a once-in-ten-year or once-in-one-hundred-yeardesign flood or possible dam break. Housing in thearea subject to frequent (for example, once in tenyears) flooding should generally not be permitted.Flood warning systems should be in place in areassubject to the hundred-year flood and contingencyplans must be available to evacuate people duringmore severe floods or a dam break.

Water intakes. The water quality and water tem-perature in the upper 10 to 15 meters of a reservoirare normally the best. There is a definite trend tovariable-level intakes that allow water to be takenfrom the top layer—examples are Bakun (Malaysia),Kaeng Krun (Thailand) and Katse-Mohale (Lesotho).Intake levels were determined after extensive reser-voir water quality modeling. The release of waterwithout oxygen or with a temperature very differentfrom that of the downstream river should be avoidedto prevent adverse effects on fish downstream of thedam.

Water conduits. Tunnel-boring machines arebecoming more attractive for various reasons: Theyallow construction of tunnels and inclined shafts ofincreasingly large diameters; they cut constructiontime (which is most important in privately financedschemes); and they are much more reliable than inthe past. The steel lining of underground pressureshafts is increasingly substituted by much cheaperheavily reinforced concrete lining, prestressed bymeans of pressure grouting after placement of theconcrete lining.

Underground water conduits are attractive from anenvironmental point of view, particularly for theabsence of aesthetic disturbances in the landscape.Surface penstocks, especially those with smallerdiameters, are now often galvanized in order to cutdown maintenance cost. In flat alluvial areas,

increased mechanization allows major cost reductionsin the excavation and lining of power and irrigationcanals, with substantially reduced water losses com-pared with unlined canals.

Powerhouses and control rooms. There is atremendous drive to cut costs and manufacturingtime of hydroelectrical equipment. This has led toincreased employment of computer-aided manufactur-ing, a trend to welding rather than casting turbinerunners, and to the design of low-maintenance equip-ment.

It appears that there is a trend toward enlargingthe head range that can be covered by Francis tur-bines, which have a cost advantage over both Kaplan(low head) and Pelton units (high head). For verylarge projects, unit sizes are becoming bigger to capi-talize on the economy of scale.

Particularly for underground powerhouses, wherethe setting depth of the turbines imposes little extracost, Francis turbines with very high speeds can bechosen, hence reducing not only the cost of the tur-bine but, even more significantly, the cost of the gen-erator.

The increasing popularity of the electronic digitalgovernor and clever software makes it possible toreduce cost and at the same time increase operationalflexibility of the power plant.

The digital era has also led to simpler and moreinteractive project control rooms. Improved andcheaper data archiving, analysis and graphic presen-tation permit quick and comprehensive statisticalanalysis of operational data and abnormal events.

Reregulating ponds and fish ladders. For damprojects with a peaking hydropower plant, it is neces-sary to provide a reregulating pond at the power out-let unless the project discharges directly into a down-stream reservoir. Besides regulating the water so thatit can be used for irrigation and will not cause dam-age to downstream boating and fishery, it sometimeshas the added advantage that the water temperaturecan become closer to that in the natural river down-stream.

Since the outflow is regular and the head is low,fish ladders may be effective (they are certainly noteffective in high dams). Migratory fish can be lured

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into a container by means of electric inducers andtransported to the river reach upstream of the man-made lake.

Irrigation components. Large dams are oftenassociated with major irrigation schemes, and lessonslearned in irrigation affect the planning and design oflarge dams. Old irrigation systems often involved“recession”; i.e., the lands would be planted as theriver receded after a flood and the irrigated landswould be subject to considerable variation in waterlevels during the year.

More or less constant river levels with barragesand/or pumping lead to more continuous irrigation.The water table rises, leading to waterlogging, andwhen the water table is within reach of the surface,capillary action brings salt dissolved from the soilmatrix to the surface. River water itself has a smallsalt content, and this concentrates in the plant rootzone, leading eventually to water rising to the sur-face, evaporating and leaving behind the salt, whichis toxic to plants. Dam projects can also raise thegroundwater table in their vicinity generally, some-times with similar result of water logging and salinityproblems.

Modern irrigation design incorporates surfaceand/or subsurface drainage to keep the groundwatertable at a safe distance from the surface and to carryaway the saline drainage water.

Older irrigation systems tended to be inefficient,especially when featuring unlined canals and surfaceflooding. The general trend, especially in water-poorareas, is toward more efficient systems, includingsprinklers and drip-irrigation. Modern lining tech-niques for canals help to reduce the conveyance loss-es involved in bringing water from the dam to theirrigation areas. The increased efficiencies reducethe stored reservoir volume requirement and theamount of water lost to percolation rather than evapo-transpiration from within the plant root zone.

Geographical information systems (GIS), integra-tion of satellite imaginary and terrestrial survey data,and highly automated design, cost estimation and biddocument preparation have now reduced the engi-neering cost of large-scale irrigation systems.Extensive use of modern construction machineryleads to efficient canal excavation and, using the

same machine, immediate concrete lining with slip-forms. Laser-controlled earthmoving equipment facili-tates the preparation of flat irrigation areas. This highdegree of automation and mechanization cuts devel-opment costs and reduces time and cost overruns.

HV transmission. High voltage direct current(HVDC) transmission is becoming cheaper and per-mits efficient long-distance transmission of largeamounts of power, even if the electrical systems send-ing and receiving power are not synchronized. Thismay permit the construction of large, remotehydropower stations that serve distant load centersand may encourage regional and cross border trans-fers of electricity.

Design tools. Enhanced finite-element analysis in,for example, rock mechanics, more detailed mathe-matical models for hydraulic and water quality simu-lations, and sophisticated, yet user-friendly computer-aided design software are now commonplace andallow the designer to work more quickly and yetmore accurately. This is not to say that computermodels replace experienced engineers, but ratherthat experienced engineers are able to work moreefficiently and thoroughly.

Just like the models for economic and financialanalysis, software used during the design phase isbecoming more and more “probabilistic,” replacing“deterministic” models. An example is the calculationof the risk of dam-overtopping, a potentially cata-strophic event that could trigger the destruction ofthe dam. Here various events, each with their ownprobability, may be superimposed on each other: theinitial degree of fullness of the reservoir and the ini-tial “wetness” of the catchment, the occurrence of amajor storm and the path it follows in passing overthe catchment, the direction and force of the windcausing wave action and the likelihood that one ormore gates of the spillway will not function. Similarly,other factors affecting dam safety can be analyzed ina probabilistic manner, including the effects of earth-quakes, internal erosion due to piping and/or founda-tion problems. None of these problems in isolationmay be reason for a dam failure, but in combinationthey could be.

The choice of an “acceptable” level of risk needssome thought. First, people are less prepared toaccept “involuntary” risk than “voluntary” risk. A per-

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son who smokes may for safety reasons protestagainst the planned construction of a chemical facto-ry nearby, although the real risk for his health associ-ated with smoking is far greater than the risk of, say,a catastrophic explosion of the chemical factory.Second, the perceived risk levels of rare events aregenerally overestimated, and those associated witheveryday dangers are underestimated. A person mayhappily, without even being aware of any risk, climb aladder to replace a light bulb, but be extremely afraidto board an airplane for an international flight.However, the likelihood that he dies of an electricshock or falls off the ladder is several orders of mag-nitude greater than the likelihood that he dies in anairplane crash. The behavior of people depends onhow they perceive risk, rather than what the true riskis. This is why, for example, airplanes are designed toa much higher safety standard than, say, ladders.

The coming decade will see a tremendous drivetoward visualization of the project, based on GIS,computer-aided design and animation techniques.This is increasingly important in an age where non-technical people have to participate in the decision-making process.

Design work by utilities, contractors andmanufacturers. Increasingly, utilities from Westerncountries seek to expand internationally in theabsence of a growing domestic market. They haveexcellent but underused design teams, which can beused to carry out planning and design work for over-seas projects in which the utility would like to invest.

In the era of privatization, there is also a trend forthe detailed construction design, previously much thedomain of international consultants, to be carried outby civil works contractors and equipment suppliers,particularly if they form part of the developer group.

Quality insurance by independent panel ofexperts. Particularly in an era of increased private-sector involvement and the resulting time pressureon engineering, it appears important that experiencedand competent engineers are recruited to examinethe design of large dam projects. The importance ofquality assurance by a panel of independent expertsin reviewing the design and safety of all project struc-tures during the ongoing design stage cannot beoveremphasized.

6. CONSTRUCTION

Overall project management. As a result of theincreasing cost pressures and the desire to limitfinancial risks to a minimum, professional projectmanagement using modern information tools to co-ordinate and control construction time schedules andto keep a check on expenditures is becoming evermore important. Increasingly, project managers arerequested to have excellent communication skills andto be sensitive to environmental and social issues.

Inclusion of resettlement and environmentalmitigation. Implementation of a large dam project isnot restricted only to the physical construction of thescheme itself, but equally importantly includes thesuccessful realization of environmental and social mit-igation measures. The costs of these measures arepart of the normal cost of the scheme and form partof the project equity.

Influx of workers. The desire to build largeschemes faster and more efficiently, crucial for pri-vate sector financed projects, will often mean thatcheap but well-trained skilled labor from other coun-tries is hired by contractors. This may cause localunrest because the local population feels cheated bynot having enough access to well-paid constructionjobs. The influx of foreign workers may also lead tothe unwanted spread of hitherto unknown or rare dis-eases in the area. Well-paid employment of locallaborers in all stages of the resettlement activities,the provision of vocational training to the local popu-lation in technical and administrative skills and exten-sive preventive health care can help in such cases.

Monitoring by independent panel of experts.The regular inspection of ongoing construction andequipment manufacture as well as socioenvironmen-tal mitigation measures by an independent panel ofexperts is necessary to ensure that the developers,contractors and equipment manufacturers follow pre-scribed standards and work specifications. The panelshould be able to discuss and help solve unexpectedproblems of whatever nature. For privately financedprojects, independent experts should safeguard theinterests of the government.

Training of operator personnel. Operator andadministrative personnel should receive training dur-ing the construction period. This training can take

THE BOOK - Q 7/25/97 4:45 PM Page 39


place in similar schemes already in operation and/oron the premises of equipment manufacturers. Thosewho will be responsible for operation and mainte-nance of equipment should participate in the erectionof it. Training should specifically include safety andenvironmental monitoring activities. For projects indeveloping countries, it is wise to train about twicethe number of people needed to counter the usuallyhigh fluctuation of staff.

7. CONSIDERATIONS DURINGTHE OPERATION PERIOD

Project operation and management. Lessonsfrom the past are that only a well-trained and well-equipped project staff with sufficient authority canensure reliable and efficient operation. In developingcountries it would often be advisable to engage anumber of expatriate specialists, under whose guid-ance the project is run and maintained during thefirst few years of operation, while local staff aretrained and duties are progressively handed over.

Regular operational tasks can now be scheduled,monitored and administered by computer, greatlyfacilitating the project administration. Operation andmaintenance manuals can be available on computer,with on-line help functions.

For reservoir storage projects in particular, it isrecommended that monthly or ten-day water releasesbe optimized in a strategic way to maximize revenuesand minimize environmental impact of the project.The look-ahead period should be one year, and beupdated every month. Short-term operation modelswould then optimize hourly releases and, in the caseof hydropower plant, actual unit commitment.

Catchment management and protection should beseen as part of normal project operation and is ofcommon interest to the project developer and envi-ronmentalists. Likewise, attention should be paid tomandatory releases to the downstream river, thetrend here being away from constant releases towarda pattern that to some extent follows the natural sea-sonal flow cycle, albeit at a reduced discharge level,for the benefit of the downstream aquatic ecology.

Project operation during abnormal events.Just as aircrews are trained for emergency landings

of a plane, personnel of large dam projects should betrained to react decisively and correctly to any emer-gency situation that could possibly arise, such as pas-sage of extreme floods that threaten to flood down-stream settlements; malfunctioning of the projectspillway; fire in the project control room, power sta-tion or access tunnel; abnormal seepage or settle-ment of the dam or spillway; or damage to any of themajor project structures due to landslides.

Contingency plans must be available, the chain ofcommand must be clear, regular drills should beorganized so that the operations staff is prepared forany eventuality, and systems should be in place andtested to warn or even evacuate the downstream pop-ulation. Flood forecasting and, when appropriate, con-trolled releases of flood waters to minimize flooddamages, should become the rule rather than theexception.

Outsourcing operation and maintenance.Many of the private developers of large dam projectsare not familiar with the operation and maintenanceof such schemes. To ensure the highest efficiencyand to reduce outage times, they outsource projectoperation and maintenance to specialist companies.

Safety inspections. An independent panel ofexpert should carry out regular safety inspections.This panel should have full and unlimited access toall operation data and logging devices.

Monitoring environmental and social impacts.The monitoring of environmental and social impact ofthe project is best carried out by independent organi-zations, funded by the proceeds of the dam project.Such monitoring should include regular measure-ment of water levels, flows, water quality parametersand sedimentation in the reservoir, and upstream anddownstream of the project; observation of wildlife,fish and fish migration, fauna and flora in and aroundthe reservoir area; health monitoring, active preven-tion of diseases and medical care for the affected pop-ulation; monitoring of employment and income levelsof the affected population; and control of tourism,hunting and other activities.

Every five years or so a comprehensive ex-post evalu-ation should be carried out to verify whether projectexpectations have been met and to determine wherefurther remedial action, to be paid by the project, is


THE BOOK - Q 7/25/97 4:45 PM Page 40



required. Ex-post evaluations play an important rolein understanding the real environmental and socialimpact of large dams.

8. REHABILITATING AND UPGRADINGOF EXISTING DAM PROJECTS

Review of safetyAs existing dams grow older, it becomes increas-

ingly important to regularly reassess their safetyaspects. This would best be done by independentexperts, rather than by the owner’s personnel, toavoid coverups of findings that might embarrassmaintenance personnel or perhaps lead to expensiverepairs for which the owner would be reluctant topay.

A thorough review of the safety aspects of existingdams every ten years or so could help to avoid poten-tially catastrophic situations, such as:

■ The magnitude of the design flood may be high-er than previously estimated, based on new hydrolog-ical data, possibly affected by climatic change;

■ In the absence of appropriate regulations anddue to a false sense of security given by the absorp-tion of major floods in a reservoir since constructionof the dam, housing areas and other infrastructuremay have encroached upon the areas that would besubject to flooding during the occurrence of majorfloods;

■ As a result of aging and wear and tear, spillwaygates and other outlets may be in poor condition;

■ The dam instrumentation may no longer be up-to-date or functioning properly;

■ Piping or seepage may have caused deteriorationof the dam embankment;

■ Deterioration of concrete may have taken place.Cores from old gravity dams are sometimes verydegraded; sedimentation may have blocked the bot-tom outlet; or

■ Project operators and downstream communityleaders may not have (or may not have been trainedto use) contingency plans for emergency conditions.

The review of safety aspects could lead to designchanges (for example, additional spillway capacity),installation of additional instrumentation, changes in

operation, additional operator training, installation ofwarning systems, and so forth. The growing impor-tance of environmental awareness, established recre-ational activities and new project duties may lead tochanges in modes of project operation.

Upgrading existing dam projectsIt is often possible to boost the performance of

existing projects, with relatively little incrementalenvironmental or social impact, and to avoid, or delay,the construction of new dam projects. Depending onthe characteristics of the scheme, the followingaspects should be checked: replacing or recondition-ing of existing turbines and generators in hydropow-er plants; adding additional turbine units to existingplants; raising existing dams; diverting additionalwater into existing reservoirs; lining, or repairing thelining of, irrigation canals, cutting conveyance losses;using on-farm irrigation techniques that use lesswater; improving cropping patterns on existing irriga-tion schemes; and improving reservoir operation tobetter exploit the reservoir storage.

9. LONG-TERM TRENDS

Increasing importation of water rights. Thegrowing world population and the increasing needswill make water an increasingly precious commodity.The competition and conflicts about water willincrease. It will become increasingly important thatnational and international water rights are recognizedand honored.

The poor’s increasing difficulty of paying forwater. Increased use and competition of water willalso lead to higher costs, and this has two main con-sequences: There will be increasing emphasis onwater conservation and water reuse; and with higherprices, it will become more difficult for the poor topay for drinking and irrigation water. Social consider-ations in the planning and design of dam projectsmay therefore become an important issue.

Greater use of pumped storage plants. In thelong term, the role of renewable energy production,particularly solar and wind power, will increase. Somesort of energy storage will be required to offset theconsiderable fluctuations inherent to solar and windpower plants. Compensation can be provided by con-ventional hydropower plants, provided they have a

THE BOOK - Q 7/25/97 4:45 PM Page 41



reasonable size reservoir, but also by pumped stor-age schemes, which are particularly suited to evenout short-term fluctuations from minute to minuteand over the day. The role of pumped storage plant istherefore likely to increase in the long term. Thisincludes underground pumped storage plants, whichwould make use of disused underground mines.Other storage devices that are getting increasedattention are SMES (super magnetic energy storage),battery storage and storage of compressed air inunderground caverns.

10. SUMMARYAND CONCLUSIONS

This paper provides a broad overview of thelessons learned and trends in the planning, design,construction and operation of large dam projects,specifically addressing engineering and economicaspects.

In conclusion, the main trends for large dam pro-jects seem to be:

■ Increased understanding and awareness of com-plex technical, environmental and social issues thatare inherent to large dam projects; and realizationthat the development of large dam projects involves atrade-off between the benefits gained against losses;increased awareness that environmental sustainabili-ty and high discount rates are in conflict;

■ Increased public scrutiny of large dam projectsand increased public interest in large dam projects asa result of NGO campaigns;

■ Increased public consultation in identifying andscreening of projects;

■ Increased private-sector financing and, as a con-sequence, drive to cut costs and duration of designand construction, and to reduce financial risks;

■ A number of technological developments thatmake the planning and construction of large dam pro-jects more efficient;

■ The recognized need for independent monitor-ing and control of project cost, dam safety and envi-ronmental and social impact during all phases of pro-ject design, construction and operation;

■ Increased need for safety inspection and envi-ronmental management of existing dam projects; and

■ Increased interest in modernization and upgrad-ing of existing schemes.

In summary, the most important are the move toprivate-sector financing and the increasing publicinterest in large dam projects. This leads to changes

in planning procedures, design and operation.The review of EIAs, project design, construction

and operation by independent panels of experts willplay a key role in providing suitable assurance to thepublic, owners, lenders and government. Withincreasing public scrutiny of environmental andsocial impacts, the trade-offs between the benefits ofdam construction and the losses will be more explicitto the decision makers.

ACKNOWLEDGEMENTS

In addition to those from IUCN and the WorldBank staff, comments on earlier drafts of this paperby David Mayo, Kevin Oldham and Peter Wilson aregratefully acknowledged.

BIBLIOGRAPHY

Gupta, P., and G. Le Moigne, “The World Bank’sApproach to Environmentally Sustainable DamProjects,” International Journal of Hydropower andDams, Issue 5 (1996). Hoeg, K., “PerformanceEvaluation, Safety Assessment and Risk Analysis forDams,” International Journal of Hydropower andDams, Issue 6 (1996).Lafitte, R, “Classes of Risk,” International Journal ofHydropower and Dams, Issue 6 (1996).McCully, P., “Silenced Rivers — the Ecology andPolitics of Large Dams.” (U.K./New Jersey: ZEDBooks in association with the Ecologist and theInternational Rivers Network, 1996)Muir, T.C., E. Oud and D. Mayo, “Hydropower at aCrossroads — Reconciling Public and PrivateObjectives,” Proceedings of Asia Power 1997, AICConference, (Singapore, February 1997).Rivertech96 International Conference onNew/Emerging Concepts for Rivers conference pro-ceedings (Urbana, Ill.: International Water ResourcesAssociation, September 1996).World Bank, "The World Bank’s Experience withLarge Dams — A preliminary Review of Impacts,"Washington D.C. (1996).World Bank (R. Bacon, J. Besant-Jones and J.Heidarian), "The Performance of Construction Costand Schedule Estimates for Power GenerationProjects in Developing Countries," Washington D.C.(1996)

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Level: INVENTORY Level: PREFEASIBILITY Level: FEASIBILITY

Objective: Establish a comprehensivecatalog of project options for the candi-date reach or site(s).

Objective: Determine provisional rankingof options taking into account optimalintegrated development of river reach.

Objective: Demonstrate technical, envi-ronmental, economic and financial feasi-bility of project.

Topography: Minimum requirement aeri-al photography at least 1:60,000, prefer-ably 1:25,000, for stereoscopic interpre-tation (geometric, geologic, agronomic).Vertical control and river profiles by sur-veying altimeter. Contour maps by pho-togrammetric interpretation covering pos-sible dam sites and reservoir areas (forelevation/area/volume curves). Field sur-veys of cross-sections at dam, power-house and other hydraulic works fortopographic maps at 1:5,000 with 5 or 10meter contours.

Topography: Photogrammetric survey ofreservoir area, altimetric precision corre-sponding to 1:5,000 up to 1:25,000scales with 2 or 5 meter contours.Verification of 1:5,000 topography at sitesby additional cross-sections. Linkage ofsurveys (and water level gauges) withregional or national geodetic network.

Topography: Field surveys at structuresites and compilation of 1:2,000 mapswith 2 meter contours. Surroundingareas at 1:5,000 with 2 or 5 meter con-tours. Verification of profiles, reservoirarea/volume curves and maps preparedduring earlier studies.

Hydrology: Historical discharge series ofabout 30 years, either recorded at (ornear) site or reconstituted by regressionwith records at nearby locations and/orby catchment model. Probabilisticassessment of severity of streamflowdeficiency periods included in series.Estimated probability curves of floodpeaks and volumes, possibly fromregional analysis. Evaluation of regionallyavailable data on sediment transport forestimation of accumulation rates inreservoir. Approximate assessment ofprecipitation/evaporation balances inreservoir area.

Hydrology: Verification of streamflowseries established at inventory level.Derivation of design flood hydrographs atvarious probabilities for spillway anddiversion works. Detailed analysis of anysediment load measurements madesince inventory, for better estimation ofdeposition rates and design of any trap-ping and separating structures.Determination of stage discharge rela-tionship at dam sites and powerhousesbased on staff gauge readings and dis-charge measurements.

Hydrology: Updating of previouslyderived streamflow and meteorologicalseries, flood hydrographs and sedimentdeposition rates by incorporating any fur-ther data obtained since previous study.

Geology: Surface reconnaissance toenable inferences to be made on depthof alluviums, tectonic features, availabilityof construction materials, pervious forma-tions and slope stability at dam site andreservoir area. Possibly some subsurfaceinvestigation by geophysical methods forlarger project after preliminary screeningof options.

Geology: Subsurface investigation bygeophysical methods (seismic and/orelectrical resistivity) to yield more accu-rate interpretation of foundation condi-tions for major hydraulic structures.Verification of previous assessments ofslope stability and perviousness of for-mations in reservoir area and at damsite. In special circumstances, limitedmechanical drilling at specific sites oflarger projects.

Geology: Comprehensive subsurfaceinvestigations by mechanical drilling atsites of major surface structures andunderground works (tunnels, caverns),supplemented by trenches and explo-ration adits at dam abutments, along tun-nel alignments and in area of under-ground powerhouse. Complementaryinvestigations by geophysical methods ifnecessary. Detailed verification of previ-ous evaluations of slope stability, pervi-ousness of formations and availability ofconstruction materials.

Socio-environment: Sufficient agronom-ic and demographic information to quan-tify loss of agricultural land and commer-cial enterprises, number of families orpersons to be resettled, etc. Qualitativeevaluation of impacts relating to biodiver-sity, erosion, forest habitat, aquatic ecol-ogy, health, archaeology, legal aspects,etc.

Socioenvironment: Field surveys toimprove inventory level estimates ofresettlement and inundation of agricultur-al lands and business enterprises.reassessment of potential social andenvironmental problems for IEE report todevelopment bank requirements.

Socioenvironment: Verification ofprefeasibility estimates of resettlementand inundation of agricultural lands andcommercial enterprises. Detailed evalua-tion of socioenvironmental benefits andpotential problems, with recommenda-tions for solutions. Preparation ofdetailed plans and costings for measuresto be undertaken during construction andoperation. Fulfill EIA report to WorldBank requirements.

ANNEX ONE: A General Guide to the Scope and Accuracy of Hydropower Project Studies

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Level: INVENTORY Level: PREFEASIBILITY Level: FEASIBILITY

Design: Consideration of several projectlayouts, including variations of dam axislocation, waterway alignment and power-house location. Use of generalized typesof dam (earthfill, rockfill, concrete gravitydam), hydraulic structures and electro-mechanical equipment, avoiding uncon-ventional designs intended to reducecosts. Standard criteria for selection ofnominal installed capacities and reservoiroperating levels. Presentation as singledrawing showing general layout and sec-tions through principal structures, supple-mented by technical data sheet.

Design: Consideration of various projectlayouts (maximum operating levels andpowerhouse locations), for optimumdevelopment of river reach or site.Variations around pivotal design (damheight/installed capacity) to permit opti-mization. Use of specific solutions formajor project features such as diversionworks, dam, spillway, waterways, power-house.

Design: Economic optimization of princi-pal project features such as flood sur-charge (trade-off spillway capacity anddam crest elevation), diversion workssize, waterway dimensions, etc.Preliminary stability analysis of majorstructures. Particular consideration ofconstruction methods and schedules andtheir influence on project cost. Details ofdrawings sufficient for offtake of volumesand costs, including access roads andconstruction site installations.

Costing: Consistent criteria and stan-dard procedures to obtain homogenouscost estimates of project components,indirect costs and contingencies.Individual unit or total costs representedas functions of specific project variables,on basis of information from suppliersand actual civil works costs incurred oncompleted projects. Estimates of opera-tion and maintenance costs based onexperience in existing projects.Breakdown of costs into labor, equipmentand materials, foreign and local currency.

Costing: Standard cost estimating pro-cedure similar to that used at inventorylevel, possibly with greater desegregationinto project components.

Costing: Use of standard proceduresapplied during inventory and prefeasibili-ty studies as a basic reference fordetailed cost estimate. Determination ofunit cost composition of main construc-tion items, taking into considerationcapability of local labor, performance ofconstruction equipment, costs of supplyand handling of materials, meteorologicalconditions, access, etc. Combination ofcost estimates with construction sched-ule to yield investment schedule.

Evaluation: Computation of energy pro-duction and capacity availability overperiod of recorded or reconstitutedstreamflow series, taking into accountreservoir elevation area/volume relation-ships, evaporation and seepage, turbineperformance characteristics, existing andplanned river basin developments andother uses (irrigation, water supply, floodcontrol), using independent operatingpolicies. Assessment of power and otherbenefits to yield estimates of net benefitsand unit values of kilowatts and kilowatt-hours for projects and alternatives, apply-ing cost allocation procedure to multipur-pose projects.

Evaluation: Assessment of energy pro-duction, capacity availability and powerand other benefits for project variants(range of dam heights and installedcapacities), applying procedures similarto those used during inventory study,possibly incorporating in some form anoptimization model, to arrive at a devel-opment of the river reach or site whichmaximizes total net benefits. Refinementof the scheme, in particular moredetailed assessment of installed capacitybased on system approach or assumedPPA terms and conditions.

Evaluation: Demonstration of technicalfeasibility of constructing project.Economic evaluation and detailed finan-cial analysis based on estimated invest-ment schedule and possible sources offinance. All assumptions to be statedand sensitivity testing of plausibleadverse outcomes included. Benefits,risks and returns for participants to beclearly identified.

All three levels of investigation provide input data to the continuously ongoing planning process, which in turn yields technical andeconomic bases for:

i) identifying river basins or reaches for study at prefeasibility levelii) selecting individual projects for study at feasibility leveliii) deciding to construct a project

ANNEX ONE, continued: A General Guide to the Scope and Accuracy of Hydropower Project Studies

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and

hypo

limni

on, a

naer

obe r

ottin

g pro

cess

es in

hyp

olim

nion

, pos

sible

emiss

ion of

hyd

roge

nsul

phat

e and

met

hane

pos

sible

inve

rsion

, cold

er ri

ver w

ater

may

dip

into

hyp

olim

nion

lead

ing t

o nut

rient

def

icien

t top

laye

r of r

eser

voir,

effe

ct on

aqua

tic ec

ology

❑ d

isapp

eara

nce o

f rive

rine s

pecie

s, pr

olife

ratio

n of

lacu

strin

e spe

cies,

deve

lopm

ent l

ake f

isher

y, po

ssibl

e int

rodu

ction

of n

on-e

ndem

icsp

ecies

with

unk

nown

effe

cts,

bree

ding

of ve

ctor

s for

wat

erbo

rne d

iseas

es❑

bird

s, wi

ldlif

e❑

incr

ease

d ev

apor

ation

loss

es, b

locka

ge of

inta

kes,

incr

ease

d ro

tting

of b

iomas

s, ef

fect

s on

navig

ation

, pro

spec

ts fo

r biol

ogica

lco

ntro

l (we

evils

), al

ga b

loom

ing a

nd d

ie-of

fs❑

emplo

ymen

t in

serv

ice a

nd sp

orts

sect

ors,

indus

try, d

ange

r of p

ollut

ion, w

aste

disp

osal

and

sewe

rage

pro

blem

s, inc

reas

ed b

uildi

ngac

tivity

❑ w

ave a

ction

on m

an-m

ade l

ake,

affe

ct on

rese

rvoir

slop

es, d

am cr

est e

levat

ion a

nd n

aviga

tion

❑ m

orni

ng m

ist, l

ocal

ly in

crea

sed

cloud

ines

s and

rain

fall,

redu

ced

tem

pera

ture

s aro

und

lake

❑ w

ater

logg

ing,

salin

izatio

n, p

robl

ems w

ith la

trine

s❑

effe

ct on

dam

safe

ty, ot

her m

ajor

stru

ctur

es, f

ear o

f loc

al p

opul

ation

❑ p

ower

pla

nt❑

high

pres

sure

cond

uits,

turb

ines

❑ fi

sh en

train

men

t❑

fish

kill

❑ d

amag

e due

to a

brup

t pre

ssur

e diff

eren

ces,

turb

ine m

orta

lity

ANNE

XTW

O:

THE BOOK - Q 7/25/97 4:45 PM Page 45

Imp

act A

rea

Eff

ect

of

Dam

Co

nse

qu

ence

sB

asic

Imp

acts

Asp

ects

to

be

Eva

luat

ed

❑ do

wnstr

eam

river

❑ fl

ow re

gula

tion

❑ re

duce

d flo

ws(u

pstre

am d

ivers

ion)

❑ le

ss se

dim

ents

❑ ch

ange

d wat

er qu

ality

❑ d

iscon

nect

ion fr

omup

stre

am ri

ver

❑ le

ss se

dim

ents

toes

tuar

y❑

less

nut

rient

s to

estu

ary

❑ fl

ood

cont

rol

❑ lo

w flo

w au

gmen

tatio

n

❑ le

ss w

ater

leve

l var

iation

❑ lo

wer w

ater

leve

ls

❑ er

osion

of ri

verb

ed

❑ le

ss n

utrie

nts

❑ ox

ygen

def

icien

cy❑

acid

ity of

wat

er

❑ co

asta

l ero

sion

❑ d

istur

banc

e aqa

utic

ecolo

gy

❑ le

sser

inun

datio

n of

floo

dplai

ns

❑ im

prov

ed n

aviga

tion

❑ in

crea

sed

irriga

tion

❑ in

crea

sed

wate

r use

❑ le

ss sa

lt wa

ter i

ntru

sion

❑ le

ss ri

verin

e hab

itats

❑ lo

wer g

roun

dwat

er le

vel

❑ n

aviga

tion

prob

lems

❑ in

crea

sed

salin

ity in

trusio

n❑

lowe

r gro

undw

ater

leve

l❑

cavin

g in o

f rive

r em

bank

men

ts❑

und

ercu

tting

foun

datio

ns❑

less

fish

❑ fi

sh ki

lls❑

fish

kills

❑ in

crea

sed

corro

sion

❑ m

iner

als d

issolv

e in

wate

r❑

redu

ced

fish

migr

ation

❑ n

o boa

t con

nect

ion❑

loss

of h

abita

ts a

ndin

frast

ruct

ure

❑ le

ss fi

sh a

nd ot

her s

ealif

e

❑ n

utrie

nt su

pply

to fl

ood

plai

n, n

eed

to u

se a

nd p

ay fo

r fer

tilize

rs, e

ffect

on m

icro-

orga

nism

s enc

roac

hmen

t of p

eopl

e to f

loodp

lain

swi

th in

crea

sed

dam

ages

dur

ing m

ajor

floo

ds w

hich

cann

ot b

e reg

ulat

ed❑

oil s

pills

, nois

e, ne

w po

ssib

ilities

to tr

avel

to a

nd fr

om h

ither

to is

olate

d ar

eas,

esta

blish

men

t of c

omm

ercia

l boa

t tra

nspo

rt❑

see:

irrig

ation

are

as❑

indu

stry

: inc

reas

ed em

ploy

men

t, im

prov

emen

t reg

ional

econ

omy,

wast

e wat

er p

robl

ems,

air q

ualit

y pro

blem

s, in

flux o

f peo

ple t

oth

e reg

ion❑

indu

stry

: inc

reas

ed em

ploy

men

t, im

prov

emen

t reg

ional

econ

omy,

wast

e wat

er p

robl

ems,

air q

ualit

y pro

blem

s, in

flux o

f peo

ple t

oth

e reg

ion❑

est

uary

: cha

nge i

n wa

ter s

alin

ity, e

ffect

on h

abita

ts❑

wat

er ex

tract

ions d

owns

tream

can

incr

ease

❑ le

ss fi

sh, b

irds,

mam

mals

; effe

ct on

food

chain

, effe

ct on

nut

rition

less f

ish, b

irds,

mam

mals

; effe

ct on

food

chain

, effe

ct on

nutri

tion

❑ d

ryin

g up

of gr

ound

wate

r well

s, pr

oblem

s for

wat

er su

pply,

des

ertif

icatio

n du

e to g

roun

dwat

er le

vel f

allin

g belo

w ro

otzo

nes o

f tre

es❑

less

boa

ting t

rans

port,

high

er tr

ansp

orta

tion

cost

s, ef

fect

on re

giona

l eco

nom

y, ef

fect

on fi

sh m

igrat

ion a

nd sp

awni

ng, e

ffect

onm

amm

al m

igrat

ion❑

est

uary

: cha

nge i

n wa

ter s

alin

ity, e

ffect

on h

abita

ts❑

dry

ing u

p of

grou

ndwa

ter w

ells,

prob

lems f

or w

ater

supp

ly, d

eser

tifica

tion

due t

o gro

undw

ater

leve

l fall

ing b

elow

root

zone

s of t

rees

❑ lo

ss of

over

bank

hab

itats

, los

s of i

nfra

stru

ctur

e❑

pro

blem

s for

foun

datio

ns of

exist

ing b

ridge

s, we

irs, j

ettie

s, un

derw

ater

cabl

e cro

ssin

gs, e

tc.

❑ re

duce

d in

com

e fish

erm

en, i

ncre

ase f

ish p

rice,

less p

rote

in in

take

poo

r pop

ulat

ion, m

alnu

tritio

n ef

fect

s on

bio-

chai

ns, i

.e. le

ssfis

h-ea

ting b

irds

❑ s

ee a

bove

, bew

are o

f rele

ases

thro

ugh

low le

vel o

utlet

s of r

eser

voir

❑ s

ee a

bove

, bew

are o

f rele

ases

thro

ugh

low le

vel o

utlet

s of r

eser

voir

❑ m

etal

objec

ts, s

uch

as b

oats

, gat

es. p

ower

hous

e equ

ipm

ent,

may

be a

ffect

ed❑

pot

entia

l pro

blem

if ri

ver s

edim

ents

cont

ain

heav

y met

als,

pest

icide

s, et

c. wa

ter m

ay b

ecom

e tox

ic

❑ tr

ansp

ort p

robl

ems

❑ e

ffect

on b

iodive

rsity

, loc

al ec

onom

y and

recr

eatio

n

❑ lo

ss of

biod

ivers

ity, e

ffect

on fo

od ch

ain,

redu

ced

inco

me f

isher

men

❑ s

tream

rece

iving

dive

rted

flows

❑ in

crea

sed

flows

❑ le

ss se

dim

ents

(rela

tive t

o disc

harg

e)

❑ ch

ange

d wate

r qua

lity

❑ h

igher

wat

er le

vels

❑ lo

w flo

w au

gmen

tatio

n

❑ e

rosio

n of

rive

r bed

❑ le

ss n

utrie

nts

❑ o

xyge

n de

ficien

cy❑

acid

ity of

wat

er

❑ h

igher

grou

ndwa

ter l

evels

❑ in

crea

sed

flood

ing

❑ le

ss sh

allow

wat

er❑

impr

oved

nav

igatio

n❑

incr

ease

d irr

igatio

n❑

incr

ease

d wa

ter u

se

❑ lo

wer g

roun

dwat

er le

vel

❑ c

aving

in of

rive

r em

bank

men

ts❑

und

ercu

tting

foun

datio

ns❑

less

fish

❑ fi

sh st

arva

tion

❑ fi

sh st

arva

tion

❑ in

crea

sed

corro

sion

❑ m

iner

als d

issolv

e in

wate

r

❑ w

ater

logg

ing,

salin

isatio

n, p

robl

ems w

ith la

trine

s❑

cro

p los

ses,

dam

age t

o inf

rast

ruct

ure,

dam

age t

o hab

itats

,❑

less

spaw

ning

, effe

ct on

fish

, effe

ct on

food

chai

n❑

oil s

pills

, nois

e, ne

w po

ssib

ilities

to tr

avel

to a

nd fr

om h

ither

to is

olate

d ar

eas,

esta

blish

men

t of c

omm

ercia

l boa

t tra

nspo

rt❑

see

: irri

gatio

n ar

eas

❑ in

dust

ry: i

ncre

ased

empl

oym

ent,

impr

ovem

ent r

egion

al ec

onom

y, wa

ste w

ater

pro

blem

s, ai

r qua

lity p

robl

ems,

influ

x of p

eopl

e to

the r

egion

❑ d

ryin

g up

of gr

ound

wate

r well

s, pr

oblem

s for

wat

er su

pply,

des

ertif

icatio

n du

e to g

roun

dwat

er le

vel f

allin

g belo

w ro

otzo

nes o

f tre

es❑

loss

of ov

erba

nk h

abita

ts, l

oss o

f inf

rast

ruct

ure

❑ p

robl

ems f

or fo

unda

tions

of ex

istin

g brid

ges,

weirs

, jet

ties,

unde

rwat

er ca

ble c

ross

ings

, etc

.❑

redu

ced

inco

me f

isher

men

, inc

reas

e fish

pric

e, les

s pro

tein

inta

ke p

oor p

opul

ation

, mal

nutri

tion

effe

cts o

n bi

o-ch

ains

, i.e.

fewe

rfis

h ea

ting b

irds a

nd m

amm

als

❑ s

ee a

bove

, bew

are o

f rele

ases

thro

ugh

low le

vel o

utlet

s of r

eser

voir

❑ s

ee a

bove

, bew

are o

f rele

ases

thro

ugh

low le

vel o

utlet

s of r

eser

voir

❑ m

etal

objec

ts, s

uch

as b

oats

, gat

es, p

ower

hous

e equ

ipm

ent m

ay b

e affe

cted

❑ p

oten

tial p

robl

em if

rive

r sed

imen

ts co

ntai

n he

avy m

etal

s, pe

stici

des,

etc.:

wat

er m

ay b

ecom

e tox

ic

CHEC

KLIS

T FO

R KE

Y PO

TENT

IAL

ENVI

RONM

ENTA

L AN

D SO

CIAL

IMPA

CTS

CAUS

ED B

Y LA

RGE

DAM

PRO

JECT

S

ANNE

XTW

O, c

ontin

ued:


THE BOOK - Q 7/25/97 4:45 PM Page 46

ANNE

XTW

O, c

ontin

ued:


Imp

act A

rea

Eff

ect

of

Dam

Co

nse

qu

ence

sB

asic

Imp

acts

Asp

ects

to

be

Eva

luat

ed

❑ ir

rigat

ion a

reas

❑ in

crea

sed a

pplic

ation

of w

ater

❑ hi

gher

grou

ndwa

ter le

vels

❑ in

crea

sed

agric

ultu

ral

activ

ity

❑ in

crea

sed

drai

nage

❑ w

ater

logg

ing

❑ h

igher

food

pro

duct

ion

❑ in

crea

sed

use o

f che

mica

ls❑

mec

hani

zatio

n❑

mov

e to c

ash

crop

s

❑ a

dapt

ation

to n

ew te

chni

ques

❑ in

crea

sed s

alinit

y of r

etur

n flo

w

❑ sa

liniza

tion

of so

ils u

nles

s goo

d dr

aina

ge p

rovid

ed, l

oss o

f soil

ferti

lity i

n lon

g ter

m❑

redu

ced

mal

nutri

tion,

redu

ced

food

impo

rt, in

crea

sed

food

expo

rts, e

mer

genc

e of a

gro-

indu

stry

, inc

reas

ed em

ploy

men

t effe

ct on

regio

nal a

nd n

ation

al ec

onom

y, in

crea

sed

need

for s

ervic

e ind

ustry

❑ ef

fect

of in

crea

sed

use o

f fer

tilize

r and

pes

ticid

es on

surfa

ce a

nd gr

ound

wate

r qua

lity,

incr

ease

d de

pend

ency

on ca

sh cr

ops

❑ ch

ange

of fa

rmin

g met

hods

, whi

ch sm

all h

older

s can

ill a

fford

❑ h

igher

econ

omic

vuln

erab

ility t

o cro

p fa

ilure

s, low

er p

rodu

ction

of tr

aditi

onal

stap

le fo

ods,

high

er fo

od p

rices

whi

ch p

oor c

anno

taf

ford

❑ st

ress

, fea

r, hi

gher

expe

nditu

re on

mac

hine

s and

agr

icultu

ral in

puts

,❑

effe

ct on

fish

, drin

king w

ater

inta

ke

❑ H

V tra

nsm

ission

lines

❑ n

ew co

rrido

rs❑

clea

ranc

e of l

and

❑ el

ectro

-sm

og

❑ po

tentia

l sec

urity

prob

lem

❑ d

istur

banc

e of h

abita

ts❑

visu

al im

pact

❑ n

oise i

mpa

ct❑

elec

tro m

agne

tic fi

elds

❑ vu

lner

abilit

y to s

abot

age

❑ fr

agm

enta

tion

of h

abita

ts, i

nvas

ion b

y new

spec

ies, n

ew a

cces

s to p

ristin

e are

as❑

dist

urba

nce o

f nat

ural

land

scap

e❑

hum

min

g sou

nd❑

espe

cially

for v

ery h

igh vo

ltage

lines

, pos

sible

heal

th im

pact

❑ sa

bota

ge to

towe

rs in

rem

ote a

reas

, effe

ct on

pro

ject i

ncom

e, ef

fect

on p

ower

supp

ly se

curit

y in

the c

ount

ry

❑ re

settl

emen

tar

eas

❑ n

ew se

ttlem

ents

❑ in

flux o

f peo

ple

❑ ch

ange

of n

atur

alen

viron

men

t

❑ w

aste

disp

osal

❑ so

cial d

isrup

tion

❑ m

argin

aliza

tion

❑ h

ealth

impa

ct❑

hea

lth im

pact

❑ in

crea

sed p

ress

ure o

n res

ourc

es❑

incr

ease

d po

llutio

n

❑ et

hnic

conf

licts

, res

entm

ent i

n ho

st co

mm

unitie

s for

pre

fere

ntial

trea

tmen

t of s

ettle

rs, h

omes

ickne

ss, a

dapt

ation

to n

ew en

viron

men

tan

d lif

estyl

e, de

stru

ction

of in

tact

socia

l net

work

, dec

reas

ed m

utua

l sup

port

❑ in

tegr

ation

with

hos

t com

mun

ity, c

ompe

tition

for l

abou

r and

serv

ices

❑ sp

read

of co

mm

unica

ble d

iseas

es to

or fr

om h

ost c

omm

unity

, inc

reas

ed st

ress

and

trau

mat

a❑

wat

erbo

rne d

iseas

es, b

uild

up

of ve

ctor

s❑

deg

rada

tion

of n

atur

al fo

rest

, los

s of h

abita

ts, t

hrea

t to f

ood

secu

rity

❑ w

aste

disp

osal

, sew

erag

e tre

atm

ent,

sani

tatio

n st

anda

rds

❑ co

nstru

ction

area

s❑

cons

truct

ion a

ctivi

ty❑

labo

ur d

eman

d

❑ d

istur

banc

e of

surro

undi

ngs

❑ ex

posu

re to

unn

atur

alris

ks

❑ em

ploy

men

t of l

ocal

labo

r

❑ em

ploym

ent o

f im

migr

ant l

abor

❑ ef

fect

s on

land

scap

e❑

nois

e and

dus

t❑

incr

ease

d tra

ffic t

o and

from

site

❑ co

nstru

ction

acc

iden

ts

❑ te

mpo

rary

incr

ease

of in

com

e, ne

glect

of tr

aditi

onal

work

par

ticul

arly

subs

istan

ce fa

rmin

g, ac

quiri

ng n

ew sk

ills, e

xpos

ure t

o hea

lthris

ks❑

socia

l disr

uptio

n, sp

read

ing o

f dise

ase,

pros

titut

ion, u

se of

dru

gs a

nd a

lcoho

l, op

portu

nitie

s for

shop

s and

rest

aura

nt❑

quar

ries,

spoil

area

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THE BOOK - Q 7/25/97 4:45 PM Page 47


THE BOOK - Q 7/25/97 4:45 PM Page 48

Social Impacts of Large Dam Projects 41

By THAYER SCUDDER, California Institute of Technology

Paper Contents

Overview ........................................................42Introduction ....................................................45Definitions ......................................................46Numbers ........................................................46Resettlers ........................................................46Hosts................................................................51Other Project Affected People......................52Immigrants......................................................55

Project Affected Peopleand Resistance Movements ..........................55Helping Project Affected Peopleto Become Beneficiaries................................56Research Needs ............................................62Conclusions and Lessons Learned ..............63Acknowledgements........................................64Bibliography ..................................................64Annex One: Key Issues ................................68

Thayer Scudder is Professor of Anthropology and a co-founder of the Instituteof Development Anthropology at the California Institute of Technology.

