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| Features, February 2001 |
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| Dammed if you do... |
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| Launched with great fanfare at the end of last year, the report from the World Commission on Dams promised a new, consensual approach to dam development. But, as Melvyn Westlake reports, it may have simply given dam builders and busters a new battleground |
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 It could be the last chance for dam builders to clean
up their act and reverse the precipitous decline in such projects
during recent decades. Or, it could be the death knell for large dam
construction in the developing world. November's 440-page report from
the World Commission on Dams (WCD), Dams and Development, which lays
out a blueprint for ending the bitter controversies surrounding many
dam projects, and reconciling the opposing forces, is itself now the
battleground. Much depends on how the report's 26 guidelines are interpreted. They cover everything from negotiations with indigenous people and other groups affected by dam construction, through environmental and cultural impact assessment, to the evaluation of alternative energy sources, better utilisation of existing dams and more efficient management of supply and demand for energy and water. The guidelines "definitely raise the bar for [dam builders], to a level not jumped before," says John Briscoe, a senior water adviser to the World Bank, in Washington DC. Indeed, the so-called 'dam busters' - such as environmental non-governmental organisations (NGOs) - and the dam builders appear to agree that if the guidelines are viewed as completely binding in every particular, then no more dams will ever be built. "If you see the guidelines as stretch targets, something to be aimed for at some point in the future, we can agree with them. We are already fulfilling many of them. But if the [World Bank] board were to adopt them in their entirety, the bank would not finance another dam," says Briscoe. More than two years in preparation, the report of the WCD, under the chairmanship of South African education minister, professor Kader Asmal, aims to reduce the escalating risks of dam building by ensuring wider public approval for such projects and a more equitable sharing of their benefits. Sponsored by the World Bank and the World Conservation Union - although entirely independent - the WCD's report has been mostly well-received by the multilateral banks, and other financing bodies, such as export credit agencies, and perhaps a little more coolly by some private engineering and construction companies. It has, however, been gleefully embraced by anti-dam groups, who see it as giving them ammunition for their campaigns to prevent dam construction. Even as the WCD's report was being launched in London, 109 NGOs in 39 countries issued a joint statement calling on all public financial institutions to "immediately and comprehensively adopt [its] recommendations." Otherwise, there should be a "moratorium on funding the planning or construction of new dams." The International Rivers Network, a Berkeley, California-based NGO, demanded reparations for past social and environmental damage caused by many of the world's 45,000 large dams. Although the report's recommendations have no force in law, some multilateral funding agencies and dam sponsors are concerned that the opposition groups will be able to say that a particular guideline has not been met to the letter, and therefore construction should not proceed. There are several points of the report that worry Briscoe. In the first place, the guidelines reduce the role of government in the process of negotiation between affected communities and the construction sponsors. Government only becomes involved if they cannot agree, and then somewhat passively, as arbiter. "I doubt that many governments will accept that as a reasonable modus operandi in countries where a lot of infrastructure needs to be built," Briscoe says. In addition, the report recommends that where there are outstanding claims for compensation or reparation in connection with past dams, then no new ones should be built in the same area. In many cases, these issues never get entirely resolved, he says, so this is an impossible requirement. As the report is widely seen as a model that extends beyond dams to infrastructure in general - roads, bridges, and so on - "you would have a process that would gum up development very fast," if some of the guidelines were applied religiously, says Briscoe. There are also more technical recommendations that are viewed by dam sponsors as unimplementable, such as ex-ante assessments of the contribution of a proposed reservoir to greenhouse gas emissions. (Emissions caused by rotting vegetation can reach the same levels as from an equivalent thermal plant.) Such emissions cannot even be measured ex-post at the moment, say some experts. The report "would require you to know everything about everything before you can do anything," as the representative of one Western utility says. And, although alternatives to dams - tidal barrages, windmills, solar energy and demand management - have some part to play, there are unlikely to meet the needs of large, fast-growing countries such