The World Bank has experienced what it calls a long and complex relationship with hydropower.
In the 1990s, concerns about the environment, water equity, population displacement and social justice led to protests and lawsuits around hydropower projects and a steep decline in Bank funding for hydro development that bottomed out in 1999, when the Bank put no money at all into hydropower.
Then in 2003, the Bank began funding hydropower projects again, including Bujagali in Uganda, Bumbuna in Sierra Leone, Felou in Senegal, Nam Theun 2 in Laos (above), and Rampur in India.
A recent report from a World Bank Group (WBG) team led by Senior Water Resources Specialist Daryl Fields verifies the shift: Directions in Hydropower: Scaling Up for Development describes the World Bank taking a renewed role in hydropower development and examines the challenges and opportunities hydropower presents today.
This realignment of hydropower is being driven by a number of factors, starting with estimates that the developing world has 1,333 GW of potential and unexploited hydro capacity.
Some NGOs, however, say that number, also promoted by the hydropower industry, would be much lower if negative social and economic impacts were taken into consideration. Some also don't believe large scale hydropower is the answer for rural electrification.
"Large hydropower projects have been shown to lead to irreversible impacts on rivers and their ecosystems, displace communities and even small towns, and often do not provide economic benefits - or even electricity - to those living close to the dams," says Elizabeth Bast, International Program Director for Friends of the Earth U.S.
"The reservoirs created by the construction of large dams have been shown to create substantial greenhouse gases, contributing to climate change."
Yet the authors of the World Bank policy believe that hydropower, when developed sustainably, can mitigate a number of global issues including climate change, carbon emissions and energy security.
New standards of hydro development, they claim, take into account issues of water security, regional cooperation and population displacement, though they acknowledge that has not been the case in most large hydro installations to date:
Implementation of good practices is challenged by lack of capacity throughout the industry and in client countries, and by weak regulatory and policy frameworks. Inherent complexities and the multisectoral, multi-objective nature of hydropower projects further emphasize the importance of a strong risk management approach to the sector. This framework has to encompass both careful project preparation and supervision (including efficient decision making) and strengthening of the sector's basic foundations along the entire life cycle of hydropower investments.
As a result, the World Bank is showing some realism that there will continue to be risks and challenges associated with hydropower developments.
A foremost challenge is limited funding.
Private sector investment is slow, particularly when it comes to project preparation. That is why the World Bank believes it must play a major role in financing by making direct investments in high quality projects.
Some organizations worry about how the Bank will define "high quality projects," though, and they wonder whether hydropower is crowding out support for renewable energy alternatives.
The Bank's lending for hydropower increased from an average of $250 million per year in 2002-2004 to more than $1 billion in 2008. Based on industry trends, it expects more than $2 billion in projects in the coming years. Meanwhile, Bank funding for wind, solar, biomass and small hydro was $476 million in 2008.
"The World Bank's current approach to the energy sector on all fronts appears to be repackaging old strategies with green-washed language," Bast says. "'Sustainable' hydropower is actually proving to be a way to repackage the return to the large-scale hydropower projects that it supported in the 1990s. Similarly, the proposed energy sector strategy is more of the same dirty energy projects despite the Bank's professed climate concerns."
Triple Bottom Line
Due to these kinds of concerns, hydropower has been in disfavor for a number of years resulting in a lack of planning and what the Bank calls a "lost tradition of prefeasibility studies", as well as a lack of development of service firms and expertise.
The Bank also says that to avoid environmental and social risks, new standards of development - which few have experience implementing - must be integrated into new projects. The Bank recommends 'blending' energy and water policies, integrating upstream environmental and social concerns and taking a triple bottom line approach of social, environmental and economic considerations:
Strong programs are emerging in Africa and South Asia, but greater focus is needed in Central Asia and Latin America, and in accelerating broad basin-level plans. These projects must be measured not only in terms of lending volumes but also in terms of sustainability and the triple bottom line of economic, social and environmental value.
But Bast doesn't believe that taking a triple bottom line approach to large scale hydro is possible. "Large hydropower has been shown not to deliver on any of the triple bottom line criteria," she explains. "A true assessment of environmental, social, and economic benefits of large dams would likely turn up challenges on all fronts. Even the Bank itself makes a distinction between hydropower below 10 megawatts in its 'new' renewables calculations."
Many NGOs remain concerned about the environmental and displacement repercussions of dams and large hydropower projects.