SOCIAL IMPACTSof Large Dam Projects

Women working in a rice paddy near the Victoria Dam, Sri Lanka.




42 Social Impacts of Large Dam Projects

ABSTRACT

This paper asserts that the adverse social impactsof dam construction, whether short-term or cumula-tive, have been seriously underestimated. Large-scalewater resource development projects unnecessarilyhave lowered the living standards of millions of localpeople. According to the World Bank’s senior envi-ronmental advisor, “Involuntary resettlement isarguably the most serious issue of hydro projectsnowadays.” There are a range of difficulties, yet forthose removed and the host populations amongwhom they are resettled the goal of resettlementmust be to become project beneficiaries. The incomeand standard of living of the large majority mustimprove to the greatest extent possible. The histori-cal record suggests that realizing this goal is possiblebut very difficult to achieve. Besides resettlers andhosts, other people affected by dam constructioninclude rural dwellers residing downstream from adam. They are often neglected in project assess-ments because it is assumed that they will benefit

from the project, but evidence suggests that there aresignificant negative impacts. While the World Bankhas attempted to improve its performance, it contin-ues to underestimate adverse resettlement outcomesand downstream impacts. Scudder suggests a num-ber of ways in which all project affected people canbecome project beneficiaries. These include increas-ing local participation, improving the design andimplementation of irrigation schemes, providingtraining and technical assistance to utilize the reser-voir fisheries, and conducting strategic flood releasesthat can benefit downstream users and habitats.Multilateral donors are essential in ensuring thatmore local people become project beneficiaries.

1. OVERVIEW

Whether short-term or cumulative, adverse socialimpacts are a serious consequence of large dams.When combined with adverse health impacts, it isclear that large-scale water resource developmentprojects unnecessarily have lowered the living stan-dards of millions of local people. The emphasis in thispaper is on the low-income rural majority that live insubtropical and tropical river basins. The analysis willdeal mainly with resettlers, host populations andthose other project affected people (OPAPS), espe-cially downstream residents, who are neither reset-tlers nor hosts.

RESETTLERSAccording to the World Bank’s former senior advisorfor social policy and sociology, “Forced populationdisplacement caused by dam construction is the sin-gle most serious counter-developmental social conse-quence of water resource development.” The Bank’ssenior environment advisor concurs: “Involuntaryresettlement is arguably the most serious issue ofhydro projects nowadays.”

A wide range of difficulties is involved. Theyinclude the complexity of the resettlement process;the lack of opportunities for restoring and improvingliving standards; the problem of sustainability of whatdevelopment occurs; the loss of resiliency andincreased dependency following incorporation withina wider political economy; inadequate implementationof acceptable plans due to such factors as timing,financial and institutional constraints; unexpectedevents, including changing government priorities;

THAYER SCUDDER

Thayer Scudder is professor of anthropology and a co-founder ofthe Institute of Development Anthropology at the CaliforniaInstitute of Technology. Mr. Scudder has researched thesocioeconomic impacts of large dams and river basin develop-ment projects on project affected people within reservoir basinsand below dams in many parts of the world. He has also servedas a consultant on large dam and river basin development pro-jects in North America, Africa, the Middle East and Asia.

Thayer ScudderDivision of Humanities and Social Services, 228-77California Institute of TechnologyPasadena, Calif. 91125United StatesFax. (818) 405-9841E-mail. [email protected]

Note: This paper was commissioned by IUCN from the author forthe joint IUCN-The World Conservation Union/World Bank work-shop. Any personal opinions should in no way be construed asrepresenting the official position of the World Bank Group orIUCN.

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lack of political will on the part of governments; host-resettler conflicts; and the lack of empowerment ofrelocated and host populations.

For those removed, and for the host populationsamong whom they are resettled, the goal of resettle-ment must be to become project beneficiaries. Thismeans that the income and living standards of thelarge majority must improve. Analysis of the globalrecord in regard to resettlement suggests that realiz-ing this goal is possible but very difficult. The mainresource is those relocated. The global experience isthat resettlers can contribute to the stream of projectbenefits if appropriate opportunities and security oftenure over their natural resource base are present.

If more local people are to become beneficiaries,not only must World Bank-type guidelines for reset-tlers be extended to all project affected people, butthe horizon of environmental and social impactassessments must be expanded to include all habitatsand human populations that are likely to be affected.

The main theoretical framework dealing with damresettlement is a four-stage model developed duringthe late 1970s. Briefly, the four stages are character-ized by: one, planning; two, efforts by the resettlersto cope and to adapt following removal; three, eco-nomic development and community formation; andfour, handing over and incorporation. Successfulresettlement takes time. At the minimum it should beimplemented as a two-generation process.

Following the initial planning and recruitmentstage, the second stage is characterized by the strug-gle to adjust to the loss of homeland and to new sur-roundings. That stage is characterized by multidi-mensional stress, with physiological, psychologicaland sociocultural components synergistically interre-lated. During the initial year following removal,income and living standards can be expected to drop.If new opportunities are available, the third stage ofeconomic development and community formation canbegin once a majority of resettlers have adjusted totheir new habitat and gained a measure of householdself-sufficiency. The tragedy of most resettlement todate is that a majority of resettlers never reach stagethree. Rather as the resettlement process proceeds,they remain, or subsequently become, impoverished.

Stage three development must be sustainable into

the next generation for the resettlement componentto be considered successful. Stage four commenceswhen the next generation of settlers takes over fromthe pioneers and when that generation is able to com-pete successfully with other citizens for jobs andother resources at national and local levels. It is alsocharacterized by the devolution of what managementand facilitation responsibilities may be held by spe-cialized resettlement agencies, nongovernmentalorganizations (NGOs) and others to the communityof resettlers and to the various line ministries.

HOSTSEven when political leaders among the host popu-

lation agree to the movement of resettlers into theirmidst, sooner or later conflicts between the two canbe expected. They arise because of competitionamong a larger population over a diminished landbase, as well as over access to job opportunities,social services and political power.

It is best to anticipate the inevitability of host-reset-tler conflicts. The best approach for minimizing themis to include the host population in the improvedsocial services and economic development opportuni-ties intended for the resettlers. While such anapproach will increase the financial costs of resettle-ment in the short run, in the long run it will enhancethe possibility of multiplier effects as well as reducethe intensity of conflict. Unfortunately, such incorpo-ration of the host population within resettlement pro-grams is rare.

OTHER PROJECT AFFECTEDPEOPLE (OPAPS)Large-scale river basin development projects speed

the incorporation of all project affected people, includ-ing resettlers and hosts, within wider politicaleconomies. Theoretically that should be a plus interms of national development. The studies that havebeen completed suggest, however, that such incorpo-ration is more apt to reduce than improve the livingstandards of a majority. This is especially the casewith OPAPS living below mainstream dams.

Aside from run-of-the-river installations, a majorfunction of dam construction is to regularize a river’sannual regime. Though few detailed studies havebeen completed on the impacts of such regulariza-tion, those that exist have shown them to have a dev-


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astating effect on millions of people. The topic hasbeen best researched in West Africa in connectionwith mainstream dams on the Senegal River and anumber of dams in Nigeria. After three years of stud-ies, an Institute for Development Anthropology teamshowed that the Manantali Dam as managed by thetrinational Senegal Valley Development Authority(OMVS) was adversely affecting up to 500,000 peoplebelow the dam. Below the Kainji Dam on the Niger,adverse downstream impacts include reductions inswamp rice and yam production and in the productivi-ty of the riverine fishery. On a Niger tributary furtherupriver, costs of the Bakolori Dam to downstream vil-lagers is estimated to exceed the benefits realizedfrom the project.

As for OPAPS living in the vicinity of large-scaledams, Hydro-Quebec’s James Bay Project illustratesthe impoverishing impact on an entire cultural area.For example, the 1975 James Bay and NorthernQuebec Agreement split the Cree into eight geo-graphically isolated bands whose exclusive control ofsurface rights involved only 5 percent of their formerlands. More specifically, implementation of the LaGrande Phase of the project has had two quite differ-ent types of negative impacts. One is the mercurycontamination of reservoir fish to the extent that mer-cury contamination of some Cree, for whom fish arean all-important dietary component, significantlyexceeds World Health Organization standards.Causality in this instance can rather easily be ascer-tained. Such is not the case with the other type ofimpact, which includes an increased incidence of sex-ually transmitted diseases and social pathologiessuch as spousal abuse and suicide, especially amongyoung women.

IMMIGRANTSImmigrants, both temporary and permanent, from

without a particular river basin are major beneficia-ries of river basin development projects. Seeking thenew opportunities created by a project, they frequent-ly are able to out-compete local people. Two majorbenefits of large dams are the reservoir fishery andirrigation. Though both involve project affected peo-ple as well as immigrants, the latter tend to dominateunless a special effort is made to select and increasethe competitive abilities of local people.

HELPING PROJECT AFFECTEDPEOPLE BECOME BENEFICIARIESIncreasing local participation. In recent years,

the need for local people to have greater involvementin project planning, implementation, managementand evaluation has been increasingly emphasized.That emphasis is welcome and important. As with theimplementation of plans that actually make projectaffected people beneficiaries, however, the extent towhich local people have actually been involved hasbeen disappointing. Aside from lack of political willon the part of governments to actually decentralizedecision-making, there are several other issues thatmust be dealt with. These include differences in defi-nition as to what local participation means, failure tolink decentralization of decision-making with decen-tralization of financial resources for implementingthose decisions, and social disorganization at thecommunity level.

Ironically, increased emphasis on the need forlocal participation is occurring at a time when cus-tomary participatory institutions are weakeningbecause of increasing incorporation of local commu-nities within wider political economies and growingemphasis on private ownership of resources.Moreover, within communities, educated individualsare placing increasing emphasis on household andindividual interests, as opposed to extended kingroups and customary institutions of cooperation.

Such circumstances must be dealt with if local par-ticipation is to play the role it should in improving theliving standards of project affected people. A prereq-uisite will be participatory appraisal. While custom-ary institutions may be adjusted to new conditions,new socioeconomic and political institutional formswill probably be required.

Regardless of the type of institutions utilized ordeveloped, effective local participation must involve amuch broader range of actors than just project affect-ed people. At the national level, commitment must bereflected in the necessary legislative and judicialframework. The assistance of NGOs in institution-building would also be necessary in many cases, aswould be the financial assistance of various donors.Also important would be private-sector involvementin various joint ventures as well as assistance fromuniversities and research institutions to developappropriate monitoring and evaluation capabilities.


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Irrigation. Well-designed, implemented and main-tained, major irrigation schemes can produce signifi-cant increases in both production and living stan-dards in an environmentally sustainable fashion. Themain disadvantage of irrigation projects for projectaffected people is when they not only are unincorpo-rated within a project but are actually evicted fromtheir land to make way for it. As land and waterresources become scarcer, political elites will beincreasingly tempted to either access them at theexpense of project affected people or use them toachieve political goals.

Reservoir fisheries. Critics of large dams havetended to underestimate the importance of reservoirfisheries for project affected people. To benefit, how-ever, training and technical assistance are required,as is protection of the entry of project affected peopleduring the early years of a new fishery. Otherwise,more competitive fishers from existing reservoirs andnatural water bodies can be expected to dominate thenew fishery. While a major policy deficiency has beenfailure to anticipate the decline in productivity thatcharacterizes the formation of new water bodies,techniques exist to at least partially compensate forsuch a decline by expanding the fishery to capture awider range of species and to use a wider range oftechniques.

Improved design and management of existingand future engineering works for making con-trolled releases. Where dams are to be constructed,design and operations options should include con-trolled flood releases at strategic times for the benefitof downstream users and habitats. Controlled flood-ing is not a panacea, however. It may involve trade-offs with hydropower generation, for example, andthe floods that are released may be ill-timed.Moreover, only rarely can they provide a substitutefor natural river regimes. Nonetheless, where feasi-ble, the advantages of controlled floodwater releasescan be expected to outweigh disadvantages.

ACTIONS TAKEN OR INTENDEDBY THE WORLD BANK

In the World Bank’s 1994 review of their experienceswith involuntary resettlement, a series of “Actions toImprove Performance” are listed. Most important isthe recommendation to improve project design inways that “avoid or reduce displacement.” Toimprove government capabilities when removal is

required, the recommended strategic priorities wereto “enhance the borrower’s commitment” by onlyfinancing projects with acceptable policies and legalframeworks, “enhance the borrower’s institutionalcapacity,” “provide adequate Bank financing” and“diversify project vehicles,” whereby the Bank com-plements the financing of physical infrastructure withstandalone resettlement projects.

Other recommended strategic priorities includethe need to “strengthen the Bank’s institutionalcapacity” so as to improve the Bank’s ability to dealwith the different stages of the project cycle, and toimprove “the content and frequency of resettlementsupervision.” Where possible, “remedial and retro-fitting actions” are also emphasized in connectionwith previously funded, but inadequately implement-ed, Bank-assisted projects. Finally, the Bank empha-sizes that more attention will be paid to promoting“people’s participation” and NGO facilitation of “localinstitutional development.”

On the other hand, Bank documents continue topresent an unrealistic optimism; a "can-do" advocacyattitude that is uninformed by case and comparativestudies. The text of the Bank’s 1996 desk study oflarge dams is an example. The case studies in thesecond volume, for example, tend to underestimateadverse resettlement outcomes and downstreamimpacts.

2. INTRODUCTION

This workshop is occurring at a time of increasingcriticism of large dams. Such criticism is overdue andwelcome because benefits have often been inflatedand costs underestimated. Much less has been writ-ten on social impacts (aside from those relating toresettlement) than on environmental impacts; hencewell-designed long term research is urgently needed.Due to its absence, the arguments presented hererely to a large extent on case studies. What is knownindicates that, whether short-term or cumulative,adverse social impacts often are serious. When com-bined with adverse health impacts (Hunter et al.,1993), it is clear that large-scale water resource devel-opment projects unnecessarily have lowered the liv-ing standards of millions of local people.

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3. DEFINITIONS

Generally speaking, environmental impact analysishas dealt with impacts on the physical and non-human biotic components of ecosystems while socialimpact analysis has dealt with impacts on sociocultur-al systems (SCOPE, 1972). In this chapter, an equallybroad definition of social impacts will be used, withparticular emphasis on the impacts of large dams onthe lifestyles of affected communities, householdsand individuals.

The topic is a vast one, since in effect it includesimpacts on entire societies. To make it manageable,some restrictions are necessary. Emphasis through-out will be on the low-income rural majority that livedin subtropical and tropical river basins prior to beingaffected by one or more large dams. The analysiswill deal mainly with three categories of people: thosewho must be relocated because of project works andfuture reservoir basin inundation (the resettlers),those whose communities must receive resettlers(the host population or hosts), and those other pro-ject affected people (OPAPS) who are neither reset-tlers nor hosts. A fourth category, immigrants, willbe dealt with more briefly.

Because environmental and social impact assess-ments, as well as supervisory and project completionreports, have tended to ignore project impacts onOPAPS, they will be dealt with in some detail. Theyinclude three major types. The first includes thosewho live in the vicinity of the project works, includingnot just the dam site and township but also accessroads and transmission lines. The second consists ofthose who live in communities within reservoirbasins that do not require relocation or incorporationof resettlers. The third type, which tends to be by farthe most numerous, involves people who live belowdams whose lives are affected—for example, by theimplementation of irrigation projects or changes inthe annual regime of rivers in whose basins theyreside. Taken together, such other project affectedpeople usually outnumber resettlers and hosts.Therefore failure to assess impacts upon them can beexpected to distort feasibility study results.

Regrettably, the restrictions outlined above deem-phasize several important categories of people,including immigrants from without the river basinand inhabitants of cities, mining townships and other

major industrial complexes both within and without ariver basin. Since these categories—as opposed tolocal rural communities—tend to be the major benefi-ciaries of water resource development, in terms ofrising living standards resulting from increased sup-plies of industrial and residential electricity andwater, it is important for readers to realize that thispaper is biased toward those who, to date, are mostapt to be adversely affected. While some effort willbe made to correct this bias, it is intentional in orderto emphasize two points. The first is that the tenden-cy worldwide to ignore (in the case of OPAPS) orunderestimate (in the case of resettlers and hosts)the costs of major dams to large numbers of peoplehas inflated their benefits to the extent that insuffi-cient attention has been paid to other alternatives.The second is that there are ways for increasing thelikelihood of making a larger proportion of all cate-gories of project affected people beneficiaries incases where future dams are selected for implemen-tation.

4. NUMBERS

Little accurate data exists on the total number ofpeople affected by even a single dam. The majorexception is where a project impacts upon a easilydefined area with a relatively small population whosenumber is already known. An example is Quebec’slarge-scale James Bay Project, whose componentswill have a direct impact on approximately 11,000Cree Indians and an equal number of other residents.In that case the number of resettlers and hosts wouldconstitute only a small minority of the total, a relative-ly small number of people lived below dam sites, andno major cities would be involved. In contrast, whereprojects impact upon large numbers of downstreamresidents—as with the Kariba Dam on the Zambezi,the Kainji Dam on the Niger, the Aswan High Damon the Nile and the Gezouba and Three Gorges damson the Yangtze—numbers of those impacted can runinto the millions.

5. RESETTLERS

THE GOAL OF DAM-INDUCEDRESETTLEMENTFor those removed, and for the host populations

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among whom they are resettled, the goal of resettle-ment must be to become project beneficiaries. Thismeans that the income and living standards of thelarge majority must improve to the extent that suchimprovement is obvious both to themselves and toexternal evaluators. Such a goal is justifiable in termsof both human rights and economics. Inadequateresettlement creates dependence and impoverish-ment and lowers the stream of project benefitsthrough its failure to incorporate whatever contribu-tion those relocated might make, on the one hand,and by creating an increased dependence on safetynets, on the other. It also jeopardizes the life of theproject by increasing siltation and decreasing waterquality, since poorly relocated and impoverished peo-ple within a reservoir basin have little alternative butto overutilize their environment.

Analysis of the global record with resettlementalso suggests that the goal of raising the majority’sliving standards is possible but very difficult. Thepotential beneficiaries are mainly the relocated peo-ple themselves. Although far more research is need-ed on the later stages of the resettlement process,what little evidence exists suggests that within a fewyears of removal, the majority may be more receptiveto development than their neighbors who were notdisplaced. That is partly because resettlement is aptto remove a range of cultural constraints to futureentrepreneurial activities and initiative, including landtenurial, political and economic constraints. Thathypothesis, however, should never be used as a rea-son for resettlement for two major reasons. One isthe multidimensional stress associated with resettle-ment’s initial years. The other is the difficulty ofkeeping land, other natural resources and of employ-ment opportunities available while sustaining aprocess of development once it has commenced.

THE SCALE OF DAM RESETTLEMENTScale. According to the World Bank, “The dis-

placement toll of the 300 large dams that, on average,enter into construction every year is estimated to beabove 4 million people” (1994: 1/3), with at least 40million so relocated over the past ten years. The con-struction of dams and irrigation projects in China andIndia are responsible for the largest number on acountry-by-country basis. In China, over 10 millionpeople were relocated in connection with water devel-opment projects between 1960 and 1990 (Beijing

Review, 1992), while Fernandes et al. have estimatedthat a still larger number—many of whom were oftribal origin—have been relocated in India over aforty-year period (1989).

Resettlement counts for specific projects are rela-tively accurate where governments attempt to calcu-late numbers for compensation and other purposes.To date, the largest number of resettlers from a sin-gle project was 383,000, in connection with China’sDanjiangkou Dam on a Yangtze tributary.Completion of the Three Gorges Dam on the mainYangtze will require the resettlement of over 1 millionpeople.

Impacts. According to Michael M. Cernea, theWorld Bank’s senior advisor for social policy and soci-ology until his recent retirement, “forced populationdisplacement caused by dam construction is the sin-gle most serious counterdevelopmental social conse-quence of water resource development” (1990: 1).The Bank’s senior environment advisor, RobertGoodland, concurs: “Involuntary resettlement isarguably the most serious issue of hydro projectsnowadays.” He goes on to add, “it may not be improv-ing, and is numerically vast” (Goodland, 1994: 149).Add the adverse effects that most resettlement todate has also had on incorporating host populationsand on habitats surrounding resettlement sites, andthe impact magnitude increases still further.

RESETTLEMENT THEORYAND POLICY IMPLICATIONThe main theoretical framework dealing with dam

resettlement continues to be the four-stage model Isuggested in the late 1970s (1981 and in press;Scudder and Colson, 1982). In evolving that frame-work, I drew heavily on earlier work by RobertChambers (1969) as well as on Michael Nelson(1973), both of whom presented three-stage frame-works dealing, respectively, with institutional and eco-nomic issues involved in land settlement schemes. Ialso drew heavily on Elizabeth Colson’s and my long-term study of those Gwembe Tonga, who were relo-cated in the 1950s because of the Kariba Damscheme in what is now Zambia and Zimbabwe.Especially influential was Colson’s The SocialConsequences of Resettlement (1971), which Ibelieve remains the best single case study of theresettlement process.

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Throughout, my focus has emphasized resettlerbehavior at different periods. Briefly, the four stagesare characterized by planning; efforts by the reset-tlers to cope and to adapt following removal; econom-ic development and community formation withinresettlement areas; and handing over and incorpora-tion.

The influence of Chambers is clear in the empha-sis placed on the need for facilitating agencies tohand over eventual responsibility to resettler institu-tions; the influence of Nelson is clear on the need forsuccess to be defined not just in terms of increasedproduction but also improved living standards for themajority.

Successful resettlement takes time. At minimum, itshould be implemented as a two-generation process.Barring the impingement of unfavorable factorsexternal to the resettlement process, if success can-not be passed on by the first generation of resettlersto their children, then resettlement has failed.Following an initial planning and recruitment stage,the second stage is characterized by the struggle toadjust to the loss of homeland and to new surround-ings. That stage is characterized by multidimensionalstress, with physiological, psychological and sociocul-tural components synergistically interrelated.Increased morbidity and mortality rates are indicativeof physiological stress, while psychological stressrelates to the loss of home and habitat and anxietyabout the future. The non-transferability of variousnatural resources and knowledge, and cessation, atleast temporarily, of a wide range of behavioral pat-terns, statuses and institutions, cause socioculturalstress.

As a result of such multidimensional stress, I havehypothesized that a majority of resettlers cling tofamiliar routines and rely on kin, neighbors and co-ethnics to the extent possible during this stage. Ialso have hypothesized that they are risk-averse,behaving as if a sociocultural system was a closedsystem. Although a minority may not be affected,such stage two behavior appears to be associatedwith at least the initial year or two immediately fol-lowing physical removal.

At least during that initial year, living standardsalso can be expected to drop to well-planned and well-implemented schemes, since resettlers are faced with

the daunting tasks of familiarizing themselves with anew natural resource base, new neighbors and newgovernment expectations while simultaneously devel-oping new production systems and settling into newhomes. Hence the cautious, risk-adverse stance con-tinues for a majority of the first generation of reset-tlers, at least until they have adjusted to their newhabitat and gained a measure of household self-suffi-ciency. Then, if new opportunities are available, thethird stage of economic development and communityformation can begin. The tragedy of most resettle-ment to date is that a majority of resettlers neverreach stage three. Rather, as the resettlementprocess proceeds, they remain, or subsequentlybecome, impoverished. Based on comparative analy-sis of development-induced rural and urban resettle-ment, Cernea has identified eight impoverishmentrisks (Cernea, 1990 and in press), all of which areapplicable to dam relocation. They are: landlessness,joblessness, homelessness, marginalization,increased morbidity, food insecurity, the loss ofaccess to common property and social disarticulation.As a ninth risk, I would add the loss of resiliency.

As for the third stage, I have hypothesized that it isone of the paradoxes of resettlement that after the ini-tially stressful cessation or inapplicability of a widerange of behavioral patterns and indigenous knowl-edge, important statuses and institutions may subse-quently foster a more dynamic process of economicdevelopment and community formation. Less inhibit-ed by previously restricting customs (relating, forexample, to land tenurial patterns and community rit-uals) and by entrenched leaders, aspiring entrepre-neurs and leaders are apt to find themselves in amore flexible environment. If true, and moreresearch is required, this finding has important poli-cy implications since attempts by government, NGOsand other institutions to provide appropriate opportu-nities for resettlers and host communities couldspeed the arrival of stage three and reduce the trau-ma and lower living standards that are associatedwith stage two. They could also increase project ben-efits by allowing resettlers and hosts to become pro-ject beneficiaries rather than liabilities.

On the other hand, I am aware of no cases wheretimely external assistance can allow a majority ofresettlers to bypass stage two entirely. Involuntaryresettlement involves trauma that most resettlerscope with in the conservative fashion described. But

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the extent of that trauma can be lessened, and thelength of stage two shortened, by the immediate pro-vision, for example, of upgraded educational andmedical facilities. Security of tenure is another pre-requisite, whether of housing, land or other impor-tant household and community natural resources.

Joy A. Bilharz’s study of Seneca relocated in the1950s in connection with Pennsylvania’s Kinzua Damstrongly suggests that resettler participation in theplanning, implementation and evaluation of the reset-tlement and development processes has a positiveeffect on those involved as well as on their children(in press). We are confronted here with a tricky issuesince we have cases where participation has under-mined local leadership (since that leadership wasseen in the eyes of their constituencies as acceptingthe undesirable) and where it has strengthened it.How participation can occur and local leadersbecome involved would appear to be a delicate issuethat requires careful comparative research.

Since the early 1980s in the tropics and subtropics,and much earlier in the United States, institution-building for such participation has been facilitated byassisting NGOs whose purview includes developmen-tal as well as environmental and human rights issues.As advocates for potential resettlers, such NGOs, aswell as experts hired by local communities, have alsobeen able to bring pressure to bear on governmentsand donors alike to improve planning and plan imple-mentation in ways that can increase the odds of reset-tlers eventually becoming project beneficiaries.

Where it helps to empower local communities andto improve their capacity to make informed choices,such assistance can be invaluable. In some cases, aswith the Orme Dam in the United States, it can evenplay an important role in stopping projects that wouldinvolve destructive resettlement (Khera and Mariella,1982). Such assistance, however, also involves risksfor local communities. That is especially the casewhere the agendas of NGOs and potential resettlersvary, or where assistance, including legal challenges,not only fails to stop resettlement but increases theassociated trauma by prolonging the period of uncer-tainty prior to the move.

Again, it is important to repeat that while theabove “improvements” can reduce the trauma associ-ated with stage two, the theory holds that they can-

not eliminate that stage. As for its termination, thereare a number of indicators that characterize move-ment toward the third stage of economic develop-ment and community formation. These include thenaming of physical features and increased emphasison community as opposed to household developmentas reflected in the establishment of funeral and othersocial welfare associations and places of worship,including churches, temples and mosques. Culturalidentity is apt to be reasserted and even broadened,as in the case of Egyptian Nubians resettled in themid-1960s in connection with the Aswan High Dam(Fernea and Fernea, 1991). Indeed, I hypothesizethat stage three tends to be characterized by a resur-gence of cultural symbols, almost a renaissance, ascommunity members reaffirm control over their lives.

As for institutional development, it continues andbroadens throughout stage three. Because largedams incorporate project affected people within awider political economy, the horizons of resettlersexpand if new local, regional and national opportuni-ties exist. Economic development is fostered ashouseholds increasingly pursue dynamic investmentstrategies to access those opportunities. Here again,based on comparative analysis, I hypothesize similartrends around the world. Farmers initially begin shift-ing from a reliance on consumption crops to highervalue cash crops. Increased emphasis is also placedon the education of children. Production systems atthe household level also begin to diversify, not somuch as a risk avoidance strategy as earlier, but as ameans for reallocating family labor into more lucra-tive enterprises, including livestock management andsmall-scale nonfarm enterprises. Small businesses arerun from the household’s homestead allotment withsubsequent expansion to service centers within theresettlement area and, if especially successful, tourban centers, including national capitals, where realestate investments may also be made.

Stage three development must be sustainable intothe next generation for the resettlement componentto be considered successful. Stage four commenceswhen the next generation of settlers takes over fromthe pioneers and when that generation is able to com-pete successfully with other citizens for jobs andother resources at both the national and local levels.It is also characterized by the devolution of what man-agement and facilitation responsibilities may be heldby specialized resettlement agencies, NGOs and oth-

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ers to the community of resettlers and to the variousline ministries.

Having relocated the largest number of develop-ment-induced resettlers (40 million since the 1950s inconnection with construction projects alone, many ofwhich involve dams) it is significant that China’s firstnational research center for the study of resettlementissues has evolved a quite similar four-stage frame-work for describing a successful resettlement process(Hohai University, 1996).

DIFFICULTIES IN TRYING TO ACHIEVESUCCESSFUL RESETTLEMENTI have dealt at length in two recent publications

with why successful resettlement is so difficult toachieve (Scudder, 1995 and 1997). A wide range ofdifficulties is involved. They include the complexityof the resettlement process; lack of opportunities forrestoring and improving living standards; the prob-lem of sustaining what development occurs; the lossof resiliency and increased dependency followingincorporation within a wider political economy; theinadequate implementation of acceptable plans due tosuch factors as timing, financial and institutional con-straints; unexpected events, including changing gov-ernment priorities; the lack of political will on thepart of governments; host-resettler conflicts; and lackof empowerment of relocated and host populations.Restoration and improvement of living standards andsustainability warrant special emphasis.

IMPROVEMENT OF LIVING STANDARDSGiven the extent of the disruption caused by invol-

untary resettlement, I do not share the optimism ofcolleagues within the World Bank that implementa-tion of World Bank guidelines (1980 and 1990) canrestore the living standards of a majority in Bank-financed projects. I refer specifically to the Bank notto denigrate its policies but rather because it is theBank, more than any other institution, that has beenresponsible for trying on the one hand to reduce theextent of development-induced involuntary resettle-ment, and on the other hand to improve its imple-mentation where necessary. But most Bank’s practi-tioners are, in my opinion, too optimistic about theextent to which their policies can be expected torestore and maintain living standards over the longerterm.

While commending the Bank’s guidelines as amajor step forward, they contain, in my opinion, theself-defeating statement that while the improvementof pre-removal living standards should be the goal ofall resettlement plans, at the very least they must berestored. Restoration of income and living standards,however, is not enough; indeed, in a majority of casesthe mere restoration can be expected to increase thevarious types of impoverishment included withinCernea’s impoverishment risk model.

Several reasons support this conclusion. The firstone relates to the nature of the resettlement process.During the years immediately following resettlement,and in some cases during the years immediately pre-ceding removal, income levels tend to drop. A secondreason relates to the long planning horizon for majordams. During that time period, the people, govern-ment agencies and private-sector investors will under-take less development than is the case in adjacentnon-project areas. For that reason, resettler livingstandards will already be lower before removal thanthey would have been without the project.

Third, where farm land and access to commonproperty resources are lost or reduced, expenses fol-lowing resettlement are apt to be greater than before.Increased costs are especially a problem for reset-tlers who have to purchase food supplies that theywere able to produce previously, or where less fertilesoils require the purchase of such inputs as improvedseed and fertilizers, or where new production tech-niques require loans that lead to indebtedness.

Fourth, even where pre-resettlement surveys areundertaken—and adequate ones are rare—there is ageneral tendency to underestimate people’s incomesat that time. Fifth, merely restoring living standardsdoes not compensate resettlers for the negativehealth impacts and the sociocultural trauma a majori-ty can be expected to suffer. What is involved hereare the wider aspects of what Cernea refers to ashomelessness and social disarticulation—namely,Downing’s Social Geometrics (forthcoming) andAltman and Low’s Place Attachment (1992). There isno way that social cost-benefit analyses can accurate-ly reflect the hardships involved; hence the need to atleast partially compensate for them by raising livingstandards.

Sixth, assuming that peoples’ living standards have

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not been worsened by a project also assumes that nodevelopment among those people would haveoccurred without the project during the years thatmere restoration requires. In some cases that wouldbe an unjustified assumption.

Because of the Bank’s influence, the unfortunateacceptance of mere restoration of living standardshas also crept into even the best national policies.China’s policies are a case in point. In the 1991 StateCouncil Regulation on Land Acquisition andResettlement Regulation for the Construction ofLarge and Medium-sized Water ConservancyProjects, Article 2 states that “all resettlers shall beassisted to improve or at least restore their former liv-ing standards in steps.”

SUSTAINABILITYThe difficulty of sustaining a successful resettle-

ment process into the next generation has been seri-ously underestimated. There are two major reasons.The first is the tendency for the large majority ofdonor-funded and government projects to deal onlywith the initial years of resettlement. Project comple-tion reports are finalized at too early a date to be ableto assess whether or not initial success is sustainable.The second is the absence of research that deals withresettlement’s later stages. As global populationsincrease and habitats degrade, resettlement areas areincreasingly problem-prone, with more people com-peting for less resources. Relatively unpopulatedrural resettlement areas are apt to have a less favor-able natural resource base, in terms of land and watersupplies, than the resettlers’ habitats of origin—thatis why they are relatively unpopulated to start with.Elsewhere, whether rural or urban, resettlement usu-ally increases population densities with resettlers,hosts and immigrants competing for naturalresources, jobs and other employment opportunities,social services and political influence.

Whether in Africa, Asia, Latin America or theMiddle East, land for agriculture is becoming lessavailable for farming populations. Planners talk aboutreplacing land with jobs, forgetting that land is a heri-table resource that can support generations of fami-lies while jobs, if they are permanent, are rarely heri-table, and therefore only benefit a single generation.I am especially concerned by the lack of attentionpaid by policy-makers and planners to passing on aviable resettlement habitat to a second generation.

Another problem is the tendency of better-educated,more experienced and better-capitalized immigrantsto outcompete resettlers for what rural opportunitiesare available or for hosts, with existing networks andbusiness activities, to outcompete resettlers in estab-lishing or maintaining commercial activities.

6. HOSTS

Though donors may emphasize the importance ofinvolving the host population in project benefits, fewplanning documents attempt to calculate the size ofthe host population. Aside from time, personnel andfinancial constraints to enumeration, there is a prob-lem of defining who is a host. The simplest waywould be to restrict enumeration to inhabitants of set-tlements that physically receive resettlers, but thatwould place too much emphasis on the housing com-ponent as opposed to the impact of those resettled onthe arable and grazing lands and other naturalresources, as well as employment opportunities andsocial services of the recipients. Since resettlementalways reduces access of a recipient population toland, all such recipients should be considered hosts.

Even when political leaders among the host popu-lation agree to the movement of resettlers into theirmidst (as was the case at Kariba), sooner or later con-flicts between the two can be expected. They arisebecause of competition of a larger population over adiminished (in terms of per capita) land base, as wellas over access to job opportunities, social servicesand political power. Conflicts over grazing can beexpected from the start (as illustrated by the IndianKrishna subproject), while securing adequate provi-sions of water, forage and sustenance for livestockare chronic weaknesses of resettlement programs.Conflicts over arable land can be expected to intensi-fy as the children of resettlers and hosts seek fieldsto support newly established families. Since politicalleaders are apt to welcome resettlers as a means ofenlarging their constituencies, their resentment canbe expected to grow when initially hesitant resettlersappoint their own leaders, some of whom may takeover the position of host leaders, especially whereresettlers are in the majority.

Few resettlement projects have been documentedwhere host-resettler conflict has not appeared. In theLusitu resettlement area for the Kariba project, where

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resettlers outnumbered the host population, initiallyrelationships between the two categories were good.That was in the late 1950s and early 1960s. Thenland was plentiful, with hosts providing fields to reset-tler “friends” in return for various kinds of assistance.Today those hosts increasingly are requesting thereturn of that land, while their chief has accused thechief of the resettlers of usurping his custodianshipof the land.

In Mahaweli’s System H, nervous Sri Lankanresettlers and voluntary settlers told Vimaladharmaand the author of threats by the host population todrive them off project lands which originallybelonged to the hosts. In the catchment surroundingthe Kotmale reservoir basin, where over 40 percentof the Kotmale Dam resettlers chose to stay, Ben-Amireported that the combination of increased popula-tion densities and environmental degradation wascreating a critical situation not just for the habitat butalso in regard to conflicts between the resettlers andthe host population (1989 verbal communication).

Some ten years after resettlement in connectionwith Ghana’s Kpong Dam, fighting broke out in early1989 between resettlers in one of the six villages andthe host population. At least ten people died. In thatsituation, conflict was triggered by the decision of theresettlers to fill a chieftaincy vacancy with one oftheir own people. Pointing out that their current landhad been given to them by the government, theyinsisted on their right to appoint their own chief. Thehosts disagreed and fighting—no doubt exacerbatedby tensions over arable land and grazing—broke out.

It is best to anticipate from the outset theinevitability of host-resettler conflicts. The bestapproach for minimizing them is to provide the hostpopulation with access to at least some of theimproved social services and economic developmentopportunities intended for the resettlers. While suchan approach will increase the financial costs of reset-tlement in the short run, in the long run it willenhance the possibility of multiplier effects as well asreduce the intensity of conflict. Access to newschools and medical facilities, as well as to extensionservices, is probably the cheapest approach. Theseservices are necessary but in most cases not suffi-cient, simply because increased population densitiessooner or later will require some intensification ofproduction among both hosts and resettlers.

Unfortunately, such incorporation of the host popula-tion within resettlement programs is rare. One of thefew examples relates to planning rather than imple-mentation, but it comes from China, where ThreeGorges planners have included the hosts within theiragricultural development program should the dam bebuilt.

Granted the importance of incorporating hostswithin project development plans, the treatment ofhost populations in the initial draft of the WorldBank’s current reformatting of the 1990 resettlementOperational Directive (OD 4.30) into a set ofOperational Policies, Bank Procedures and GoodPractices is a step backward. OD 4.30 states thatplans “should address and mitigate resettlement’simpact on host populations . . . Conditions and ser-vices in host communities should improve, or at leastnot deteriorate.” The emphasis on improvement isdropped, however, in BP 4.12 Annex A (l), havingbeen moved into the advisory Good Practices (para-graph 12).

The change is a major one, since the connotationof mitigation is the reduction of negative impacts onthe host as opposed to implementing policies thatincorporate both resettlers and hosts within a pro-ject’s benefits. Since the potential for resettler-hostconflict is an ever-present one, not to require thathosts also benefit is a short-sighted policy that can beexpected to cause eventual conflict.

7. OTHER PROJECTAFFECTED PEOPLE (OPAPS)

Large-scale river basin development projects speedthe incorporation of all project affected people,including resettlers and hosts, within wider politicaleconomies. Theoretically that should be a plus interms of potential national development. Studiescompleted among affected rural populations suggest,however, that such incorporation over the longerterm is more apt to reduce rather than improve theliving standards of a majority. This certainly hasbeen the case with Kariba, the first main stream damon the Zambezi. Today, nearly forty years after pro-ject completion, the majority of the more than100,000 project affected people in the reservoir basinare worse off due to environmental degradation andinadequate development influenced by resettlement-

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related increases in population densities, higher adultmortality rates, reduced incomes and social disorga-nization. Hundreds of thousands of downstream ripar-ian residents are also worse off due to the adverseeffects of the Kariba and Cahora Bassa dams onreduced Zambezi flows, and especially reduced annu-al flooding, on their production systems. The timefactor has been important, with conditions worseningas the years go on.

On the other hand, millions of downstream ruralresidents between the Aswan High Dam and theMediterranean are probably better off today thanthey were before the dam due to improved irrigation,flood control and rural electrification (White, 1988).But are such benefits sustainable over the longerterm? In an analysis of the impact of the High Damand other factors such as rising sea level on Niledelta erosion, a recent conclusion is “no” (Stanley andWarne, 1993). Egypt’s breadbasket, the delta is byfar the nation’s most important agricultural resource.There, however, “human intervention . . . has causednorthern Egypt to cease as a balanced delta system.”After postulating a range of interventions for revers-ing declining conditions, caused, among other fac-tors, by loss in the High Dam reservoir of the Nile’shigh sediment load, the authors conclude that “at cur-rent levels of population growth . . . these measureswill be inadequate.” (page 634).

DOWNSTREAM PROJECTAFFECTED PEOPLE

Very few detailed studies have been made of theimpacts of large dams on the many millions of peopleliving downstream, the assumption being that floodcontrol benefits would more than compensate for anydisbenefits. Worldwide, informed people are begin-ning to realize, for several reasons, just how wrongthat assumption is. As in the Mississippi and Rhineriver basins, various flood control mechanisms have,in conjunction with urbanization, led to increasedflooding by reducing farm land and water absorptivewetlands and channeling more and more water into ariver’s primary channel. That is one reason.