as China (which alone has 22,000 large dams). On one measure, only 10% of developing countries' economically-viable hydro-electric potential has been exploited, compared with 70% for developed nations. The experts at the World Bank will tell its governing board that there is much in the WCD report that they agree with, and are already implementing. But there are some parts that they view as "stretch targets," and some which "we, frankly, do not agree with," says Briscoe. Those involved in preparing the report say it is not intended to be "anti-dam." On the contrary, "we recognise that for some countries, dams will be the best option, and they should be allowed to proceed with building them," says WCD secretary general Achim Steiner, an economist and natural resources specialist. Some people are viewing the report as a crisis point, he says. But, the "reality is that the crisis in dam building started over 15 years ago." The last decade has seen a halving in the construction of large dams (defined as those with a height of 15 metres, or between 5 and 15 metres and a reservoir volume of more than 3 million cubic metres), from more than 4,000 in the 1980s, to 2,000 in the 1990s. Bilateral and multilateral donors have virtually ceased funding large-scale dams. They now provide only 7%-10% of finance for new dams. In the case of the World Bank, dam financing accounts for only 1% of its loans. Export credit agencies, such as Britain's Export Credit Guarantee Department (ECGD), have also been reducing their exposure to dam building (accounting for 5%-7%), while the private sector's share is down to 2%-5%. Today, governments and state-owned utilities in host countries pay for 78%-86% of dams. This decline has been caused by high risks and public opposition, says Steiner: "We [the Commission] believe that the report is probably the dam construction industry's best chance to clean up its act, and to repair what is broken; so that 15 years from now we still have a level of public acceptance where development funding and export credit agency funding is available to countries that need to build dams." The aim of the report, he argues, is to provide the analytical tools to assess when a dam is a successful investment project, when it is not and what are the key factors influencing that outcome. "We provide a whole series of criteria with which to assess risk," says Steiner. The number of dams built in the future will probably continue to decline, he adds, but the report should enable a larger number of them to be built 10 or 15 years from now than "would be the case on a business-as-usual scenario." What remains unclear is the extent that the up-front costs of dam building will be increased by meeting the guidelines - a process inevitably involving more detailed evaluation and preparation, as well as potentially extensive and prolonged negotiation with indigenous peoples in the affected areas. The proposed guidelines "will not make dams more expensive to build" overall, says Steiner. "Doing your homework properly at the beginning will add to up-front costs. But it will not necessarily take any more time because so often the environmental and social issues have to be dealt with at a later stage, causing delays," he says. It is a view supported by Martyn Riddle, associate director at the environment divisions of the International Finance Corporation (IFC), the private sector arm of the World Bank. "To the extent that the guidelines bring clarity to what has been a fairly murky process, and therefore removes uncertainty about the future, it should make the process more efficient," he says. The huge delays experienced in the past have also been costly. A more efficient approvals process and greater certainty could help keep costs down, he argues. The World Bank's Briscoe cites the case of the Sardar Sarovar dam project on India's Narmada River, from which his institution withdrew in 1993. Construction of this dam has been stalled for six years because of resettlement problems. This case has gone up to the Indian Supreme Court of India, and involved substantial unexpected costs. Much like the World Bank and IFC, the export credit agencies - such as the US Export-Import Bank, Britain's ECGD, and France's Coface - all indicate that they will incorporate the guidelines into their own procedures, although with some flexibility over how they are applied. There were no real standards for dam construction previously, says Francois de Ricolfis, director of Coface's medium and long-term transactions, in Paris. "The guidelines will be an important reference for our involvement in dams." But the WCD report is not the Holy Bible - it is just a tool for getting the best dams, he adds. It is a position broadly echoed at the ECGD, which is currently deciding whether to become involved in Turkey's controversial Ilisu Dam - a project that is claimed to breach many of the Commission's principles. The ECGD maintains that it already follows best international practice. Across the Atlantic, the US Ex-Im Bank, in Washington DC, is also reviewing its possible involvement with the Ilisu project. It claims the highest existing environmental guidelines of any export credit agency but intends to incorporate some of the Commission's guidelines into its own approach. |
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