Curuá-Una Dam in Brazil, built in 1980, emitted 3.6 times more greenhouse gases than would have been emitted by generating the same amount of electricity from oil, Philip Fearnside writes in Mitigation and Adaptation Strategies for Global Change. The trees and plants flooded by the reservoir rotted, releasing methane as water flowed through the turbines.
The World Bank acknowledges this is an issue, and perhaps a bigger one than is even currently understood:
First, where present, methane emissions from reservoirs must be investigated and embedded in project assessments and environmental management plans. While it is thought that emissions are likely associated with anoxic, shallow, tropical reservoirs (versus temperate or deep reservoirs), the science is still emerging and predicting and measuring emissions pose technical challenges.
And then there is the Three Gorges Dam in China, the world's biggest hydro project. It was first envisioned in 1919, began construction in 1994, and by the time it is fully operational in 2011, will have a capacity of 22,500 MW and cost just under $30 billion.
According to International Rivers, the project "sets records for number of people displaced (more than 1.2 million), number of cities and towns flooded (13 cities, 140 towns, 1,350 villages), and length of reservoir (more than 600 kilometers)". It may offset the burning of 50 million tons of coal, but critics ask at what social and environmental price?
Even the UN Human Rights Division has concerns over dam projects. It released a report in May criticizing the Changuinola Aes dam construction for the Chan 75 hydroelectric plant in Bocas del Toro, Panama. James Anaya, the UN Special Rapporteur on the Situation of Human Rights and Fundamental Freedoms of Indigenous People, found that both the company and the government had violated the rights of the Ngobe Indians. In June, the Inter-American Commission on Human Rights granted the Ngobe's request for an injunction, suspending construction.
Not all dams draw opposition. Organizations like Friends of the Earth UK are supportive of small scale, community owned hydro, like the Torrs Hydro New Mills Ltd planned installation in Derbyshire. And Friends of the Earth Malaysia, Green Empowerment and the Borneo Project helped the community of Long Lawen in Sarawak Malaysia develop a micro hydro system after they were displaced by the development of the controversial Bakun Dam. But projects like these are not the scale or technology (Torrs will use an updated version of a 2,000-year-old Greek technology called the Archimedean Screw) that the World Bank is looking to support.
The World Bank Group is collaborating with members of the Hydropower Sustainability Assessment Forum (HSAF) which is trying to establish a widely accepted sustainability assessment tool based on the International Hydropower Association (IHA) Sustainability Assessment Protocol developed in 2006.
Organizations like International Rivers complain that
"HSAF is a self-selected group, and dam-affected people have no seat in it. The Forum started a belated consultation exercise in January 2009, half-way through the process. Even then, it did not ensure that affected people could effectively participate in the process."
While the WBG report references the World Commission on Dams (WCD), which the Bank helped set up, it has not adopted their guidelines covering equity, efficiency, participatory decision-making, sustainability, and accountability. The Bank acknowledges, however, that a number of NGOs would like it to do so.
International Rivers and others say that the WCD guidelines are comprehensive and were established with a more participatory process, calling them "the international best practice guidelines in the water and energy sector".
"The WCD recommends an approach in which social, environmental and economic interests are given equal weight, projects are selected through a balanced assessment of all available options, and affected people have a right to participate in project development," says Peter Bosshard, Policy Director at International Rivers.
Bosshard is concerned that the World Bank may have a different agenda and finds that its current approach to hydropower remains questionable. He doesn't believe that the bank is acting as an unbiased advisor on dam projects, but rather promoting them and lobbying for weaker environmental licensing processes in vulnerable areas like the Amazon in order to push them through.
He points to the Nam Theun 2 Project in Laos for example, asserting that legal agreements and social environmental commitments have been broken:
"The people displaced by the reservoir have received better houses, but the more than 120,000 people affected by the project still don't know how they are supposed to feed their families.
"Similarly, the Bank treated displacement mainly as a matter of compensation in Uganda's Bujagali Dam, and did not ensure that affected people can restore their long-term livelihoods.
"Coastal communities in Pakistan are still waiting for compensation of the damages caused by a World Bank drainage project that ignored all their warnings. The Tonga people in Zambia are still impoverished 50 years after they were forced off their lands by the Kariba Dam. Guatemalan farmers are still seeking justice for the murder of hundreds of family members who stood in the way of the Chixoy Dam."
(Photos: International Rivers)