Another reason is the growing realization of thevery high productivity of riverine habitats, wetlandsin particular (IUCN, ongoing), and the need toenhance rather than reduce their extent and produc-tivity. Related to that, a third reason—of primary con-cern here—is the fact that millions of contemporary

people are dependent on the productivity of thosewetlands and flood plains. Where dams reduce them,local people are impoverished. Developers anddonors rarely take that into consideration. If theyhad in the past, and the necessary broader feasibilitystudies had been carried out, many completed pro-jects would have been shown to be uneconomic.

Flood plain utilization has played a major role inthe formation of city states and of civilization inAfrica, Asia, the Middle East and the Americas, asshown by archaeological studies. Oddly, few socioe-conomic studies have dealt in detail with the contem-porary utilization of flood plains. Those that havebeen done emphasize the extent to which flood plainsconstitute by far the most important resource in localproduction systems (Scudder, 1962, 1980 and 1991;Horowitz, Salem-Murdock et al., 1990). Annual flood-ing is not only critical for maintaining that resource,but for the survival of dependent communities. Asfloods recede, for example, communities throughoutthe arid and semi-arid lands of Africa practice floodrecession agriculture. As the dry season progresses,the much higher carrying capacity of flood plain graz-ing allows cattle and small ruminants to survive untilthe coming of the rains, while the flood cycle itself isnecessary for sustaining productive fisheries andrecharging aquifers.

DAMS AND FLOOD REGULARIZATIONAside from run-of-the-river installations, a major

function of dam construction is to regularize a river’sannual regime by augmenting low-flow periods andgreatly reducing periods of flooding in order to makeavailable a more constant water supply for hydropow-er generation, navigation and commercial irrigation.Though few detailed studies have been completed onthe impacts of such regularization, those that existhave shown them to have a devastating effect on mil-lions of people (Drijver and Marchand, 1985;Horowitz, Salem-Murdock et al., 1990; Adams, 1992;Hollis et al., 1993; Scudder, 1994; and Acreman andHollis, 1996).

The topic has been best researched in West Africain connection with mainstream dams on the SenegalRiver and a number of dams in Nigeria. After threeyears of studies, an Institute for DevelopmentAnthropology team showed that the Manantali dam,as managed by the trinational Senegal ValleyDevelopment Authority (OMVS), was adversely

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affecting up to 500,000 people below the dam(Horowitz, Salem-Murdock et al., 1990). In his 1994analysis of the Kainji Dam project on the Niger,Roder notes that adverse downstream impactsinclude an estimated 60 to 70 percent reduction in theriverine fishery and a 30 percent reduction of season-ally flooded (fadama) land that has lowered swamprice production by 18 percent. Although I have seenno confirmation of his figures, in a 1979 FAO techni-cal paper (Welcomme) Awachie stated that Kainji hadalso been at least partially responsible for a 100,000-ton reduction in yam production further downriver, inwhich case we can assume that the dam’s impover-ishing effects involved hundreds of thousands of peo-ple. On a Niger tributary further upriver, Adams(1993) estimates that the costs of the Bakolori Damto downstream villagers in terms of reduced crop,livestock and fisheries production actually exceedsthe benefits realized from the project.

Elsewhere in Nigeria, dams constructed mainly forirrigation purposes in the Hadejia-Jama’ are systemhave significantly reduced downstream flood plains—once again at the expense of local producers. Indeed,in at least one major case, evidence suggests anotherproject-related loss, with Barbier et al. demonstratingthat the net economic benefits of flood plains thathave been significantly reduced by river controlmechanisms were at least $32 per 1,000 cubic metersof water versus only $0.0026 for the irrigated KanoProject when all costs (including operational costs)are included (referenced in Acreman and Hollis,1996; see also Hollis, Adams and Aminu-Kano, 1993).

THOSE WITHIN A PROJECT’S VICINITY:THE JAMES BAY PROJECT AND THE CREEHydro-Quebec’s James Bay Project provides an

excellent case history in that it illustrates the impov-erishing impact on an entire culture area (as opposedto just resettlers and hosts), and the difficulties thatlocal people must face in trying to modify, let alonecancel, projects. Like the Lesotho Highlands WaterProject, the James Bay Project is one of the fivelargest contemporary river basin development pro-jects in the world. If completed, the total generatingcapacity of more than twelve dams would be about25,000 megawatts, of which the generating facilitiesfor 10,000 megawatts have either already been com-pleted or are under construction in the first (LaGrande) phase.

Advocates of the project point out that virtually nocompulsory relocation is necessary, the engineeringworks and reservoirs require the movement of not asingle Cree village. Rather the only relocation, andnumbers of people are probably less than a few hun-dred, pertains to a relatively small number of traplinecamps. Most of those, if not all, can be re-sited withineach family’s trapping territory, so that the number ofhosts is even smaller. In other words, well over 90percent of the people (OPACs) adversely affected bythe project are neither resettlers nor hosts.

SOCIAL IMPACTS (THE 1975 JAMES BAYAND NORTHERN QUEBEC AGREEMENT)At the time Quebec’s premier announced the

James Bay Project, in April 1971, there had been noCree involvement in project planning or design, norhad any form of social impact analysis been carriedout. With construction already under way by the mid-1970s, the emerging Cree leadership believed, proba-bly correctly, that they had little hope of stopping thefirst phase of the project. By agreeing to its imple-mentation and becoming signatories of the JBNQA,at least they received in return a promise of a degreeof self-government and an innovative program formaintaining trapping, hunting and fishing activities.

Such benefits led anthropologist Richard Salisburyand other friends of the Cree to see JBNQA in a posi-tive light. Certainly it had an impact-mitigating influ-ence. More important, it led to the formation of theGrand Council of the Cree and the Cree RegionalAuthority, which provided the Cree with a degree ofpolitical self-determination and an institutional struc-ture for facilitating economic development. On theother hand, the land settlement provisions of theJBNQA split the Cree into eight geographically isolat-ed bands whose exclusive control of surface rightsinvolved only 5 percent of their former lands, withanother 15 percent set aside for their exclusive hunt-ing, fishing and gathering. Aside from preferentialaccess for the Cree to certain mammals, the remain-ing 80 percent in effect was handed over to Quebec’sJames Bay Development Corporation.

The implementation of the La Grande Phase hashad two quite different types of negative impact. Oneis the mercury contamination of reservoir fish (withinundation increasing the release of methyl mer-cury), to the extent that mercury contamination ofsome Cree, for whom fish are an all-important dietary

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component, significantly exceeds World HealthOrganization standards. Causality there can rathereasily be ascertained. Such is not the case with theother type of impact, which includes a high incidenceof sexually transmitted diseases (STDs) and suchsocial pathologies as increasing spousal abuse andsuicide, especially among young women. Unlike thesituation on other reservations in both Canada andthe United States, the Cree have been able to avoid adependency on provincial and federal welfare.Unemployment insurance, for example, and aid todependent children make up a relatively small pro-portion of Cree income: only 6 percent in 1985, forexample. Can the increasing rates of STDs and socialpathologies be associated, therefore, with the project-related, accelerated rates of contact with outsidersand outside ideas, which Cree elders and leaders alsotend to associate with an erosion of cultural values?Quite possibly they can.

To summarize, the James Bay Cree agreed to theproject in the 1970s in return for a degree of politicalself-sufficiency at the expense of maintaining controlover the development of their homeland. Thereafterneither the federal government of Canada norQuebec Province delivered what they had promisedthe Cree under the James Bay and Northern QuebecAgreement. Furthermore, the James BayDevelopment Corporation has largely ignored theCree in planning and implementing development pro-jects. Tourist and other facilities along the north-south access road, which fell under JBDC jurisdic-tion, were almost exclusively run by outsiders in 1994with minimal Cree involvement, including employ-ment.

8. IMMIGRANTS

Immigrants, both temporary and permanent, fromwithout a particular river basin are major beneficia-ries of river basin development projects. The largestnumber of temporary immigrants are associated witha project’s construction phase. While employment onadvanced infrastructural and the main civil engineer-ing contracts are often listed as a benefit for local peo-ple, in fact local workers tend to be only a smallminority of the labor force. For example, during con-struction of the first stage (La Grande) of the JamesBay Project in Quebec, less than 5 percent of thelabor force were Cree Indians, in spite of the exis-

tence of available and otherwise unemployed man-power. There are several reasons for this situation.Most important is the fact that local people seldomhave the skills required by contractors, with crashtraining programs seldom bringing skills up to thedesired level—as the Lesotho Highlands WaterProject found out. Moreover, contractors often bringa significant portion of their labor force with them orrecruit immigrant workers with previous construc-tion experience. On completion of China’s GezoubaDam, for example, many of the 40,000 workers stayedin the area expecting to join the labor force for theconstruction of the Three Gorges Dam.

Though a small minority of temporary workerschoose to remain in the area after their contracts end,most immigrants come after the completion of theconstruction phase. Seeking the new opportunitiescreated by the project, they frequently are able to out-compete local people. Two major benefits of largedams are the reservoir fishery and irrigation.Though both involve project affected people as wellas immigrants, the latter tend to dominate unless aspecial effort is made to select and increase the com-petitive abilities of local people.

9. PROJECTAFFECTED PEOPLE ANDRESISTANCE MOVEMENTS

Planners are apt to attribute local opposition tolarge dams to outside agitators. The British colonialadministration blamed resistance to Kariba on thenorth bank of the Zambezi, for example, on the grow-ing influence of external political organizers agitatingfor national independence. That was in the late1950s. When approximately 1,000 local citizens vili-fied senior officials at a meeting to protest the arrivalof equipment in late 1990 for initiating the first phaseof the Southern Okavango Integrated WaterDevelopment Project (SOIWDP), the government ofBotswana blamed international environmentalists andlargely expatriate-owned, safari firm interests.

In both the Kariba and Okavango cases, however,resistance came primarily from project affected peo-ple who believed construction would be at theirexpense (Colson, 1971; Scudder et al., 1993).Opposition in both cases appeared to be close to uni-versal. Among project affected people in SOIWDP’simpact areas, opposition was based on the people’s

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conviction that their lives had deteriorated followingprevious attempts to manipulate Okavango flows. Themisgivings of those affected by Kariba have beenshown to be correct: inundation of the fertile alluvialsoils cultivated by villagers before removal has beenone factor in the deterioration of their living stan-dards in recent decades.

To date, resistance movements have involvedresettlers more than hosts and other project affectedpeople (Scudder, in press). Worldwide, with only afew exceptions, a majority of those involved in thou-sands of water resource development projects haveresisted removal. Exceptions themselves are illumi-nating. The construction of the Aswan High Dam inthe 1960s appears to have been welcomed by thoseremaining in Nubia only because the earlier construc-tion of the Aswan Dam, plus two dam heightenings,had so impoverished those who had relocated to thereservoir margins that up to 100 percent of the menin some of the villages closest to the dam had to seekemployment in the urban centers of Egypt and theSudan. Resettlement in the 1960s was welcomed bymen and women alike because they believed it wouldreunite families in the downstream Kom Ombo reset-tlement area that had been split up because of earlierrelocation impacts. In the case of TVA’s Norris Dam,the majority initially welcomed the project because,as tenant farmers and poor land owners, theybelieved, erroneously, that completion would bringindustry and higher-paying industrial jobs.

Looking to the future, resistance movements canbe expected to increase because of the increasingopposition—as currently in Brazil and India—ofnational and international human rights and environ-mental NGOs who are willing to become advocatesfor project affected people. Their arguments in turnwill be supported by increasing emphasis on therehabilitation and reorientation of existing facilities,by the extent to which benefits have been overesti-mated and costs—especially to project affected peo-ple and the environment—underestimated, and byincreasing evidence that greater benefits in manycases can accrue from the implementation of alterna-tives that do not require major engineering works.The growing sophistication and recent internationalnetworking of indigenous people affected by majorprojects will also strengthen resistance—for example,the James Bay Cree played a major role in the sus-pension during 1994 of Hydro-Quebec’s Grande-

Baleine Project.

10. HELPING PROJECTAFFECTEDPEOPLE BECOME BENEFICIARIES

INCREASING LOCAL PARTICIPATIONIn recent years, governments, donors, academics

and NGOs all have been emphasizing the need forlocal people to have greater involvement in projectplanning, implementation, management and evalua-tion. That emphasis is welcome and important. Aswith the implementation of plans that actually makeproject affected people beneficiaries, however, theextent to which local people have actually beeninvolved has been disappointing. Aside from lack ofpolitical will on the part of governments to actuallydecentralize decision making, there are severalissues that must be dealt with.

One is a difference in definition as to what localparticipation means. In Botswana, for example, gov-ernment presents its use of customary meetings, atwhich local people discuss vital issues with their lead-ers, as a form of local participation. Such meetingsare used more to inform local people of the govern-ment’s intentions, and to solicit their reactions tothose intentions, than to actually involve them in theplanning process. A second issue relates to govern-ment and donor hesitation to link decentralization ofdecision-making with decentralization of financialresources for implementing those decisions; yet thefirst without the second is meaningless.

A third issue relates to local populations them-selves. Ironically, increased emphasis on the need forlocal participation is occurring at a time when cus-tomary participatory institutions are weakeningbecause of increasing incorporation of local commu-nities within wider political economies. Whether bygovernments, donors or local people themselves,increasing emphasis is being placed on private own-ership of resources as opposed to customary systemsbased on limited access to communal resources.Within communities, educated individuals are placingincreasing emphasis on the household as opposed toextended kin groups and customary institutions ofcooperation, such as work parties. Moreover, house-holds themselves are becoming increasingly fraction-ated due to differing interests among members(Dwyer and Bruce, 1988).

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Such circumstances, including also the increasingdifferentiation within communities, must be dealtwith if local participation is to play the role it shouldin improving the living standards of project affectedpeople. A prerequisite will be participatory appraisal(Kumar, 1993), whereby local people and plannerswork together to determine how best to institutional-ize local participation. In some cases, customary insti-tutions such as funeral and other social welfaregroupings and cooperative labor parties may beadjusted to new conditions. More often, however, newinstitutional forms will probably be required. Aneffective example of this is the Grand Council of theCree, which arose during the 1970s in response tothe Province of Quebec’s James Bay Project. Anotherinstitution extending beyond specific communities,which would appear to be especially applicable to pro-ject affected people clustered within a defined area, isa People’s Trust (Reynolds, 1981). Proposed as aHighlands Trust for the Lesotho Highlands WaterProject (Maema and Reynolds, in press), the People’sTrust idea also would be especially applicable to the11,000 Cree affected by the James Bay Project.

Key features of a People’s Trust involve placingfunds allocated for benefiting local people in a trustunder their control. Such funds should be available atthe beginning of the project cycle so that local peoplecan be actively involved during feasibility studies.Although it did not extend beyond such studies, onerecent example is the instance in which Hydro-Quebec made funds available to the Grand Council ofthe Cree so that they could carry out their own analy-sis during the 1990s of the impacts of the Grande-Baleine component of the James Bay Project.

Should a decision be made to proceed with a pro-ject, funds allocated for resettler, host and other pro-ject affected people’s development would be added tothe Peoples’ Trust. Trustees would be locally select-ed from project affected people, rather than govern-ment officials, and would have the authority to decidehow those funds should be used, while at the sametime, subject to the appropriate oversight. Other fea-tures of the trust concept look especially attractive ifapplied to project affected people. One is its linkageto a hierarchy of periodic markets that link local com-munities as producers to government administrativecenters as providers of services. Government and pri-vate-sector institutions (such as banks providing cred-it), for example, would send representatives to the

local markets so that local people would not have tomake expensive, and often futile, trips to district andother government centers.

Regardless the type of institutions utilized or devel-oped, effective local participation must involve amuch broader range of actors than just project affect-ed people. At the national level, commitment must bereflected in the necessary legislative and judicialframework. Where revenue-sharing occurs too late inthe project cycle—as in China, where revenue fordevelopment purposes comes primarily from electrici-ty sales—multilateral, bilateral and NGO donors maybe asked to provide some funding. The assistance ofNGOs in institution-building would also be necessaryin many cases. So, too, would the private sector’sinvolvement in various joint ventures with local com-munities, such as linking agricultural outgrowers toprocessing facilities, or developing tourism or othernonfarm industries. Assistance from universities andresearch institutions could also be anticipated forhelping project affected people develop appropriatemonitoring and evaluation capabilities.

IRRIGATIONAdvantagesA major option for assisting project affected people

to become beneficiaries is to incorporate them withinirrigation schemes. One of the best examples of suchincorporation was during the earlier phases (SystemsH and C) of Sri Lanka’s Accelerated Mahaweli Projectwhere resettlers and downstream hosts were givenpriority over all other categories of participants.

If well-designed, implemented, managed and main-tained, major irrigation schemes can produce signifi-cant increases in both production and living stan-dards in an environmentally sustainable fashion.There are examples of such successes from all geo-graphical areas. Adjacent communities (those notwithin command areas) may also benefit in a majorfashion, as Epstein’s Indian research in Karnatakahas shown (1962 and 1973), while Goldschmidt’sresearch in California’s Central Valley showed thatirrigation schemes based on family farms can beexpected to generate more multiplier effects in termsof enterprise development and employment genera-tion in market and service centers than large-scaleagribusinesses (1978).

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DisadvantagesThe most disadvantageous situation for project

affected people is when they are not only unincorpo-rated within an irrigation project, but are actuallyevicted from their land to make way for it. There areinnumerable cases where the land base of unincorpo-rated project affected people has been reduced tomake way for irrigation projects on which govern-ment selected settlers are predominantly immigrants.Although cases where hosts to a scheme are evictedfrom their lands without compensation are far fewer,the danger exists that their proportion is increasingas more and more people compete for less and lessnatural resources. Large dams are especially vulnera-ble to political considerations (Fredericksen, 1992;Ribeiro, 1994; and Waterbury, 1979), with large-scaleprojects frequently influenced by the political ideolo-gies of heads of state (Scudder, 1994).

As land and water resources become scarcer, polit-ical elites will be increasingly tempted to eitheraccess them or use them to achieve political goals.Three examples illustrate the risks to project affectedpeople. In recent years the governments of bothMauritania and Somalia passed land registration actsthat favor individual tenure of those with capital overcustomary systems of land tenure at the village level.In both cases, politically well-connected immigrantsin search of land to irrigate have used those acts todisplace local people below the Manantali Dam on theSenegal River and the proposed Baardeera Dam onthe Juba River. In the third case, a cabal within theMahaweli Authority of Sri Lanka plotted to displaceTamil-speaking hosts from now arable lands in a laterphase (left bank of System B) of the Mahaweli projectby a massive land invasion of poor Singala-speakingsettlers in order to split in half the Tamil-speakingminority to the north and east (Gunaratna, 1988).Though the land invasion failed, government-statedpolicies to not mix settlers of different religious affili-ation in the same community, and to select settlersfrom all ethnic groups according to their percentagein the national population, have been ignored. Inspite of major international funding in all three exam-ples, in no case did donors (the World Bank includedin two of those cases) try to intervene.

Disadvantages where project affected people areincluded within irrigation projects are the same asthose for all participants where projects are poorly

designed and maintained. Environmental problemsaffecting project life include siltation of reservoirs,water logging and salinization, and loss of biodiversi-ty. Public health problems include increased inci-dence of malaria, schistosomiasis and other water-borne diseases, as well as dysenteries.Socioeconomic problems arise from insecurity oftenure and poor land preparation and water distribu-tion as well as from poorly designed production andmarketing systems that prevent settler householdsfrom raising their living standards beyond a subsis-tence level. A separate problem is the frequency withwhich focus on a single cash crop lowers the status ofwomen, especially in cases where they had their ownpre-project fields or crops. Notwithstanding suchproblems, incorporation within an irrigation project isstill a better option for project affected people thanexclusion. Technical and participatory (e.g., wateruse associations) solutions to all of the above disad-vantages exist and are well known. What is lacking istheir incorporation within plans followed by theirimplementation.

RESERVOIR FISHERIESCritics of large dams have tended to underestimate

the importance of reservoir fisheries for projectaffected people. In order to make them beneficiaries.however, training and technical assistance arerequired, as is protection of the entry of projectaffected people during the early years of a new fish-ery. Otherwise, more competitive fishers from exist-ing reservoirs and natural water bodies can beexpected to dominate the new fishery as has been thecase with Ghana’s Volta reservoir (still the largestartificial reservoir in the world) and Mali’s ManantaliReservoir.

The development of the Lake Kariba reservoir fish-ery illustrates effective ways for incorporating projectaffected people. For an initial five-year period the fish-ery was closed to immigrants. During that time atraining center was built that offered short courses tosmall-scale commercial fishermen. Improved boatswere designed with local carpenters trained in theirmanufacture. Credit was made available to buy boatsand other gear. Lakeside markets were provided withaccessible feeder roads for exporting fresh andsmoked sun-dried fish.

Although they did not previously have the technol-ogy for fishing mainstream Zambezi waters, the

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response from local people was rapid, with over 2,000resettlers, hosts and other project affected peoplecatching over 3,000 tons annually within a four-yearperiod. Not only were loan repayments over 90 per-cent, but savings were invested in ways that enableda majority of fishermen to shift to other activitieswhen the now predictable decline in the reservoir’sinitial productivity occurred. Especially importantwas investment in cattle (and especially plow oxen),which played a major role in the rapid development ofmixed farming, including cash cropping of cotton andcereals and sale of livestock by small landholders.Small village stores and other commercial enterpriseswere also established. Education of children wasemphasized, which allowed many children to proceedon to a secondary school education, and higher earn-ing opportunities, which their families otherwisecould not have afforded. The fishery also provided amajor mechanism for further incorporating villagewomen within a market economy by providing themwith an outlet for the sale of village produce and themanufacture of beer within the fish camps.

The major policy failing was not anticipating thedecline in productivity that characterizes the forma-tion of new water bodies. Anticipatory planning can atleast partially compensate for such a decline byexpanding the fishery to capture a wider range ofspecies and to use a wider range of techniques. Useof cages, as in Indonesia and China, has the potentialof significantly increasing production. Other meansinclude placing barriers across inlets to create smallwater bodies when reservoir levels rise so they thencan be stocked with fingerlings and fertilized.Appropriate introductions can also significantly raiseproductivity. While landings during the height of theKariba gillnet fishery between 1963 and 1964 proba-bly did not exceed 7,000 tons annually, stocking ofthe reservoir’s open waters during the late 1960s witha small sardine-like fish (Limnothrissa miodon) canproduce annual yields of approximately 20,000 tons.

The Limnothrissa fishery, however, is capital-inten-sive and until recently all equipment has been ownedby immigrant entrepreneurs. Nonetheless, employ-ment of over 1,000 local people on the fishing rigsand in processing and marketing activities has provid-ed an important source of income in an otherwisesuffering economy (Scudder, 1993). An incentive sys-tem based on nightly catches has increased yieldsand income for both owners and employees. And in

the last few years purchase of rigs by local councilsand NGOs has begun to bring a larger share of thebenefits to at least some local communities.

IMPROVED DESIGN AND MANAGEMENTOF EXISTING AND FUTURE ENGINEERINGWORKS FOR MAKING CONTROLLEDRELEASESWhere dams are to be constructed, the design and

operations should include controlled flood releases atstrategic times for the benefit of downstream usersand habitats (Scudder, 1991; Acreman and Hollis,1996). In exceptional cases such releases may benegotiated after construction, as with South Africa’sPongolapoort Dam and the Manantali Dam on theSenegal. However, since dam design may precludethem, the best approach is an attempt to influencepolicy during the planning and design stage.

Controlled flooding is a relatively new concept pri-marily initiated by researchers and planners. Localresidents, when involved, have been highly support-ive. Government responses have been mixed, whiledonors have largely ignored such an option.Controlled flooding is not a panacea, however. It mayinvolve trade-offs with hydropower generation, forexample, and floods released may be ill-timed orinsufficient to offset dam-induced downstream costs.

Nonetheless, where feasible, the advantages ofcontrolled floodwater releases can be expected to out-weigh disadvantages. The best examples are wherepreviously constructed dams were unable to retainflood magnitude with the result that sluices werebuilt to pass, for the benefit of downstream habitatsand users, silt and nutrient-laden waters during theinitial flood. Those sluices were then closed to cap-ture in the reservoir what were then relatively silt-free flows, the original Aswan Dam being one exam-ple. While some contemporary dams, such as theAswan High Dam and Kariba, were not designed toallow controlled flooding, others, such as CahoraBassa further downstream on the Zambezi, could beso operated to benefit downstream wetlands, includ-ing the important delta and riparian communities. Inoff-shore waters, according to Gammelsrod, catch perunit effort of shrimp could be increased by 17 per-cent along the Sofala Bank by altering distribution ofrun-off. Even when such operations might reducehydropower generation, developing internationalgrids, as is currently the case in Southern Africa,

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would allow individual dams to serve a wider range ofdevelopment purposes.

AdvantagesThe Aswan Dam, as originally built in 1902 and

heightened in 1913 and 1933, was designed to passmost of the silt-laden annual flood of the Nile throughits sluices. In recent years the importance of suchreleases have been emphasized for a number of rea-sons. Williams’ analysis has shown that properlymanaged releases from the America River’s FolsumDam in California would preclude the need for fur-ther dam construction, including that of the AuburnDam (1993). California is also pioneering controlledreleases for the benefit of fisheries and the ecologicalhealth of the Sacramento Delta.

Controlled releases for the benefit of project affect-ed communities is a more recent concept (Scudder,1980), which has been tested in only a few cases.Theoretically, both reservoir basin communities andcommunities below a dam should benefit. Wheredams are located well upstream, downstream benefi-ciaries could number in the millions. For them,increased flooding by well-timed controlled releaseswould benefit fisheries and recharge aquifers for thebenefit of community wells and riparian forests.Farmers once again could practice some of the floodrecession agriculture that a more regularized regimewould have curtailed. They would also benefit froman increase in flood recessional grazing.

Within reservoir basins, controlled releases wouldalso increase the extent of the drawdown area forboth recessional cultivation and grazing. Both haveproven to be valuable, and underestimated, benefitsfor lakeside communities. Drawdown cultivation atLake Kariba, for example, has provided the mostimportant single source of food for thousands of peo-ple during five serious drought years since the early1980s. Drawdown areas around Ghana’s Lake Voltaprovide an important source of vegetables, while resi-dents in the Kainji Lake basin reap and sell draw-down fodder. In none of those cases, however, weredams designed to expedite controlled downstreamflows. If they had been, the benefits to lakeside com-munities, as well as to downstream residents, wouldbe significantly increased.

Careful research has attempted to quantify thebenefits that would accrue from controlled releases

from the recently completed Manantali Dam on theSenegal River and dams in Nigeria’s Hadejia-Ngurusystem. Based on several years’ analysis of theimportance of natural flows for over 500,000 riverineinhabitants, the Senegal research has shown that eco-nomic benefits accruing from controlled releasesfrom the Manantali Dam would significantly exceedany costs arising from reduced hydropower genera-tion (Horowitz, Salem-Murdock et al., 1990; Salem-Murdock, 1996).

Similar conclusions have been reached by govern-ment officials and academics alike in regard toNigeria’s Hadajia-Nguru river basin, where the bene-fits from controlled releases are significantly greaterthan use of the same water on government-managedirrigation schemes (Hollis et al., 1993; Acreman andHollis, 1996). A third example comes from SouthAfrica’s Pongola River Basin in the province of Natal-KwaZulu. When an intended irrigation project therefailed to materialize below the Pongolapoort Dam,fisheries biologists recommended experimentationwith controlled releases for the benefit of down-stream fisheries. Subsequently, experimentation wasexpanded for the benefit of all aspects of the localeconomy, including flood recession agriculture andpasture. Initially, the affected communities did notparticipate in making decisions about the timing andduration of releases. More recently, however, theyhave been brought into the decision-making processthrough the formation of water committees and awater committee executive (Bruwer, Poultney andNyathi, 1996).

DisadvantagesWhile controlled flooding can improve the produc-

tivity of wetlands and riverine communities, in mostcases the economies of those concerned would bebetter served by the natural flood regime. As Hugheshas shown for Kenya’s Tana River and generalized forother African flood plains (1988), even extreme floodsplay a vital role in the maintenance of flood plain pro-ductivity.

There are also policy, technical and environmentalconstraints to the implementation of controlledreleases. Current droughts in western, central andsouthern Africa’s semi-arid lands have adverselyaffected river flows, making it more difficult to workout the type of suboptimization strategies that con-trolled flooding would involve. Since the early 1980s,

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for example, Zambezi flows have been only approxi-mately 50 percent of what they were during the previ-ous 20 years, while reduced intakes into the IvoryCoast’s Kossou Reservoir and Ghana’s VoltaReservoir have had adverse economic effects onoccasion. Even without drought conditions, the mag-nitude, timing and duration of controlled releasesmay not have the desired effect on productivity, asillustrated by releases from Zambia’s Iteshiteshi Damfor the benefit of downstream communities using thewetlands resources of the Kafue Flats (Acreman andHollis, 1996).

Technical constraints relate to capacities to knowwhen to release flows in what volume for what dura-tion. The necessary knowledge requires operationand maintenance of a sophisticated hydromet net-work; its utilization requires well-qualified personnel.Policy constraints are of several sorts. One is lack ofpolitical will to make the necessary releases.Notwithstanding the demonstrated economic andenvironmental benefits, the tri-national Senegal RiverBasin Authority has been unwilling to make con-trolled releases that would benefit downstream ripari-an communities since the completion of theManantali Dam, even though operational turbineshave yet to be installed. The releases that have beenmade were so poorly timed that they led to decreasesrather than increases in local productivity (Horowitz,1991).

A second policy constraint is tied to the unfavor-able rural-urban terms of trade that continue to char-acterize so many countries. While realizing longer-term economic returns that are in the national inter-est, controlled releases benefit mostly low-incomerural households at the short-term expense of eitherthe urban sector or farmers on commercial irrigationschemes. For example, the hydropower that wouldhave to be foregone under some circumstanceswould be more for the benefit of rural communitiesthan of urban industrial and residential users.Donors also might favor maximizing power genera-tion in order to facilitate debt repayment, since thereis no easy way to siphon off funds from the rising dis-posal incomes of hundred of thousands of low-incomerural households.

ACTIONS TAKEN OR INTENDEDBY THE WORLD BANKIn the final section of their 1994 review, the World

Bank lists a series of “Actions to ImprovePerformance.” All are important; they warrant sum-marizing here. Most important is the recommenda-tion to improve project design in ways that “avoid orreduce displacement.” Some success has alreadybeen achieved in this area on previously Bank-financed projects (Indonesia’s Saguling and China’sShuikou, for example). In the Saguling case, loweringthe height of the dam five meters during the designstage reduced resettlement by nearly 50 percent. Inthe Shuikou case, protective works around NanpingCity at the top of the reservoir, and similar worksaround several towns, also reduced resettlement sig-nificantly.

To improve government capabilities, recommend-ed strategic priorities were to “enhance the borrow-er’s commitment” by only financing projects withacceptable policies and legal frameworks, “enhancethe borrower’s institutional capacity,” “provide ade-quate Bank financing” and “diversify project vehi-cles,” whereby the Bank complements the financingof physical infrastructure with stand-alone resettle-ment projects. Though too few have been funded todate, financing stand-alone resettlement projects likethe $110 million credit for the Xiaolangdi project onChina’s Yellow River is especially important. Two rea-sons are the increasing financial cost of adequateresettlement and the fact that resettlement withdevelopment takes more time than constructing phys-ical infrastructure—hence the risk, as with Ghana’sKpong, that funds will be exhausted by the time theyare needed unless they are from a protected source.

Other recommended strategic priorities includethe need to “strengthen the Bank’s institutionalcapacity” so as to improve the Bank’s ability to dealwith the different stages of the project cycle, and toimprove “the content and frequency of resettlementsupervision.” Where possible, “remedial and retro-fitting actions” are also emphasized in connectionwith previously funded, but inadequately implement-ed, Bank-assisted projects. One example is Kariba,where a rehabilitation study for project affected peo-ple by the University of Zambia’s Institute for Africanstudies is currently underway with funding thoughthe World Bank and sponsorship through Zambia’s

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62 Social Impacts: Of Large Dam Projects

Electricity Supply Corporation (ZESCO). Finally, theBank emphasizes that more attention will be paid topromoting “people’s participation” and NGO facilita-tion of “local institutional development” (1994: 8/1-8/4).

11. RESEARCH NEEDS

I have outlined elsewhere (Scudder, in press) amore detailed research agenda dealing with resettle-ment. While there are a relatively large number ofstudies, including several longitudinal ones, of theresettlement process, the same cannot be said of theother categories of project affected people. This defi-ciency is especially serious in regard to large dams.Notwithstanding the fact that such projects frequent-ly are the largest in national development plans interms of financial costs and impacts on nationalheartlands, there are few projects for which imple-menting agencies or donors have completed adetailed, long-term evaluation. This omission is espe-cially surprising in the case of the World Bank, whichhas, in its Operations Evaluation Department, a time-tested monitoring and evaluation capacity that onlynow is beginning to focus on the necessary studies(World Bank, 1996).

The necessary studies will involve methodologicaldifficulties, especially in the assessment of cumula-tive impacts (Dickson et al., 1994). Problems relatenot just to changes that would have occurred amongaffected people without a project, but also, in regardto longer-term cumulative impacts, to factoring outthe relevance of other post-project influences. Suchproblems must not be allowed, however, to put offfurther the necessary studies, since the few long-term studies that have been undertaken, by acade-mics largely, agree that longer term project-inducedsocial impacts have been seriously underestimated(see, for example, Colson, 1971; Bartolome andBarabas, 1990; and Scudder, 1993).

A major problem concerns the inadequacy of pre-project benchmark studies against which subsequentimpacts can be assessed. Even where such studiesare undertaken, their initiation and completion tendsto be out of phase with the engineering cycle. Hencein the case of the Lesotho Highlands Water Project,the completion of both epidemiological and socioeco-nomic benchmark studies occurred after construc-

tion activities had begun. The same was the casewith detailed socioeconomic studies carried out inconnection with System B of Sri Lanka’s AcceleratedMahaweli Project.

The only solution to this situation is to initiate thenecessary pre-project benchmark studies much earli-er in the planning process. Much of the necessarydata is required by the World Bank’s guidelines,which state that borrowers must present a resettle-ment plan before project appraisal. Gathering data forsuch a plan provides the opportunity for integratingthe necessary benchmark studies into the planningprocess. Once again, however, all too often construc-tion activities are apt to proceed more rapidly.

While there is no alternative to undertakingdetailed pre-project benchmark studies among poten-tial resettlers, one reason why there are so few fol-low-on studies relates to arguments among social sci-entists and statisticians regarding methodologies formonitoring and evaluation. Ideally, it would be advan-tageous to follow a statistically significant randomsample drawn from the original benchmark studies.This, however, is seldom done because of time, per-sonnel and financial constraints. These appear to beinsurmountable in part because the delay in provid-ing results, a delay that can involve years as opposedto months, makes such follow-on studies of little usefor dealing with key issues as they arise.

One cost-effective solution is to select a small,carefully stratified subsample of no more than 50 to100 households, which are re-interviewed over anextended time period once or twice annually. Use ofindicators relating, for example, to housing, watersupply and sanitation, fuel and lighting and produc-tion technology, linked with questions relating toincome and expenditures, allows the interviewer toconclude within an hour whether living standards areimproving, remaining the same or deteriorating.Complementary questionnaires, following by group-focused interviews, can then be expected to identifythe causes for change or lack of change. Such amethodology can provide planners with a problem-oriented report within a six- to eight-week period.

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12. CONCLUSIONS ANDLESSONS LEARNED

An obvious and major conclusion is that theadverse social impacts of large dams have been seri-ously underestimated. Not only is a much largernumber of people involved than acknowledged byresearchers, government planners and donors, butthere has also been a failure to acknowledge therange and magnitude of impacts on the different cate-gories of people; affects on resettlers, for example,differing from those on hosts as well as on other pro-ject affected people living below dams. This situationis partially due to a paucity of research, and especial-ly of research designed to assess long-term impacts.

Another lesson learned, and one that has beeninsufficiently documented, is that large dam projectsare more apt to be subverted during implementationdue to political and broader ideological considera-tions. Sri Lanka’s Accelerated Mahaweli Project hasalready been mentioned as an example. Large damsare sponsored by a powerful coalition includingheads of state, multinational corporations of consult-ing engineers, contractors and suppliers, and multilat-eral and bilateral donors. As Gustavo Lins Ribeiroexplains, multinational corporations to remain com-petitive must move smoothly from one project toanother; indeed, “they stimulate the market for themby indicating and proposing new works” (1994: 50).Their involvement is facilitated by bilateral donorslinking favorable credit arrangements (as throughexport-import banks) to contracts for nationallybased firms and by the World Bank’s insistence onInternational Competitive Bidding.

Heads of state like Franklin Roosevelt of theUnited States and Kwame Nkrumah of Ghana at leasthad visions, based on political ideologies and capital-intensive technology, of “their” projects stimulatingregional development. It is this political componentthat John Waterbury has labeled “hydropolitics.”According to the World Bank’s Harald Fredericksen,“The conditions encountered in a country’s water sec-tor reflect the political demands and the wisdom andleadership in these matters more than any other fac-tor” (1992: 4). In regard to specific cases,Waterbury’s assessment of the Aswan High Dam con-cludes that “the history of this project is testimony tothe primacy of political considerations determiningvirtually all technical choices with the predicted

result that a host of unanticipated technical and eco-logical crises have emerged that now entail morepolitical decisions.” (op. cit: 4).

Ribeiro, who also used the phrase “hydropolitics”in the title of his analysis of the binational(Argentina/Paraguay) Yacyreta High Dam, notesstatements by Argentine specialists of better alterna-tives to Yacyreta in the form of smaller dams, bettersites for high dams and use of natural gas (an alterna-tive equally applicable to Quebec’s James BayProject). He emphasizes several other factors sup-porting the decision to proceed with Yacyreta. One isproject-specific, involving competition betweenArgentina and Brazil (with its binational Itaipu HighDam) for “regional hegemony” (op.cit.: 45). Theother can be generalized to other national politicaleconomies. Rejecting the word “development,”Ribeiro sees large-scale projects, like Yacyreta, as “aform of production linked to economic expansion”into “outpost” areas (ibid, 163).

Ribeiro’s interpretation would also appear to beapplicable to both the James Bay Project and theSouthern Okavango Integrated Water DevelopmentProject (SOIWDP). In addition to economic expan-sion, the former project gives the province of Quebecincreased control over indigenous lands of ambigu-ous legal status as far as that province is concerned.SOIWDP would not only channel more water to thediamond mines (and hence to the advantage of boththe government and the DeBeers/Anglo-Americanmultinational corporation), but also provide increasedaccess for Botswanan elite from the more denselypopulated eastern regions to Okavangan resources inthe form of water for irrigation and grazing and waterfor cattle. Rhetoric aside, in neither project are theintended beneficiaries are supposed to be local peo-ple. Impacts on such people are ignored or playeddown—to the extent possible—throughout the pro-ject cycle. Appropriate assessment of those impacts,because they are widespread, is expensive, which isanother reason they are underassessed.

If more local people are to become beneficiaries,not only must World Bank-type guidelines for reset-tlers be extended to all project affected people, butthe horizon of environment and social impact assess-ments must be expanded to include all habitats andhuman populations likely to be affected. The sameguidelines, however, must also be applied to other

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options, including, for example, increased reliance oncoal-generated electricity. Should that be done, inmany cases, other alternatives to major project workswould be seen as preferable. And where major damscontinue to be the “least-cost alternative” such majorchanges in design and operation as controlled flood-ing would be called for.

ACKNOWLEDGEMENTS

This paper is based on several recent manuscriptsincluding chapters on resettlement and on socialimpacts in Water Resources: Environmental Planning,Management and Development, edited by Asit K.Biswas (New York: McGraw Hill, 1997), as well as achapter called “Advancing Theoretical Perspectiveson Resettlement” for the forthcoming conference pro-ceedings of the Second International Conference onDisplacement and Resettlement held at OxfordUniversity in September 1996. I am indebted toMichael M. Cernea, Elizabeth Colson, Chris de Wet,Scott Ferguson, Robert Goodland, Michael M.Horowitz, Patrick McCully and Martin ter Woort fortheir comments on initial versions of those papers.

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Key Issues To Be Addressed in a Future Review Process

1. The guidelines on issues relating to people impacted by the construction of large dams, issued by the World Bank andother donors, as well as borrowers, do not reflect the present state of knowledge. In the case of the World Bank,Operational Directive 4.30 on Involuntary Resettlement exemplifies how guidelines are being weakened rather thanstrengthened.

2. Poor implementation of guidelines continues to be a major problem. Many country governments believe it is better toimplement a mediocre plan well than to ignore an excellent plan, which may take several years to formulate with donors.

3. Contrary to the arguments of many, increased involvement by the private sector in the construction of dams requires anew and strong role on the part of international development agencies, including the World Bank and regional banks, ifsustainable development is to occur.

4. Participation by project affected people is also essential but far more difficult than advocates realize. Allowing communi-ties to be involved is a necessary but insufficient condition of project development. Community participation also needsto be complemented by appropriate laws, judicial systems, as well as the involvement of donors, NGOs and, in regard tonatural resource management, the private sector.

5. For resettlers to become project beneficiaries, their living standards must be improved.

6. To date, guidelines have paid far too little attention to the nature of the downstream impacts of large dams on riverinepopulations and habitats.

7. A carefully selected sample of the most successful cases of large dams in which project affected people have benefitedover an extended time period needs be studied in order to learn if a majority have, in fact, become project beneficiariesand, if they have, to determine the reasons for success.

ANNEX ONE:

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ENVIRONMENTAL SUSTAINABILITY IN THE HYDRO INDUSTRYDisaggregating the Debate

The service spillway at the Tarbela Dam, Pakistan.


By ROBERT GOODLAND 1, Environment Department, The World Bank

Paper Contents

Introduction....................................................70Transparency and Participation...................73DSM, Efficiency and Conservation.............76Balance Between Hydro and OtherRenewables.....................................................78Rural vs. Urban Supply Balance...................79Medium vs. Big Hydro Projects ..................79Sectoral Social and EnvironmentalLeast-Cost Ranking........................................81

Storage Dams vs. Run-of-River:Area Lost to Flooding ...................................82Involuntary Resettlement .............................84Project-Specific Mitigation............................89Damage Costs of GreenhouseGas Emissions................................................93Conclusion......................................................96Acknowledgements .......................................97Endnotes.........................................................97Sources of Further Information...................99Annex One...................................................102

Environmental Sustainability in the Hydro Industry: Disaggregating the Debates 69

Robert Goodland is environmental advisor to the World Bank based in Washington, D.C.He has worked on environmental impact assessments of many large dam projects worldwide.



70 Environmental Sustainability in the Hydro Industry: Disaggregating the Debates

ABSTRACT

This paper disaggregates the debates embroilinghydroelectric dams and specifies ways to make hydroenvironmentally sustainable. The main means toapproach sustainability is site selection: to select thebetter dams in the first place. This means integratingenvironmental and social criteria into traditional eco-nomic least-cost sequencing in a SectoralEnvironmental Assessment (SEA).

When a good site has been identified, then the nor-mal project-level Environmental Assessment seeks tomitigate residual impacts, such as by lowering thedam or moving it upstream. While the project-levelEA is essential and needs to be strengthened, usingthe SEA to select the better projects is far more pow-erful. In addition, the hydro industry needs to fostertransparency and participation, as well as show thatconservation is well in hand and that electricity pric-ing is adequate before new capacity is contemplated.The biggest impact of hydros, involuntary resettle-ment, needs the most attention. Oustees must be bet-ter off promptly after their move.

