Should we build more large dams?

“The actual costs of hydropower megaproject development”

Ever since the World Commission on Dams (WCD) report in 2000, the environmental and social impacts of dams, and especially large storage dams for hydropower production have been under close scrutiny and its recommendations were largely integrated by the multilateral funding agencies which basically led to a “drought” in dam construction in Africa.

However, with the economic boom in emerging nations in Asia and South America, dam building started again but with different sources of funding, in its most extreme version the so-called “boot” dams (build-own-operate-transfer) on, for example, the Mekong.

The mechanism is simple: private funding (in this case based on the electricity demand of air conditioning offices and middle class housing in cities like Bangkok) signs a deal with a poor country (e.g. Laos) builds the dam and sells the electricity for a number of decades, reimbursing itself with a handsome profit. The dam is then transferred to the country (but of course its useful life time has expired, it is full of sediment, etc.). The thing is that this kind of money is not subjected to any environmental or social criteria (or these can be negotiated downward with the receiving country, possibly with some personal incentives for those who sign). The dam-building epidemic has now spread to Africa, often with new bilateral donors who have also not signed up to the recommendations of the WCD.

Many of the most damaging aspects of dams can be reduced by making them either run-of-the-river i.e. without storage and only producing power during good river flows (and interlinking power grids – it always rains somewhere in Africa) or, if storage is unavoidable, design and operate for managed flood releases that can keep the downstream ecosystems and sociosystems operating or even improve on them.

As can be seen from the picture of Masinga dam (the biggest storage dam on the Tana River) during a recent drought in Kenya, planning for a dam with rainfall and run-off data most often from the 1960s does not guarantee that they will actually have water in the 21st century.

Bent Flyvbjerg and his team have been writing about cost overruns in various types of megaprojects for many years now but this one on dams is a real eye-opener showing that it, in general, they also do not make economic sense.

 

by Atif Ansar, Bent Flyvbjerg, Alexander Budzier and Daniel Lunn

The paper can be downloaded at
http://ssrn.com/abstract=2406852