Finally, the power sector should play by the sameeconomic rules; all power projects should internalizeexternal environmental damage costs, includingthose of decommissioning and greenhouse gas emis-sions. To do less than that means that the playingfield is not level. This promotes coal and penalizeshydro, an environmentally retrogressive course.

1. INTRODUCTION

Proponents2 of hydro and other renewable energysources are losing the fight to promote them. Hydroshave not yet become fully environmentally sustain-able. Hydro opponents have been so successful inpointing out inadequacies that hydro development isslowing and coal is burgeoning—precisely the retro-gressive course. Hydro proponents have not beentotally successful in persuading opponents thathydro’s benefits clearly outweigh the costs.(Figures 1 and 2) 3

Part of the controversy is caused by confusion onthe precise nature of the issues between hydro propo-nents and opponents, even by parties who should bewell informed (see section titled “Damage Costs ofGreenhouse Gas Emissions”). This paper seeks to dis-aggregate the debate into at least ten related but sep-arate debates. Clarification of the differences will, it ishoped, foster convergence on which disagreementsare real, important and need much discussion, andwhich may be resolved more readily. Consensus-building is the main purpose of this paper. This paperwas commissioned as the overview of what environ-mental improvements are needed to make hydro sus-tainable. It was provided to all participants of theworkshop to frame the issues in advance and seeks tobe relatively neutral and as unbiased as possible,although the author believes that much more envi-ronmental prudence than is customary in hydrodevelopment is urgent and overdue. To this end, thepaper disaggregates the controversy into ten issues,and presents pros and cons of each.

CAVEAT: This workshop had two goals. First, itsought to learn from the past—what needs to beimproved and what mistakes may have occurred.Second, the workshop looked to the future—how canhydros be improved and what should be done differ-

ROBERT GOODLAND

Robert Goodland is the Principal Economist in the EnvironmentDepartment at the World Bank. Mr. Goodland has worked on theWorld Bank’s environmental impact assessments on many largedams worldwide including Itaipu, Three Gorges, Arun, and NamTheun. He has also served as Independent Commissioner on theinquiriy for Canada’s Great Whale Hydro Project in James Bay.

S-5043Environment DepartmentThe World Bank1818 H Street, NWWashington, D.C. 20433United States

Fax: 202/477-0565E-mail: [email protected]

Note: This paper was commissioned by IUCN from the author forthe joint IUCN-The World Conservation Union/World Bank work-shop. Any personal opinions should in no way be construed asrepresenting the official position of the World Bank Group orIUCN.

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Figure 1: Examples of Controversial Dams

1. ThailandÕs 576-megawatt ($352 million) Nam Choan was indefinitely postponed by the Royal Thai cabinet in 1982because the 140-square-kilometer reservoir would flood 4 percent of the 4,800-square-kilometer Thung Hai WildlifeSanctuary. This sanctuary was (and is even more since) being actively logged and poached, both of which the projectcould have halted. This is just one example of the many hydro projects that are indeed dropped on environmentalgrounds.

2. Sweden has banned further hydro projects on half of its rivers. The new government may rescind this decision partlybecause of availability of FinlandÕs nuclear energy.

3. Norway until recently derived 100 percent of its energy from hydro, which was considered good and sustainable.Norway has now postponed all new hydros because of excess capacity and opposition.

4. Slovakia is defying the EC and the EC-appointed tribunal looking into the DanubeÕs Gabcikovo Dam. The dam isalleged to have lowered the water table in HungaryÕs prime agricultural area (yields dropped 30 percent) by 6 metersin the lower central part of HungaryÕs Szigetkoz wetland. Most Danube fish are reported to have since declined. Workwas halted for a period in mid-construction.

5. In the United States, New York State (NY Power Authority) canceled its 20-year $12.6 billion contract to buy 1,000megawatts of QuebecÕs James Bay power, reportedly for environmental and social reasons, in March 1992. Demand-side management in New York played a role too. HydroQuebec indefinitely postponed Great Whale hydro in 1994.

6. India requested that the World Bank cancel the outstanding $170 million Sardar Sarovar (Narmada) loan on March 31,1993, partly because the contractual agreement schedule was unlikely to be met on time. This was the worldÕs mostintense dam controversy for years on environmental and social impacts, as amplified by Morse and Berger (1992).

7. NepalÕs 401-megawatt Arun hydro, which created a 43-hectare reservoir and caused little resettlement, twice enteredNepalÕs Supreme Court in 1994 because of opposition related to the 122-kilometer access road and complaints aboutthe lack of transparency. A petition was lodged with the World BankÕs Inspection Panel in 1994, and the project wasdropped in 1995 largely because of financial risk, although environment was criticized by opponents.

8. ChinaÕs approximately 16,000-megawatt Three Gorges, the largest in the world, had U.S. support withdrawn inDecember 1993, when the U.S. Secretary of the Interior ordered the Bureau of Reclamation to cease collaboration.The U.S. Export-Import Bank withdrew support in 1994. According to World Rivers Review, the export credit agenciesof Switzerland, Japan and Germany (Hermes-Buergschaften Ex-Im Bank) were involved as of 1997.

9. ChileÕs 400-megawatt Pangue hydrodam, the first of five planned for the BioBio river (IFCÕs first major dam, $150 mil-lion, approved in 1992 and completed March 6, 1997), came under litigation in ChileÕs Supreme Court in 1993, partlybecause the EA failed to address downstream impacts. An independent review commissioned by IFC and led by JayHair, former president of IUCN-World Conservation Union, is said to be very critical of both the project process andIFC; World Bank Group President James Wolfensohn threatened on February 6, 1997, to declare default to FinanceMinister Aninat. On March 11, Chile severed ties with IFC by prepaying IFCÕs loan and obtaining cheaper money fromthe Dresdner Bank, with fewer environmental conditions.4

ently. To this end, the paper outlines what needs tobe improved and suggests throughout how suchimprovements may be achieved. The many benefitsof big dams are not the focus of this paper. However,the major benefits of big dams may not be as well-known or as frequently posed as what needs to beimproved. Dam proponents may want to emphasizewhich dams have worked well, as that case is oftenassumed, rather than documented. The case that

many big dams have created valuable economic ratesof return is clearly portrayed in the Big Dams Review(World Bank, 1966). Recent major improvements inturbine efficiencies and the huge non-hydro benefitssuch as flood control, navigation, irrigation, watersupply and river regulation to improve water usedownstream must be acknowledged. This paperfocuses on developing country hydro projects andonly barely mentions irrigation and multipurpose

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Figure 2: The General “Big Dams” Debate

PROPONENTS’ CLAIMS OPPONENTS’ CLAIMS

It is possible to mitigate hydroÕs impacts significantly, given politi-cal will.

Developing countries need large power projects; many smallpower projects (deforestation, old diesels) can be environmental-ly and economically worse than the best hydro projects.

The impacts of hydroÕs alternatives (coal, nuclear) cannot be mit-igated.

Hydro generates much less GHG compared with coal alterna-tives.

Gas is best reserved for transport fuels or for chemical feed-stock; costly for base load.

Many countries still have good hydro sites left. The best hydrosites should promote local development. They can also provideopportunities to export electricity to neighbors to postpone coalor nuclear alternatives and to benefit the country by attractingenergy-intensive industries.

The worst hydro sites should not be built, such as those in tropi-cal areas, those with many oustees 5 and with much species lossand those that create large, shallow reservoir areas.

Government regulation is needed, and enforcement is possible.

After privatization, government regulation is still needed.

Public and private power projects should follow least cost.

Electricity sales help the country irrespective of the use to whichthe power is put. This includes electricity for export or for thealready electrified elites.

Water must not be allowed to Òwaste to sea,Ó unharnessed.

Large-scale hydro is necessary for urban, industries and surplus-es, especially because their capability to pay is greater.

Electricity subsidies to the rich can be cut, but pricing can helppoor.

Foreign contractors involved in large-scale hydro projects createjobs and transfer technology.

Less-developed countries lack the capacity to build large dams.The low maintenance cost and simplification of operations ofhydro is suitable for LDCs.

Small hydro projects are not substitutable with large hydro pro-jects.

Historically, hydroÕs impacts have not always been mitigated,even when well-known, such as involuntary resettlement.

Developing countries are better served by less lumpy powerinvestments than big hydro projects.

Lumpy power projects demote DSM, so small coal and gasturbines make DSM more likely.

GHG reduction by hydro is unlikely to be the least cost; trans-port sector improvements are more likely to be less cost.

Natural gas should be used for the next decade or so or untilother renewables become competitive.

Practically all good hydro sites have already been developed,especially in Europe and the United States.

The really good hydro sites are non-tropical (that is, moun-tainous), with no biomass or resettlement, no fish or noendemics, and those with high head and deep reservoirs.

Government regulation is unlikely and enforcement may beweakening.

After privatization, government is less able to regulate the pri-vate sector.

The private sector less likely to follow least cost. It prefers toexternalize all it can.

More electricity for elites is not needed. What is needed iselectricity for basic needs, including health, education and forthe poor. These needs are not best met by big hydro projectsfeeding the national grid.

Water flowing to the sea is not wasted, but used by ecosys-tems.

Poor and rural benefit less, if at all, from large-scale hydroprojects. The priority should be to provide for the poor beforeindustries.

Large-scale hydro projects subsidize the rich and decreaseequity.

Less-developed countries are already too dependent on for-eign exchange and contractors.

Big hydro has huge capital costs, so in the beginning indige-nous, smaller sources of electricity are more appropriate forLDCs.

Small and medium-sizd hydro projects can partly substitutefor big projects and attain more equitable goals.

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dams and those in industrial countries. The record ofindustrial country dams is probably better than thatin developing countries for compelling reasons.Although not the focus of this paper, developingcountry multipurpose dams may not, in general, beas problem-free as some hydro—again for compellingreasons that must remain for another occasion. Partof the controversy is that hydro can be made sustain-able and renewable, but only with more effort than iscustomary. Hydro is on the cusp between fully renew-able and clearly non-renewable (Annex 1).

The environmental impacts of hydro can be sepa-rated into nine topics listed in Figure 4. The impor-tant point here is that the old-fashioned approach oftit-for-tat mitigation for each individual impact isinherently weak. The project-level EA is being com-plemented by the much more powerful sectoralapproach. The retail project-specific environmentalassessment and mitigation cannot influence projectselection. It is precisely during the project selectionphase that most impacts can be prevented or mini-mized. Once the project has been selected, the weak-er project-level EA should still be applied, but isseverely constrained in what it can mitigate.

International best practice is converging on thenotion that most impacts are better reduced in theselection process of low-impact projects or site selec-

tion, rather than mitigating impacts of previouslyselected projects. This sectoral EA approach is essen-tially integrating the tried-and-true economic least-cost analysis with environmental and social criteria.This is amplified in the section called “Sectoral Least-Cost Ranking.” If environmental criteria are used inproject selection, then only projects with the leastimpacts are selected. This is much more efficient andeffective than any project-level EA.

The goal of both the sectoral and the project EA isto make hydro projects sustainable. Figure 4 specifieswhat sustainability should be when applied to hydro.Specific impact mitigation is taken up in the sectiontitled “Specific Mitigation.” In addition to the sectoralEA approach, the other powerful means of reducingenvironmental impacts are:

■ To foster transparency and participation

■ To squeeze most demand-side management(DSM), efficiency and conservation out ofthe system before building new capacity

■ Balancing rural with urban electricitysupply

■ Balancing medium and big hydros

Proponents and opponents converge that environ-mental impacts are better reduced by attending tothese upstream sectoral opportunities, rather than byusing the previous approach of starting environmen-tal work when a project already has been selected.Thus a major shift of emphasis is underway:Continue with the traditional project EA, but attend toall these sectoral opportunities before the project isselected.

2. TRANSPARENCYANDPARTICIPATION

Dam proponents scarcely fostered transparencyand participation of stakeholders in the past. Planningbehind closed doors by expert hydro planners whoknew best was the order of the day. Secrecy oftenreigned. Now dam proponents see that secrecy is nolonger possible. In the last few years, especially sinceabout 1995, pressure has mounted to make trans-parency and participation permanent features of the

Figure 3: The “Dam Controversy”The Controversy Disaggregated Into Ten Main Issues:6

1. Transparency and Participation.

2. DSM, Efficiency and Conservation.

3. Balance Between Hydro and Other Renewables.

4. Rural vs. Urban Supply Balance.

5. Medium vs. Big Projects.

6. Sectoral Least-Cost Ranking; Social andEnvironmental Criteria.

7. Storage Dams vs. Run-of-river: Area Lost toFlooding.

8. Involuntary Resettlement.

9. Project-Specific Mitigation vs. Trade-offs.

10. Greenhouse Gas Emission Damage Costs.


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planning process. But proponents are nervous aboutexposing their schemes to public scrutiny, and gov-ernments are concerned about risks to sovereignty.The Mekong River Commission, a UNDP-sponsoredproject, is widely reported in the press to have notfully embraced transparency and participation on sev-eral occasions in 1994-96, flying in the face of UNDP’spromotion of transparency. In addition, dam propo-nents often do not know how to foster transparencyand participation, or are uncomfortable with them, sosome initial attempts may not have been fully effec-tive. But participation is here to stay and is slowlyspreading worldwide.

Proponents and opponents argue that participationis essential for democracy, and that participationgreatly improves project selection and design.Because the EA is performed by the proponents,external scrutiny and participation in the wholeprocess is essential to reduce any possible conflict ofinterest. The World Bank now insists that EA reportsbecome publicly available, and this is helping to raiseEA quality. Now that civil society or non-governmen-tal organizations are burgeoning, national govern-ments and governance are weakening, and privatiza-tion is sweeping the globe, it is increasingly difficultto impose major investments covertly on taxpayers.New big proposals are increasingly subject to trans-parency and full participation from the earlieststages. Most importantly, participation and trans-parency can foster early agreement and build consen-sus on the project, thus reducing controversy andopposition later on. This in turn expedites implemen-tation. These two relatively new aspects are mandat-ed by an increasing number of governments anddevelopment agencies. They are best started at thesector planning stage (Sectoral EnvironmentalAssessment), well before an individual new dam isidentified.

Synthesis: In view of the fact that a growing num-ber of governments and development agenciesrequire transparency and participation, the planningof hydro projects is becoming an increasingly openprocess, no longer restricted to experts (Figure 5).The People’s Democratic Republic of Laos, untilrecently an almost closed society, held it first publicthree-day participation meeting in January 1997 on itsbiggest proposed hydro project, Nam Theun Two.

Proponents of the Nam Theun hydro project arereceiving many useful proposals from nontraditionalstakeholders because of such participation.

Although transparency and participation are hereto stay, they are not yet at all the norm. The gianthydro proponent, ABB Consortium, espouses trans-parency, but has not yet been able to persuade theowners of Malaysia’s $6 billion Bakun dam to makethe EA public (as of March 1997), not even to theaffected people. ABB’s tentative contract is worth $5billion to ABB. The 2,400-MW project is scheduled togenerate electricity commercially in 2003. Jayaseela(1996) writes that Malaysia’s EA was never intendedto address social issues, in spite of the fact that vul-nerable ethnic minorities will be harmed. Apparentlythe Bakun dam was approved before the EA wascompleted. Jayaseela (1996) quotes distinguishedopponents who claim Bakun7 would never be permit-ted in relatively unpopulated and species-poorSweden, so why is ABB, a partly Swedish-ownedcompany, supporting it? Moreover, the dam will pro-vide Malaysia with excess electricity, which it plans tosell by the beginning of the next century. So whyinvest in a damaging scheme rather than in renew-ables? On the other hand, proponents (Green, 1996)note major benefits. Malaysia is in need of consider-able capacity expansion, as electricity demand grewat nearly 10 percent per annum in the 1980s andreached 14 percent in the early 1990s, resulting inblackouts. Most Malaysian new capacity will be gas-fired, reaching 70 percent of the national mix by2000. Bakun will hedge by broadening the mix.

Proponents also point out that the dam will flood only695 square kilometers of valuable tropical forest,which is two orders of magnitude less than jungleloss from current logging in Sarawak. Bakun will dis-place 5.5 million tons of coal or 11 million tons of CO2

per year. Biomass rot from the reservoir will be theequivalent of 1.5 years of coal equivalent (at 17 ter-awatt-hours a year from 2,400 MW installed). As theSEA is not available, opponents suspect that the ous-tees may not participate in decisions affecting them,nor do they expect vulnerable ethnic minorities tosurvive involuntary settlement. The journal Power InAsia reported in February 1997 that Bakun is spear-headed by the Malaysian timber potentate and theEkran Berhad Head, Ting Pek Khiing.

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Figure 4: What is Environmental Sustainability in Hydro Reservoirs?

The starting point is the solar-powered hydrological cycle which is the quintessence of sustainability. Water flow is a renewableresource. The cycle must be harnessed so that the project continues to generate benefits (such as power, fish; in multipurposedams irrigation, flood control, navigation, water supply) for a long period, certainly decades, preferably a hundred years or more.In the narrow sense, sustainability means the hydroÕs lifetime should be as long as possible. In the broad sense, sustainabilityrequires that the environmental and social costs are low and do not increase, especially not for future generations, such as cli-mate change (the intergenerational equity component of sustainability). Sustainability is NOT only a continuation of power output.A modest fraction of power sales allocated to social and environmental needs ensures their acceptability. The concept of environ-mental sustainability in general is elaborated in Goodland (1995) and Goodland & Daly (1996).

Involuntary Resettlement (includes all affected people): The number of oustees is zero or low (e.g. NepalÕs Arun reservoir);those relocated are promptly better off after their move. To be no worse off means stagnation, so cannot be called develop-ment. Of course, Òno worse offÓ would be much better than historic achievements. Diseases cannot be allowed to increase.Brazil and China call for fractions of power sales to be allotted to oustees. ChinaÕs policy is to ensure oustees are better off, notÒworse off.Ó The impacts on affected people should be made acceptable.

Sedimentation: The reservoir generation capacity will not be curtailed because of sedimentation. Certainly, the damÕs lifespanshould last longer than the amortization of the loan. Opponents claim that 50 years of power is too brief a benefit to outweighthe environmental costs. Early designs need to calculate the ratio of live to dead storage to inform dam selection. In addition,catchment protection should be made an integral component of all relevant hydroprojects. It is important to determine currentsediment loadings, and the expected life of the reservoir before sediment starts to curtail generation. Thereafter, if the damoperates as run-of-river, it is necessary to determine the implication of that. Other issues involve understanding the potential forde-silting for example, the use of bottom gates, and understanding the downstream effects of de-silting. Finally, it is importantto calculate and monitor erosion processes upstream.

Fish: Sustainability means that the fish contribution to nutrition, especially protein, must not decline. Unless fish catch increasessubstantially and permanently, the new opportunity presented by the new reservoir will have been wasted. It is necessary toascertain how many people currently depend on fish for their livelihood (self-consumption or barter or commercial sales). Thevalue of non-marketed fish usually exceeds the value of marketed fish. A large proportion of so-called weekend or recreationalfishing forms an integral part of poor household budgets, so it also must be included. The potential for fish cultivation in thenew reservoir or elsewhere should be realized, including the high initial offtake. A damÕs operating rules need to be implement-ed in such a way that optimizes fisheries and internalizes costs. Compensation must be made available for the reduction infishing downstream caused by the construction of the dam.

Biodiversity: Species or genetic diversity should not decline as a result of the project. Sustainability means the project does notcause the extinction of any species. Moreover, migrations (e.g., seasonal, anadromy, catadromy, potadromy) should not be soimpeded as to harm populations. For example, fish breeding or fish passage facilities should be proven in advance. It is neces-sary to determine if wildlife habitat will be lost? And if so, then, to determine if there are equivalent (or better) compensatorytracts purchasable nearby? Improvements in net biodiversity are not difficult, and should be sought.

Land Preempted: If agricultural production declines, then it is necessary to clarify that the net power benefits clearly exceed thenet value of lost agricultural production. Equivalent areas need to be made available for the oustees.

Water Quality: Sustainability means that water quality will be maintained at an acceptable level. The project must ensure thatthe reservoir does not impair water quality. Can water weeds, decaying vegetation and the like be controlled so that water ofacceptable quality will occur downstream? Determining the level of organic mercury7 releases from rotting biomass and phos-phorus is important. Sustainability cannot be defined as just meaning cleaning up dirty water that fills the reservoir, for instanceas is done in the case of MexicoÕs Zimapan dam, which fills from the effluent of Mexico City.

Downstream Hydrology: Sustainability means preventing negative impacts on the downstream uses by people (e.g., irrigation,soil fertility restoration, recession agriculture, washing, cattle watering) and to downstream ecosystems (e.g., mangroves, delta-ic fish, wetlands, flood plains). There are substantial benefits to be realized for water regulation downstream, whether it is floodcontrol, urban and industrial water supply, and/or multiple use. Temperature of releases also needs to be controlled.

Regional Integration and Esthetics: The project is more sustainable if it is well integrated into the activities and future of theregion. Losses to cultural property and aesthetics should be avoided (Goodland and Webb, 1989).

Greenhouse Gas Production: Total GHG production (from biomass, cement, steel, etc.) should not exceed the gas-fired equiv-alent. It is important to recognize that rotting biomass remaining in the reservoir after filling produces estimable amounts ofCO2 and CH4.

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Nevertheless, stakeholder analysis has become auseful tool in promoting participation. Major dam pro-jects are improving in this regard. In an increasingnumber of countries, a major dam is likely to goahead without massive opposition only if civil societyhas been fully involved and broadly agrees that theproposed project is the best (or least objectionable,and least-cost in terms of the environment and soci-ety) alternative to meeting the goals that have beenagreed upon in advance by civil society and govern-ment, and supported by financiers and developmentagencies. Society as a whole bears the financial debtsand the environmental and social costs, so society asa whole needs to be meaningfully consulted beforesuch costs are incurred (Narayan, 1995; World Bank,1994).

Transparency and participation mean that civilsociety exercises a role in the selection of criteria tobe subsequently used for decision-making and inidentifying stakeholders. These normally includeaffected people (eventually all taxpayers) or theiradvocates, government, academia, syndicates, con-sumer and safety organizations, as well as projectproponents. Civil society’s role is broad, assisting inthe selection and design of studies needed beforedecisions can be made, in the interpretation of thefindings of such studies, in the burden-sharing or rel-ative weights given to demand-side management,pricing, conservation, efficiency on the one hand andnew generation capacity on the other. The interven-ing organization that finances the project enables civilsociety to play its legitimate role, and is accepted bygovernments and development agencies.

3. DSM, EFFICIENCYAND CONSERVATION

Dam opponents urge that most of the potential fordemand-side management, energy efficiency and con-servation be squeezed out of the sector before invest-ing in new capacity. Most conservation measures,including demand-side management, should be sub-stantially in place before new dams are addressed.“Substantially in place” means that the marginal eco-nomic cost (including environmental and social exter-nalities) of saving energy through conservationbecomes as high as the marginal cost of a new hydro

scheme. Proponents agree that many LDCs need tomove on both DSM and new capacity fronts. Theimportant point is not to jump to new capacity if thereis a large scope for DSM. Opponents point out thatpricing is very effective in fostering conservation, butthat tariffs are rarely raised to equal long-run margin-al cost of production. Opponents sometimes calculatethat demand predictions are unrealistically high. Thisoften subsequently proves to be the case. Proponentsjustify going ahead with the next dam partly by usinghigh demand predictions, and before DSM and pric-ing benefits have been put in place. Early in 1997,India’s huge states of Punjab and Kerala waived elec-tricity charges for farmers. In such cases, how dopower producers keep up with demand?

Dam proponents now admit that matureeconomies and sectors have substantial conservationpotential, but that developing economies have lessscope. Proponents in LDCs claim that the emphasisshould be on increasing supply rather than reducingstill small demand in those countries. To its credit,the OECD hydro industry is now focusing onrevamping existing industrial plants to improve effi-ciency to low or zero impact. Utilities in matureeconomies are now espousing the fact that it is intheir interest to help their consumers reduce con-sumption by means of DSM, pricing and conserva-tion. Leading utilities in California, for example, onlybegan promoting fluorescents over incandescents asrecently as the early 1980s. Utilities are now seeingthat it is in their interests to ensure that DSM isachieved and publicized well before contemplatingnew capacity. Only in this way can utilities raisebonds and other capital to finance new capacity.

Current Status: The basic theme is the win-winnotion of reducing the price of final services — ener-gy — while reducing the environmental costs. Thismeans encouraging end-use efficiency. DSM shouldbe vigorously promoted until the marginal economiccost (including environmental externalities) of thor-ough conservation becomes as high as the short-term marginal cost of new production. As conserva-tion measures are always advancing, implementationwill always lag behind savings potential. The aim is tominimize this gap. Because DSM has not yet beenvigorously pursued in many countries, DSM projectswill rise rapidly as they will initially often be part of

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the least cost.

DSM by population stability: This topic is nei-ther well-known, nor widely accepted yet. It is essen-tially long-term. Stabilizing the numbers of electricityconsumers is as important — if not more so — thanmanaging electricity consumption. Urgently neededimprovements in living standards and developmentitself also boost energy consumption. This sectionaddresses demographic growth.

The world is expected to have a population ofabout 8 billion by 2020, up from 5.8 billion in 1997.Population stability — births matching deaths — is anecessary eventual condition for social and environ-mental sustainability. The importance of populationstability in DSM calculations is that sustainability andDSM are possible for a stable population, but practi-cally impossible for a growing population. In general,population stabilization (in other words, zero growth)is a necessary precondition for environmental sus-tainability in all sectors, not only the energy sector.Most environmental impacts will be eased to theextent population growth rates fall. People concernedwith environmental sustainability have a big stake inreducing population growth rates.

Environmental sustainability is difficult to achieveeven without having to double electricity supplyevery generation, and without having to supply elec-tricity for 80 million new consumers each year.Sustainability cannot be achieved in a vacuum thatexcludes one of its most important components, pop-ulation stability. All sectors of the economy shouldmap out what it would take for them to become sus-tainable. Most sectors have a stake in population sta-bility. Therefore, population cannot be the soleresponsibility of the ministry of health or its equiva-lent, thus relieving other sectors for any role whatso-ever. While dams should certainly not be burdenedwith righting all societal ills, it is clearly in the inter-est of hydro proponents to see their consuming popu-lation stabilize. Population stabilization will make percapita electricity supply increases easier or with less-er impact. Proponents have to repeat the case thatmore electricity is needed. As European Union con-sumption exceeds 1,300 watts per capita, and LDCper capita is one order of magnitude less (120 wattsper capita), such an argument should be straightfor-ward.

Hydro proponents may object that they should notmeddle in population policies. But it was only a few

Figure 5: Historical Evolution of Transparency and ParticipationBroadening the constituency of the design team

Design Team Approximate Era

1. Engineers Pre-WWII Dams

2. Engineers + Economists Post-WWII Dams

3. Engineers + Economists + an Environmental Impact Statementat the end of complete design Late 1970s

4. Engineers + Economists + Environmentalists & Sociologists Late 1980s

5. Engineers + Economists + Environmentalists & Sociologists + Affected People Early 1990s

6. Engineers + Economists + Environmentalists & Sociologists + Affected People+ NGOs Mid 1990s

7. Engineers + Economists + Environmentalists & Sociologists + Affected People+ NGOs + Public ÒAcceptanceÓ Early 2000s?

Note: These dates hold more for industrial nations than for developing ones, although meaningful consultations with affected people ortheir advocates and local NGOs, and the involvement of environmentalists in project design, are now mandatory for all World Bank-assisted projects. The World BankÕs mandatory environmental assessment procedures are outlined in the three-volume ÒEnvironmentalAssessment SourcebookÓ (World Bank, 1991). Environmental Impact Statements (EIS) were added on to the end of a completelydesigned project Ñ a certain recipe for confrontation and waste.

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very short years ago that the utilities achieved theirbiggest about-face in history and began to pay elec-tricity consumers not to consume, or at least to stabi-lize their consumption. It is strongly in the interest ofhydro proponents to support national population sta-bilization goals to the extent they are able, and it is intheir interests to help in fostering family planning, aswell as energy conservation.

4. BALANCE BETWEEN HYDRO ANDOTHER RENEWABLES

Proponents of non-hydro renewables rightly claimthere is much scope for such renewables in practical-ly every country, and unless they are experimentedwith they will never catch on. Practically all nationshave scope for installing 0.5-1 MW wind turbines intheir best sites at commercially competitive rates.There is enormous commercial scope for photo-voltaics (PV) use in isolated systems and smallpumps worldwide.

The harsh reality is that there is limited scope fora rapidly industrializing country to meet their energyneeds through non-hydro renewable energies. Evenindustrial countries may be moving in the wrongdirection. The United States, for example, decreasedits renewable energy from 0.4 percent in 1987 toabout 0.2 percent in 1997 (World Bank, 1997).

Photovoltaics and tidal energy have yet to reach the 1MW mark. Wind generators are only scaling up inthe 5-plus MW range, but 0.5 MW models are com-mercially available. Solar-thermal has exceeded 300MW in one experimental plant and shows promise forcountries with a patch of desert near ocean (for thewater needed). Non-hydro renewables are positivecontributions in many counties, but do not yet con-tribute substantially to any industrialized nation. Forexample, the share of wind energy is declining in thetwo world’s leaders, United States and Denmark.

The impact on energy demand of an additional 80million per year resulting from population growth isenormous. As a consequence, world energy con-sumption is expected to double between 1990 and theyear 2020. Practically all new capacity is already indeveloping countries, rather than in OECD countries.More than two-thirds of the world population use 20gigajoules per person or 15 kilowatt-hours a day. Thisis one-tenth the energy use in OECD countries.However, the facts also show that the price of non-hydro renewables is declining fast and will be com-petitive sooner if they are tried on an experimentalscale now. In light of the fact that environmental sus-tainability will necessitate phasing down coal useuntil greenhouse gas emission costs can be stemmed,the faster coal has to be subjected to the same eco-nomic cost-benefit analysis as hydro and other renew-ables, the sooner hydro and other renewables will

FIGURE 6: Historic Evolution from Warning, Consultation and Participation to Partnership

1. Pre-1950s: One-way information flow: Oustees were warned that they would be flooded in a few weeks or monthsand had to get out of the way for the greater good of distant citizens.

2. 1960s: Primitive participation in resettlement site selection: Oustees were informed that they would be flooded out,and were asked where they would like to move to among a few sites selected by the proponent; compensation ofteninadequate.

3. 1970s: Participation in resettlement site selection: Oustees were consulted about their impending move, and invitedto assist in finding sites to which they would like to move.

4. 1980s: Resettlement participation evolves into consultation: Oustees are meaningfully consulted in advance and caninfluence dam height of position on the river; oustees views on mitigation of resettlement are addressed.

5. 1991: World BankÕs ÒEA SourcebookÓ mandates meaningful consultation in all EAs; EA is unacceptable without suchconsultation.

6. 1990s: Resettlement consultation evolves into stakeholder consultation: Stakeholders views are sought on allimpacts, not just involuntary resettlement.

7. 1992: World BankÕs EA Policy mandates participation.

8. 1996: World BankÕs ÒParticipation SourcebookÓ published.

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outcompete coal. When coal becomes more expen-sive by virtue of the fact that its environmental costswill be internalized (Goodland and El Serafy, 1997),hydro and other renewables will burgeon. Later,probably in a decade or so, non-hydro renewables willoutcompete all but the very best hydros, and theworld’s energy sectors will be reaching sustainability.

5. RURALVS. URBANSUPPLY BALANCE

Proponents are more interested in supplying elec-tricity to the national grid for urban and industrialareas, rather than for supplying rural users, becausethe costs to link each consumer are relatively lowerin densely populated areas, and urban/industrial con-sumers consume much more electricity than ruralconsumers. In addition, urban/industrial consumersare more likely to be able to afford the supply. It maycost an order of magnitude more to connect a ruralconsumer compared with an urban consumer. Therural consumer normally would use little electricityfor the first several years: a couple of light bulbs, thena radio, and only later a TV or small machine such asa rice dehusker, and that only sporadically. This is atypical “who benefits” question.

Opponents point out that this exacerbates theurban-rural bias. Rural societies bear the impacts ofhydro schemes, while city dwellers reap the benefits.This is a philosophical debate on the nature of eco-nomic development. Historically, development hasbenefited mainly city dwellers and intensified rural-to-urban migrations. In the case of dam construction,overseas firms have profited, while the rural poor,who are most impacted by the project, have paid thecosts. Now, in today’s environmental crisis, oppo-nents ask if this bias should be redressed in order toapproach environmental sustainability and moredirectly alleviate poverty. In Nepal, for example, isnational sustainability fostered more by increasingbenefits, such as electricity, for the load centers andrelying on trickle-down to help non-consumers? Orwould sustainability be better approached by balanc-ing the current status by more emphasis on ruralelectrification and isolated small (1 MW, for example)hydro projects supplying a group of a dozen villages?Opponents of big hydro projects point out that mini-

hydros tend to retard environmental degradation,such as deforestation for fuel wood, erosion or loss ofprecious topsoil. Mini-hydros also make eco-tourismmore sustainable. In fact, for a country or region, pro-moting sustainable eco-tourism may be a more appro-priate course to follow toward development, ratherthan yet more conventional industrialization.

Synthesis: Certainly, the balance between devel-opment targeted to rural vs. urban sites is real andinvolves much more than just hydro. Governmentsare progressively short of resources to subsidizeexpensive isolated hydros. The private sector is moreprofit-motivated and is unlikely to find isolated hydrosmore profitable than supplying the grid. Until thevery real but little recognized costs and benefits ofsustainability, poverty alleviation, the rural exodus,rural environmental protection and urban slums canbe better calculated, there will be little progress onthis front.

6. MEDIUM VS. BIG HYDRO PROJECTS

The “size” of a dam is primarily a function of how itfits into overall river basin development. Big damsare mainly for big rivers (for example, the Nile andIndus), in which case the main purpose is irrigationor flood control, and hydro is a secondary benefit.Proponents of big dams point out that, in general, nodam should stand by itself; the use of the basin’swater resource should be optimized. Proponentssometimes also claim that big dams are needed bycountries with few alternatives to earn foreignexchange by exporting electricity. Thus the big vs.medium trade-off can be separated into supply for thenational grid vs. foreign exchange, and trade/envi-ronment issues. To the extent big hydro is for export,as is often the case, the medium vs. big dams debateoverlaps the trade/environment debate. Proponentsclaim that if all impacts are internalized in the cost,the fact that the exporter bears such costs becomesirrelevant. This too is very much a “who benefits”question. Private developers can be leaders in plan-ning for the internalization of social and environmen-tal costs, such as the NTEC Consortium proponentsof Lao’s Nam Theun Two hydro project.

Proponents want to internalize formerly external

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costs, and this sums up the entire history of the envi-ronmental movement worldwide: the internalizationof environmental costs. It took centuries to internal-ize the cost of black lung disease to coal miners;decades in the case of Minimata victims. Today, oneof the most pressing issues is how to internalize thecosts of greenhouse gas emissions. Most projecteconomists, whether the project is for coal, gas orhydro, resolutely persist in externalizing these costs(see “Damage Costs of Greenhouse Gas Emissions”).While development agencies, in principle, seek tointernalize environmental and social costs, this isoverridden by the much more important (to them)priority of free trade. The World Trade Organizationstringently promotes free trade, but is not stringent atpromoting environmental and social standards, andresolutely against any country seeking to protect anefficient national policy of internalization of environ-mental costs.

Opponents of big dams claim that exporting elec-tricity burdens the exporter with the environmentaland social impacts precisely because such costs havenever historically been internalized in the price ofproduction. Japan now imports all of its timber,although it has plentiful and good quality forests.Much of Japan’s steel and aluminum also are import-ed, thus avoiding the environmental and social costsof their production. Such imports are “cheaper” toJapan because their social and environmental costsare externalized. Most electricity from Brazil’s $8 bil-lion Tucurui hydro supports the aluminum smeltersthat export to Japan, creating only 2,000 jobs in Brazil(Fearnside, 1997). Such costs are not fully factoredinto prices, opponents claim, because the environ-mental and social standards of the exporter (e.g.,Brazil, Philippines, Indonesia, Lao PDR) are muchlower than in Japan. This pushes hydro projects intothe debate over the environmental impacts of freetrade (Daly and Goodland, 1994). A country internal-izing environmental and social costs into its priceswill be at a disadvantage in unregulated trade with acountry that externalizes such costs.

Proponents of medium-size dams — that is, damsin the 50 MW to 300 MW range — urge that a bal-ance be sought between catering to the export mar-ket and meeting domestic demands. Such proponentsprefer to emphasize national needs before exports.

This preference has to do with concerns about theunreliability of export markets, if a big importerdecides not to pay for or to reject the electricity afterthe dam has been built or, more importantly, after theimpacts have been caused. Proponents are concernedthat the exporter bear the impacts, which are moresevere in larger projects than in medium-size ones.Proponents point to the fact that some medium-sizehydro are run-of-river or outstream diversions, whichcan have fewer negative impacts compared to thosefrom a large storage reservoir. Oud and Muir (1997)point out that it is less risky to build a number ofsmaller schemes rather than one big one with equiva-lent total capacity, even if this would entail a higherpresent value of cost, as this would spread the risk.

There are fewer opponents of medium-scale hydroprojects. Utilities encourage the private sector toinvest in national grid supply partly because powercuts are extremely costly (about 10 times the tariffper kWh). Thus utilities may be forced to pay highertariffs simply to avoid outages. If domestic demand islow, such as in Laos or Nepal, and there is a power-hungry neighbor, such as Thailand, India or Vietnam,that can pay, the private sector may be interested.Even so, power exporters need to conquer a marketwhich leads to downward pressure on the tariff.

Synthesis: We can dismiss the concern overexporting per se: No one criticizes Idaho for export-ing its potatoes. But the value-added debate is ger-mane. Idaho would be better off exporting potatochips (now priced higher than smoked salmon!),potato latkes, instant french fries or whatever higher-value products consumers can be induced to eat. Oreven distill potatoes into poteen or potable alcohol ifthat is more profitable. The situation is similar intropical timber, where international debate is ragingover the balance between the export of crude logs vs.the export of value-added wood products (doors, win-dows, tiles, veneer, particle board, etc.) by domesticprocessing (Goodland and Daly, 1996). In the case ofwater, it is normally not possible to stop water flowingfrom one country to a downstream riparian who doesnot pay for it. How much better then to turbine it anduse the head of the upstream country to add valuebefore the natural water resource is lost downstream.By analogy, it would help the hydro-rich countrymore by exporting products embodying much electri-

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cal energy manufactured at home, rather than export-ing only electricity. For example, Paraguay’s popula-tion is less than five million and it receives half theelectricity generated by the 12,600 MW Itaipu, theworld’s biggest hydro project. It expects to receivehalf of the output from the 2,700 MW Yacyreta short-ly, and of Corpus (about 2,000 MW) eventually, butcan consume less than 10 percent even of its halffrom Itaipu. Understandably, Paraguay is seekingelectricity-intensive manufacturing industries.Meanwhile, Paraguay sells much of its half of theenergy to Brazil and Argentina.

7. SECTORAL SOCIALAND ENVIRONMENTALLEAST-COST RANKING

This section contains the most important recom-mendation of the paper — the use of the sectoral EA.Dam opponents are very keen to start environmentalprudence before the next individual project is select-ed. Once a project is selected there is only modestscope for reducing impacts such as by lowering damheight. The biggest opportunity to reduce impacts isby integrating social and environmental criteria intoproject analysis. In practice this means expanding tra-ditional least-cost sequencing in a sector to includesocial and environmental criteria in order to find thetrue least-cost path. Sectoral EnvironmentalAssessment (SEA), a relatively new tool, is starting tobe applied to the hydro subsector by means of coarseand fine screening so that the lowest-impact projectsare taken up first. The world’s best example isNepal’s superb SEA, which was devised in 1996-97and is based on coarse and fine screening and rank-ing of an inventory of 132 potential projects. Throughthe SEA, Nepal has narrowed down the choices tothe seven economically and financially feasible pro-jects with low or the least environmental and socialimpacts.

Dam proponents normally invest in the single pro-ject that meets their own criteria of what type of dam,the timing of its implementation, the size of invest-ment they have experience in, and which project islikely to have the higher returns on capital.Proponents, particularly private investors, cannot getinvolved with the whole sector; that is clearly the gov-

ernment’s role. Pre-construction planning and investi-gation time is often less generous with a privateinvestor than with government. The private sectorwould like the government to accept as much as pos-sible the sectoral needs, feasibility studies, pre-con-struction planning and risks. Development agenciescan indeed help with sectoral planning and feasibilitycosts.

The project-level EA seeks to ensure that the pro-ject identified is indeed the least-cost one. This is usu-ally sought by the less-than-ideal “analysis of alterna-tives” undertaken after identification of the next pro-posed project mandated in Bank-assisted EAs. Suchanalysis of alternatives is a desperate and tardyattempt to second-guess that the project identifiedshould indeed be the next one taken up, or is the bestsolution. Experience shows that SEA is much moreeffective in promoting least-cost sequencing than isanalysis of alternatives.

Current Status: Environmental assessments his-torically have focused on individual projects. Indeed,in the past, EAs used to be performed after the pro-ject had been designed. In the late 1970s, EAs wereadded on to the end of a previously designed project.In the last few decades, EAs have moved “upstream,”so that many now start more or less at the same timeas project design. By the time the project has beendesigned, environmental and social concerns wouldbe fully internalized. While this is a huge improve-ment over the add-on of the EA to a previouslydesigned project, it is now clear that project-level EAsare inherently weak, and many are low in quality.Project-level EAs have to focus on the project identi-fied and being designed. For example, if an EA of ahighway proposal is requested, that precludes themore important modal choice between highway andrail. Similarly, the EA of one proposed atomic energyreactor may be able to improve site selection, designof the containment vessel, and safety of radioactivetransport and disposal. However, it is not useful if thepreferred choice was natural gas imports, for exam-ple, instead of atomic energy.

Sectoral vs. Project-Specific EA: The EA of aproposed dam may be able to site the dam on anotherriver than what was originally proposed, reduceimpacts by lowering dam height, or move it

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upstream, as was done with Thailand’s Pak Munhydro. Similarly, Indonesia’s Saguling dam was low-ered by 5 meters to halve the number of oustees. Butthe project-specific EA could not make it less usefulin making the case that alternatives to the proposedhydro — for example, gas, wind, or solar — couldpossibly be even less costly overall. These considera-tions have led governments and development agen-cies to adopt a “Sectoral EA” (Goodland and Tillman,1996). The sectoral EA environmentally scrutinizesthe whole sector as part of the least-cost analysis.Least-cost sequencing now should integrate the con-ventional economic least-cost criteria with social andenvironmental criteria. This is easy to do reliably atthe first approximation (Figures 7 & 8). All rehabilita-tion and expansion of existing dams should be sub-stantially completed before new dams are started. Asthis is almost always achieved at much less environ-mental and economic cost than construction of newdams, it should routinely be part of the least-costanalysis. The sectoral EA, related to analysis of alter-natives, ensures that the subsequent project-level EAis quick, cheap and reliable.

8. STORAGE DAMS VS. RUN-OFRIVER: AREA LOSTTO FLOODING

In general, there is much scope for greatly reduc-ing environmental and social impacts by selectingprojects with no reservoirs (outstream diversions), orvery small reservoirs, such as weirs or run-of-river(ROR) projects. Large storage reservoirs generallycreate the most severe impacts (Figure 8).

Opponents of big dams point out that historicallythere has been little attempt to calculate the area ofland lost to the reservoir, and little attempt to selectsmall reservoirs over larger ones. It is very difficultto ascertain reservoir area from the literature. In fact,OED’s review (World Bank, 1996) was not able tofind the area of some of the reviewed reservoirs.Reservoir area is one of the most crucial environmen-tal and social variables, but has not commonly beenallocated much importance nor even provided byhydro proponents.

Proponents of big dams are learning that smalldams or run-of-river dams (no storage, therefore little

or no reservoirs) cause less impacts, so may attractless criticism than big dam projects. But the term“run-of-river” means different things to differentgroups. In 1994, the Mekong Secretariat published amajor study for a series of half a dozen main-stemdams across the Mekong, entitled “Run of River”(Mekong Secretariat, UNDP, 1994), which concludedthat “environmental impacts of the proposed projectsare expected to be . . . not severe.” This caused inter-national disagreement, partly because the samereport (fish chapter) concluded the opposite: Theproposed dams “may cause a wholesale decline in thefishery throughout the lower Mekong River.” Andpartly because there is disagreement on how suchdams could be labeled run-of-river as the nine reser-voirs would have flooded 1,000 square kilometers,displaced more than 60,000 people (Rothert, 1995),and would create extensive storage reservoirs in thelow flow season — ranging from 75 to 200 kilometersin length. All of the dams exceeded ICOLD’s 15meter height definition of a “large dam,” as they areall 30 to 60 meters high. Some of the nine damswould extend to the next dam upstream. Given thatprevious Mekong mainstem dam proposals, datingfrom the 1950s to the 1970s, would have flooded outup to 120,000 people, this was a big improvement.

We need to agree on definitions. Strictly, RORmeans the river is not dammed; the river runs overand around any structure. A true ROR hydro can bean axial tube turbine either sitting on the river bed orat least below the surface of the river, but without abarrier to water movement. An undershot water-wheel would also be ROR. Others claim ROR has toraise at least some head for energy. Zaire’s Ingahydro is ROR, as part of the river is diverted into aheadrace canal while most of the river continuesunimpeded. In this case, the storage is the river itself,which is so voluminous and has the unique advantageof benefiting from wet seasons on either side of theequator. Can an outstream diversion be ROR if someof the river is diverted into a tunnel while the restcontinues free-flowing? A weir can be defined as adam over which water passes. For how long can thewater not pass for a weir to become a dam? If a weirhalts fish migrations upstream, should it be called adam? How high must a be to be called a dam? Howmuch daily pondage can a ROR have and still retainits label? Can daily or weekly pondage be part of an

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ROR definition, but any seasonal or annual storagecannot?

Possibly, opponents and proponents could discussthe possibility of cooperating on the best tributarydams if much higher-impact mainstem dams are post-poned. Cramming all dams on a few tributaries in cas-cades, like PRC’s superb Pearl River cascade, whileleaving a sample of the nation’s rivers free-flowing,should be debated and become more routine. In gen-eral, the higher up a dam is in the river basin, thelower the impacts. For example, higher tributarieshave lower productivity but higher endemicity than inthe mainstem. In 1996, the EA conducted for SogreahEngenerie, the dam proponent for Laos’s tiny NamLeuk hydro, was so roundly criticized at the ADB’sboard that it had to be redone (by Dr. M. Kollelatin,in 1997). While deficient EAs should indeed be re-done, sometimes this debases the EA into a post hocjustification for the already designed project. TheMekong ROR controversy led UNDP to request theMekong Secretariat promptly integrate environmen-tal and social concerns fully into hydro design. Asmentioned above, we need more clarity in the defini-tions of run-of-river vs. storage reservoirs, weirs vs.dams, and pondage vs. storage. “Water in equalswater out” cannot be the definition of run-of-riverschemes, as these could create extensive reservoirsin the lean season. “Water in equals water out”applies to all schemes where evapotranspiration, irri-gation or outstream diversions do not occur.Environmentally, the barrier nature of the dam orweir is critical (mainly its height); socially, the areaflooded may be critical.

Proponents of big reservoirs rightly point out thatstorage capacity is needed in the mix of most or allnational energy systems in order to provide electrici-ty in the dry season and for peaking. Storage is alsoimportantly needed in multipurpose and irrigationreservoirs to provide water stored in the wet seasonfor irrigation when it is needed in the dry season. Asagricultural intensification normally creates lower netimpact than extensification in the urgentpopulation/food supply race (Goodland, 1997), irriga-tion (i.e., storage dams) need to be expedited.However, this paper is restricted only to hydro pro-jects. Proponents also point out that the distinctionbetween storage and run-of-river is one of degree.

Certainly, storage (annual/seasonal), run-of-river andpondage (daily/peaking) need to be defined and dis-cussed.

The length of river that becomes dried up as aresult of a project can be the biggest impact of a pro-ject. In addition, in some projects, the downstreamimpacts can exceed the upstream impacts. For thesereasons, the two proxies of oustees and reservoir sizecan be rough guides only. While environmentalistsseek to minimize dewatered length, there is no doc-trinaire solution. If the reach to be dewatered is unin-habited, already dammed downstream or not signifi-cant from the point of view of fish biodiversity or fish-eries, nor for dry season animal or plant watering,then possibly a mutually acceptable compromise canbe reached. This generic problem demands attention,as each cubic meter released can reduce profit for thenation by $1 million! Can weekly pulses of water torefresh pools suffice? Could animal watering pointsbe supplied at less cost, in places more accessible towildlife?

Definition of the “area of influence” of hydro pro-jects still causes difficulties. The World Bank’s defini-tion has withstood the test of time but is not wellknown. It includes the whole watershed and airshedof all project-related activities (reservoir, downstreamto estuary, delta and offshore, wetlands downstream,resettlement sites, access roads, power transmissioncorridors, migration routes of wildlife, including fish),and also includes indirectly affected areas, such asexisting roads that experience heavier use duringconstruction. Of course, not all such airsheds andwatersheds need receive the same scrutiny, but allare legitimate areas for inclusion in EA work. Thedays are largely gone when the lone ecologist, arriv-ing often just before construction or sometimes after,asks to see something, only to be told by the propo-nent, “No, that will not be impacted so you cannot gothere.” In the case of China’s Three Gorges dam, oneinitial resettlement site was proposed in the deserticsemi-autonomous province of Sinkiang several thou-sand kilometers away, so it is not always easy tocarry out EA work. In the case of Lao’s Nam Theunhydro, the area between Yunnan and Tonle Sap willbe included.

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9. INVOLUNTARY RESETTLEMENT

Opponents and proponents agree that involuntaryresettlement must — and can — be improved.Resettlement is an inescapable companion of infra-structure development. Involuntary resettlement (IR)and its impacts on people in general have become themost contentious of all socioenvironmental issues ofdams. Adverse social impacts of big dams have beenseriously underestimated (Scudder, 1997; Cernea1997), and this is nearly always the case, not theexception. Open-cast coal mines, ash disposal sites

and mine drainage ponds also displace thousands ofpeople, and displace more as the project operatesthrough the years. Reservoirs displace millions ofpeople, but only before operation, so the number ofaffected people does not increase with time.Reduction of downstream agricultural productivity, orharm to recession agriculture (e.g., Zambezi) alsoincreases displacement of people.

Until recently, many social costs of dams wereexternalized. Violence, bloodshed and murders arereported in many cases involving controversial dams,

Figure 7: How To Distinguish Better Hydros From Worse

A First Approximation of a Coarse Environmental and Social Screening and Ranking of Potential Hydro SitesThe First Step of a Sectoral EA: Integrating Environmental and Social Impacts into Conventional Least-Cost Sequencing

Opponents and those seeking to improve dams claim that a reliable first approximation to distinguish between ÕbetterÓdams and ÒworseÓ are two simple and robust proxies: first, the number of oustees, and second, the area lost due to thefilling of the reservoir. These two figures suffice to rank, crudely but reliably, most sites. A second approximation disag-gregates these two numbers on further criteria. After these two, the next ranking should include downstream impacts,including the number of affected families, the length of river that will dry up, fish migrations and the minimum dry seasonrelease regime.

1. Social Rank

Number of oustees: Figure 8 shows the number of oustees per megawatt. There is a huge scope for taking up projectswith zero or very few oustees. It is necessary to disaggregate type of oustee by proportion with land and dwelling lost,land lost but not dwelling, and partial losses. Rural oustees should weigh more than urban. One question is whetherreplacement land is readily or scarcely available. The World Bank endorses the notion that it should be possible to reset-tle oustees successfully (World Bank, 1994). As this has rarely been the historical experience, this number needs to bestringently minimized in all future projects.

Vulnerable Ethnic Minorities: The proportion of affected people in this category is important, as they are extremely difficultto relocate adequately. If it is the case that involuntary resettlement of such people has never been successful, then per-haps the project should not go ahead. The recent extension of the BankÕs policy on vulnerable ethnic minorities to lessvulnerable minorities may not best serve truly vulnerable societies.

2. Environmental Rank

Intact Habitat Lost: The size of the flooded area is the single most relevant proxy for environmental impact, yet proponentsof dams rarely calculate it in advance and it is difficult or impossible to ascertain from dam publications. Historically,reservoir area has not been accorded great importance by dam proponents. Area flooded per MW ratio (Figure 8) showshow much scope there is for selecting projects with little or no reservoir (those in uninhabited rocky canyons), run-of-river or outstream diversions to reduce impacts. For aquatic biodiversity, perhaps the best proxy measurement is thekilometers of stream or river flooded. Generally, moist forest contains more biodiversity than dry ecosystems. Intactecosystems are more valuable than agriculturally modified agro-ecosystems or barren landscapes. If part of the ÒlandlostÓ due to dam construction is a national park or other conservation unit, that would weigh much heavier in the ranking.

Conclusion: If projects are ranked on such social, environmental and downstream criteria, and if only projects with goodscores are considered further, impacts will be significantly less than in the past, when EA started after a project wasidentified.

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and are deplored by proponents and opponents alike.But human rights violations bolster the case of damopponents. People at India’s Narmada project suf-fered greatly (Morse and Berger, 1992); Guatemala’sChixoy (the 375 women and children massacred inthe early 1980s may have been victims of the civil warrather than because they were oustees, according tothe report of the 1996 forensic exhumation team);Lesotho Highlands Water Project’s Muela dam man-agement fired 2,300 strikers in September 1996.

Police then shot and killed five workers, seriouslywounded 30, while another 1,000 sought sanctuary ina nearby church. This was a labor dispute, not relatedspecifically to the dam. Proponents realize suchevents do not help their cause, and seek to preventthem. Violence is socially regressive, as it penalizesthe poor more than the rich, as noted earlier. Theworldwide, sad record of involuntary resettlement,since it was started on any scale after World War II, iswell documented by the World Bank’s 1994 report

Figure 8: Rank of Hydropower Generated

Following the two proxies of the number of oustees and the area of reservoir 9

Country Project Name Megawatts Hectares Oustees ha/MW Oustees/MW

China Three Gorges 18,200 110,000 1,300,000 6 71Brazil/Paraguay Itaipu 12,600 135,000 59,000 11 5Venezuela Guri Complex 10,300 426,000 1,500 41 0Brazil Tucurui 7,600 243,000 30,000 32 4United States Grand Coulee 6,494 33,306 10,000 5 2Canada Churchill Falls 5,225 665,000 0 127 0Pakistan Tarbela 3,478 24,280 96,000 7 28China Ertan 3,300 10,100 30,000 3 9Brazil Ilha Solteira 3,200 125,700 6,150 39 2Argentina/Paraguay Yacyreta 2,700 172,000 50,000 64 19Turkey Ataturk 2,400 81,700 55,000 34 23Malaysia Bakun 2,400 70,000 9,000 29 4India Tehri 2,400 4,200 100,000 2 42Egypt Aswan High 2,100 400,000 100,000 191 48Mozambique Cabora Bassa 2,075 380,000 250,000 183 120Pakistan Ghazi Barotha 1,450 2,640 899 2 1Brazil Sobradinho 1,050 415,000 65,000 395 62India Narmada Sagar 1,000 90,820 80,500 91 81Pakistan Mangla 1,000 25,300 90,000 25 90Ghana Akosombo/Volta 833 848,200 80,000 1,018 96Nigeria Kainji 760 126,000 50,000 166 66Laos Nam Theun 2 600 34,000 4,500 57 8Chile Pehuenche 500 400 10 1 0Nepal Arun III 402 43 775 0 2Thailand Khao Laem 300 38,800 10,800 129 36Brazil Balbina 250 236,000 1,000 944 4Sri Lanka Victoria 210 2,270 45,000 11 214Laos Nam Theun-Hinboun 210 630 0 3 0Laos Nam Ngum 150 37,000 3,000 247 20Thailand Pak Mun 34 6,000 4,945 176 145Indonesia Kedung Ombo 29 4,600 29,000 159 1,000Burkina Faso Kompienga 14 20,000 1,842 1,426 132

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“Resettlement and Development.” Recent years haveseen a worldwide struggle to internalize the environ-mental and social costs of power development num-bers of people involved are staggering and increas-ing. IR must be perceived as a grand opportunity tohelp the poor, not as a constraint to providing morepower. Oustees should be offered training so they ortheir children can benefit from project-relatedemployment.

Dam proponents claim that while IR may have notbeen adequate in the past, this time it will be marked-ly better. Proponents realize that although adequateIR has historically proved elusive, it is not impossibleto achieve. Proponents realize too that unless IRmarkedly and promptly improves, the future of thehydro industry will be jeopardized. Many if not mostproponents, increasingly the private sector, which haslittle experience with social issues, say that IR wasmishandled in the past, but this time they havelearned from previous mistakes. The next phase of IRwill be a radical departure from the track record.

Dam opponents ask why the next IR component islikely to be greatly different from the last one. Whatis the evidence that robust historical trends world-wide in similar projects will be significantly differentin the next project? Opponents also question the goalof IR. The goal of IR, where it has to take place, isdevelopment; the oustees must be not worse off dur-ing the resettlement; oustees must be better offimmediately after, and the resettlement should beprompt. This has recently become official policy inChina and Brazil, for instance, but not yet in develop-ment agencies. Skeptics may claim that it is not pos-sible to make oustees even modestly better offpromptly after the resettlement. Future oustees oftendisinvest in the several years before the move, andthen regress for a year or more immediately follow-ing the move.

If affected peoples really cannot be made evenmodestly better off after their move, a fundamentalrethinking of resettlement is imperative. If develop-ment cannot improve the lot of affected people, thewhole role of development could be called into ques-tion. Some stress is unavoidable, but provision ofland, schools, water, housing, clinics, communityfacilities, income restoration and rural electrification

should be ensured so that oustees are indeed prompt-ly better off. The lack of political will to want theaffected people to be promptly better off may be themain constraint. (See Figure 9)

Poverty must be reduced, not perpetuated or exac-erbated. Eventual restoration of previous income lev-els and standards of living can no longer be the goalof power proponents. If income is restored only sev-eral years after the move, that means a lower averageincome over the oustees’ lifetime. This means pover-ty has been exacerbated, thus contradicting develop-ment’s overarching goal: poverty alleviation. Non-declining income implies stagnation, and this cannotbe called development. Practically all oustees arepoor, and the main aim of development — povertyalleviation — will not be achieved by such a policy.

Dam opponents, and those promoting poverty alle-viation, insist that oustees must not be penalized forthe greater good of the nation. This used to beviewed as idealistic, just as practically any provisionsfor IR were considered idealistic 50 years ago. Then agovernment loudspeaker truck informed the villagesto be displaced that they had two weeks to get out.Some may have dropped a few bales of roofingthatch, but not much more. The question is: Should“development” substitute for human welfare? Ofcourse, it is possible to achieve higher income levels,such as by income supplements until incomes start torise above pre-move levels and have made up for lostincome during the move. Possibly such supplementsare not the best way to go, but they show that pover-ty can indeed be reduced, given political will.

Opponents urge upgrading involutary resettlementpolicy. They assert that rarely is 100 percent of anypolicy goal achievable, but in the case of involuntaryresettlement, the goal — the eventual restoration ofincome to pre-resettlement levels — is set too low,causing poverty to increase rather than decrease.Because the reduction of poverty is the goal of devel-opment, oustees must be modestly or incrementallybetter off afterward, including taking account ofincome lost during the move itself. Since the overallwelfare of the nation is supposed to improve as aresult of dam construction, compensating ousteesshould be feasible.

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The first goal of dam project proponents must beto stringently to abbreviate the duration of the moveitself. To make people wait for a couple of years in atemporary holding camps, after they have had toleave their homes and before they are given access totheir new sites, is a recipe for disaster and dependen-cy. The goal is to make the move as painless as possi-ble. Having to live in a temporary camp is very coun-terproductive. In some instances, interim access toboth old and new sites can be useful. Oustees can goon using their old land while their new land starts tobear. The second goal must be to maintain incomeduring the move, and the third to raise incomespromptly after the move. Scudder (1997) makes theimportant point that resettlement attention must con-tinue for decades or even to the next generation. Thisis a legitimate cost to be borne by hydro proponentsthat should come out of project proceeds and that will

encourage monitoring.

Proponents and opponents agree that involutaryresettlement can be avoided in two ways. First, wher-ever possible, project sites should be selected suchthat IR is not needed. This emphasizes the crucialneed for sectoral EAs in selecting the best projects —that is, the ones with no or very little IR. If the high-er costs of ensuring that the affected people arepromptly better off ultimately deters the project frombeing taken up, fine. That is a good cost-benefit analy-sis in action. The second way to avoid involuntaryresettlement is to convert IR into voluntary resettle-ment by making the conditions attractive. Avoiding IRby site selection follows from the improved least-costprocess, conservation and demand-side management.Involuntary resettlement is both difficult and expen-sive in terms of social trauma and therefore best

Figure 9: Hydropower ‘Efficiency’ Ratios of Installed Capacity to Involuntary Resettlement and Reservoir Area

WORST

BEST

Oust

ees/

MW

ha/MW0

VICTORIA

1 10 100 1,000 10,0000.000

0.001

0.010

0.100

1.000

10.000

100.000

1000.000

ARUN III

GUAVIO

CHIVOR

GHAZI BAROTHA

TOCOMA

SOGAMOSO BENMORE

NAM THEUN-HINBOUN

PEHUENCHE

DALESICE EMBORACAO

GURI COMPLEX

LA GRANDE

VICTORIA

PORTO PRIMAVERA

ZAYA

SAMUEL

BALBINA

AKOSOMBO

KOMPIENGA

KEDUNG OMBO

CABORA BASSAPAK MUN

SOBRADINHO

NAM NGUM

ASWAN HIGH

KAINJI

NARMADA SAGARMANGLA

THREE GORGES

TEHRI TARBELA ATATURK YACYRETA

VOLGAFUMAS

SERRA DA MESASRINAGARIND

ZIMAPAN

TUCURUIBAKUNGRAND COULEE

ERTAN PLAYASITAIPU

GUATAPE

ILHA SOLTEIRA

KHAO LAEM

NAM THEUN 2

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avoided altogether.

Make Resettlement So Attractive That ItBecomes Voluntary: Practically all individuals havea price at which they become willing to move.Offering anything less is ultimately involuntary orcoercive resettlement. Involuntary resettlementappears cheaper, at least to begin with. Thus, affectedpeoples are subsidizing beneficiaries. The terms ofresettlement should not be minimized by proponentsseeking a higher return. The project is a developmentproject; affected people need to be promptly betteroff as a result. There is a strong but overlooked eco-nomic argument for making resettlement voluntary.When a corporate executive, spouse and children areresettled overseas by a multinational corporation, thedeal is sweetened so much that involuntary resettle-ment becomes voluntary. Inducements include freefurnished housing, servants, utilities, generous mov-ing and entertainment allowances, foreign supple-ments, tax-free status, pay raises, free car and driver,frequent home visits, and so on. Moreover, whenpotential oustees are very poor, landless laborers,debt-bonded or debt peons, they may welcome reset-tlement because anything is better for them thantheir present lot. Landless oustees — that is, peoplewithout paper titles to their land — deserve specialattention. They are almost always poorer, even thanpoor titled families, and should not be penalizedbecause their poverty has prevented them obtainingtitle. The legally respectable category of usucapionshould be implemented more than is the case today,so that propoments can provide titles to the land thatthe landless have been using.10

Oustees should be the foremost beneficiaries ofany project that forces their IR. Projects should bedesigned with resettlers’ needs in mind, especiallyjobs. While jobs are not inherited, boosting humancapital by education should, if done judiciously, helpensure that the children of oustees continue to devel-op. Dam proponents have to acknowledge that with-out the sacrifice and cooperation of oustees, therewould be no project. The economic argument is thatpayment to settlers is part of the opportunity cost ofthe project even when migration is voluntary (at asufficient payment). When migration is involuntary,any payment to the oustees is likely to underestimatethe true opportunity cost of the move. The true

opporutunity cost reflects how much money is need-ed to persuade individuals to agree to move. Underlaissez-faire economics, all transactions are based onvoluntary exchange, so when exchange is not volun-tary, the economic argument is sacrificed. While it ispossible to estimate the costs of “forced choice,” theprevious generalization still holds.

While resettlement ideally should be Pareto opti-mal (i.e., no one should be worse off), in practicethere are losers. The winners should compensate thelosers, but determining how much compensation isrequired rapidly becomes subjective. That is why amodest earmarking of, say, 2 percent of power salesallocated to social and environmental concerns, espe-cially to retraining of the oustees, would be useful.One way is to provide productive assets — land is themost common — such that incomes are exceeded inthe first year. Another way may be to offer once ortwice the average national income for life, if theirincomes never reached anywhere near the nationalaverage. Escrow accounts and similar means canencourage investments likely to foster rehabilitation.The following sequence is suggested: First, start dis-cussing the project concept, pros and cons with allstakeholders and especially with affected people.Second, minimize resettlement by project selection,siting and design. Third, permit property sales onlyto the project sponsors very early on so that normalattrition over the decade of planning and designreduces the numbers still further. Fourth, createincentives to leave voluntarily. The problem is likelyto be greatly reduced if these measures are adopted.

Financial Adequacy: Compensating oustees forinvoluntary resettlement is not a privilege to bebestowed ex gratia, but a right. It ought to be countedas part of the expenses incurred in the course ofcompleting a power project. Frequently the IR costsare usually underestimated, and resettlementarrangements have erred on the parsimonious side.Scudder concludes after four decades of hands-onresearch worldwide: “It is clear that large-scale waterresource projects unnecessarily have lowered the liv-ing standards of millions of people” (1997, and see1993, 1994). Population counts, demographic rates,land valuation and the costs of necessary improve-ments (such as sites and services) are usually under-estimated. The infrastructure of involuntary resettle-

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ment has often been provided minimally, grudginglyor paternalistically. The concept of compensation isadversarial; the proponents usually offer less, whilethe oustees plead for more.

Historically, proponents’ demands have prevailed,and oustees have had to accept what they are offered,which shows that IR still has not been fully recog-nized as rights rather than privileges. These rightsare full and essential components of power projects,as are cement, coal and turbines. Admittedly, IR wasrecognized as something dam builders had to attendto only as recently as the 1930s and ’40s in developedcountries. Even the U.S. Tennessee Valley Authorityof the 1930s was not successful in all its IR schemes.This component of hydro projects has yet to be fullyinternalized and conscientiously implemented. IRbudgets are often the first to be cut. Cost estimationmust be rectified to err on the generous side. It ismost encouraging that several recent projects haveearmarked a modest fraction of power sales from theoutset for social and environmental expenditures forthe life of the project. Acceleration of this trend wouldbe highly effective in reducing social and environ-mental problems of dams. But checks and balanceswill be necessary to ensure appropriate allocation ofsuch funds should political will waver. Leaving IR costestimation to the proponent has invariably led tounderestimation.

10. PROJECT-SPECIFIC MITIGATION

When all the above sectoral prerequisites, DSM,pricing and least-cost have been met, and whennational agreement has been reached that additionalgeneration capacity is needed, and that a dam in thiscase is indeed the least social, economic and environ-mental cost, dam-specific social and environmentalprecautions need attention. Proponents and oppo-nents agree, however, that sectoral environmentalprecautions have to precede project level precautions,and that sectoral measures are more powerful thanproject measures — although both are essential.

Conventional project-specific environmental assess-ment is becoming routine (World Bank, 1991),although still not satisfactory (World Bank, 1996). Ithas been a big struggle to begin a project EA as soon

as a project is identified. Most project EAs used tobegin at about the time of project appraisal. A project-level EA is still started some years after identificationin too many cases, when the design is advanced. Thisdebases EA into a post hoc cosmetic justification andis to be stringently avoided. While project-specific tit-for-tat impact assessment and mitigation needs to bestrengthened, it is inherently much weaker thanselecting low-impact projects from the beginning.This is partly because, at least in the past, specificimpact mitigation works only up to a point. In addi-tion, not all impacts are identified. And some arenever fully mitigable. For example, conscientiousimplementation of whatever the malaria or fish biodi-versity experts advise certainly improves the situa-tion. If individual impact mitigation achieves 80 per-cent of its goals, the project will be better off.However, in addition to individual impact mitigation, areally well-designed project would from now oninclude a bold measure to account for all the unmiti-gable 20 percents, and ensure that the area is unam-biguously better off. In the case of hydro, the conser-vation in perpetuity of a large tract of biodiversity inthe watershed is the paradigm. Ironically, the mostaffected biodiversity, aquatic biodiversity, is the leastmitigated; therefore, conservation of these biologicalresources needs to be enhanced. On the social side,ensuring that all villages in the region have wells,schools, health campaigns, rural electrification or apackage of benefits, even if not directly impacted, isthe sort of measure needed to elevate a possiblyquestionable project to an unequivocally beneficialone.

The latest example is Brazil’s biggest hydro underconstruction, the 154-meter-high Serra da Mesa,planned to generate 1,293 MW on the Tocantins Riverupstream of the Tucurui hydro project (Goodland,1978). The $1.1 billion Serra da Mesa has no final EA,the biomass has not been removed, and $115 millionof commercial timber will be flooded. The 1,784-square-kilometer reservoir (Brazil’s most volumi-nous) is now filling for the next 18 months, while 40kilometers of the river below the dam is dry, and as aconsequence, killing all aquatic and those terrestrialorganisms dependent on the river. About 10 percentof the reserve of the nomadic Ava’-Canoeiro, a vulner-able ethnic minority, will be flooded. Their compensa-tion, in addition to more land elsewhere, will be $100

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for every $1 million earned by the proponent, Furnas.By way of contrast, following a thorough 1996-97GHG/biomass calculation, Lao’s Nam Theun Twohydro clearly demarcated the forest planned to beflooded, and is well on the way to removing most bio-mass, not only commercial timber.

The lesson is that if the EA is to be at all effective,it must start as soon as the specific hydro designstarts, and it must also be transparent and participa-tory. The whole EA process must be in the publicdomain from the beginning. When project-specific EAfollows sectoral EA, the former will be much easier,agreement will be expedited, and opposition less like-ly.

Specific impacts that are not yet fully mitigated arefish and aquatic resources, sedimentation, biodiversi-ty, water quality, human health, and downstreamimpacts. These are enumerated in Figure 4. Thispaper proposes that resolution of hydro’s broaddebates (transparency, DSM, balance of hydro sizeand type, sectoral least-cost project selection) willreduce impacts much more than a reliance on pro-ject-specific EAs. Even so, a project EA remains nec-essary, according to the World Bank (1996). So thissection notes the status of each impact, and how wellsuch impacts are indeed mitigated. This does notmean these impacts are not important. On the con-trary, they can sometimes be the most seriousimpacts in specific hydro projects — induced seismic-ity, for example. They are elaborated elsewhere in theliterature cited.11

Fish: There are two separate issues with regard tofish and aquatic resources: subsistence and commer-cial fish production and fish biodiversity. The first isthe nutritional and commercial aspects of fish. Theaccepted sustainability principle is that nutritionalstandards and commercial benefits should notdecline. Nutritional standards and subsistence fishingoften decline as they are non-marketed and areunderestimated or completely overlooked in calculat-ing compensation or mitigation. Some families mayobtain most of their annual fish consumption in only acouple of fishing trips per year when the fish aremore readily available. Sociological fish surveyorsusually miss such crucial but sporadic events. Oftenso-called evening or weekend fishing is downplayed

but is important for subsistence. Often fisheries bur-geon in the few years or decades after impoundmentso people near the new reservoir are often betteroff. 12 They may not adapt to catching reservoir fishand may be outcompeted by recently arrived com-mercial fisherfolk. People downstream from the damnormally are able to catch far fewer fish. This is relat-ed to the vexed problems of arranging for low-flowminimal releases, as well as to water quality.

Fish culture is possible, and this can greatly helpthe poor. But it does nothing for fish biodiversity andmay decrease biodiversity if aggressive exotic com-mercial species outcompete indigenous species, ashappened in Lake Victoria. The introduction of NilePerch caused the extinctions of hundred ofHaplocromine species.

Passage facilities such as fish ladders work for onefamily of fish, the Salmonidae, especially in the north-west United States, New England, Scotland andScandinavia. Such fish passage facilities rarely workin tropical ecosystems, and opponents of dams claimthere are biological reasons why they probably neverwill play much of a role. Electric luring of fish intocontainers or elevators (e.g., Yacyreta) may have arole. Recent research-stage findings may alter thisgloomy picture (Acreman, 1996a,b).

The second major impact on fish relates to theirbiodiversity. A full one-fifth of the world’s freshwaterfish are endangered or have been extinguished inrecent years; most of this loss relates to the introduc-tion of new species of fish, dam construction and theresulting diversion of water, and pollution. Pollutioncan be reversed: Ohio’s Cuyahoga River used tocatch on fire a couple of decades ago; now it has beenrestored to a clean trout stream. Salmon havereturned after centuries of absence to London’sThames, and to the Rhine. Dams, on the other hand,are not yet treated as reversible. The case to removeold dams has begun but has a long way to go beforethey and their impacts will be removed. In species-poor temperate rivers, cleanup and restoration is pos-sible; it will not be possible to the same extent fortropical rivers rich in biodiversity. Many tropicalaquatic species will be extinguished by dams beforethey are known to science — unless very special pre-cautions are implemented. The introduction of exotic

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fish species, either accidently or purposely, often seri-ously damages local fish faunas. The main measure isto conserve a representative fraction of the nationalriver system in a free-flowing state. For this a nationalaquatic biodiversity survey is needed. This is a rela-tively low-cost means of improving hydros.

Given that most dam construction is planned totake place in tropical countries, the fish fauna may beorders of magnitude greater than that encountered intemperate dams. Because dams are often now builtin remote anthropogenically undamaged areas, thefish fauna may be extraordinarily rich, often intactand undocumented. Dams in wet lowlands with highrainfall may support rich faunas, but low endemicity.Sites in mountains and those fed by snow melt sup-port species-poor faunas, but high endemicity. Theother difficulty is that many tropical fish migrate sea-sonally as an essential part of their life cycle. If suchmigrations are stopped, such as by a dam, the fishspecies suffers or is extinguished. Because the bio-logical character of most tropical rivers is not well-known, fish taxonomy surveys ought to be conductedto identify new or rare species. In addition, morestudies are necessary to see if the new or rarespecies also live in adjacent rivers not slated fordamming. Laos’s Nam Theun dam is the only projectI am aware of where this is happening. At present,the sustainability principle, which states that a repre-sentative sample of the nation’s rivers be conservedin their free-flowing pristine state, is not being imple-mented widely and is not of major concern to privatedevelopers. Moreover, mitigation measures for fishbiodiversity often do not effectively compensate forthe impacts.

Sedimentation: As a relatively straightforwardimpact and one that can directly reduce profits bycurtailing live storage, it is surprising that sedimenta-tion persists as a big problem. Sedimentation takesplanners by surprise for two reasons. First is that sed-imentation increases exponentially, not arithmetically.When a catchment is developed by agriculture orroads, for example, sediment yield explodes geomet-rically. Second, most sedimentation is very sporadic.A river may carry little sediment for years, only todeposit enormous volumes in one night of a storm.Nepal’s Kulekhani hydro project, now 92 MW, wasestimated to have a useful life of 85 years when it was

commissioned in 1981. Nearly half its 12 million cubicmeters of dead storage capacity was filled with sedi-ment by 1993, and the exceptional floods of late 1993filled another 5 million cubic meters. Generation hasto cease for a few months until mid-1997 until the esti-mated $40 million remedy can be completed (a newoutlet from the dam at a higher lever above the mud,combined with many check dams upstream). TheU.S. Army Corps of Engineers calculated the usefullife of El Salvador’s 135 MW Cerron Grande reservoir(Goodland, 1974) would be 30 years, rather than theoriginally estimated 350 years (McCully, 1996).

Biodiversity: Sustainability demands at least nonet loss of species. Detection of no net loss meansone has to know what is there to begin with — inother words, careful biotic surveys to determine alltaxa needs to be conducted. This has never beendone for any hydro project, as far as I am aware.Thus, the conservation of biodiversity is not fully inte-grated into the planning of hydro projects. The mainde facto measure of conservation has become siteselection and the resulting reservoir size. Whatamounts to on-site biodiversity conservation in hydroprojects, then, is whatever adjacent areas happen tonot be flooded by the project. In practice, the conser-vation of on-site biodiversity is dependent upon notflooding large areas, particularly intact habitat, suchas tropical forest. The next main mitigatory measureis the conservation in perpetuity of an offset. Forexample, Lao’s 450-square-kilometer Nam TheunTwo reservoir proposes to conserve the 3,710-square-kilometer watershed. This has the added benefit ofvastly reducing sedimentation risks and should bestandard for all hydro projects. The basic principle onwhich an agreement is sought concerns the financingof the mitigation or offset. A small fraction (say, 1 per-cent each for environmental and social measures) ofthe hydro’s income should be allocated in perpetuityto watershed management, conservation of biodiver-sity and prolonging dry seasonal flows.

Water Quality: Until very recently, little attentionwas paid to removing biomass from the area flooded(Ploskey, 1985). However, if even a small proportionof trees are profitable species, it may be worthwhileto remove them. Much biomass is unprofitable, suchas brush and other non-marketable organic matter. Inthe case of 7,600 MW Tucurui dam, which created a

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2,430-square-kilometer reservoir, the military pensionfund corporation was contracted to clear portions ofthe adjacent area and is expecting to make an enor-mous profit. Unfortunately, it borrowed many mil-lions of dollars from the Bank of Paris and then bank-rupted itself (Goodland, 1978). Now that proponentsare starting to internalize GHG production, biomassremoval is a rising priority. As a result, water qualityin the reservoir is expected to improve. The length oftime water takes between entering and leaving thereservoir is the critical variable. Brief retention time(days) results in better water quality than sluggishretention time (months).

Water quality downstream is easier to fix by meansof variable outlet structures in the dam. Multiple-levelpenstocks in the power house also can improve waterquality and temperature of turbined water. Re-regulat-ing ponds also can be useful in adjusting tempera-tures and oxygen levels of turbined water. Mercury isa relatively new water quality problem (see end-notes), and now silicate retention behind the dammay impair the growth of silicate-needing plantsdownstream.

Human Health: Sustainability demands humanhealth shall not decline; development demands itshall improve. Health and sustainability are mutuallysupportive; investment in sustainability and healthenhance each other. Historically, some hydro projectshave damaged health; diseases related to irrigationprojects damage even more. The sad fact is thatdevelopment projects often exacerbate disease.Project-related health measures seek to prevent theintroduction of diseases, and prevent their spread andaggravation. Reservoirs can cause epidemics of threewater-related diseases: malaria, schistosomiasis andJapanese “B” encephalitis.

Malaria is intensifying worldwide, killing morethan a million people every year, and sickens overtwo orders of magnitude that number. Malaria inci-dence in some villages exceeds 100 percent, as somepeople get it more than once a year. The cost of twoor four weeks a year out of work due to malaria isonerous. The female Anopheles mosquito breeds inmany tropical and subtropical reservoirs and is asso-ciated with development, as mosquitoes breed intires, cans, wheel ruts and water tanks. Many

Anopheles species are a vector to this parasite.Malaria is increasing largely due to the lack of politi-cal will and finance. Insecticide-impregnated bed netsare effective in reducing incidence. Education cam-paigns and vector breeding site destruction can sig-nificantly reduce the risk. Resistance of mosquitoesto common insecticides and resistance of thePlasmodium protozoan parasite make malaria increas-ingly expensive to control. Chemical prophylaxis andchemotherapy is available, at least for the well-educat-ed rich.

Schistosomiasis is also carried by a water-relatedhost, a few species of aquatic snails. Snail control isnot easy and is expensive. Draining snail habitat andmollusciciding moist areas is very expensive initially.The initial enthusiasm for the main molluscicide,organic tin, has waned because it damages theecosystem so severely. Now even tin-antifouling paintfor hulls is widely banned. The difference from malar-ia is that once destroyed, snails immigrate very slow-ly, while mosquitoes can be blown many kilometersovernight to repopulate a sanitized zone. Education isimportant and a powerful preventive. Chemotherapyusing the 1970s drug praziquantel is relatively cheapand relatively effective, and a person only needs oneoral dose a year in most cases. It is also manufac-tured in developing countries. Similar to malaria,schistosomiasis is largely a disease of poverty andlack of education.

Japanese “B” encephalitis is different in that it isviral, and it is carried by several genera of mosqui-toes, some of which breed in reservoirs and are asso-ciated with human settlements. A range of wild anddomestic animals (birds, pigs, rodents) host this dis-ease, which is severe for infants and the elderly.Prevention and therapy are similar to that for malaria.

A range of other diseases are not water-related butare dangerous in many development projects. AIDSis still incurable, increasing sharply and usually fatal.The main cheap measure is to reduce the incidenceof common venereal disease, as VD victims are farmore likely to catch AIDS. Free condoms reduceboth diseases and it is in the interest of proponents tosupply them easily. Intestinal parasites, TB, pneumo-nia, influenza, measles, dengue hemorrhagic fevers,and accidents often increase in development projects,

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reservoir-related or not. In theory, all these diseasesneed not be major risks. They are widely preventable.Unfortunately, the fact is that they commonlyincrease in development projects generally and inreservoir projects too. The World HealthOrganization should routinely be a partner in suchprojects (Hunter et al., 1993).

Downstream Impacts: Downstream impacts canexceed impacts above the dam in certain cases;hence they deserve much more attention than iscommon nowadays. Downstream social impacts canexceed upstream resettlement upheavals. For exam-ple, 10,000 Malinke, a tribe in West Africa, were reset-tled by Senegal’s Manantali reservoir, while double ortriple the number of riparians downstream have fur-ther impoverished as a result of the dam, and manywill be forced to leave their plots because of decliningproductivity (Horowitz personal communication,1997). Clearly, the number of downstream ripariansharmed by the dam must be minimized, and fullycompensated. If they have to resettle, they should bemade promptly better off after their move.

There are additional impacts that are rarelyaddressed. These include cessation of annual fertilesilt and moisture deposition, leads to declining cropyields, grazing impairment, fish declines and wildlifedeclines. Often aquifer recharge is impaired; wellsdry up; water for crops and for vegetation decline.The decrease in vegetation accelerates deforestation,as people must search for fuel wood and lumber else-where. Declines in productivity and income acceler-ate labor migration from the area, especially amongyoung men. This in turn further burdens the women,children and the elderly. Nutrition also worsens. Inaddition, the decline in water availability and agricul-tural yields increases conflicts for water and otherscarce resources. Furthermore, the construction of adam forces people who are long adapted to cyclicalfloods to switch suddenly to rain-fed livelihoods. Theswitch compounds the struggle to survive and usual-ly triggers further impoverishment.

Managers of hydro facilities find it extremely diffi-cult to accommodate the needs of downstream ripari-ans. It is difficult because downstream water is need-ed during the dry season, precisely when it is in theshortest supply and the most expensive for dam oper-

ators to conduct a release. Flood releases (artificialflooding) for recession agriculture and other needs isnormally not considered a priority. There is no hydroin the world that is operated to provide an artificialflood to simulate pre-dam regimes. The Manantalidam may be the single exception, but even there it isnot clear if pre-dam floods will be replicated once allthe turbines are installed. Mauritania’s national plansassume that historic floodings will cease, and Malihas not signed on to the trinational draft agreementallocating the costs and benefits of the hydro project.Furthermore, downstream priorities are not mandat-ed in the international agreements (Horowitz person-al communication, 1997).

Even where they are achieved, controlled releasesscarcely substitute for the pre-dam regimes on whichmany poor depend. This should be systematicallyaddressed in design and operation. The Manantalidam on the Senegal River (Horowitz, 1991; Koenigand Horowitz, 1990) is one of the few where thiscould be addressed for the first time. Controlledflooding as a mitigation measure is not at all routineas of yet. This issue has a long way to go before it isresolved.

11. GREENHOUSE GAS EMISSIONDAMAGE COSTS

Hydro proponents ask: Why ever should the hydroindustry worry about greenhouse gas emissions?After all “hydropower plants produce no carbon diox-ide,” according to the U.S. Department of Energy’s1994 brochures. The editor of a leading U.S. hydrojournal opined in late 1996 that hydro is “clean ener-gy, producing no toxic gases like coal.”

Opponents point out that such ignorance furthertarnishes hydro’s reputation. In fact, hydro producessome GHG but far less than coal-fired equivalents.13

There are very few exceptions to this generalization;the Balbina dam in Brazil is the big exception. Decayfrom Brazil’s large, shallow and densely forested 250MW Balbina reservoir (236 square kilometers) maygenerate more GHG than a coal-fired equivalent(Junk and Mello, 1987; Fearnside, 1995). The mes-sage for the hydro industry is clear: Admit that allhydro projects produce some GHG from decay, and

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from cement and steel manufacture, but that coal-fired equivalents normally generate orders of magni-tude more. All hydro proposals from now on shouldcompare their GHG production with that of a coal-fired equivalent. In addition, the selection fromamong alternative dam projects should be influencedby how much GHG emissions a particular dam wouldgenerate. This new sustainability criterion willdemote large shallow forested reservoirs, and pro-mote small reservoirs in non-forested sites. Biomassremoval will not be a panacea. New dams in tropicalrain forest, if unavoidable, will find it very expensiveto remove biomass. Tropical rain forest is often inac-cessible, difficult to burn, and difficult to commercial-ize even high-value tropical timbers.

Proponents claim that the GHG emissions result-ing from the manufacture of the dam’s cement andsteel, plus the energy used in the construction,amount to less than 10 percent of the annual CO2

emissions of the fossil-fuel equivalent. The largestproportion of GHG emissions from a dam is causedby the decay of flooded biomass, which includesorganic soil matter, peat, roots and vegetation. Thetypes of biomass vary greatly, and the amount whichwill eventually rot also differs markedly. Biomass inmountainous, cold, deep, dark, anoxic water may notdecay, not even anaerobically. Ancient wooden shipsare recovered relatively intact from oceans and lakes,for example. Depending on circulation and stratifica-tion, anaerobic decomposition ceases below about4°C. If marketable timber is removed beforeimpoundment, the carbon will be sequestered untilthe product in the form of furniture or buildings, forexample, rots or is burnt. Wood fuel extracted fromthe reservoir, even when burnt, might displacekerosene or dung and so may be a net carbon benefit.Trees left standing in the filled reservoir can be har-vested years later or when they break off and floatdownstream. It is possible that the GHGs producedfrom large shallow reservoirs in densely forestedsites may exceed the gas-fired equivalent. From a cli-mate change perspective, these projects should notbe taken up.

Two facts make it imperative to take the risk of cli-mate change more seriously than at present. First,over 186 governments have signed, and about 100(1996) have ratified, the U.N. Framework Convention

on Climate Change (FCCC), which became interna-tional environmental law on March 21, 1994.Signatories to this convention seek to “achieve stabi-lization of greenhouse gas concentrations in theatmosphere at a level that would prevent dangerousanthropogenic interference with the climate system.”The targeted level should be achieved within a framesufficient “to allow ecosystems to adapt naturally toclimate change, to ensure that food production is notthreatened and to enable economic development toproceed in a sustainable manner.”

Some signatories seek to return their GHG emis-sions to 1990 levels by the year 2000. This means thatgovernments are now looking for cost-effective waysto meet their CO2 reduction targets. The currentslow progress is increasing the risk of massive dam-age. The 150 governments met in Bonn in March1997 but failed to agree on any specific targets orschedules. Australia is the sole OECD country resist-ing GHG reductions. The European Union now feelsGHG emissions have to be cut by 15 percent below1990 levels if major damage is to be prevented.Unless LDCs join GHG restrictions, investors maywell transfer jobs and capital to LDCs as they willhave lower standards than OECD nations. The com-petition to lower environmental standards alreadyoccurs in the hydro industry.

The second fact is that climate has already startedto change faster than historic fluctuations, althoughscientific debate continues on the precise details ofchange. Now even conservative economists areadmitting the gravity of the problem. Nobel prize win-ning economists Robert Solow and Kenneth Arrow,with support from 2,000 other economists, publiclyacknowledged in 1997 that GHG was more seriousthat they had thought.

While it is still just statistically possible that thesehuge changes lie within “normal” climatic variation,the probabilities are falling. Globally, the insuranceindustry is betting in premium setting, insurance can-celations and risk calculations that climate trends willworsen. The industry is now lobbying governmentsto accelerate their actions to prevent climate change.Developing countries do not have the money to pro-tect themselves from climate change as much asOECD countries can. In the case of developing coun-

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tries, prevention, not a cure, is the only possibility.

The world derives about two thirds of its commer-cial energy from fossil fuels, of which two thirds isfrom coal. About half of greenhouse gas is carbondioxide; most CO2 (80 percent) is energy-related, andemissions now reach 22 billion tons of CO2 annually.Electric power generation worldwide contributes 25percent of GHG, mainly from coal. Because there isso much coal available worldwide — possibly 236years’ worth at current consumption levels — thereis scant prospect for an impending fuel scarcity thatwould send the kind of price signal needed to phasedown coal. Moreover, because developing countriespersistently experience capital shortages, they areless likely to opt for higher-cost technologies, such assolar, on their own.

Methane contributes 13 percent to GHG accumula-tion, and a substantial part of this is from fossil fuelexploitation, such as coal mine gas. Although CH4 isless abundant in the GHG mix, it is more than oneorder of magnitude more effective in forcing climatechange than is carbon dioxide. Methane is producedin reservoirs by biomass rotting under anaerobic con-ditions; carbon dioxide is produced from more aero-bic rotting. Biomass in deep, stagnant, stratified, cool,dark reservoirs is likely to decay anaerobically; bio-mass in shallow, light, warm reservoirs with briefwater retention times is more aerobic and hence willproduce carbon dioxide. Residence time and stratifi-cation in reservoirs should be routinely calculatedduring sectoral planning, as should the ratio of live todead storage. The other characteristic of reservoirsthat should be systematically calculated are the peri-

Figure 10: Potential Areas of Agreement

1. a) Revamping, rehabilitation and updating (even upgrading) existing industrial facilities is often economically and environ-mentally cheaper than installing new energy capacity.

b) Permit new capacity only when revamping is substantially complete.

c) Permit new capacity only when most DSM, efficiency and pricing is substantially complete.

2. a) Removal of subsidies would level the playing field between coal and hydro and other renewables.

b) Because fossil fuels and nuclear power have been subsidized so much and for so long, is there a case for renewablesto redress this historic imbalance, until the costs of the worldÕs rapidly deteriorating environment can be internalized?

3. a) Internalize todayÕs largely externalized environmental and social costs, such as SOx, NOx and GHG in economic cost-benefit analysis. While who pays is important, it is a separate question; compensation to LDCÕs internalizing such costsmay be essential.

b) Facilitate GHG emissions trading.

c) Adopt the principle of binding GHG-reduction or emissions targets by all countries before the end of 1997; goals to beadjusted as evidence accrues.

4. a) Reverse current declines in research and development on renewables; increase R&D commensurate with increasingclimate change risks.

b) One option is to encourage the OECD to agree on renewable R&D targets, for example, 25 percent of energy R&D bythe year 2000.

c) Governments should also support some R&D on GHG sequestration and clean coal, including gasification.

5. a) Oustees must not be Òas well off sometime after their moveÓ; oustees should be better off promptly after their move.

b) The eventual goal is to abolish involuntary resettlement entirely, making all resettlement voluntary through financialand other incentives.

6. a) Ensuring sustainability could be achieved by allocating a small fraction of all power project proceeds to social andenvironmental needs in perpetuity.

b) Hydro projects should invest in the source of their raw material by catchment conservation.

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odically exposed drawdown strip (the strip betweenthe reservoir’s high-water and low-water marks),because this has major implications for ecologicalplanning.

While natural gas produces much more energywith less GHG during generation, leaks frompipelines make gas almost as polluting as coal insome countries. As there are only about 40 years ofoil and 56 years of gas left, coal is by far the mostimportant fossil fuel to control. Proponents claim thatproven hydro potential amounts to about five timeswhat is currently exploited, the equivalent of today’sannual oil production. The need to make the transi-tion away from GHG production and toward hydroand other renewables is clear to both dam opponentsand proponents.

Many countries face agonizing trade-offs betweenmassively increasing the burning of coal, on the onehand, and constructing enormous dams, such asChina’s Three Gorges Dam and India’s NarmadaDam, on the other. China’s Three Gorges dam is pro-jected to generate 84,000 gigawatt-hours, which is theequivalent of annually burning 40 million tons of local

coal (based on the equivalency that 1 ton of coalequals about 2,100 kWh). The health and environ-mental effects of burning that amount of coal can beestimated. If the expected deaths from the next hun-dred-year flood are regrettably allowed to occur, pre-sumably Three Gorges will sail ahead. One has tobalance the trade-offs. If the approximately one mil-lion oustees can be made better off in that overpopu-lated nation, surely avoiding the burning of 40 milliontons of coal annually is preferable. Proponents andopponents alike need to make such comparisons sys-tematically and transparently.

Proponents and opponents both have big stakes inthe rate at which GHG is internalized in cost-benefitanalyses throughout the energy sector. If the hydroindustry insists on a level playing field and on goodeconomics, GHG will be internalized sooner and thetransition to hydro and other renewables will acceler-ate. The irony is that reluctance to internalize damexternalities such as involuntary resettlement hasled, in part, to a decline in support for dams. In con-trast, the fact that currently there is less pressure tointernalize coal’s even more severe externalities,such as CO2 and involuntary resettlement, has result-ed in increases in coal use — an environmentally ret-rospective course.

Dam proponents, for a number of reasons, havebeen vulnerable to criticism. By focusing on damsand their the adverse impacts, dam opponents haveallowed proponents of coal to escape criticism fortheir failure to internalize coal’s social and environ-mental costs. In the competition between energysources, dam opponents have, in effect, made coalmore attractive to the market. This trend is socially,economically and environmentally imprudent.

12. CONCLUSION

The vision for dams is that they should supporteconomic and social progress and be environmentallysustainable. Figure 10 outlines areas of commonground in the hydro debate. Agreement in theseareas would be an important step forward. Hydroproponents should be required to provide estimatesof environmental and social data, such as those out-lined in Figure 11, before they are permitted to build

Figure 11: Suggestions for dam data to bedivulged before permitting new reservoirs

1. Number of oustees or affected people, of whichwhat proportion are vulnerable ethnic monitories.

2. Size of reservoir or area lost by flooding, includingthe types of ecosystem to be lost.

3. Ratios of energy per oustee and energy hectarelost, if hydro is the prime benefit.

4. Dead vs. live storage ratios.

5. Average depth of reservoir and stratification(anaerobic hypolimnion: H2S, CH4 vs. aerobic epil-imnion: CO2).

6. Tons of coal equivalent displaced; ratio of GHGproduced by hydro vs. fossil equivalent.

7. Is the area seasonally exposed; in other words,what is the drawdown strip?

8. Is national aquatic survey complete? (Cascade vs.fewer dams on many rivers).

9. Dam height.

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new reservoirs. The vision is for the best and mostsustainable dams to become an interim stopgap mea-sure on the transition to other renewables — the less-er of two evils, as opponents put it. The phase-downof coal to gas and hydro with other renewables needsto be accelerated. The transition to sustainability isurgent; limiting global warming to 2°C requires a 50percent cut in GHG emissions. That is impossiblewithout a major shift to hydro and other renewables.

Ensuring that hydro projects are sustainable nec-essarily means that some projects will not go for-ward. Opponents will argue that by the time all thesepreconditions and qualifications have been met, it isunlikely there will be enough eligible sustainablehydro sites to substitute substantially for fossil fuel.To the extent this is the case, hydro will displace onlysome fraction of the coal thermals that would other-wise be built. Without higher standards, hydro willcontinue to decline and coal will continue to increase.The fact is, it is economically imprudent to continueexternalizing coal’s social and environmental costswhile at the same time internalizing those same costsof hydro projects. Proponents will claim that thereare enough sustainable hydro sites available to dis-place substantial amounts of coal, and that sustain-able hydro is an invaluable bridge to a solar/windtransition. Because the price of non-hydro renewableenergy is tumbling, the hydro industry may haveonly a matter of decades to become sustainable or beoutcompeted by other renewables.

ACKNOWLEDGMENTS

For their helpful comments on earlier drafts, Ioffer warm thanks to Michael Horowitz, MarittaKoch-Weser, Etienne Linard, Ken Mott (U.N. WHO),Engelbertus Oud, Thayer Scudder, Robert Robelus,Salah El Serafy and Jan Veltrop.

ENDNOTES

1. The author is environmental advisor to theWorld Bank based in Washington, D.C. He has visitedor worked on environmental impacts of many bigdams worldwide, such as Itaipu, Yacyreta, ThreeGorges, Xiaolangdi, Ertan, Arun, Nam Theun and

Tucurui. He served as independent commissioner forCanada’s Great Whale James Bay hydro enquiry. Hewas elected president of the International Associationof Impact Assessment, and metropolitan chair of theEcological Society of America. Before joining theBank he worked for the governments of Brazil,Malaysia and Bangladesh inter alia.

2. The term “proponent” is used here to meanthose promoting dams, often hydro engineers whofeel that dam benefits clearly outweigh their costs, aswell as the hydro and related industries (turbine man-ufacturers). ICOLD does not promote dams; it seeksto establish guidelines for sound design and con-struction. “Opponents” is used to mean critics ofdams in general, often those environmentalists wanti-ng to ensure the benefits clearly outweigh the costs,particularly the environmental and social ones, andthose questioning specific dams, such as IRN. This isclearly a generalization of two ends of a long dis-parate spectrum. The long track record of big damsin industrial countries and their benefits needs to besystematically used to ensure that dams in develop-ing countries learn from the past. Partly because, bydefinition, developing countries are difficult places inwhich to ensure high standards, partly because tropi-cal ecosystems are vastly more complex and lessunderstood than temperate ones, and partly becausedeveloping countries are often overpopulated, hydro’strack record is not improving fast enough. Hence thecontroversy.

3. By far the best documented and thoroughaccount of the inadequacies of hydro projects is therecent book by McCully (1996). This is the starkestwarning for the hydro industry to become environ-mentally sustainable. Further details are available inthe three volumes by Goldsmith and Hildyard (1984-91), also in Pearce (1992) and Sklar and McCully(1994).

4. This is about the second time a major operationhas cut its ties with the World Bank Group partly onenvironmental grounds. The first was the U.S.-basedmining corporation Freeport-McMoRan, operators ofthe world’s largest gold mine, in Indonesia’s IrianJaya. Freeport canceled its MIGA insurance justbefore an independent commission of enquiry waslaunched to assess allegations of human rights and

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environmental abuses in 1996. Unilateral insurancecancelation quashed the probe as MIGA became nolonger connected to Freeport.

5. “Oustee” is a term meaning ousted people, suchas people ousted by a reservoir. The term is usedhere because OED lists it (Giles Goodland, OED,personal communication, 1994), it is readily under-stood and widely used, and there seems no betterchoice. The synonyms “displaced person” and “reset-tler” are less precise. “Affected person” is a non-syn-onymous euphemism.

6. This paper is restricted to these ten major areasin the interests of brevity and because the workshopis unlikely to allocate as much time to the other veryimportant impacts (tabulated in Figure 4) such asfish, sedimentation, biodiversity, water quality anddownstream hydrology. These are crucial to makinghydro sustainable. This list of ten topics is not rankedin order of importance; rather it follows a rough plan-ning sequence (except for greenhouse gas produc-tion).

7. Mercury contamination in reservoirs is a rela-tively recently discovered impact. Mercury seems toarise from its use in recovering gold in the Amazon,from coal-fired thermal generating plants, and trafficin OECD and elsewhere, but is in some soils withoutsuch sources. It is accumulated in the organic(methyl mercury) form from sediment, especially inanoxic humus and peats, through algae and insects tofish. Poisonous MeHg accumulates up the food chainto such an extent that carnivorous fish consumptioncan harm vulnerable humans, such as children andpregnants. The U.S. FDA limit of 1.0 mug/g wet wt iscommonly exceeded. See: Leino and Lodenius(1995), Bonzongo et al. (1996), Tremblay et al.(1996), Allen-Gil (1995), Meulman et al. (1995), Rudd(1995), Porvari et al. (1995), Iskander (1994),Rodgers et al. (1995) and Olem (1993).

8. Power In Asia of Jan. 13, 1997, and Feb. 10,1997, outlines the controversy: Bakun has been called“a timebomb, unlawful, unsustainable, economicallyquestionable.” The king of Sweden’s environmentaladvisor was fired from his Royal Swedish Academy ofSciences post just before Christmas 1996, just afterhe publicly criticized Bakun; later he called Bakun

“an ecological catastrophe,” “not tenable” and “out-dated technology.” He called the environmentalreport “insufficient.” ABB Chair Percy Barnevik isreported to be defending Bakun against “environ-mental fascists.”

9. It has been unexpectedly difficult to obtain “areaflooded” by reservoirs as it is not commonly providedin the literature. This suggests that the area floodedhas not been important to proponents. Similarly withoustees, the World Bank’s OED report notes thatoustee numbers are simply not known for earlier pro-jects. Installed capacity (MW) is always easily avail-able, but the far more meaningful GWh is exception-ally difficult to obtain, and of course varies from sea-son to season. Figure 8 should therefore be usedwith care, as GWh has not yet been systematicallycollected and this would make the rank more mean-ingful. However, use of 50 percent plant factor isunlikely to change the ranking unduly. Proponentsshould be required to count oustees well in advanceand to provide reasonable estimates of area lost toflooding also well in advance. The other importantcaveat of Figure 8 is that hydro is not the major bene-fit of several of the projects listed (e.g., ThreeGorges, Tarbela, Aswan High, Mangla). A nextapproximation using GWh and non-hydro benefitsthus will modify this first approximation ranking.

10. Usucapion is a legal category of land owner-ship whereby the landless use a plot well for someyears, until they have earned the right to continue touse it.

11. As mentioned, the best general sources onhydro’s impacts are McCully (1996) and Goldsmithand Hildyard (1984-91). Goodland and others (1978-1996) amplify hydro mitigation, as does Helland-Hansen et al. (1995). Pearce (1992) and Sklar andMcCully (1994) provide useful details. Morse andBerger (1992) are the most thorough on the impactsof a single project (India’s Narmada). The mostrecent is Biswas (1997). Most recent project-specifichydro EAs run to many volumes, commonly occupy-ing several meters of shelving, are not commonly“published” in the conventional sense, and are not atall easily available, not even in IUCN or the WorldBank.

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12. Reservoir fishery optimization has a long wayto go. A good introduction can be found in: Kapetskyand Petr (1984), Costa-Pierce and Soemarwoto(1990), De Silva (1988), Lu (1992), Moreau (1991),Petrere (1996), Sugunan (1995), Crul and Roest(1995) and Knapp (1994).

13. Oud (1993), Gagnon (1993, 1996 and 1997);Rosa and Schaeffer (1994), Rudd et al. (1993),Svensson and Ericson (1993).

SOURCES OF FURTHER INFORMATIONAND REFERENCES CITED

Acreman, M.C., “The IUCN Sahelian floodplain initia-tive. Water Resources Development” (1996a) 12(4):429-436.

Acreman, M.C., “Environmental effects of hydro-elec-tric power generation in Africa and the potential forartificial floods,” J.CIWEM (1996b) 10: 429-435.

Allen-Gil, S.M., D.J. Gilroy and L.R. Curtis, “An ecore-gion approach to mercury bioaccumulation by fish inreservoirs,” Archives of EnvironmentalContamination and Toxicology (1995) 28(1): 61-68.

Biswas, A. K., (ed.), Water Resources: EnvironmentalPlanning, Management and Development (New York:McGraw-Hill, 1997).

Bonzongo, J.C., K.J. Heim, J.J. Warwick and W.B.Lyons. 1996, “Mercury Levels in Surface Waters,Nevada,” Environmental Pollution (1996) 92(2): 193-201.

Cernea, M.M., “Hydropower Dams and SocialImpacts: A Sociological Perspective,” World BankEnvironment Department Social Assessment Series(1997).

Costa-Pierce, B.A., and O. Soemarwoto, Reservoirfisheries and aquaculture development for resettle-ment in Indonesia (Manila: ICLARM, 1990)

Crul, R., and F. Roest, “Current status of fisheries andfish stocks of the four largest African reservoirs:Kainji, Kariba, Nasser/Nubia & Volta,” FAO Tech.Paper 30 (1995)

Daly, H.E., and R. Goodland, “An ecological-economicassessment of international commerce under GATT,”Population and Environment (1994) 15(5): 395-427and 15(6): 477-503.

De Silva, S.S., “Reservoir fishery management anddevelopment in Asia,” IDRC series (1988) 264e.

De Silva, S.S., “Asian reservoir fisheries,” Hangzhouworkshop, IDRC (1992)

Fankhauser, S., Evaluating the social costs of green-house gas emissions (London: Univ. Coll. CSERGE,1994).

Fearnside, P., “Hydroelectric dams in the BrazilianAmazon as sources of ’Greenhouse’ gases,”Environmental Conservation (1995) 22(1): 7-19.

Fearnside, P., “Environmental services as a strategyfor sustainable development in rural Amazonia,”Ecological Economics (1997) 20: 53-70.

Gagnon, L., “Emissions from hydroelectric reservoirsand comparisons of hydroelectricity, natural gas andoil,” Ambio (1993) 22:568-569.

Gagnon, L., and J.F. van de Vate, “Greenhouse gasemissions from hydropower,” Energy Policy (1997)25(1): 7-13.

Goldsmith, E., and N. Hildyard, The social and envi-ronmental effects of large dams, three volumes(Wadebridge, U.K.: Ecological Centre, 1984-91)

Goodland, R., Environmental reconnaissance of ElSalvador’s Cerron Grande hydro project (WashingtonD.C.: The World Bank, 1974)

Goodland, R., Environmental reconnaissance of theTucurui hydro project, Amazon, Brazil (Brasilia: DF.,Eletronorte, 1978)

Goodland, R., “Environmental optimization inhydrodevelopment of tropical forest regions,” in R.Panday, ed., Man-made lakes and human health.(Paramaribo: University of Suriname Faculty ofMedicine, 1979)

Goodland, R., “Hydro and the environment: evaluat-ing the tradeoffs,” Water Power & Dam Construction

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(Nov. 1986) 25-34.

Goodland, R., “The environmental sustainability chal-lenge for the hydro industry,” Hydropower and Dams(1995) 1:37-42.

Goodland, R., A.A. Juras and R. Pachauri, “Can hydroreservoirs in tropical moist forest be made environ-mentally sustainable?” Energy Policy (June 1992) 507-516.

Goodland, R., “Environmentally sustainable energysystems: the case of tropical hydropower,”International Journal of Sustainable Development(1993) 1(4):3-14.

Goodland, R., “Ethical priorities in environmentallysustainable energy systems: the case of tropicalhydropower,” World Bank Environment WorkingPaper 67 (1994).

Goodland, R., “The concept of environmental sustain-ability,” Ann. Rev. Ecology (1995) 26:1-24.

Goodland, R., “Environmental sustainability in theagriculture sector,” Ecological Economics (1997, inpress).

Goodland, R., “The big dams debate: the environmen-tal sustainability challenge for dam engineers,”Journal of the Society of Civil Engineers (1997) 12(2).

Goodland, R. and H.E. Daly, “Environmental sustain-ability: universal and non-negotiable,” EcologicalApplications (1996a) 6(4):1002-1017.

Goodland, R., and H.E. Daly, “If tropical log exportbans are so perverse, why are there so many?”Ecological Economics (1996b) 18:189-196.

Goodland, R., and S. El Serafy, “The urgent need tointernalize CO2 emission costs” (1997 draft).

Goodland, R., and G. Tillman, “Strategic environmen-tal assessment,” Shell International, EnvironmentPaper (1995).

Goodland, R., and M. Webb, “The management ofcultural property in World Bank-assisted projects:archaeological, historical, religious and naturalunique sites,” World Bank technical paper (1989) 62.

Goodland, R., and S. Negishi, “Greening hydro: theenvironmental sustainability challenge for the hydroindustry,” in A. Wagstaff, ed., International WaterPower and Dam Construction, Proceedings of theAnnual Conference (Nov. 25-26, 1996).

Green, S., “Bakun: The six billion dollar question,”Power Economist (November 1996):32-35.

Helland-Hansen, E., T. Holtedahl, and K.A. Lye,“Environmental effects of hydropower development.Norwegian Institute of Technology” (1995).

Horowitz, M.M., “The management of an Africanriver basin: alternative scenarios for environmentallysustainable economic development and poverty allevi-ation,” Proc. Int. Conf. Water Resources Planning in aChanging World, Institute for Dev. Anthropology(1994) IV73-IV82.

Horowitz, M.M., “Victims upstream and down,”Journal of Refugee Studies (1991) 4(2):164-181.

Hunter, J., L. Rey, K. Chu, E. Adekolu-John and K.Mott, Parasitic diseases in water resources develop-ment: the need for intersectoral negotiation. (Geneva:World Health Organization, 1993).

Iskander, F.Y., H.R. Vega-Carrillo and E.M. Acuna,“Determination of mercury and other elements in LaZacatecana dam sediment in Mexico,” Science of theTotal Environment (1994) 148 (1):45-48.

Jayaseela, F., “Bakun hydro electricity project: proofthat ’business is as usual’ globally?” Forests, TreesJournal of Refugee Studies (1993) 6(5):123-152.

Scudder, T., “Recent experiences with river basindevelopment in the tropics and subtropics,” NaturalResources Forum (1994) 18(2): 101-113.

Scudder, T., “The social impacts of big dams,” Gland,Switzerland, IUCN Large Dams Workshop (1997).

Sklar, L. and P. McCully, “The rivers: The WorldBank’s lending for large dams,” International RiversNetwork Working Paper 5 (1994).

Sugunan, V.V., “Reservoir fisheries of India,” FAOFisheries Technical Paper 345.

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Svensson, B.S., and S.O. Ericson, “Does hydroelectricpower increase global warming?” Ambio (1993)22:569-570.

Tremblay, A., M. Lucotte, and I. Rheault,“Methylmercury in a benthic foodweb of two hydro-electric reservoirs and a natural lake in NorthernQuebec,” Water, Air and Soil Pollution (1996) 91(3-4):255-269.

van der Knapp, M., “Status of fish stocks and fish-eries for thirteen medium-sized African reservoirs,”FAO technical paper (1994) 26:107

World Bank, “The World Bank’s experience withlarge dams: a preliminary review of impacts,”Operations Evaluation Department (SecM96-944)(1996).

World Bank, “Second review of environmental assess-ment” (1996).

World Bank, “Resettlement and development: aBankwide review of projects involving involuntaryresettlement,” Environment Department (1994).

World Bank, “The World Bank and participation,”Operations Policy Department (1994).

World Bank, “Participation Sourcebook” (1996).

World Bank, Environmental Assessment Sourcebook,Technical Paper, three volumes (1991).

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Environmental Ranking of New Energy Sources

LEAST IMPACT

1. EFFICIENCY AND CONSERVATION2. SOLAR AND HYDROGEN3. PHOTOVOLTAICS RENEWABLE &4. WIND SUSTAINABLE5. TIDAL AND WAVES6. BIOMASS

7. HYDRO RENEWABLE &8. GEOTHERMAL POTENTIALLY SUSTAINABLE

9. GAS 10. OIL NON-RENEWABLE &11. COAL UNSUSTAINABLE12. NUCLEAR

MOST IMPACT

The main means to improve the environmental and social aspects of all energy is to gradually phase up this ranking, and tophase out those forms lowest on the ranking.

1. Energy efficiency and energy conservation: Since these are becoming recoginized as alternatives to increasing energy sup-ply options, they top this list. They free up existing energy supplies used elsewhere, thus postponing the need for new capacity.

2. Solar power: JapanÕs Agency of Industrial Science and Technology, in collaboration with the International Atomic EnergyAgency, is developing a solar hydrogen power system by electroysis of water with sunlight expected to be commercial before2030. This system is 20 to 30 percent more efficient that todayÕs best gas turbines, but without the CO2 pollutant and the depletionproblem. Photovoltaics and batteries break down after a few years. In this relatively trivial sense, they are unsustainable.

3. Hydropower: This is or could be renewable due to the fact that it burns no fuel and is power by solar energy via the hydroliccycle.

4. Geothermal: The environmental and social impacts are, in general, easily managed. It makes sense to exploit this resource.

5. All fossil fuels: These are unsustainable due to the fact that combustion releases CO2 into the atmosphere. Many nationshave signed the Framework Convention on Climate Change because they feel the risks of global climate change should be mini-mized. Unlike sulfur oxides, nitrous oxides and particulates, CO2 is not controlled. The risks of climate change can be reducedonly be phasing out coal well before supplies run out. It is estimated that there are about 300 years worth of coal supplies remain-ing. Gas and to a lesser extent oil are not as risky as coal because their supplies are more limited, only about 50 years, and emitmuch less CO2 than coal. Through the process of industrialization, energy users typically switch from a reliance on wood to coalto oil to gas. Accelerating this historic trend in which the ratio of carbon to hydrogen falls would greatly help to meet GHG emissionreduction targets. If coal technology improves such that CO2 emissions can be mitigated or adequately sequestered, theprospects for coal would improve.

6. Nuclear: The nuclear industry has spent about 75 percent of the total R&D budget over the last four decades, but now onlygenerates 3 percent of global commercial energy. Rather than earning a profit after all these subsidies, the abandonment ofnuclear plants has caused $10 billion in losses to shareholders in the United States alone. In order to replace coal, as many as10,000 to 20,000 new nuclear plants would be needed, which would require a new plant opening every three or four days fordecades, but in light of the losses incurred in the United States this is highly inadvisable. Nuclear powerÕs main proponent, theIAEA, forecasts only about 770 plants for this period. Should the victims of the 1986 Chernobyl accident exceed 4 million, asseems likely, this will postpone any recrudescence of nuclear projects. In 1996-97, advanced nuclear plant were canceled inIndonesia; and postponed until 2011 in Thailand. The Japanese nuclear program, whose nuclear program is considered one of theworldÕs most advanced, had been crippled since the Òvery seriousÓ accident on February 9, 1991, in Mihama. In 1992, JapanÕsMinistry of International Trade and Industry reported 20 major problems and incidents in 1992 alone. Further setbacks include themolten sodium leaks at the Monju fast-breeder reactor in December 1995, and the radioactive fire and explosion in March 1997 atthe Tokaimura waste processing plant. The government of Japan is pressing criminal charges, as of April 15, against Donen, thestate-owned Nuclear Energy Corporation, with regard to the Tokaimura explosion. Four out of six nuclear facilities operated byDonen have now been shut down following accidents, and it admitted on April 17 to 11 more unreported radioactive leaks over thelast three years. If radioactive waste storage is solved, and if ÒinherentlyÓ safe nuclear reactor designs are achieved, uranium min-ing impacts are reduced, nuclear weapons proliferation halts and radioactive shipment becomes safe, then prospects for nuclearpower would improve.

ANNEX ONE:

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Meeting Hydro’s Financing and Development Challenges 103

By ANTHONY A. CHURCHILL, Washington International Energy Group

Paper Contents

Introduction ................................................104The Power Market Grows ........................104A Less Friendly Environment ..................105Improving Accountability ..........................106

Performance Problems ............................107Meeting the Challenge ..............................108Changing Technology ..............................109Making the Future Work ..........................110Endnotes ....................................................110

Anthony Churchill is a senior advisor with Washington International Energy Group, an inter-national financial and project development consulting firm based in the United States.

MEETING HYDRO’S FINANCINGAND DEVELOPMENT CHALLENGES

This article first appeared in the Fall 1994 edition of HRW. Reprinted with permission from HCIPublications, Kansas City, Mo., 64111.

Surveyor on the construction site of the Tarbela Dam, Pakistan.



104 Meeting Hydro’s Financing and Development Challenges


ABSTRACT

This article argues that hydropower is at an inter-national crossroads. The environmental and socialproblems associated with dams, particularly poorlyconceived and executed resettlement programs, havetarnished the reputation of the hydro industry.Performance problems, such as cost overruns andproject delays, have also plagued the industry. Ascountries increasingly look to the private sector tofinance hydro projects, these problems threaten todiscourage future investments in hydropower. Inorder for the hydro industry to succeed in the future,the resettlement issue must be resolved.Governments must ensure that adequate funds areavailable for compensation and other costs of resettle-ment. The hydro industry must also improve the sys-tem of accountability in projects. Those decidingwhat projects are built, when, by whom and howmust be held accountable for the final results.Moreover, to meet the challenge of increased compe-tition from other sources of electricity, hydropowermust develop new technologies to improve efficiency.Ultimately, what is needed, Churchill asserts, is anew model of public-private partnership, whereby theprivate sector agrees to undertake greater responsi-

bility for project results and the government agreesto treat electric power as commercial business sub-ject to the discipline of the market.

1. INTRODUCTION

Hydropower stands at an international crossroads.On the one hand, project owners face increasing eco-nomic, environmental and developmental challenges.There are the vocal and visible attacks by environ-mental interest groups on hydro projects, particularlythose with large dams. There is competition fromalternative energy sources, such as natural gas,whose shorter project lead times and lower capitalcosts give them a near-term advantage. And there isthe drying up of inexpensive public financing forenergy projects. These factors have led some criticsto question the future of hydropower.

On the other hand, several factors warrant opti-mism about hydro and its future, especially in thedeveloping countries. Two-thirds of the large damsbuilt in the 1980s were in developing nations. Thedemand for electric power continues to grow rapidlyin those countries, and many good sites still are avail-able. Because hydro is a domestic resource, govern-ments and utilities in developing countries often pre-fer hydro generation over electricity produced fromfossil fuels, which must be imported or, if the nationhas its own supplies, are valuable sources of exportrevenues. In addition, the relatively low maintenancecosts and simplicity of operation associated withhydro projects are strong pluses in countries wherethe more complex maintenance and operating logis-tics of thermal plants pose serious problems.

The question is not whether hydro has a future buthow the industry passes through the crossroads itnow faces, resolves the environmental and economicproblems of its past, and meets the challenges that lieahead.

2. THE POWER MARKET GROWS

The World Energy Council (WEC) estimates sug-gest energy consumption worldwide will approxi-mately double between 1990 and 2020 1. The WECexpects almost all of this increase to occur in thedeveloping world—and the estimate probably is on

ANTHONY A. CHURCHILL

Anthony A. Churchill is a senior advisor with WashingtonInternational Energy Group, an international financial and projectdevelopment consulting firm based in the United States. UntilJuly 1984, he was principal advisor for finance and private sectordevelopment with the World Bank.

Anthony Churchill Washington International Energy GroupThree Lafayette CentreSuite 202 1155 21st Street, NWWashington, D.C. 20036Fax: (202) 331-9864E-mail: [email protected]

Note: This paper was included in the background documentationfor the joint IUCN-The World Conservation Union/World Bankworkshop. Any personal opinions should in no way be con-strued as representing the official position of the World BankGroup or IUCN.

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the conservative side.

How much of the new demand will hydropowersupply? The WEC suggests that hydro energy pro-duction will increase from the present level of about2,000 terawatt-hours per year to nearly 5,000 terawatt-hours by 2020. These estimates do not include smallhydro development, which the WEC lumps with

other renewables. Even the very constrained andprobably unrealistic supply scenarios of environmen-talists show a doubling of energy from hydropower to4,000 terawatt-hours per year over the same period 2.Figure 1 illustrates the WEC’s estimates of energydemand growth in the future.

At present load factors, both these estimates sug-gest an increase in installed hydro capacity world-wide from nearly 680 terawatts (tw) in 1986 to morethan 2,200 tw in 2020. That growth rate—about 4 per-cent per year—is about half the rate of the 1970s and

1980s. By 2020, on the basis of these estimates, theinstalled hydro capacity would increase from about 10percent of the technically usable potential to some 30percent.

Although this appears to be a feasible growth pat-tern for hydropower, some caution needs to be exer-cised in interpretation. First, the forecasts assume

continuing advances in long-distance transmission and bet-ter utilization of low-headhydro potential as develop-ment sites move farther frompower markets and towardmore challenging locations.Second, about half of thehydro development in the next25 years is likely to take placein the "Big Three" countries ofChina, India and Brazil, wheremarket size is not likely to bea constraint. However, muchof the remaining potential, par-ticularly in Africa, is in coun-tries where markets are small.Unless those countries over-come their reluctance to relyon internationally tradedpower, a significant portion ofthis potential may remainunexploited.

3. A LESS FRIENDLYENVIRONMENT

In less than a decade,hydropower and the damsassociated with many develop-ments have gone from being

viewed as the most environmentally benign source ofpower to among the most aggressively criticized.Even projects with relatively minor environmentaleffects—for example, the Pangue project on the Bio-Bio River in Chile—have drawn widespread publiccriticism for the harm they allegedly would do to rela-tively small local populations and the recreationalopportunities of an even smaller number of raftingenthusiasts.

Are the new critics of hydropower projects right?

Developing countries

Former Soviet Bloc

Developed countries

1900 1930 1960 1990

Ener

gy P

rodu

ctio

n (G

toe)

20

15

20

5

0A B B1 C

WEC Forecasts for 2020

Figure 1: The World Energy Council expects developing countries to account for most ofthe forecast growth in world energy demand between 1990 and the year 2020. Thisgraph shows energy demand in gigatons of oil equivalent (Gtos) through 1990 and WECforecasts of demand in 2020, based on four scenarios. Case B is an updated version ofthe "moderate" growth projections presented at the WEC Congress in 1989. Case B1 is avariation of that case that assumes weaker expansion in central and eastern Europe andthe former Soviet Union. Case A is a high-growth forecast, while Case C is the WECÕs"ecologically driven" forecast.

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In some cases, yes. The developing world’s recordfor dealing with the environmental and social issuesassociated with dams—particularly the resettlementof populations—is not very good. Poorly conceivedand executed resettlement programs have tarnishedthe reputations of many governments and their elec-tric utilities. Until the last several years, project devel-opers, contractors and financiers tended to leavethese issues to host governments, many of whomwere not equipped to manage the problems.

What about the future? Can proper attention toenvironmental and resettlement issues erase the neg-ative image? The answer has to be "maybe."

Many of the effects of hydropower and waterresource projects are inherent in the underdevelopedconditions that surround many sites. Some can betraced to poorly defined property rights and humanrights in those regions, and to a lack of institutionalmechanisms with which to adjudicate those rights.Other issues result from a shortage of administrativeresources in the underdeveloped parts of the world.These are relatively long-term problems that cannotbe resolved within the context of a single project.

In some cases, it may be possible to overcome theconstraints of the overall institutional environment,although at additional cost. For example, planning forthe 1,800-megawatt (MW) Xiaolangdi project in Chinaincluded extensive work on issues related to resettle-ment of more than 180,000 people. The World Bankin May 1994 approved some $570 million for projectcosts, nearly one-fifth of the money for land purchas-es and other support for the relocated people. In thecase of other projects, the added costs of dealing withthese issues sometimes ignored in the past maylower project returns below an acceptable level.

Under both domestic and international pressures,most governments have accepted the need to exam-ine environmental effects and to plan for their mitiga-tion. However, many countries lack the administrativeand institutional capacity to implement that commit-ment. Failure to recognize that limitation and take itinto account in energy planning and hydro projectdevelopment has resulted in high post-project costs.As an example, the failure of both the project ownerand the World Bank to anticipate the complexity ofresettlement issues more than doubled costs at the560-MW Guatape II hydro project in Colombia and

delayed completion by three years. That delay,which in turn forced postponement of filling of thereservoir, effectively cost project owner EmpresasPublicas de Medellin the equivalent of an entire yearof energy generation 3.

4. IMPROVING ACCOUNTABILITY

Hydropower’s record in dealing with environmen-tal and social issues—both the reality of the indus-try’s performance and the public perception of it—isdamaged by unclear lines of accountability in plan-ning and implementation of projects.

In most developing countries, hydro projects havebeen commissioned by large public monopolies.These monopolies are neither particularly effective inrecognizing the need for change nor particularly sen-sitive to it. They are subject neither to commercialrules nor public scrutiny. They often have beneficia-ries, not customers. In the construction of dams, theyseldom have given adequate attention to social andenvironmental problems, preferring instead to focuson engineering issues with which they are comfort-able.

Financial and other pressures are forcing govern-ments to undertake major reforms of the sector.Private investment, more open regulatory systems,increasing competition to market electricity genera-tion, system management, transmission services, andthe rescinding of monopoly power all are part of theprocess. The structure being created by privatizationof energy resources and public concern will be moreaccountable.

A badly handled resettlement program that resultsin project delays will adversely affect the profits ofthe developers. The increase in risks born by thedeveloper and the financiers may well discourageinvestments.

A World Bank analysis of more than 80 hydro pro-jects completed between 1970 and 1990 shows thatresettlement costs contributed significantly to projectbudgets and—most damaging—to cost overruns.Resettlement expenses averaged 11 percent of allcosts on the projects studied and ranged as high as22 percent. On average, final resettlement costs were54 percent above project estimates 4. The effect of

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resettlement costs on project economics probablywas even greater, if the cost of lost electricity salesthat resulted from related project delays were fac-tored in.

Governments will have to be prepared to betterarticulate their choices and trade-offs with regard toenvironmental and social issues. In the present cli-mate of suspicion, project developers and theirfinanciers find themselves under attack by bothdomestic and international environmental groups.These developers will back off unless governmentsproduce the public support required to overcome theinitial hostility.

5. PERFORMANCE PROBLEMS

Changes in the public’s perception of the environ-mental and social consequences of hydropower pro-jects rightly can be attributed to growing concern andexpectations for those issues. The heightened level ofconcern caught governments, private developers,even the public itself unprepared, and it is not sur-prising that the hydro industry’s performance has

lagged behind ideal.

Changing perceptions cannot be blamed for otherissues that are affecting hydro development world-wide. Hydropower project costs have tended toexceed estimates by substantial magnitudes. TheWorld Bank review of 80 hydro projects completed inthe 1970s and 1980s indicated that three-fourths hadfinal costs in excess of budget. Final costs on half theprojects were at least 25 percent higher than esti-mates; costs exceeded estimates by 50 percent ormore on 30 percent of the projects studied. Costswere less than estimated on 25 percent of the pro-jects, the study indicated. Figure 2 illustrates the find-ings of the study.

Viewed individually, the cases where costs exceed-ed estimates include a number where project partici-pants can make the case that unanticipated problemsincreased costs after work initially had begun: caseswhere unexpected geologic conditions, fundingdelays and resettlement problems slowed the projectand created additional expense. Together, however,the individual projects create a clear pattern of cost

overruns that has damagedthe image of hydro projects inthe minds of members of thepublic and the financing com-munity. Simply put, if three-fourths of hydro projects expe-rience geological problemsthat cause delays and increasecosts, geologic problems arethe expected norm—not theunanticipated exception.

The bank analysis suggestsmany factors contributing tocost increases and delays inhydro projects have to do withcapabilities of the project own-ership and management teamor problems in implementingproject plans. In general, well-managed utilities or other pro-ject owners do a better job ofplanning projects, estimatingcosts and implementing plans.Similarly, projects that useexperienced consultants, par-ticularly those with a back-

0 5 10 15

Ratio

of A

ctua

l to

Estim

ated

Cos

t

>2.00

20 25 30%

Percentage of Projects

1.76–2.00

1.51–1.75

1.26–1.50

1.01–1.25

0.76–1.00

²0.75

Figure 2: A World Bank study of 80 hydro projects completed in the 1970s and 1980sindicated that final costs exceeded budget in 76 projects. As indicated in this graph, finalcosts on half of the projects were at least 25 percent higher than estimates. Costsexceeded estimates by 50 percent or more on 30 percent of the projects studied. Costswere less than estimated on one-fourth of the projects.

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ground in hydro projects, are less likely to exceedcost estimates or experience delays.

Whatever the cause, the upshot is thathydropower project estimates too often are beingtreated as unreliable and burdened by unacceptablehigh-side risks. With countries and utilities increas-ingly turning to the private sector to fund and buildsuch projects, that perceived high financial risk willdiscourage investment.

Investors can be further discouraged when pre-sented with uncertain costs and less-than-reliable rev-enue forecasts. If a project takes eight years to com-plete, the investor faces a situation in which he willhave to lock in large amounts of capital on the basisof what cost and income are estimated to be nearly adecade down the road.

By their nature, the demand forecasts that are thebasis of revenue estimates contain large elements ofuncertainty. However, a World Bank study suggeststhat more than three-fourths of the electricitydemand forecasts analyzed for the 1960-85 periodwere overly optimistic and that the degree of errorincreased with time 5. Though perhaps expected,those facts have been especially deadly for hydroelec-tric projects in which gestation periods typically areextended.

Hydroelectric project development and financealso have been hindered by the historic project devel-opment structure in much of the underdevelopedworld. Most such projects have been built as publicworks ventures. The owner (most often a govern-ment monopoly or agency) initiates the project, butits representatives typically do little of the planning,design or project supervision. Accountability can befragmented, and the system frequently includes fewprivate sector incentives for optimizing costs.

6. MEETING THE CHALLENGE:WHAT CAN BE DONE?

Financial agencies, environmental groups and theindustry itself are pushing for improved policies inmany of these areas, but their implementation hasbeen handicapped by the weakness of existing institu-tional structures. Careful planning and attention tothe details of environmental mitigation, population

resettlement and financial issues in the early stagesof specific projects will help, but ultimately the solu-tions will add to costs.

RESOLVING THE ’PEOPLE’ ISSUESome empowerment of the local community is

probably essential to provide checks and balances onthe weaknesses of public administration in carryingout resettlement and addressing other social and pub-lic concerns of hydropower development.

The role of the power utility and governmentagency should be to ensure that adequate funds areavailable for compensation and other costs of resettle-ment, not to decide how each dollar is spent in theprocess. Why not insist that compensation be givendirectly to the individuals or communities affected bythe project? In many developing countries, whereindividual property rights are weak, community-based solutions are necessary.

If the community and its residents are dislocatedby a power project, estimate the compensation dueand put the control of the funds in the hands of thecommunity’s leadership. Let the community decidewhat public or private goods it wishes to purchaseand for whom. For example, in Turkey the resettle-ment programs permit each affected individual toselect from a menu of public services and direct com-pensation offerings.

The government, financiers and project developersmay wish to exercise some control, depending on thecompetency of local leadership. But the objectiveeven in establishing those controls should be to moveaway from the usual paternalistic approach and putthe process on a more businesslike basis.

Where possible, the wise hydropower developershould insist on local involvement in a specific pro-ject. More generally, the hydro industry should beencouraging the policy internationally and within thecountries where it is most influential.

Governments also have a responsibility to con-vince the public that proposed projects are efficientsolutions to real needs. This may be slow and diffi-cult, but recent experience with a few hydropowerprojects demonstrates that it is now an essentialingredient of any successful venture. The success ofthe Chilean national government, Empresa Nacional

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de Energia S.A. (Endesa), and various interest groupsin reaching agreement on resettlement issues wascritical to private financing of the 450-MW Pangueproject. (A ten-bank syndicate of European banksannounced in May 1994 that it would loan $50 millionto Pangue S.A., an Endesa subsidiary, for the pro-ject.) A private developer who gets involved in a pro-ject in a country where the government is eitherunwilling or unable to initiate such a dialogue is run-ning unnecessary risks.

IMPROVING THE REPUTATION OF HYDROIt is essential that the hydro industry come to

grips with its record of cost estimation and projectimplementation. This record has caused the financialcommunity to regard hydro projects as more riskythan they are. This means that project owners anddevelopers must rely on public funds or privatefinancing packages with substantial public guaran-tees. In today’s marketplace, that can be a seriousconstraint.

In many countries, electric power is being regard-ed as just another commodity to be produced andfinanced by the private sector under normal commer-cial terms. Given the many demands on their limitedpublic funds, governments increasingly are reluctantto subsidize the capital requirements of hydropower.The availability of competing technologies at lowerfront-end costs, which the private sector is preparedto finance, adds to this reluctance.

Performance issues must be approached from twoangles: better planning and more effective implemen-tation. In both cases, the root causes of problemsassociated with project cost and revenues lie with thepresent organizational and institutional structure ofthe power sector in general and hydropower in partic-ular. As long as these projects are treated as publicworks projects, high costs and poor performance willbe a consistent danger.

Changing this will require a different way of doingbusiness. Accountability will have to be pinned down.Those deciding what project is to be built, when, bywhom, and how must be held accountable for thefinal results. Project designers, for example, willensure that adequate allowances are made for geolog-ical uncertainties if they are to be held financiallyaccountable for the failure to do so. Essentially, thereis no alternative but to treat electric power as a com-

mercial business subject to the discipline of markets.As long as there is a soft budget—where risks andcosts are born by the public sector—the incentivesfor efficiency will be muted. In fact, unless there areshareholders who stand to lose from poor perfor-mance, improvements are unlikely. In recent indepen-dent hydropower projects in Colombia, India, andGuatemala, a major portion of the project developers’return on equity comes from delivering the project ontime and within budget, and operating the project inexcess of the agreed-on availability.

7. CHANGING TECHNOLOGY

Hydropower also is facing the challenge from with-out. In only a few years, the natural gas-fueled com-bustion turbine has become a dominant technologyfor producing electric power. Its physical and eco-nomic characteristics are almost the opposite of thoseof hydroelectric power: Project capital costs are rela-tively low and predictable with a high degree of accu-racy; construction times are short; and fuel/operatingcosts are high. Where gas is readily available at whatis at least for the foreseeable future a low cost, it hasbecome difficult for hydropower to compete.

Of course, gas is not available everywhere, and inmany cases hydropower is competing against tradi-tional coal- and oil-fired plants. Hydropower has defi-nite advantages in comparison with those sources,both from an environmental standpoint and becauseit is an indigenous resource. In many of the largercountries—China and India in particular—strongdemand likely will warrant exploitation of all potentialenergy resources.

New technology also can play a role in broadeningthe potential of hydropower to meet future energydemand. For example, continuing developments inthe efficiency and utility of turbines for low-head andsmall hydro sites will permit more effective use ofmore sites in a less environmentally intrusive man-ner. Recent successes in development of adjustable-speed generation and research into other new tech-nology for large turbines will make it possible torehabilitate, expand and develop other new sites.New technologies that permit the efficient movementof larger volumes of power over greater distanceswould allow developers to take advantage of remotesites where much of the future potential lies.

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5. MAKING THE FUTURE WORK

Hydropower is, indeed, at a crossroads. Changesare taking place in the electric power business thatwill affect the growth of hydropower. The financialconstraints of the public sector and the poor perfor-mance of most national electric power monopoliesare forcing countries to consider alternative institu-tional arrangements for the sector. A major feature ofthis changed institutional environment is the intro-duction of competition and the private ownership andfinancing of power plants.

There are those who maintain that hydropowerprojects will only be built in the future with explicitpublic support. Some even go as far as to say privatepower will not build hydropower projects.

Under the present way of doing business, they areright. Significant private financial resources will bereserved for power projects that are reliably plannedand minimize environmental and other risks. On theother hand, continuing public support as it is present-ly done, particularly in developing counties, will pro-vide further ammunition to the critics, and weakenthe longer-term competitiveness of hydropower.

What is needed is a new model of public/privatepartnership. The private sector would agree to under-take greater responsibility for project results inexchange for greater control over selection, design,construction and operations. The government, inexchange for a lower level of public financing, wouldagree to restructure the electric power sector so thatit is a competitive business subject to normal com-mercial rules. In the transition period, public funds orguarantees will have to be an important part of thetotal financing. There should be, however, a clearunderstanding that it is a temporary measure andonce the project (or industry) has demonstrated itscapacity to perform, public funding would bereduced.

ENDNOTES

1. World Energy Council, Energy for Tomorrow’sWorld (New York: St. Martins Press, 1993).

2. Goldemberg, J., T. Johansson, A. Reddy and R.Williams, Energy for a Sustainable World, Wiley.Eastern Ltd. 1988.

3. World Bank, “1981 PPAR Colombia: Guatape IIHydroelectric Project.” Report No. 3718. WashingtonD.C. 1981.

4. Merrow, E.W., and R.F. Shangraw Jr.,“Understanding the Costs and Schedules of WorldBank Supported Hydroelectric Projects,” World BankIndustry and Energy Department Working Paper,Energy Series No. 31 (1990).

5. Sanghvi, A., R. Verstrom and J. Besant-Jones.“Review and Evaluation of Historic ElectricityForecasting Experience (1960-1985),” World BankIndustry and Energy Department Working Paper,Energy Series No. 18 (1989).

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Hydropower: A New Business or an Obsolete Industry? 111

P aper C ontents

Introduction ................................................112The Structural Issue ..................................113Managing Risk ............................................114Adapt or Die: Can theIndustry Respond? ......................................116

Profile of the Successful Developer ..........116The Firm ......................................................116Some Tactics and Strategies......................117Conclusions ................................................117Endnotes ......................................................118

HYDROPOWER: A NEW BUSINESSOR AN OBSOLETE INDUSTRY?

The Aksombo Dam on the Volga River, Ghana.


By ANTHONY A. CHURCHILL, Washington International Energy Group

Anthony Churchill is a senior advisor with Washington International Energy Group, an inter-national financial and project development consulting firm based in the United States.

This paper was first presented at the 27th International Symposium on Hydraulic Engineeringin Aachen, Germany, January 3-4, 1997

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112 Hydropower: A New Business or an Obsolete Industry?

ABSTRACT

This article reviews the hydropower industry’spresent poor performance and outlines actions thatare needed. The criticisms leveled at the hydroindustry are analogous to those leveled at the U.S.defense industry: poorly defined products, lack of dis-cipline and political, rather than economic, decision-making. The weaknesses of the hydro industry areinstitutional in nature and are associated with publicprocurement. The industry is currently composed ofdiverse and specialized firms that compete for con-tracts in which all of the risk is undertaken by gov-ernment. As such, it is not well-suited to a environ-ment in which private capital is playing an increasing-ly central role. To survive, the industry must adaptby creating developers—that is, firms with sufficientcapital, technical skills and marketing ability tofinance and manage the risks inherent in hydropowerprojects. These firms will have to develop a diverseportfolio of projects in order to spread risks, andnegotiate a better way to share risks with govern-ments. The role of the developer is to develop plants,not run them forever. Only through a restructuringof the industry will firms emerge with the ability to

compete in the international power market.

1. INTRODUCTION

The World Energy Council’s Energy forTomorrow’s World suggests annual global productionof energy from hydropower will grow from the pre-sent 2,000 terawatt-hours per year to 5,000 terawatt-hours by 2020 1. This implies a growth rate of about 4percent, or half that of the 1970s and 1980s. On thebasis of this scenario, only 30 percent of technicallyfeasible potential, up from 10 percent today, will be inproduction.

There are several problems with these scenarios.First, based on more recent data, the implied growthrate in energy demand in these and other similar sce-narios is seriously underestimated. More recentinformation, and a more optimistic outlook for growthin the developing world, suggest that the increase inglobal demand could be double the present consen-sus outlooks. Second, the share of hydropower inthis growing demand is not likely to increase. If wetake the output of the industry of the last few yearsand project it into the future, a possible decline inhydro’s proportion of new capacity is possible. Forthose in the hydro industry and those concernedwith the possible adverse effects of increased fossilfuel consumption on global climate, this is bad news.

What has brought about this sorry state of affairs,and what can be done about it? Let us start with areview of the industry’s performance and then moveon to the major factors accounting for the record.

1. Hydro projects have become a source of envi-ronmental concerns. Almost every major projecttoday faces a suspicious environmental community.In view of this opposition, potential sources offinance, both public and private, have backed awayfrom financing these projects. The poor past perfor-mance of the industry in handling environmentalissues, particularly where resettlement is involved,will continue to adversely affect public perceptions.

2. The industry’s record of overruns is an embar-rassment. Although not all projects have sufferedfrom poor performance in this regard, enough havedone so, and this in turn has resulted in a perceptionin the financial community that these are high-risk

ANTHONY A. CHURCHILL

Anthony Churchill is a senior advisor with the Washington EnergyGroup, an international financial and project development con-sulting firm based in the United States. Until July 1994, he wasprincipal advisor for finance and private sector development atthe World Bank.

Anthony ChurchillWashington International Energy GroupThree Lafayette CentreSuite 2021155 21st Street, NWWashington, D.C. 20036Fax. (202) 331-9864E-mail. [email protected]

Note: This paper was included in the background documentationfor the joint IUCN-The World Conservation Union/World Bankworkshop. Any personal opinions should in no way be con-strued as representing the official position of the World BankGroup or IUCN.

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projects. Endless litigation between contractors, engi-neers, and owners has added to this perception 2.

3. This performance, in turn, has resulted in a lossof confidence in engineering and technical staffs.Cost estimates prepared by engineering firms, forexample, are routinely factored up by multipleamounts based on the past record. The poor qualityof site information, which produces expensive “sur-prises” in a majority of projects, adds to this lack oftrust.

In response to this perception of its performance,the industry has tended to react in a defensive man-ner. Facts and figures are disputed. There are goodprojects that have come in on cost and on time. Notall projects have been environmental disasters. Theindustry is being unfairly judged relative to the alter-natives—after all, fossil plants have their own environ-mental consequences. Hydro is capital-intensive andought to receive financing at favorable interest rates.And so the debate continues. It may make those inthe industry feel better, but it seldom alters publicperceptions. In fact, the defensive nature of theresponses probably adds to public suspicions.

2. THE STRUCTURAL ISSUE

The heart of the problem lies in the way the busi-ness has been conducted. The same criticisms lev-eled at the hydro industry are also leveled at thedefense industries—for the same reasons. It hasbecome another large public purchase with all thefaults and weaknesses of public procurement. Poorlydefined products, lack of discipline and political deci-sion-making have combined to turn the industry intoanother fat sow elbowing its way to the public trough.

In the 1970s and 1980s, the hydro industry waseffective in aligning itself with the national interestsand became another product similar to defense. Theexistence of national public monopolies running thepower industry made the job easier, as did the securi-ty concerns associated with rising oil prices. For thatimportant public good, national defense, there arefew alternatives, and through the centuries, theinevitable inefficiencies associated with the raisingand maintaining of armies has been accepted as anecessary evil. Fortunately, armies are seldom test-ed, and inefficiencies can persist for long periods of

time. Unfortunately, in the case of electric power, theinefficiencies tend to accumulate and become morevisible with every passing year. In the case of electricpower there are alternatives to treating it as a publicgood.

By the mid-1980s, governments, particularly indeveloping countries, found themselves increasinglyunable to deliver electric power to their growing pop-ulations. The huge financial needs of the industrywere bankrupting governments and the waste andinefficiencies were increasingly obvious to all. Inresponse there was a notable slowing down in invest-ments in electric power, as countries sought to definealternatives to public procurement. The environmen-tal movement had grown in strength and was expos-ing some of the adverse consequences of hydro pro-jects. Oil prices were falling and new technologies,notably the gas turbine, were proving their economicand technical feasibility.

In the final analysis, it is various combinations ofall of these factors that threaten the hydro businessas it was practiced through the 1980s. Electric poweris moving from public procurement, with which thehydro industry feels comfortable, to a commercialbusiness, where the hydro industry is uncomfortable.In order to compete in this new world, the hydroindustry will have to strengthen its areas of weaknessand work on improving its competitive advantage inan increasingly market-based industry.

The weaknesses of the industry are institutional innature and are the result of its association with publicprocurement. Some of the issues that will have to beaddressed:

Lack of accountability. The owner, usually a pub-lic monopoly, makes the basic decision on where andwhat to build. Behind this decision is a system plan-ning exercise that lasts forever and where a greatmany assumptions are strung together to produce a“least cost” expansion plan. The planning and eventu-al construction process can last a decade. By thetime the first kilowatt-hour is produced, the plannersand decision makers have long gone. No one isaccountable for the mistakes or the lack of reality inthe planning exercise. Many hydro projects, forexample, were justified on the basis that oil would be$100 a barrel in the 1990s.

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Divided responsibilities. The major partiesinvolved in any hydro project are the owning utility,its government, the engineers, the financiers and thecontractors. None of these parties feels responsiblefor the eventual outcome of the projects. The ownershire engineers to do site investigation. At this pointthe owner is politically committed to the site and maywell have the financing lined up. The owner is usual-ly in a hurry and reluctant to spend too much on siteinvestigation. In any case, bad news would be unwel-come at this point in time. The engineers have avested interest in keeping the project going in orderto obtain supervision and other work. The contrac-tors are doing what they are told—changes to ordersare welcome and “surprises” are an opportunity toclaim more money. The larger the cost overruns, thebigger the engineering firms’ commissions. Thefinanciers do not depend on the project to be repaidbut rather on the government; they have their gov-ernment guarantees and will get paid whether theproject is successful or not. Attempts to control coststhrough turnkey contracts do not work whereresponsibilities are so divided.

Lack of risk management. Project risks, particu-larly market and financial risks, are seldom adequate-ly quantified, and risk mitigation strategies primitiveat best. The risk of cost overruns, for example, isquantified in terms of plus or minus 10 percent or 20percent on overall costs. In practice it is not unusualto find cost overruns of 50 percent to 80 percent.The cost of delays, an almost inevitable consequenceof the financing mechanisms, receives only cursoryanalysis. Most projects have a significant proportionof their costs covered through allocations from thegovernment budget, and the assumption is made thatgovernments will make their contributions in a timelymanner. This seldom happens and, as a conse-quence, is a major risk associated with any hydro pro-ject. Yacereta in Argentina and Porto Primavera inBrazil are examples of huge infrastructures partiallyin place with completion delayed by lack of funds. Ifthese risks had been reasonably estimated, these pro-jects would not have gone forward.

In a world in which hydropower has to competewith alternative technologies for private capital, theinstitutional structure described above is not compati-ble. No private investor or lender is prepared to riskcapital in an industry unable to get its act together.Private capital will insist on all risks being quantified

and assigned to responsible parties.

Engineers who do the site development work willhave to be accountable for the results, and a failure todetect underground problems, for example, willresult in real penalties for the firm. In a recent bidfor an operations and maintenance contract for a pri-vate power plant, the winning firm was required toput up a $75 million security bond. For every day theplant fails to produce power as specified in the con-tract, the firm will have to compensate the owners forlost revenues.

Turnkey contracts are no longer flexible negotiat-ing instruments to be adjusted over the life of theproject. Governments may be willing to pick up thecosts of failure to produce on time, at cost and withperformance as specified, but private parties riskingtheir own capital will not. Private lenders will not beprepared to risk their capital on projects dependenton promises of money from public budgets. Theywill insist the government disburses its share beforethey put in a penny. Neither will they advance fundsbefore a clear resolution of land, resettlement andenvironmental issues.

3. MANAGING RISK

Engineers tend to focus on technical risks. Inpractice, with private power projects, the technicalrisks have seldom proved to be a problem. Withvery few exceptions, recent privately financed andbuilt fossil fuel plants have arrived early, usuallybelow cost and with better-than-specified perfor-mance. Although hydro presents some unique tech-nical risks, I am confident that, given the right incen-tives, the engineers can solve the technical issues. Itis other risks the industry needs to learn to managebetter.

Market risk. In the world of government procure-ment, all market risks have been assumed by govern-ment. It is assumed there will be enough customerswilling to buy the output of the plant at prices thatcover costs and perhaps allow room for some profit.In the case of privately built and owned plants, it iscommon to have a long-term power purchase agree-ment with the utility and, in the developing world,usually with some form of government guarantee.The basic assumption behind these contracts is that

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the government determines the price and, in turn,must assume all of the market risk.

But what happens when electric power becomesjust another commodity, as it has in a number ofcountries? In these cases the price of electricity is setby markets and not by governments. Where com-modity prices are market-based it is unusual to findanyone willing to take 20-year positions. The ownerof the plant has to take the risk that there will be amarket for his product at adequate prices. There areno long-term contracts, and this type of plant isknown as a merchant plant. Fortunately, as is thecase in any commodity market, there are mecha-nisms that will allow the owner to hedge some of therisks.

Can hydro think of itself as ever building a mer-chant plant? Failure to do so could drastically curtailthe business. In Argentina, Chile, the UnitedKingdom and growing number of countries, pricesare increasingly market-driven and owners of newplant must assume the market risk. Most of the newplants built in these circumstances are fossil-fired.There is, however, an example in Chile, the DuquecoRiver, where a hydro project as a merchant plant hasclosed financing. In this case, the equity holders andthe bankers had sufficient confidence in the marketand its regulatory structure to be willing to under-take the market risk.

Financing risks. A critical factor in the financingof any project is how the risk are shared betweendebt and equity. Banks and creditors do not like totake risks. This is the job of equity. To the extentbankers believe hydro projects present substantialrisks, they will insist on larger equity contributions.In the Duqueco project in Chile, the banks are willingto provide funds with only a 30 percent equity contri-bution, reflecting what must be a high degree of con-fidence in the market and the project. In the case ofthe Shaijao C project in China, a coal-fired project, thebankers insisted on a 50 percent equity contribution,indicating they viewed the project to have substantialrisks.

Increased equity requirements will raise the costof capital. Equity expects to be compensated for itsrisks. This may price many hydro projects out of themarket. In today’s markets, for example, it is unlikelymega-projects such as Bakun in Malaysia, James Bay

in Quebec or Lower Churchill in Newfoundland couldbe financed with purely private capital. Substantialgovernment guarantees or subsidies would berequired to lower capital costs to the point wherethese plants might be able to compete.

There is little that can be done about the cost ofcapital. There is a great deal that can be done, how-ever, to lower the perception of risks. The Chile pro-ject points the way. The bankers were confidentenough in the way the risks were managed to find a70/30 debt/equity ratio acceptable. I will say moreabout this later.

Site risks. Why is it cost overruns should be therule rather than the exception? Why do projectsalways take longer than expected? Why are therealways geological surprises on the site? Judging bythe way most projects wind up in court or in arbitra-tion, there is plenty of blame to go around. The con-tractual arrangements between the various partiesinvite each to protect his interests at the expense ofthe overall project. In most of the more recent pri-vate thermal power projects, equipment suppliers andcontractors are equity participants. This provides agreat incentive for all parties to work together toresolve problems, because they will all lose if theyare not resolved. Undoubtedly this is the directionhydro projects will have to take. All parties involvedin the project need to have an ownership stake.

Environment and resettlement risks. Theindustry is growing more sophisticated in the way ithandles environmental issues. A great deal can bedone to resolve these issues if they are faced up to inthe beginning. Environmentally sensitive sites arebest avoided, and where corrective measures are nec-essary, their costs have not proved overwhelming—ifundertaken in a timely manner.

Resettlement is another matter. Environmentalissues can often be dealt with through projectdesigns, whereas resettlement is primarily a manage-ment issue. The usual practice is to leave resettle-ment to governments and their power companies.Neither does a very good job. Compensation is leftto a myriad of government departments that have nei-ther the interest nor the budget. Dam builders sel-dom understand or have much interest in resettle-ment. Government promises are worth little whenthe reservoir is filling and the army has to be called

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in to move people. If private capital is to financehydro projects, it will have to undertake greaterresponsibilities in dealing with resettlement issues.

4. ADAPT OR DIE:CAN THE INDUSTRY RESPOND?

This is the main question in the minds of mostindustry observers. So far the results are not encour-aging, and there is a tendency to avoid facing up tothe central issue: who will provide the risk capital.Bankers are not in the business of providing risk cap-ital. Engineering firms do not see it as their busi-ness. Contractors would rather someone else take iton. Equipment manufacturers are reluctant.Governments want to get out of the business. And soit keeps going around in circles.

What is missing is the developer. Where is theEnron of the hydro business? The industry needsfirms with sufficient capital, technical skills, market-ing ability and management to be able to both man-age and finance the risks inherent in these projects.At present the industry is structured to meet theneeds of the public procurement process, wherediverse and specialized firms compete for contracts inwhich all of the risk is undertaken by government.

Inevitably, given the size of risks and the size ofprojects, the developers will have to be large andwell-capitalized. No one firm in the industry meetsthese specifications. It will require consolidationsand strategic mergers among existing firms to pro-duce firms capable of taking on the broad range ofrisks associated with hydro development.6.

5. PROFILE OFTHESUCCESSFUL DEVELOPER

Deep pockets. Given the perception that this is ahigh-risk business, early entrants must be preparedto put up substantial amounts of equity. Equityrequirements of 50 percent or higher should not beunexpected. Overtime, a good track record willattract greater debt capital. Project or limitedrecourse financing is likely to prove expensive anddifficult to obtain. A corporation able to raise fundson its own balance sheet will have a competitiveadvantage.

Leadership. Most projects require bringingtogether a complex set of skills. Given the traditionaldivisions in the industry, no one firm is likely to haveall of these skills. The successful developer will haveto combine these skills in ways permitting clear linesof authority and accountability. Whether it is neces-sary to pull these skills together in one firm, throughmergers and acquisitions, or to create strategicalliances is a matter of judgment. Having all partiesparticipate in providing some of the equity is one pos-sibility, but it may not be sufficient to address theneed for closer working relationships among the pro-ject developer, the engineering firms and the site con-tractors. What is clear is that the developer will haveto provide clear overall leadership and decision-mak-ing authority.

Entrepreneurship. Entrepreneurs take risks, butthey are also good managers of risks. The risk man-agement skills of the industry are underdeveloped.The traditional large firms in the industry, the equip-ment suppliers and the contractors, are unlikely tohave the necessary entrepreneurial capacity. A fewof the engineering firms might have this capacity, butthey generally lack sufficient capital to become seri-ous players. Perhaps new players from outside theindustry will be required—similar to what has hap-pened in the power business, where a gas supplier,Enron, has become a dominant player.

6. THE FIRM

Given these characteristics of a successful develop-er, how would one go about setting up the firm andwhat, in today’s less-than-perfect markets, should beits strategies and tactics? Peter Drucker and otherwell-known management gurus all recommend thatnew or entrepreneurial activities should be startedoutside or apart from existing institutional structures.The directors of a traditional equipment supplier, forexample, are going to have a difficult time under-standing the nature of the new business and the risksinvolved and are unlikely to act fast enough to takeadvantage of market opportunities. Firms such asInternational Generating in the United States havebeen established by the more traditional parts of thepower industry in order to exploit international mar-kets.

Our hydro developer should probably combine the

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capital of a major equipment supplier and contractor,the engineering skills of an experienced hydro group,and the entrepreneurial skills of one of the leadinginternational power developers. It should have suffi-cient capital ($300 million) to undertake one or twomedium-size hydro projects a year. Above all, itshould have sufficient independence from itsfounders to enable it to become entrepreneurial andto take calculated risks in what could be a profitablebut risky market.

7. SOME TACTICS AND STRATEGIES

In order to spread risks, the firm would have todevelop as diverse a portfolio of projects as quickly aspossible. This suggests focusing on relatively smallprojects that can be developed in less than threeyears. Large projects, particularly if there is a sub-stantial reservoir, inevitably experience delays. Onepossible tactic would be to buy into existing incom-plete projects. Brazil has a number of opportunitiesworth exploring. Alternatively, many countries haveprojects in which preliminary work has been donebut lack of funding has delayed further work.Offering to take over these projects is another way ofgetting a quick start.

Critical to taking over these projects will be theassignment of risks, particularly market and hydro-logical risks. Most governments recognize that inthe current underdeveloped state of their power mar-kets or because of delays in their reform programs,no developer would be willing to undertake all ofthese risks. The real issue is how can there be a bet-ter sharing of the risks. The developer, of course,should take on construction, completion and perfor-mance risks. Hydrological risks are a matter of judg-ment and risk preferences. If the developer is suffi-ciently confident in the hydrological data, he may bewilling to take on this risk. On the other hand, if thedata is weak, perhaps the government can be askedto take on the initial risk with the developer pickingup more at a later stage. With market risk, too, therewill have to be sharing. The twenty-year take-or-paycontract is probably the extreme. If, for example, thedeveloper is able to negotiate a substantial peak/off-peak price differential, it will make taking on some ofthe market risks a more reasonable proposition.There are many forms of risk sharing which can ben-efit all parties. What is needed is a more imaginative

approach that explicitly recognizes that the costs andbenefits are different, depending on who takes on therisks.

Finally, the developer has to recognize his job asdeveloping plants, not running them forever. Themoney to be made in this business is in capital gains.The developer’s job is to establish an asset in a mar-ket applying a large discount to its value in the devel-opment stages. Once the asset is developed and pro-ducing revenue, the benefit of that market discountgoes to the developer in the form of capital gains. Inother words, the developer needs to sell all or someof his interest in the asset, using the proceeds as hisprofits and to finance the next project. There are var-ious ways this can be done. The developer maychose to gradually sell his shares in the asset into thelocal capital market or perhaps to a partner that isinterested in running the plant, thereby eliminatinglonger-term exchange risks and assisting in thedevelopment of local capital markets. Another inter-esting alternative is being undertaken by Enron: Ithas put all of its returns from its international pro-jects into a fund and then turned around and soldshares in that fund in the capital market. In doing so,it is able to capitalize the gains from the revenuestream and apply them to new investments.

8. CONCLUSIONS

The world of the international power developer isextremely competitive. There are hundreds of firmstrying to establish themselves in the business. A feware world class firms with billions in capital. In thenext few years there is going to be a substantialrestructuring of the industry as winners and losersare identified. One potentially important part of thismarket yet unexploited is hydropower. Most of theexisting competitors are developing the ability tomanage the risks associated with fossil plants and arenot comfortable with the risks associated with hydro.Is this a gap that can be filled by some smart playerwith hydro experience?

I have outlined above a few of the actions thatwould need to be taken. And this is just a beginning.There are many ways the industry can strengthen itsability to compete in the international power market.The only question in my mind is whether the devel-oper will come from within the existing firms in the

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industry or whether we are going to see an outsidefirm that understands the power business step in andtake over the leadership.

ENDNOTES

1. World Energy Council, Energy for Tomorrow’sWorld (New York: St. Martins Press, 1993).

2. For further details on performance see A.Churchill, “Meeting Hydro’s Financing, DevelopmentChallenges,” Hydro Review World Wide (Fall 1994).

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PART III

APPENDICES

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Appendix A 121

APPENDIX A1:

CRITICALADVANCES NEEDED INKNOWLEDGE AND PRACTICE

During the breakout groups, the participants wereasked to address the following three questions:

■ What are the critical advances needed in knowl-edge and practice for the assessment and develop-ment of large dams?

■ What methodologies and approaches arerequired to achieve these advances?

■ Who should be involved, and what should be theprocess for follow-up action?

The responses to these questions are summarizedin Part 1 of the report. In this and the followingappendix, further details are provided on the pointsthat were made in considering the first two questions.

The breakout group discussions were wide-rang-ing but were not necessarily comprehensive in con-sidering all of the points raised in overview papersand plenaries because of the limited time available.Attention in the breakout sessions focused particular-ly on the identification of gaps and priority needs.There were differences among the groups in theapproaches taken and the ideas generated. The fol-lowing points have been taken from the summarynotes that each group put on their flip charts. Listingof these does not imply agreements on their relativeimportance. The editors have tried to summarize therich variety of ideas while resisting the temptation togo beyond what was recorded by the groups to fill ingaps or eliminate contradictions. This appendix focus-es on the first question; A2 focuses on the second.

ENGINEERING ANDECONOMIC/FINANCIAL ISSUES

Technical aspects of dam engineering. By andlarge, it was felt that technical knowledge exists toaddress most requirements for the engineeringdesign of dams, and considerable progress has beenmade on the technical side. For example, released

water may be aerated to produce required oxygenlevels or taken from different levels in the reservoirto maintain a given temperature. Dams may bedesigned so as to reduce the amount of sedimentsthat they trap and to reduce the impact on somemigratory fish species. More frequently, the problemis that the technology employed is limited by thefinances available. In addition, the requirements forthe dam are often not known, such as the amount ofwater needed to be released to maintain a down-stream ecosystem.

Competitive markets. In the past, large con-struction projects were financed almost exclusivelyby governments with financial support from interna-tional institutions, such as the World Bank. Today theprivate sector is increasing its role in financing dams.The private sector values risks differently and com-pares economics and environment differently.Countries must evaluate the trade-offs of workingwith the development agencies or with the privatesector.

Internalizing economic externalities.Traditional economic methodologies for the assess-ment of dam suitability often focused on the directcosts and benefits, such as the costs of constructionand the benefits from electricity generated or irrigat-ed crops grown; these are considered internal to theproject. There are also important indirect benefits(e.g., those associated with irrigation and regionaldevelopment) and costs (e.g., decline in fisheriesdownstream caused by lack of flood plain inundation)to be internalized. Internalizing these externalitiesinvolves including the value of all consequences ofthe dam within the cost/benefit analysis. One prob-lem is that methodologies to value some non-tradedgoods, such as biodiversity, aesthetic pleasure andcultural heritage, are not well developed.

Discount rate. To attract investment in largedams, rates of return must equal or exceed those ofother investment opportunities, such as buying U.S.government bonds. This is reflected in the economicsof a project through the discount rate. High discountrates favor projects with short-term high return,while low rates allow incorporation of sustainability

APPENDIX A: Summary of the Key Issues Discussed in the Working Groups at the Workshop

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122 Appendix A

considerations and the interests of future genera-tions. Either way the discount rate can significantlyaffect the economic viability of a project. The relation-ship between discount rate and sustainability is notwell-defined and needs further research.

Technical information. Technical information fordeciding between development options or how to mit-igate the potential effects of dams are frequently lack-ing, especially in developing countries. Engineers arewilling and able to find solutions to problems provid-ed that the problems can be quantified, in terms ofhow much water an ecosystem, for example a wet-land, needs to maintain wildlife or perform an envi-ronmental function, such as nutrient recycling.

Decommissioning of dams. In addition to theissues relating to the construction of dams, littleattention has been given to the long-term role or sta-tus of dams once their effective life has finished.Dams may cease to operate once they are filled withsediment; thus effectively they will act as land ter-races. In some cases, it may be appropriate to decom-mission dams by removal of all or part of the struc-ture. This can be a costly exercise, and who shouldpay is not considered when dams are built.

Appropriate technology. In countries whereskilled engineers and long-term financial resourcesare available, a sophisticated technological solutionmay be most appropriate, such as managing damoperations automatically using information on rainfallor river flows by telemetry from remote stations.However, in many countries investment in high tech-nology is wasted, as resources and skilled manpowerare not available to maintain equipment. Technologyneeds to be appropriate.

External impacts hydropower generation andother technologies. Hydroelectric power generationis often considered to be “environmentally friendly”in that it produces no nuclear waste and does not usenonrenewable resources, such as coal or oil. Theimmediate impression is that hydropower generationdoes not produce “greenhouse gases,” such as car-bon dioxide and methane. However, in tropicalregions especially, the rotting of vegetation can pro-duce substantial quantities of greenhouse gases.These external impacts need to be quantified andcompared between power generation technologies.

Technical flexibility. The management of damsafter construction is often different to that envisagedat the time of design. Few dams have ever been builtthat allow the passage of sediment or the release oflarge quantities of water to create artificial floodsdownstream. Dams need to be flexible so they can beremoved or operated in a manner not intended in theoriginal design.

SOCIAL AND STAKEHOLDER ISSUES

Definition of affected groups. One way oranother, large dams, like many development projects,affect a wide range of individuals. A hydroelectricpower scheme may bring benefits to a large area—indeed a whole country—if a national grid is in place.Furthermore, affected people may be in other coun-tries if power is exported. Likewise, negative effectsmay also be widespread: Regulation of flows by adam in the headwaters of a river may mean loss ofagricultural land on a flood plain downstream ordegradation of a shrimp fishery in a coastal delta.Resettlement may also affect a large area if people,wildlife or historical artifacts are moved from thereservoir site to a distant location. A major issue istherefore to define the affected groups, or at leastthose significantly affected.

Appropriate level of participation.Stakeholders, including local communities, need tobe involved at all stages in the development of choic-es and in the planning, design, implementation andmanagement of large dams. Before the final develop-ment option is chosen, the priorities of the stakehold-ers should be determined through participatoryappraisal.

Transparency in decision-making. In additionto decision-making being fair and participatory, it hasto be seen to be so, or people will have no confidencein the decisions. Meetings should be open withagreed actions, reports and data should be freelyavailable, and the objectives and steps in any processshould be clear from the start.

Equitable sharing of costs, benefits and risk.Although some net economic gain for a region maybe calculated for a proposed dam project, who actual-ly gains and loses is often not considered in detail. Atpresent too much of the costs and risks are borne by

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Appendix A 123

local people, whether resettlers, host communities ordownstream residents. For example, in many devel-oping countries electricity has benefited the urbanelite, commerce and industry. Because of little ruralelectrification, though, the rural poor do not benefit;in the meantime, they frequently suffer the costs ofdevelopment from loss of natural resources andecosystem functions. Greater efforts are needed toallow local people to contribute to the stream of pro-ject benefits in a way that is environmentally, econom-ically and culturally sustainable.

Health. In many cases human and animal diseaseshave increased significantly following the commis-sioning of dams. Disease vectors, such as snails andmosquitoes, thrive in wet conditions, leading to out-breaks of diseases such as malaria and schistosomia-sis.

Indigenous knowledge systems. In many cul-tures, traditional water management technologies andsystems have often evolved to be in sympathy withthe social structure of the communities. Many aresustainable with small populations but require devel-opment to satisfy higher demands from increasedpopulations. There is a need to identify and evaluateindigenous knowledge systems to determine whetherthey can meet the aspirations of stakeholders in thefuture. As with local people’s social structure and cul-ture, better information on indigenous knowledgesystems is required for assessing their applicability tochanged circumstances.

ENVIRONMENTAL ISSUES

EIA policy. EIAs of dams need to include a com-prehensive evaluation of alternatives that can providethe same or better development benefits, so that envi-ronmental considerations are integrated into the plan-ning process, through a sectoral EIA, with participa-tion at all stages by affected communities. The rules,regulations and processes need to be defined andimplemented by the government authorities beforeany private-sector developer enters, and environmen-tal assessment should last continuously throughoutthe life of the project, considering the very long-termimplications, including decommissioning.

The EIA process. Agreed practices need toestablished for defining project boundaries for analy-

ses. Key indicators of environmental health and socialwell-being need to be defined. These should be uni-form across all energy sectors. Analysis of futuretrends should be undertaken with and without theproject to consider the impacts from other factors,such as climate change or increasing pressure on nat-ural resources.

EIA financing and responsibility. It is widelyaccepted that the investor should implement the envi-ronmental assessment, but the responsibilities needto be defined precisely. This should include whotakes responsibility for restoration and reparationmeasures.

EIA quality control and consistency. EIAsshould be independent to remove any vested interest.They should be controlled by particular obligations,quality standards and control mechanisms. Severepenalties should be levied where EIAs are not ade-quate.

Participation in EIAs. EIA should be an interac-tive, participatory process, including the perceptionof the environment from local communities, especial-ly affected peoples. It should be open and balanceconflicting environmental needs, such as naturalresource use. Decisions should be made throughmeaningful discussion and information sharing.

Biodiversity, ecosystems and hydrology.Assessment of environmental impact is frequentlyhampered by lack of information, especially in remoteareas where little is known about biodiversity. Thehydrology of the catchment may also not be wellunderstood, as long records of rainfall, river flows,groundwater levels and evaporation rates arerequired to assess water resources effectively and todetect any apparent climatic variability. Water qualityand sediment transport rates are also normally notwell understood, which precludes assessment of thelong-term sustainability of reservoirs. Better knowl-edge of the water requirements of ecosystems wouldhelp to define likely downstream impacts.

CROSS-CUTTING ISSUES

Multidisciplinary approaches. Large dams, likemany development projects, involve many disciplines,from ecology to engineering to sociology. A multidis-

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124 Appendix A

ciplinary approach is therefore needed to provide acomprehensive approach to the evaluation of trade-offs between development options, between environ-mental costs and development benefits and betweendevelopment and social costs.

The scale of planning. The appropriate planningand management scale depends upon the relativeimportance of the components in the system. Thefundamental unit for water issues is normally thedrainage basin, as this demarcates a hydrological sys-tem, in which components and processes are linkedby water movement. Hence the term “integrated riverbasin management” has developed as a broad con-cept that takes a holistic approach. The socioeconom-ic scale is more frequently a village, town or city andits hinterland with which it interacts. This may notcoincide with a river basin. The practicalities of imple-menting an integrated socioeconomic and biophysicalapproach have not been precisely defined.

Monitoring and evaluation. Large dam projectsshould have a long time horizon. This should beginwith adequate pre-project assessments involving par-ticipation of local communities. Close monitoring ofthe impacts on local communities should take placeduring project implementation, especially if resettle-ment is required. Post-project appraisal needs to beundertaken over a long enough period such that thelong-term effects of the dam, in both benefits andnegative impacts, can be determined to ascertainwhether the measures are sustainable. For example,can resettled people and their children after themderive a higher standard in their new location?Because social effects continue well beyond the endof the construction phase, it is essential that they becarefully monitored and that sufficient financing beavailable over a longer time frame for implementingappropriate development plans.

APPENDIX A2:

METHODOLOGIES ANDAPPROACHES FOR ASSESSMENT

Please see the introduction to Appendix A1 for anexplanation of the breakout group questions and dis-cussions that led to the ideas summarized here. Theideas below focus on responses to the second ques-tion: What methodologies and approaches arerequired to achieve advances?

Definition of terms. Both the terms “environ-ment” and “sustainability” are widely used but notwell-defined. For an engineer, “environment” mightrefer to the hydrology, and to an ecologist, the func-tioning of a wetland ecosystem. In water resources,sustainability is closely related to other concepts,such as overexploitation and safe yield, each of whichhave a variety of definitions, some related to timescale. Precise definitions are needed so that damscan be assessed in terms of their environmentalimpacts and sustainability.

Trade-offs. Sound methodologies are required toassess trade-offs between financial performance andimpacts on people and the environment. Cost-benefitanalysis is often used as the decision-making tool,focusing on economic efficiency and maximization ofthe overall gain to society as the measure of success.However, a methodology is needed for taking accountof distributional effects (i.e., who gains and who losesfrom large dams).

Valuation of non-traded goods and services.Methods for assessing values associated with non-traded goods and services, such as ecosystem func-tions, and internalizing externalities, need to bedeveloped.

Discount rates. More research is required on therelationship between discount rates and sustainabilityof projects so as to resolve debates about whethershort-term, high-yield projects prejudice choicesagainst sustainable, lower-yielding projects.

Definition of stakeholders. More precisemethodologies are needed for determining the stake-holders and the cut-off point for people most affectedby large dams.

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Appendix A 125

Stakeholder involvement. Guidelines arerequired on how to involve stakeholders, includingprocedures appropriate to differing levels of income,types of employment and living standards of localpeople (for example, housing and social services) andon what makes meaningful and appropriate levels ofparticipation.

Institutional capacity. Assessment workshopsneed to be designed for evaluating the stakeholders’technical knowledge, ability to analyze informationand organizational skills in providing for democraticrepresentation. Training in technical issues and nego-tiation skills can be identified.

Ethics. Guidelines on ethics are required and tri-bunals of inquiry are necessary to hear grievances.

Ecosystem approach. The ecosystem approachis required throughout the planning, design, imple-mentation and evaluation phases of development. Theapproach recognizes the interaction and interdepen-dencies of the physical, chemical and biological aswell as social and economic elements of a given area.Taking an ecosystem approach means identifyingthese interrelationships, predicting the impact of anyproposed action and evaluating the consequencesbefore taking any decision. New methodologies arerequired to better assess the abiotic-biotic and biotic-biotic interdependencies.

Implementation of treaties and conventions. Itis essential to ensure that design, construction, imple-mentation and management of large dams is under-taken in line with international treaties and conven-tions, such as Ramsar or Biodiversity Conventions,and in line with any water-sharing agreementsbetween countries sharing international water bodies.

Proactive EIA approach. EIA tends to be a reac-tive process that looks at the environmental impactsin response to design proposals for a dam.Procedures are required to use EIA to evaluate alter-natives that can provide development benefits in sym-pathy with conservation.

Water requirements of ecosystems.Methodologies need to be developed to assess thewater requirements of ecosystems, so that effects ofimpoundment of water can be determined and strate-gies for ecosystem conservation, such as artificialreleases, can be implemented.

Conservation of biodiversity. Procedures forassessing and conserving threatened species need tobe established.

Planning. All planning needs to have clear objec-tives and criteria, for example that people are betteroff. Methods need to be developed for supportingdecision-making based on multiple criteria analyses,considering multiple options trade-offs and goingbeyond simple cost-benefit analysis. The old para-digm of design on the basis of least cost is beingreplaced by one of maximum acceptance, or leastregret by the stakeholders and affected people andwildlife.

Demand management. New methodologies forreducing water demand should be investigated toreduce the need for large dams such as water pricing,on-site sewage treatment and drip irrigation technolo-gy.

Scale. Research needs to be undertaken on howthe scale of a dam relates to impacts, decentralization,privatization and devolution of authority to local com-munities.

Private sector. The involvement of private-sectorfinancing is a relatively new phenomenon. Researchis needed on how the private sector values risk,whether they have shorter- or longer-term horizonsand how competition among the private and publicsectors may affect choice of options. The roles of thevarious actors need to be defined, such as the publicsector undertaking strategic planning and handingthe project over to the private sector for implementa-tion. Project appraisal is required on how private andpublic sector dams compare on economic, environ-mental and social grounds.

Responsibilities. The responsibilities among thevarious actors for environmental and social data col-lection, impact evaluation and decommissioning needto be defined. Questions such as who pays for higherstandards need to be addressed.

Interdisciplinary teams. Guidance is requiredon the makeup of multidisciplinary teams, whichmight include professional experts (hydrologists,engineers, sociologists, ecologists, planners, epidemi-ologists, economists and others) and locals with par-ticular knowledge of the ecosystem or cultural values.

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Appendix B 127

APPENDIX B1:

OPENING STATEMENT BY

IUCN Director General

DAVID McDOWELL

May I welcome all participants to IUCN headquar-ters. The composition of this group is not accidental:it reflects the diversity of views globally on the utilityof constructing large dams.

We have here:■ Our co-hosts from the independent Operations

Evaluation side of the World Bank;■ Top people from three highly relevant areas of

the World Bank Group: the EnvironmentDepartment, the Energy Department and theInternational Finance Corporation;

■ A group of civil society organizations, includingsome multi-country NGO networks;

■ People from several national government min-istries and public utilities;

■ A good representation of private sector peoplefrom firms involved in the design and construction ofdams;

■ Several people from the media; and■ Managerial and technical staff members of

IUCN-The World Conservation Union, a GONGO(government and NGO) hybrid with over 900 organi-zational members in 136 countries and extensiveexpert networks.

Why have the Bank and IUCN gotten such a dis-parate group together to talk about dams? The shortanswer is that a dialogue among these people is longoverdue. To use the catchy phrase, we are all stake-holders in this activity — and it is time to talk turkey.

I welcome all of you to this place, particularlythose who are here for the first time.

I welcome particularly the private-sector people.

There has been an empty chair at otherwise inclusiveIUCN gatherings over the years. It is the chair thatshould have been assigned to the corporates, for it isthe private sector that invests in and manages muchof the natural resources of the world. I now have afirm mandate from the Union membership to fill thatchair on all occasions such as this. I welcome thatrecognition of the realities.

I also welcome the press presence. This will helpincrease the transparency of the whole process.

You may ask why IUCN and the World Bank areacting as co-hosts. The answer is that this is oneresult of an experiment in partnership which begannearly three years ago. Its origins go back beyondearly 1996, when the Bank’s Operations EvaluationDivision was preparing its desk review of large dams.It was based on our side on the premise that it is bet-ter to join in the struggle than to howl from the side-lines — and on the calculation that when an institu-tion like the Bank starts to give evidence of changingits spots it should be encouraged to go on doing so.

For my part, I regard this as a gamble which ispaying off: We still argue strenuously with the Bankon many occasions and we do not see eye-to-eye onmany issues, but we have been able to influence thissomewhat implacable institution in directions we seeas useful and we have done some very good worktogether in the field. And we have ourselves learnedmuch from our closer association with the Bank.

So why does this Union have an interest in large— and indeed all — dams? The basic answer liespartly upstream and partly downstream from thesesometimes productive, sometimes destructive, some-times beautiful man-made interventions in the cyclesand systems of nature:

■ We are intensely interested as a Union in theecologically sustainable use of natural resources likethat life force that is fresh water.

■ We are intensely involved in the theory andpractice of managing freshwater ecosystems andindeed large river basins.

■ We are intensely interested in the equitable use

APPENDIX B: Opening Statements to the Large Dams Workshop and Post-workshop Correspondence

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128 Appendix B

of such resources -— so the upstream and down-stream effects on people as well as ecosystems inter-est us substantially.

■ We stand for the conservation of biological diver-sity in all its forms, not simply for aesthetic reasons— though these are valid — but also for sound scien-tific and indeed practical economic reasons.

It would be misleading to claim that there is a con-sensus among IUCN’s diverse membership on thecontinued construction of dams. A succession ofWest African presidents have said to me that big andeven medium-size dams are out and they will relyhenceforth on traditional ways of using their oftenscarce waters — and our work with them on the com-parative economics and productivity of wetlands andflood plains compared with irrigated areas in thatpart of the world largely supports this view. But onthe other side of the world, ministers in Laos havepointed out that they have precious few other ways ofraising foreign exchange and lifting the living stan-dards of their long-suffering people than buildinghydro dams to export energy — and that other waysof using natural resources would be much moredestructive of biological diversity in Laos.

The debate rages on and a variety of answers havesome validity — not just regionally and nationally, butin particular sites.

What is certain is that the Union membershipexpects us to address such big issues, to use the con-vening power that springs from our mixed member-ship, to resolve damaging conflict where feasible andto contribute to the drawing up of environmentally,socially and indeed economically sound approachesand guidelines on whether or not and how to builddams, be they large or small.

I do not need to lecture this grouping on the histo-ry and politics of large dams or on the biology offresh water. We all know that the history of dam con-struction is patchy — and open to dispute. We allknow that some dams have been a disaster on severalfronts, not least the social and environmental fronts.We all know that some have been beneficial in theirnet effects and have had a role to play in develop-ment and in meeting people’s aspirations. We knowthat water is fundamental to the biochemistry of allliving organisms; that the planet’s ecosystems arelinked and maintained by water, that evaporation

drives the energy exchange between the land and theatmosphere, thus hugely influencing the earth’s cli-mate; that water provides a habitat for a variety ofthreatened plant, animal and fish species; and thatwater will replace oil as a major source of conflictamong states in many regions in the next millenni-um.

But let me take a minute to make a special pleafrom this Union’s perspective for seeing large damsnot as a one-off intervention in one section of oneriver channel but as a major ongoing intervention inthe hydrological cycle of an entire river basin and ofthe ecosystems which maintain this cycle. ThisUnion is moving from seeing species conservation orlimited habitat protection as sufficient techniques inthemselves to achieving sustainability. We are seek-ing a more wide-ranging approach which aims totruly integrate river basin management, desirablyinvolving the management of all of the major ecosys-tems in the river basin and an understanding of thebiophysical processes upon which they depend. Thisinvolves careful and time-consuming study of thefunctioning of the different components of sometimesvast river basins.

This Union’s hard-won experience is that unlessand until you have done your basic scientific home-work over entire river basins then all your other cal-culations — not least the social and financial calcula-tions — will be flawed.

Let me illustrate this with two field examples. Atthe moment we are steadily remodeling an earth bar-rage dam in Central Africa and helping the govern-ment concerned to restore the highly productiveflood plain downstream. We are doing this piece ofrestoration ecology because that is where the netsocial, ecological and especially economic benefits tothe country lie. The original feasibility study largelyignored the ecological side and even got the hydrolo-gy wrong. So the economic calculations ended uphopelessly inaccurate. The 100,000-plus inhabitantssuffered accordingly and so did the country’s overalleconomy.

My second example comes from West Africa. Forseveral years now, IUCN has been working with non-governmental partners to protect a series of wetlandsin northeastern Nigeria known as the Hadejia-Nguruwetlands. Like many wetlands in the usually dry

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Sahel, these seasonal wetlands are an oasis of life inthe otherwise dry and dusty environment. But therains are fickle and the flooding is not predictable. Ifthe flood comes too early, it will drown out the ricetoo late and the rice will dry up. So for some time,IUCN has been working with the people of Hadejia-Nguru to help construct small micro-bunds aroundthe rice fields that will allow the people to control theflow of water to the fields. At the same time, we areworking with the whole community to raise theawareness and understanding of the underlying ecol-ogy of these life-giving wetlands. This involves jointlyassessing the biodiversity, providing training in moni-toring the hydrological cycles, and so on.

We now fear that much of this work will come tonaught. Two large dams have been built several hun-dred kilometers upstream. The draw-down on theoverall water flow has already caused the wetlandareas to contract. A third dam is now being built.The impacts of this project on the wetlands could bedramatic. Our hydrological studies show that undercertain circumstances this third dam may well com-pletely dry up the wetlands, forcing the farmers, thenomadic herders and the fishermen of Hadejia-Nguruto go elsewhere. And that is to set aside the fate ofthe birds, fish, animals and plants that have flour-ished in these wetlands.

The moral of this story is that in conservation, asin dam-building, the river basin needs to be looked atas one large, interconnected freshwater ecosystem.What is done to one part of the system has impactsupstream and downstream, sometimes hundreds ofkilometers away.

End of cautionary tales, but you will get my drift:We have to get the science right first, and we have tolook well beyond the immediate site of operations tomake true assessments of relative costs and benefits.This case for seeking true assessments based on fullinformation across several sectors should not be seenas a recipe for indefinite postponement of decisions.Decisions have finally to be taken — and they will betaken. My argument is that there is a certain mini-mum of basic scientific and related information thathas to be brought to bear before it is prudent to bemaking final assessments and investment decisions.And such assessments do have to include a thoroughlook at alternatives to the drastic intervention whicha large dam represents.

Each of us in this room will have some such spe-cial perspective. I accept that that is inevitable. Ihave had my chance to have my say. I shall be inter-ested to hear your points of view. May I underline:

■ that you are encouraged to state your viewsfreely;

■ that we want to hear the hard arguments, forthat is clarifying; and

■ that we should not get bogged down in detail orslip into posturing mode (and environmentalists arejust as likely as others to do that!).

But let me also make one additional point: that thisis an unusual opportunity to have a hard look at thebig issues surrounding large dam construction and toseek to work together to design some processes thatmay lead a year or two from now to changes in theway dam-building proposals are assessed and deci-sions on them are made. Let’s resolve not to blowthis chance to start getting it right.

Most of us here believe that in making such deci-sions, societies around the world should be in a posi-tion to make truly informed choices. By this wemean that all costs and benefits — in so far as we areable to assess them — must be studied, brought outinto the open, traded off and then internalized intothe final assessment.

I use here the language of the market place, but Iam not talking about purely financial costs and bene-fits, or purely financial trade-offs. For the factorssometimes involved in dam-building are not easilysusceptible to the techniques of the marketplace:What price do you put on a hydrological systemundermined, on a species made extinct, on a way oflife of a distinct human group effectively destroyed —or, for that matter, on the bringing of electric lights toa rural village?

These are some questions that need addressing.

I conclude by saying that IUCN, for its part — andI want to stress this — has a commitment to thiswhole process:

■ We are prepared to play an active role in further-ing it, for example, in terms of further study and fieldwork.

■ We are prepared to help facilitate an ongoing

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process involving the major stakeholders.■ We would be keen to assist in producing new

guidelines on assessing dam construction proposalsand their potential impacts.

■ We would be happy to work with others onimproved management practices for existing but dys-functional dams so that degraded riverine ecosystemsmay be restored.

May I thank our Bank colleagues for their initiativein engaging in this process of open dialogue and fortheir willingness to consider a potentially very signifi-cant role in redefining the parameters of the greatglobal debate over the future construction and man-agement of publicly and privately funded dams.

I invite you all to join with us in this fundamentallyimportant endeavor.

April 9, 1997

APPENDIX B2:

OPENING STATEMENT BY

ROBERT PICCIOTTODirector General,Operations Evaluation,The World Bank

We have assembled here today because the largedams question is emblematic of broader debates.

For some, large dams symbolize a failed, central-ized, technocratic approach to development charac-terized by waste, bureaucratic bungling and insensi-tivity to people and the environment.

For others, large dams are “almost the equivalentof Gothic cathedrals—the supreme creation of an era,conceived with passion by unknown artists andassumed in image, if not in usage, by a whole popula-tion.”

Both of these mythologies live because each con-tains a grain of truth. On the one hand, some damsare marvels of human ingenuity. They make desertsbloom, they tame floods, they produce clean ener-gy—and they put nature to work. On the other hand,to paraphrase Pat McCully, a large dam can silence ariver, destroy a landscape, endanger biodiversity anduproot whole communities.

According to Thoreau, “Rather than love, thanmoney, than life, give me truth.” What then is thetruth about large dams? Thoreau also said: “A man isrich in proportion to the number of things he canafford to let alone.” But can developing countriesafford to let large dams alone?

These are the two basic questions this workshop isexpected to address. First, the evaluative question—the Phase II Process. Second, the normative ques-tion—the standards for large dams. Underlying bothconcerns is our continuing search for an economicand social system that can provide more and bettergoods and services for all while sustaining a high-quality environment. So, the dilemmas posed bylarge dams are those involved in harmonizing devel-

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opment with the environment. And at the core of thischallenge lies energy—the fuel of economic develop-ment from time immemorial.

Who says energy says carbon. And carbon is nowthe “most wanted” environmental culprit. Conversely,displacement of carbon for the energy system may bethe largest single environmental challenge facing theplanet. Progress has been slow but sustained overthe past century. Since 1860, decarbonization has cutthe tons of carbon to units of energy produced by 40percent. In 1920, coal still provided three-quarters ofglobal energy, and heavy smog lay over London andPittsburgh. Today, carbon is struggling to sustain itsmarket share of about 25 percent. The move from apolluting carbon economy to a non-polluting hydro-gen economy is underway. It will have to be acceler-ated to keep global warming at bay.

Dams have a significant role to play in freeing theenergy system from carbon. When built on time andon budget, they produce electric power at competitiveprices. Electricity can substitute for wood, coal,kerosene and oil and therefore contribute to a clean-er, safer, healthier environment.

With electricity, deadly wastes associated withopen fire and smoke in homes and workplacesdecline and with it exposure to pneumonia, TB, diph-theria and other airborne diseases. Refrigeration alsobecomes possible, and this cuts into waterborne gas-trointestinal diseases—another major killer.

Electricity used to be based on coal alone. Hydrois a viable alternative in certain situations. So is nat-ural gas, which has increased its market share givenits flexibility, quick gestation, low capital costs andthe efficiency of combined cycle turbines. Naturalgas is carbon trim—four hydrogens for every carbon.Coal uses one to two carbons per hydrogen. Oil usestwo hydrogens per carbon, while wood uses ten car-bons per hydrogen. So only nuclear and hydro canbeat natural gas in the decarbonization game. Butnuclear involves high risks and heavy costs, whilehydro lies well within the technological reach of mostdeveloping countries.

Hydro is renewable and domestic-resource-based.By contrast, fossil fuels often require foreignexchange. Furthermore, hydro projects are easy to

operate and maintain. No wonder then that two-thirds of the large dams built in the 1980s were indeveloping countries. The power market in develop-ing countries is growing, and this is where the bulkof unexploited sites lies. According to the WorldEnergy Council, a doubling of energy production forhydro from 2,000 terawatt hours to 4,000 terawatthours per year from 1990 to 2020 is in store. Thisimplies a trebling of hydro capacity and, if it occurs,would still leave 70 percent of the technically usablepotential untapped.

Such a development would contribute substantiallyto reduced reliance on carbon as well as bring downthe currently high energy intensities of the develop-ing world. Measured in tons of oil, for example perU.S. dollar of GDP, Thailand resembles the UnitedStates in the 1940s, while India is comparable to theUnited States of a century ago. Keeping energy useat current levels in developing countries is an envi-ronmental fantasy that would confine them to perpet-ual poverty. Per capita, LDC residents use only1/15th of the energy consumed by a U.S. resident.

I will not talk about the extraordinarily importantuse of dams for irrigation. But consider this simplefact. By raising wheat yields fivefold during the pastfew decades, Indian farmers have spared an area ofcropland equal to the state of California. This yieldrevolution would not have taken place without sur-face irrigation used in conjunction with ground water.

So there is a strong economic and environmentalcase for large dams. But as dams are currentlydesigned, constructed and implemented, a strongcase can also be made against them. The dammingof a river can be a cataclysmic event in the life of ariverine ecosystem. The construction of dams indensely populated, environmentally sensitive, institu-tionally weak areas can be very destructive.

Just as in real estate, location matters.Consultation matters too. But it is not a panacea.The protection of natural habitats and the resettle-ment of people displaced by dams call for institutionsand implementation capacities that need nurturingover many years, even decades. These are not chal-lenges that can be met efficiently one project at atime. The OED report suggests that 75 percent ofthe dams reviewed did not meet current environmen-tal/resettlement standards at completion and hypoth-

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esizes that had they done so they would still haveyielded an attractive rate of return. The Bank hasnow changed its policies, but compliance with themremains a massive challenge. It cannot be achievedthrough conditionality and paper plans. It requirescountry commitment, appropriate domestic legisla-tion and adequate enforcement and implementationcapacity. The constraint is not engineering hardware.It is the societal software, the rules of economic andsocial governance and the ability of local agencies toget things done. These institutional building tasksshould lie on the critical path of dam constructionprograms.

This is where today’s workshop comes in. It ispart of an unfolding change process that is takingplace globally as well as locally. Technologically, imi-tation, adaptation and sharing of experience hasimproved the ways dams are built. In particular, safe-ty standards are now better understood and dissemi-nated. The time has now come to promote a similarchange process with respect to the human and eco-logical dimensions of large dams projects. Fact-find-ing is more effective than fault-finding. No societyshould be excluded from learning. Latecomersshould be able to benefit from the costly experimentsof pioneers. This is the challenge of evaluation andalso of this workshop.

I put the idea of workshop to George Greene a fewmonths ago and, with the support of the Bank’s man-agement and its Board, and a similar process withinIUCN, we have moved forward. The “going” willundoubtedly get tough, but this a tough group and Iam confident that it will get going.

Our joint approach to the workshop is straightfor-ward. We have brought together leading representa-tives of major stakeholders in a neutral setting. Wewould have loved to have even broader consultations.But with a larger group, we would not have had theopportunity to get acquainted and listen in detail toeach other’s point of view. Broader consultation willbe needed in future—that is for the workshop to dis-cuss.

So, let’s reason together and decide which are themost important issues that need to be addressed.The Phase I report identifies a few key issues andproposes specific areas for follow-up. We have also

been privileged to have leading authorities prepareand present excellent overview papers covering eco-nomic/engineering, social and environmental issues.You will undoubtedly have many more ideas and pro-posals of your own, which you will have an opportuni-ty to air and discuss in the working groups this after-noon and tomorrow morning.

There is not shortage of issues. They key is toidentify those that are so critical that they deservethe scarce resources that we’ll have at our disposal.Basically, we don’t want to go back home with a longlist of additional problems. We are here to put inplace a framework and a process that will eventuallyget them solved. Once we select the priority ones, letus start on the next steps.

Methodology is certainly an issue. In the Phase Ireport, we used a cost/benefit framework. It forceseverything onto a common denominator, and leads toa bottom line. It can be used to compare large damswith alternatives, and with any other application ofthe scarce human, natural and financial resourcesthat a proposed project requires.

But the cost/benefit approach has its limitations.We are open-minded about other evaluative frame-works that promise a better integration of issuesand/or a more acceptable comparison with alterna-tives given the objective of sustainable development.

We need to be concerned about the acceptance ofwhatever emerges from this workshop by the broad-er community. I am talking about potential investors,governments, affected communities, beneficiariesand others who have a stake in the future of largedams—particularly those that are involved in the 98percent of the dams that are not financed by theWorld Bank. This is the challenge for the nextphase. And it has implications for the way Phase II isconceived.

We need a rigorous, professional and transparentprocess for defining the scope, objectives, organiza-tion and financing of follow-up work. We need todevelop basic guidelines for involvement by govern-ments, the private sector and NGOs, as well as broad-er community and public participation, informationdisclosure and subsequent dissemination of results.We should not emerge from this workshop only with

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a warm feeling and a somewhat better understandingof each other’s concerns. Our time together is tooshort to get into in-depth discussions of specificissues and cases. Perhaps we ought to focus on prin-ciples, processes and partnerships that will helpaddress the critical issues in a manner that will findgeneral acceptance.

Developing partnerships should be a key elementfor reaching out to the world of stakeholders outsidethis room. I don’t think OED can or should handlePhase II on its own, and neither should the Bank. Weare prepared to remain involved, but we don’t need tobe at the center, at the top, or in the most prominentseat. What is important to us is that the issues beeffectively addressed; i.e., that the follow-up actionsgradually lead to standards for the assessment, plan-ning, building, operation and financing of large damsthat are generally accepted by the governments andthe peoples of the developing world as well as theexternal agencies, whether public, private or volun-tary, with a stake in the development process.

So the challenge before all participants today andtomorrow is to invent a plan of action that will triggerreal change. Generally accepted standards and bestpractice examples should be sought so as to getresults on the ground. Equally, new ways of coopera-tion must replace the current gridlock of distrust andrecrimination. Governments of developed and devel-oping countries will have to be involved far moreactively than they have been so far. The private sec-tor will also have to be associated with the next steps.If ways are not found out of the current logjam, damswill continue to be built, but they will be built at aslower rate with great pain and at a higher humanand environmental cost than necessary. If, on theother hand, the workshop succeeds, a win/win logicmay eventually take over and the history of dam con-struction will evolve from confrontation to coopera-tion for the benefit of all. So let us try to make histo-ry today.

April 9, 1997

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134 Appendix B

APPENDIX B3:

POST-WORKSHOP CORRESPONDENCE BETWEEN:

IUCN Director General World Bank President

DAVID McDOWELL JAMES D. WOLFENSOHN

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136 Appendix B

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Appendix B 137

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Appendix C 139

APPENDIX C1:

LIST OF PAPERS AVAILABLE TO THE WORKSHOP PARTICIPANTS

Author Title Date

Michael Acreman Environmental Effects of Hydro-Electric December 1996in J.CIWEM Power Generation in Africa and

the Potential for Artificial Floods

John Besant-Jones Guidelines for Attracting Developers April 1996in Energy Issues: World Bank of Hydropower Independent

Power Projects

Shripad Dharmahikary A Critique of the World Bank April 1997OED Review of Large Dams andSuggestions for the Future Process

Earth Island Journal Tropical Dams and Global Warming 1996

The First International Curitiba Declaration: March 1997Meeting of People Affirming the Right to LifeAffected by Dams and Livelihood of People

Affected by Dams

Robert Goodland The Urgent Need April 1997and Salah El Serafy to Internalize CO2

Emission Costs

Nicholas Hildyard Public Risk, Private Profit— July/August 1996in The Ecologist The World Bank and the Private Sector

International Commission Position Paper on Dams and November 1995on Large Dams the Environment

International Commission Some Inescapable Facts April 1997On Large Dams Which May Put the Issue

in Perspective

International Rivers Network Risky Business January 1996in World Rivers Review

International Rivers Network Manibeli Declaration: June 1994in conjunction with NGOs Calling for a Moratorium onfrom the around the world World Bank Funing of Large Dams

E.A.K. Kalitsi Management of Multipurpose April 1997Reservoirs — The Volta Experience

Franklin Ligon, William Dietrich Downstream Ecological April 1997and William Trush in Bioscience Effects of Dams

APPENDIX C: Papers Available at the Workshop, Participant Biographies

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140 Appendix C

Author Title Date

Patrick McCully A Critique of “The World Bank’s April 1997Experience with Large Dams:A Preliminary Review of Impacts”

Jeffrey McNeely How Dams and Wildlife Can Coexist: October 1987in Conservation Biology Natural Habitats, Agriculture and Major Water

Resource Development Projects in Tropical Asia

Bradford Morse Letter to the President of the World Bank June 1992and Thomas Berger Regarding the Independent Review

of the Sardar Sarovar Dam and Irrigation Projects

Charlie Pahlman Build-Operate-Transfer October 1996in Watershed

Brian Smith Presented at Guidelines for Considering the Needs of February 1997the IUCN Workshop on the River Dolphins and Porpoises During the PlanningEffects of Water Development and Management of Water Developmpent Projectson River Dolphins in Asia

Theo P.C. van Robbroeck Presented Future Water Supplies Threatened– 1996at the Sixteenth Congress of the Large Dams: A Bane or a Boon?International Commission on Irrigationand Drainage

Theo P.C. van Robbroeck Reservoirs: Bane or Boon? 1996Presented at the Geoffrey Binnie Lecture

World Bank in OED Precis Lending for Irrigation March 1995

World Bank in OED Precis Learning from Narmada May 1995

World Bank in OED Precis Environmental Assessments December 1996and National Action Plans

World Bank OD 4.00 Annex B: Environmental Policy for April 1989Dam and Reservoir Projects

World Bank OD 4.01: October 1991Environmental Assessment

World Bank OP 4.04: Natural Habitats September 1995

World Bank OD 4.20 Annex A: Indigenous Peoples September 1995

World Bank OD 4.30: Involuntary Resettlement June 1990

World Bank OP 10.04 Economic Evaluation of September 1994Investment Operations

World Bank OP 4.37 Safety of Dams September 1996

US Bureau of Reclamation, Remarks to the International November 1994Daniel Beard Commission on Large Dams

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Michael Acreman is head of River Basin andHydroecological Management at the Institute ofHydrology, a component of the Natural EnvironmentResearch Council in the United Kingdom. Mr.Acreman is responsible for hydro-ecological researchon the impacts of dams on the habitat of aquaticspecies and for developing methods of physical habi-tat assessment. Since 1993, Mr. Acreman has alsobeen an advisor on freshwater management to IUCN,advising on projects concerned with impacts of damsand reservoir management on wetlands in Africa.

Sanjeev Ahluwalia is a senior fellow at the TataEnergy Research Institute (TERI), a nonprofitresearch organization in New Dehli, India, focusingon policy, technology and institutional issues for thepromotion of clean and efficient energy technologies.TERI has conducted studies on the comparative envi-ronmental impacts of thermal, nuclear and hydropow-er; the role of hydro power in system management;and the potential for large hydro projects as a GHGmitigation option. Mr. Ahluwalia coordinates eco-nomic analysis of energy- and environment-relatedpublic policy options.

Peter Bosshard is secretary of the BerneDeclaration(BD), a public interest organization locat-ed in Zurich, Switzerland, that promotes more equi-table relations between Switzerland and the countriesof Africa, Asia and Latin America. Mr. Bosshard, whospecializes in the social, environmental and economicimpacts of large dam projects, is in charge of BD pro-grams on international financial relations, includingthe monitoring of Swiss banks, multinational corpora-tions, governmental programs and multilateral devel-opment banks.

John Briscoe is the senior water advisor at theWorld Bank. Mr. Briscoe is responsible for the over-sight of the Bank’s programs in water resources, irri-gation, hydropower, water environments and sanita-tion. He has also worked as chief of the WaterSupply and Sanitation Division at the Bank. Prior tojoining the Bank, Mr. Briscoe worked on waterresource issues for the governments of South Africaand Mozambique. Having taught water resource

issues at the University of North Carolina, he cur-rently serves on the Water Science and TechnologyBoard of the National Academy of Sciences.

Wenmei Cai is a professor at Beijing University atthe Institute of Population Resources, an interdiscipli-nary center focusing on training and research in eco-nomic, social, technical and family demography. Inaddition to teaching courses on population issues,Ms. Cai has conducted several investigative researchprojects on reservoir migration throughout China,including Three Gorges Dam, Fu-Shan Reservoir,Mei-Shan Reservoir, Long-Yan-Xia Dam and Xin-An-Jiang Reservoir.

Stuart Chape is country representative of theWorld Conservation Union’s (IUCN) Country Officein the People’s Democratic Republic of Lao. Mr.Chape, who is responsible for developing and imple-menting IUCN’s program in Lao PDR, is currentlymanaging the development of environmental andsocial action plan for the Nakai-Nam TheunCatchment Area as part of the assessment for theNam Theun Two hydropower project. He is also amember of the IUCN Asia Regional Directorate.

Eduardo De La Cruz Charry is environmentaland marketing manager at a Colombian power com-pany that has developed, built and operated severalhydroelectric plants throughout Colombian territory.Mr. De La Cruz Charry, who participated in the cre-ation of the Environmental Corporate Structure atISA, is responsible for public affairs, development ofenvironmental policies and strategies, and environ-mental auditing.

Shripad Dharmadhikary is a full-time activistwith the Struggle to Save the Narmada (NarmadaBachao Andolan—NBA), a mass-based organizationopposed to the large Sardar Sarovar (Narmada) damproject in Western India. NBA studies, documentsand disseminates information challenging the viabili-ty of the project. Mr. Dharmadhikary is involved in anumber of activities, including popular mobilization,press and media relations, as well as litigation oppos-ing the project.

APPENDIX C2

BIOGRAPHIES OFTHE REFERENCE GROUP

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Mbarack Diop administrates and managesTropica Environmental Consultants Ltd., a privateconsulting firm in Dakar, Senegal, that has coordinat-ed and assessed activities funded by the World Bankand U.S. Agency for International Development relat-ing to dams and other water resource projects inWest Africa. He has been involved in health issues,such as water-disease control, and environmentalimpact assessments. More recently, Mr. Diop hasaddressed resettlement issues.

Tony Dorcey is a professor in the School ofCommunity and the Institute for Resources andEnvironment at the University of British Columbia inVancouver, Canada. His teaching and research hasfocused on collaborative approaches to waterresources and river basin management. Mr. Dorcey,who also has served as chair of the Fraser BasinManagement Board, a multi-stakeholder governingboard that pursues environmental, economic andsocial sustainability in the Fraser Basin, served asfacilitator for the Large Dam Workshop.

Steve Fisher is manager of operations atIntermediate Technology Development Group, aninternational NGO, located in the United Kingdom,that works to increase technology choice for ruralcommunities in developing countries. Mr. Fisher isresponsible for overall direction and day-to-day man-agement of U.K. contributions to field projects, espe-cially in the area of energy. Mr. Fisher has recentlybeen involved in providing support to the Quaker ini-tiative to promote constructive discussion ofhydropower development.

Robert Goodland is the principal economist inthe Environment Department at the World Bank. Mr.Goodland has worked on the World Bank’s environ-mental impact assessments on many large damsworldwide, including Itaipu, Three Gorges, Arun andNam Theun. He has also served as IndependentCommissioner on the inquiry for Canada’s GreatWhale Hydro Project in James Bay.

George Greene is assistant director general ofIUCN. Mr. Greene is responsible for the develop-ment of IUCN’s regional and country offices, as wellas furthering cooperation with other internationalorganizations and the private sector. He has alsoserved as director general of policy development atthe Canadian International Development Agency. Mr.

Greene has led the IUCN team in the development ofthe joint IUCN-World Bank Large Dam Initiative.

David Iverach is director of the Nam Theun TwoElectricity Consortium (NTEC), an organization con-sisting of five international companies involved in theownership, construction, operation and financing ofthis hydroelectric project. Mr. Iverach is responsiblefor the preparation of the environmental assessmentand management plan, the resettlement action planand compliance with World Bank operational direc-tives.

E.A.K. Kalitsi is chief executive of the Volta RiverAuthority (VRA), a statutory organization created bythe Ghanaian government and responsible for theconstruction of the Akosombo and Kpong Dams. Mr.Kalitsi is in charge of the direction and managementof the VRA. He was responsible for planning andadministration of the resettlement program of 80,000persons displaced by the reservoir, and for providinghealth and social services to them. Mr. Kalitsi hasalso served as managing director of Ghana’s mainpower distribution agency, Electricity Corporation ofGhana.

Andreas Liebenthal is principal evaluations offi-cer in the Infrastructure and Energy Division of theOperations Evaluation Department, an independentevaluation unit of the World Bank. Mr. Liebenthal isresponsible for the evaluation of energy and environ-mental projects. He prepared the report “The WorldBank’s Experience with Large Dams: A PreliminaryReview of Impacts.” Mr. Liebenthal has also beeninvolved in the appraisal and supervision of the WorldBank-financed Shuiko hydropower project in China,and the Saguling and Cirata projects in Indonesia.

Richard Meagher is chairman and chief execu-tive officer of Hazra Engineering Company, an inter-national consulting firm of engineers and scientistsspecializing in the development of water resourcesfor conservation, electric power, irrigation, land recla-mation, flood control, water supply and pollutionabatement, located in Chicago, Illinois. Mr.Meagher, who began his career with Hazra, has beeninvolved in such projects as the 10,000-MW GuriHydroelectric Project in Venezuela and the 1,000-MWKarun River Project in Iran.

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Patrick McCully is campaigns director ofInternational Rivers Network, a nonprofit organiza-tion based in Berkeley, California, that is committedto reversing the social, environmental and economicdamage caused by large dams and other internation-ally funded large-scale river development projects.Mr. McCully, who is closely involved in monitoringinternational involvement in a number of dam pro-jects around the world, is the author of SilencedRivers: The Ecology and Politics of Large Dams.

Jeff McNeely is coordinator of the BiodiversityPolicy Program and chief scientist at IUCN. In addi-tion to advising the director-general of IUCN on sci-ence policy, Mr. McNeely promotes the integration ofbiodiversity considerations in sectoral developmentactivities. He has also worked on irrigation issues inIndonesia and in the Lower Mekong Basin and SriLanka on the design of habitat-protected areas in con-junction with water resources development pro-grams.

Kathryn McPhail is the senior social scientist inthe Environment Department at the World Bank.She provides support to governments, private-sectorclients, regional colleagues in IBRD, IFC and MIGAon social assessments and public consultation forenvironmental assessments. Ms. McPhail hasworked on social impacts of dams in India, Thailand,Ghana and most recently on Nepal Arun and LaoPDR Nam Theun Two. She was task manager for the1993 OED study “Early Experience with InvoluntaryResettlement.”

Reatile Mochebelele is chief delegate leading theLesotho delegation to the Joint Permanent TechnicalCommission, a joint organization of the Lesotho andSouth African governments responsible for the over-sight of the Lesotho Highlands Water Project. Mr.Mochebelele participates in the monitoring andapproval functions of the Commission over its twoimplementing agencies. He has focused in particularon water resources and other environmental issues.

Ricardo Luis Montagner is founder and execu-tive coordinator of Movimento dos Atingidos porBarragens (MAB), a social movement based in SaoPaolo, Brazil, and organized by citizens who have suf-fered from the social and environmental impacts oflarge dams. Mr. Montagner strives to win legalrights for displaced people and works with families to

resolve the social and environmental problemscaused by large dams.

Engelbertus Oud is head of the Water, Powerand Land Development Department of LahmeyerInternational GMBH (LI), the largest German con-sulting engineering company that specializes inpower, water, transport, environment and projectmanagement for large infrastructure projects. Mr.Oud, who has been team leader of several hydropow-er development studies, is currently the project man-ager of the study of alternatives for the 680-MW NamTheun Two hydropower project in the Lao PDR.

Bikash Pandey is co-founder and coordinator ofthe Alliance for Energy, an advocacy group based inKatmandu established in 1993 to promote a widerpublic debate on the development of hydropower inNepal. The organization successfully challengeddonors’ support for the Arun III project. Mr. Pandey,who also currently studies at the Energy andResources Group at University of California atBerkeley, has worked to promote micro and minihydro systems to rural communities.

Elias Diaz Pena is coordinator of theEnvironmental Sector at SOBREVIVENCIA: Friendsof the Earth, Paraguay, a nonprofit organization dedi-cated to the support of native communities for therestoration and conservation of the quality of theirenvironment. Mr. Pena, having originally worked asa consultant in the hydrologic studies and design ofmitigation plans for the Yacyreta HydroelectricProject, now coordinates the monitoring of the socialand environmental problems created by the project.

Thomas Philippe is project manager in theInternational Division of the Electricite de France(EDF), the largest generator of hydroelectric energyin Europe. Mr. Philippe is responsible for all ofEDF’s international project activities. He is currentlythe EDF Project Manager for the Nam Theun Twohydro project in Lao PDR.

Robert Picciotto is director general of theOperations Evaluation Department (OED) at theWorld Bank. Mr. Picciotto oversees the OED andreports to the World Bank’s board of directors.Additionally, he has supervised several major recentOED studies on dam-related issues, including “TheWorld Bank’s Experience with Large Dams: A

˜

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Preliminary Review of Impacts” (1996). In previouspositions at the Bank, Mr. Picciotto has been involvedwith dam-related projects and policies in South Asia,Europe/North Africa and Latin America and theCaribbean.

Jean Yves Pirot is the coordinator of theEcosystem Management Group at the WorldConservation Union (IUCN). Mr. Pirot coordinatesIUCNís efforts to promote an integrated approach toecosystem management. While at IUCN, he hasdeveloped a portfolio of activities relating to floodplain management and restoration, including the miti-gation of impacts of dam construction the Senegaland Chad basins.

Martyn Riddle is manager of the EnvironmentDepartment at the International Finance Corporation,the private-sector financing arm of the World BankGroup. He is responsible for the review and, if appro-priate, clearance of all IFC projects in order to ensurecompliance with World Bank policies and guidelines.He is also in charge of monitoring approved projectsduring implementation. Mr. Riddle previously hasbeen involved in preparing EIAs for several largedam projects.

Thayer Scudder is professor of anthropology anda co-founder of the Institute of DevelopmentAnthropology at the California Institute ofTechnology. Mr. Scudder has researched the socio-economic impacts of large dams and river basindevelopment projects on project-affected people with-in reservoir basins and below dams in many parts ofthe world. He has also served as a consultant onlarge dam and river basin development projects inNorth America, Africa, the Middle East and Asia.

Aly Shady is president of the InternationalCommission on Irrigation and Drainage, an organiza-tion composed of 86 country members whose mis-sion is to promote the development of techniques inmanaging water and land resources for irrigation,drainage and flood control. Mr. Shady, who hasworked as an academic, consultant and public official,is also currently a senior advisor to the CanadianInternational Development Agency. He is author ofthe recently published textbook Management andDevelopment of Major Rivers.

Andrew Steer is director of the EnvironmentDepartment at the World Bank. He leads the WorldBank’s efforts to assist its member countries inaddressing environmental problems as well as socialpolicy and resettlement. Mr. Steer, who has workedon economic and natural resource policy issues inNigeria, Thailand, Bangladesh and Indonesia, was theprincipal author of the World Bank’s annual WorldDevelopment Report for 1992, “Development and theEnvironment.” Most recently, he co-authoredMaking Development Sustainable—From Conceptsto Action with Ismail Serageldin.

Achim Steiner is senior policy advisor for theGlobal Policy and Partnership Unit at IUCN in theWashington, D.C., office. His principal task is thecoordination of IUCN’s policy dialogue and strategicpartnerships with the World Bank, UNDP and theGlobal Environment Facility. He also provides sup-port to a range of international NGO networks. Mr.Steiner has been involved in environmental and eco-nomic development policy and programs in SouthAsia and southern Africa. He has coordinated thejoint IUCN-World Bank Initiative on Large Dams.

Richard Stern is the Director of the Industry andEnergy Department at the World Bank, responsiblefor the Bank’s overall energy policy. He is alsoManager of the Energy Sector ManagementAssistance Program (ESMAP), a joint technical assis-tance consortium that includes about 15 public andprivate donors. Mr. Stern has served as Chief of theChina Industry and Energy Division at the WorldBank, and has worked for UNDP in Ethiopia and theInstitute of Development Studies in the UnitedKingdom.

Jan Strömblad is Senior Vice President ofEnvironmental Affairs at ABB, a global energy firminvolved in all types of power generation, includinghydroelectric plants and power transmission. Mr.Stromblad is responsible for the coordination ofABB’s environmental management programs in 43countries. He has participated in the planning andimplementation of environmental management sys-tems in several hydroelectric projects, including theBakun Hydroelectric Power Project in Sarawak, EastMalaysia.

Theo Van Robbroeck is President of theInternational Commission on Large Dams, a non-gov-

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ernmental international organization that provides aforum for the exchange of knowledge and experiencein dam engineering. Mr. Van Robbroeck is responsi-ble for the affairs of the Commission as it ensuresthat dams are built safely, efficiently, economicallyand without detrimental effects on the environment.He previously served as Deputy Director General inthe Department of Water Affairs in the Republic ofSouth Africa.

Pietro Veglio is Advisor to the Swiss ExecutiveDirector at the World Bank. Mr. Veglio is responsiblefor assessing Bank operations, and, in particular,environmental and energy issues and resettlement.He has actively participated in the internal discus-sions on the World Bank report on resettlement andthe OED report on large dams. Mr. Veglio has alsovisited World Bank projects involving large dams andresettlement, including National Thermal Power Ltd.in Gingrouli, India.

Martin ter Woort is senior manager of develop-ment planning at Acres International Limited, aCanada-based international consulting companyinvolved in the planning, engineering and projectmanagement of hydroelectric and water resourcedevelopments. Mr. Woort has been responsible fordirecting the resettlement and socio-environmentalstudies associated with hydropower development inChina, Lao PDR, Nepal, Panama and Thailand. He isalso actively involved in advising governments onresettlement policy.

Tanlin Yuan is deputy director general of theOffice of Foreign Investment Management in theMinistry of Water Resources of the People’s Republicof China. Mr. Yuan is responsible for the evaluationand management of foreign-financed dam projects inChina. He has been involved in the planning, design,construction and administration of a number of hydroprojects in China, including the Three Gorges DamProject and the Xiaolangdi Dam Project.

Mishka Zaman is program coordinator at theSUNGI Development Foundation, a nonprofit organi-zation, located in Pakistan, that has worked on damdisplacement since 1991. Ms. Zaman is responsiblefor SUNGI’s campaign on the Ghazi-BarothaHydropower Project, whose planned constructionthreatens to displace 120,000 people already resettledonce before in the 1970s, as a result of the construc-

tion of the Tarbela dam just seven kilometers away.Working with community-based organizations, Ms.Zaman lobbies the government and World Bank andmonitors the project through an eight-member NGOstanding committee.

Robert Zwahlen is the senior environmental advi-sor at Electrowatt Engineering Ltd. (EWE), a compa-ny of consulting engineers with core business inenergy, water management, transportation, and con-struction planning. EWE, located in Zurich,Switzerland, has been involved in more than 100large dams worldwide. Mr. Zwahlen is responsible forcoordinating and conducting environmental impactstatements, mainly for water resource developmentprojects. He has also recently published on humanresettlement and environmental issues.

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The World Bank

been a subject of growing international debate and controversy. They have played a key role inment, meeting a variety of purposes, including electricity generation, flood control and irrigation.nvironmental, social and even economic impacts are increasingly noted. In 1996 the World Bank

ation Department completed an internal review of 50 large dams funded by the World Bank.Conservation Union and the World Bank agreed to jointly host a workshop in April 1997 to dis-

of the review and their implications for a more in-depth study. The workshop broke new groundher representatives from governments, the private sector, international financial institutions andizations to address three issues:

es needed in knowledge and practice

and approaches required to achieve these advances

follow-up process involving all stakeholders

king together achieved a remarkable consensus on how to move forward. Most notably, agree-d for IUCN and the World Bank to facilitate the establishment a two-year international commis-r 1997. Its mandate is to review the development effectiveness of dams and to develop standards,lines to advise future decision-making. Part I of these proceedings summarizes the workshopcommendations for future action. Part II contains a series of overview papers commissioned forfour key topics: engineering and economics, social and stakeholder issues, environmental sus-ure challenges facing the hydro industry.

ancial support from the Swiss Agency for Development and Cooperation.

onservation Union The World Bank1818 H Street, NWWashington, D.C.USA

The World Bank

LEARNING FROM THE PLOOKING AT THE FUTU


IUCN–The World Conservation Un& The World Bank Group

The World Conservation Union The W

LARGDAMS

LARG

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Documents

Large Dams